Local hospital officials are waiting for decisions in Olympia that could affect whether their financial condition ends up being stable or critical.
It is all but guaranteed that hospitals such as Lourdes Medical Center in Pasco and PMH Medical Center in Prosser -- designated "Critical Access Hospitals" -- will take a hit, but the question is, "How big?"
A supplemental budget plan unveiled by House Democrats last week would eliminate the benefits of having critical access hospital status for any hospital within 20 miles of another hospital.
All other critical access hospitals would see a 10 percent drop in what the state pays them to treat patients on Medicaid.
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But a bill under consideration in the House Ways & Means Committee on Friday goes even farther and would eliminate what's known as cost-based reimbursement for all critical access hospitals -- and local health care officials say that would be devastating.
The committee hasn't yet taken a vote on House Bill 2130, and it is unclear whether it will, but even seeing the bill on the committee's consideration list is giving local hospital officials heartburn.
"My frustration is the state holds all the cards," said PMH CEO Julie Petersen. "They define what an allowable cost is. They define what they pay for. Once they define what they say is the true cost of providing care, then they are saying they will pay less than what our costs are. It's not sustainable. It makes no algebraic sense. The more they chase that equation, the less sense it makes."
Critical access hospitals get higher levels of reimbursement for treating Medicaid and Medicare patients than hospitals without the designation as an incentive to see those patients, but the trade-off is that critical access hospitals stay small and can't expand beyond 25 acute-care beds.
The program was created by federal legislation in 1997 as a safety net to ensure low-income people and seniors have access to care in rural areas.
Mid-Columbia hospitals with the designation include Lourdes, PMH, Sunnyside Community Hospital, Othello Community Hospital and Dayton General Hospital.
Even though Lourdes isn't technically rural, the state deemed it a "necessary provider" in 2005, which recognizes hospitals that care for underserved populations such as seniors and low-income people.
The designation also can be given to a hospital considered financially vulnerable, as Lourdes was in 2005 after several years of losing money. Getting the designation and restructuring -- or "right-sizing," as administrators called it at the time -- helped the hospital turn its finances around.
Lourdes CEO John Serle expressed frustration that the government is passing the cost of care on to hospitals for patients on government assistance while at the same time requiring hospitals to see those patients.
"We won't get paid for it, and they get out from under the obligation to pay for services rendered to their clients. It's not right," Serle said.
Because Lourdes is within 20 miles of other hospitals -- namely Kadlec Regional Medical Center in Richland and Kennewick General Hospital in Kennewick -- Lourdes looks to lose its critical access reimbursements either under the supplemental budget proposal or House Bill 2130.
Frank Becker, the hospital's chief financial officer, said that amounts to about a $6 million loss for Lourdes.
Data from the Washington State Hospital Association estimates that 23 percent of Lourdes' total revenue comes from Medicaid, and the cut would take away 40 percent of Lourdes' Medicaid payments, or about 8 percent of its total revenue.
PMH also gets about 23 percent of its revenue from Medicaid. Petersen estimated House Democrats' proposed budget would result in a net loss of about $1 million for the Prosser hospital, which laid off employees in November in anticipation of the cuts.
PMH is reviewing its budget every 30 days as uncertainty about state and federal funding lingers.
The Washington State Hospital Association estimates the loss to Othello at $2 million, Sunnyside at $5 million and Dayton at $404,000.
"This will be devastating to our Health System and community. This is not a reasonable cut for critical services," a statement on the Dayton hospital website said.
Lourdes officials have been vocally opposed to the proposed cuts to critical access hospitals since they first appeared in Gov. Chris Gregoire's proposed budget in November. Serle has pleaded with local officials and Mid-Columbia lawmakers to take the message to Olympia that critical access hospitals are vital to the region.
Serle has told legislators and the Herald that a $6 million loss could lead Lourdes to scale back or eliminate its mental health services, which typically operate at a loss.
Lourdes is the largest provider of mental health services in the Tri-Cities and surrounding area.
Petersen said one thing some lawmakers from more urban districts don't seem to understand is that cutting critical access hospitals affects the entire system of health care in a rural area.
"Hospitals in rural areas -- we are also the primary health care providers. We are the obstetricians. When you put us out of business, you eliminate health care in a community," she said.
Rep. Larry Haler, R-Richland, said House Republicans are united against cuts to critical access hospitals, and noted their party's proposed budget didn't cut those hospitals at all.
"We cannot do this to our citizens," Haler said.