Olympic Medical Center posted an operating loss of $28 million in 2023 as it continues to work to regain its pre-COVID financial footing.

Mary Wright of auditing firm Moss Adams presented OMC’s 2023 financial statements on April 17 that showed it had operating revenues of $238 million and operating expenses of $266 million.

“The pace of the loss was extreme [in 2022], there was massively growing expenses leading to these massive losses as well, and the operating as well as excess margin was definitely a concern,” Wright said. “Now, there’s still losses, unfortunately, but the pace has slowed.”

OMC faces the same challenges continuing to impact Washington state hospitals whose expenses are increasing faster than their revenues, particularly in the areas of staffing, supplies and services, Wright said.

While OMC’s revenues have increased 9% since 2019, its expenses have increased 27% over the same time period. The cost of supplies and services now eats 33% of its operating revenue compared with 27% in 2019.

Bad debt — funds it can’t recover from patients unable or unwilling to pay their bills — has increased 80% from $2.5 million 2019 to $4.5 million in 2023. It provided $4.5 million in charity care last year for indigent and low-income patients compared with $2.2 million in 2022.

OMC is among 85 % of hospitals that lost money last year, according to the Washington State Hospital Association.

“When 85 percent of the revenue for any business is based on not paying the cost, that just is inherently a losing proposition,” commissioner Phyllis Bernard said. “The more service you provide, the deeper a hole you’re in. That is something that requires a solution beyond what management is able to achieve.”

Wright pointed out that OMC’s days of cash on hand had dipped below the 60-day threshold required by one of its bond agreements in 2022 and 2023, but the bank provided a waiver so it would not be in default. Had the bank decided to take action, Wright said, OMC’s interest rate would have increased about 3%.

Moss Adams originally had planned to present OMC’s final report in February, but compliance with Government Accounting Standards Board (GASB) financial and accounting standards, particularly the recent GASB 96 that covers costs and investments related to subscription-based information technology, had created additional work that required additional time for the audit process, Wright said.

In his report to the board, Chief Executive Officer Darryl Wolfe said OMC would receive a distressed hospital grant of $262,000 from the Washington State Health Care Authority.

Although it is less than the $450,000 it received last year, “We’ll take it,” Wolfe said.

OMC also will receive funds through the Medicaid SNAP program.

OMC has continued to implement the recommendations from Advanced Operations Partners, the consulting firm it hired last year to advise it on strategic planning and operations management, Wolfe said. It halved the number of travelers it contracted with last year and is seeking to eliminate 11 locum positions.

“We’ve identified about $75,000 in savings in office supplies over the last six months,” Wolfe said. “The next phase of that is pharmaceuticals, which is a huge expense for us, as you would expect. We will be looking more closely at pharmacy and purchasing — where can we save money there?”

The Centers for Medicare and Medicaid Services errors that were discovered last fall have been resolved with assistance from the office of U.S. Rep. Derek Kilmer, D-Gig Harbor. OMC should be receiving funds it is owed sometime in May, Wolfe said.

A new telecardiology service that enables remote practitioners to interpret electrocardiogram results is expected to be up and running in June, Wolfe said, eliminating the need to send some less-critical patients out of the area for care.

“The goal is to make sure that we can provide more services to our hospital team here at OMC and give them more support for a lower-end cardiac event,” he said.

“We have great capacity here at OMC, and this will allow us to serve more people here at a community level.”

The second of OMC’s public forums that it intends to host every month this year will take place at 6 p.m. May 9 at Linkletter Hall at Olympic Memorial Hospital, 939 Caroline St., Port Angeles.

Wolfe will present an overview of OMC’s finances, plans and operations and answer questions.