Hospital to ask for levy lid lift

OMC seeking first hike since 2008

PORT ANGELES — The Olympic Medical Center board of commissioners will place a levy lid lift on the Aug. 6 primary election ballot.

The proposed lid lift, approved unanimously on Wednesday, would increase the Hospital District 2 levy from the current 31 cents per $1,000 of assessed property value to 75 cents per $1,000, the maximum amount allowed under state law.

If approved, the new levy would generate $12,073,793 annually. The current tax levy rate generates $4,990,501 annually.

Ballots for August’s primary will be mailed July 17.

OMC maintained its financial stability prior to the COVID-19 outbreak, Chief Executive Officer Darryl Wolfe told commissioners, but the pandemic dramatically changed the landscape for healthcare. OMC reported $28 million in losses in 2023 and $5.1 million in the first three months of 2024.

“We are in a place we’ve never been before,” Wolfe said. “The board has a responsibility, as we all do, to keep us as strong as possible. We need to continue to provide the services that people rely on us for.”

Among its financial challenges have been inadequate Medicare reimbursement, workforce shortages and expansion of the state’s charity law that lowered qualifying criteria and put greater cost burdens on hospitals.

The Washington State Hospital Association reported that hospitals across the state sustained $1.74 billion in losses in 2023. This was a slight improvement from 2022, when hospitals lost $2.1 billion.

If voters pass the resolution, a homeowner in Hospital District 2 would pay an additional $11 a month for a home with an assessed value of $300,000. The resolution would need a simple majority to pass.

OMC’s taxing district covers central and eastern Clallam County. Voters in the West End who live in Hospital District 1 (Forks Community Hospital) approved by 55 percent a levy lid lift in the Feb. 13 special election.

OMC’s tax levy rate was last adjusted in 2008, when 54 percent of voters approved increasing it to 44 cents from the original 11-cent levy set in 1947 to create the public hospital district. Since that time, the collection rate has dropped to its current rate of 31 cents per $1,000.

The state limits taxing districts to increasing property tax levies by 1 percent per $1,000 of assessed property value annually. A levy lid lift like OMC is proposing allows taxing districts to increase rates above the 1 percent limit.

“This is part of a strategy to keep everything open,” Wolfe said. “It doesn’t stand on its own and fix all of our problems by itself.”

OMC will continue to cut expenses and advocate at the federal level for solutions, he said.

Commissioner John Nutter said the current OMC levy rate is less than the William Shore Memorial Pool District’s rate of 32 cents per $1,000 of assessed property value.

“I’m currently paying more to support the local pool than I am to our local hospital,” Nutter said. “What is more important to me personally, the availability of a Level III trauma center that my family and I have counted on or a pool?”

Wolfe said OMC chose to run the levy on the Aug. 6 primary instead of during the Nov. 5 general election so it would not get lost among the many races and initiatives on the ballot. It would also avoid competing with the Port Angeles School District, which is planning to place both an Educational Programs and Operation levy and a bond before voters, he said.

Clallam County Fire Protection District No. 2 is also running two levy resolutions on the Aug. 6 ballot: Proposition 1 is a levy lid lift that would raise the levy rate to $1.50 per $1,000 of assessed valuation and Proposition 2 would increase the EMS levy to 50 cents per $1,000 of assessed value.

Approval of the hospital district’s levy resolution came after commissioners heard Chief Financial Officer Lorraine Cannon’s first quarter financial report, which showed OMC continued to operate at a loss.

In addition to losing $5.1 million in the first quarter, its profit margin was -8.2 percent and its days of cash on hand dropped to 45 from 56 for the fourth quarter of 2023.

Cannon pointed out that the losses were smaller than in the first quarter of 2023, when they stood at $7.9 million. Hospital admissions were up compared to the first quarter of 2023 and the length of stays were down, as well.

“That there’s an increase in admissions and decreasing patient days or length of stay [means] we’re moving in the right direction from that standpoint,” Board President Thom Hightower said.

Cannon said OMC incurred high costs in the first quarter related to professional fees for locum tenens, the short-term contract workers who fill staffing gaps. Among them were five primary care physicians who were paid $250 an hour, three radiation oncologists paid $5,300 a day and three medical oncologists paid $7,000 a day.

OMC has been working to reduce the number of locums to reduce that expense, Cannon said.

A dispute with the Centers for Medicare & Medicaid has been resolved and OMC can start rebilling the agency for services to patients OMC provided to patients at its Sequim clinic last year; Cannon said she didn’t know the impact yet of those payments on OMC’s bottom line.

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Reporter Paula Hunt can be reached by email at paula.hunt@peninsulanews.

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