WENATCHEE — "We’re tired but ready to keep moving forward," said Columbia Valley Community Health CEO Manuel Navarro. "As the demand for services continues, we all have to grow."
Navarro described his organization's challenges at a Wenatchee World health care roundtable in September that included Cascade Medical CEO Diane Blake and Lake Chelan Health CEO Aaron Edwards. Confluence Health CEO Dr. Andrew Jones provided information in a separate interview.
All agreed the need for medical services has grown in Chelan and Douglas counties since the COVID-19 pandemic began more than two years ago. Matching that need, they said, has been a struggle for providers to retain and attract staff to match the community’s expanding needs.
The cause for this growth is multifaceted — more people are moving here and the population that is here is aging, requiring more care. Organizations also continue to see pent-up demand for basic health care that was deferred as hospitals and other providers grappled to address the immediate needs of the pandemic.
"The biggest driver of stress on systems all over the place is workforce," said Lake Chelan Health CEO Aaron Edwards. "Workforce is a huge challenge. I would say that Chelan and probably all of the greater Wenatchee Valley out-compete other areas for places people want to live. And we still struggle."
Rising housing costs have made it difficult to attract new workers and retain current employees.
"In the last three weeks, I've heard from two different surgeons, who are among the highest paid in our facility, way higher than anyone else," Edwards said. "And both of them, same comment. 'I don't want to be house poor.' If your surgeons are telling you this, where are we?"
The issue is even greater for staff who make less. The turnover for nurses' aides, who have one of the toughest jobs and who are not paid nearly as much as surgeons, is high, he said.
"Trying to get that under control is tough," he said.
Lake Chelan Health, a public hospital district serving the Chelan area, is designated as a critical access hospital and rural health clinic by the Centers for Medicare & Medicaid Services. The designation provides the organization with some added Medicare reimbursement and more staffing flexibility than larger facilities, but it's an ongoing struggle, Edwards said.
A recent twist complicating recruiting efforts was a drop of the region’s Health Professional Shortage Area (HPSA) score. The HPSA score is a federal designation which indicates the need for providers in a certain region. Medical providers taking jobs in areas with a higher score are more likely to receive medical school loan reimbursement.
Physicians have a "huge amount" of student debt and many need those repayment plans, Edwards said. The region still qualifies for some reimbursement, but the lower score didn't help.
"One of the providers that we were trying to retain couldn't qualify to stay in Chelan because of our lower HPSA score, so she had to go to Monroe," said Navarro. "She’s also the wife of an (emergency room) doctor at Lake Chelan Health, so (Lake Chelan Health) was worried about the whole family moving. We’re connected."
To help counteract staffing stresses, organizations are creating or increasing in-house internship and training opportunities.
Lake Chelan Health has begun an ambassador program to hire non-clinical staff — positions that do not need a license or special training — to do food delivery, speak with families, tell folks where the hospital is in an effort to relieve the pressure off nurses.
"Make their life a little easier, from a day-to-day basis so that their retention is a little less of a challenge. It's still a challenge, though," Edwards said.
Cascade Medical created its own medical assistant apprenticeship to train new medical assistants onsite, according to Blake.
Confluence Health, the largest health care provider in the region, is seeing similar challenges with hiring staff to help handle the demand. The workaround, relying on contracted labor, has been expensive, Jones said.
Many large hospitals across the state are financially in somewhat dire straits in great part due to the high cost of contract labor, he said.
According to a Washington State Acute Care Hospital Association survey of the first financial quarter this year, expenses for "temporary labor costs" have gone up 200% from the same quarter last year.
At Confluence Health, the price of "contract labor/travelers" increased 2,103% from 2019 to 2022, according to Confluence Health records.
"The rate for certain positions would go up … it can be four times as expensive. If you do four times as expensive for 24 hours a day for seven days a week, for 365 days a year, for 100 people, it's a big number pretty fast," Jones said.
Confluence Health’s revenues stayed ahead of expenses by a narrow gap in 2021 — with revenue up by 9.9% and expenses up by 8% thanks to CARES Act funds, which helped offset lost revenue during the pandemic.
This year, with no remaining federal CARES Act funds coming in, the balance sheet is telling a different story. Confluence Health lost nearly $5 million in the first quarter of 2022, according to a Seattle Times report quoting Confluence Chief Financial Officer Tom Legel.
The high cost of contracted labor coupled with the loss of federal funds is contributing to the negative margins seen at Confluence Health and across the state, Jones said.
It's a temporary issue, though, he added.
"We're open and ready for business," Jones said. "(People) may see longer waits in some areas and others, some more minor challenges in some areas — like people are probably seeing every facet of the economy. But the areas where we have to be ready all the time to provide the care in the right moment, those get priority."
Jones said the organization is stepping up its recruiting and hiring efforts, which will reduce the reliance on contracted labor.
Cascade Medical — a public hospital district that serves Leavenworth and Lake Wenatchee — is also adjusting this year to increased expenses and reduced revenues masked for the past couple years by the addition of federal CARES Act funds.
In 2021, operating expenses increased by 7.5% while operating revenues collected went up by 15.4% compared to 2020. Just looking at operational revenue, without the CARES Act funds, though, put expenses ahead by $405,185 in 2021.
Cascade Medical also collected about $5.5 million in "nonoperational revenues."
“We’re having a really poor year financially from a margin perspective,” said Blake, Cascade Medical CEO who also heads the Washington State Hospital Association board. “Our cash remains strong.”
Cascade Medical invested in a new electronic health record system this past year. It went online in February. The switch added some expense and is complicating comparison tracking, she said, making it unclear whether “perfect” numbers are coming out of the new system.
What is certain is expenses have risen due to inflation as well as rapidly rising wages, she said, which is likely to continue.
“The biggest impact in the coming months to years is the human impact,” Cascade Medical spokesperson Clint Strand said in an email. “health care has a very tired, yet critical, workforce. We will continue to see workforce shortages in key areas, pushing up the cost of people resources in an industry whose people resources are already the majority of our costs.”
Lake Chelan Health's operating expenses increased about 12% over the past year, from $14.3 million in 2021 to $16 million 2022 when compared to this time in September. Recruitment and professional service expenses have more than doubled this year as well, Edwards said.
The organization has the added pressure of building a new 59,250-square-foot hospital during the pandemic. It is expected to open for patient care in November.
Construction costs came out to a little over $45 million, up from the original total projection of $44.5 million. It was financed by a $20 million, 2017-bond approved by voters in 2017 and a $22 million loan from the U.S. Department of Agriculture in 2018.
Lake Chelan Health was lucky the project was underway when the pandemic hit in early 2020, Edwards said, which helped avoid some, though not all the supply-chain issues.
"It would be astronomically higher if we hadn't started when we started," Edwards said. "But it's still a challenge. I mean, we had to retool — completely retool — how we did the roof because a lack of 21-inch, specialized screws that sandwiched elements of the roof together. It's almost half a million dollar in extra costs just to change the way we did the roof."
Medicaid and Medicare
The hospital CEOs said if they could wave a wand to resolve staffing shortages and inflation-related cost increases, it would still leave Medicaid reimbursements as an ongoing and increasing challenge, particularly for larger regional hospitals, like Confluence.
"Caring for Medicaid patients is a wonderful thing," Jones said. "And something we do lots of. It's the right thing to do for our community, and in many areas, providing that care does not cover the cost."
Lake Chelan Health and Cascade Medical, both categorized as rural critical access hospitals, receive higher payments from Medicaid and Medicare than Confluence does.
CVCH is a federally qualified health care center. Its Medicare reimbursement model is different from other providers, including Confluence.
“But in our region, and in the state, those larger facilities are integral to taking care of communities. They need to have a proper payment for taking care of Medicare and Medicaid patients,” Cascade's Blake said.
The Washington State Health Care Cost Transparency Board, a governor-appointed board tasked with reducing the state’s health care cost growth, has a goal of less than 3% growth in Medicaid payments to hospitals.
“Nothing else is growing by that small of an amount,” Blake said. “So I have grave concerns that we were continuing to be squeezed on the payment side while our costs skyrocket.”
Payments for Medicare, however, are complicated, like a lot about health care finances.
"Our costs keep going up, but our payment system hasn't changed or expanded," Navarro said. "Luckily we're not getting cut, but it is complex. We had an accountant who came over from the PUD, and he lasted three weeks and said 'health care accounting is too hard.' I mean it's just crazy ... it's illogical."
The greater Wenatchee Valley's approach to health care differs from urban areas or even other rural areas across the country because the population is spread across a large geographic area. Federal decision makers on the East Coast don't understand when they model Medicare or Medicaid reimbursement plans, Blake said.
"I can remember when I was in Baltimore, I explained our hospital district, and I said, 'It's 1,200 square miles, we have just under 10,000 people," Blake said. "And that person actually laughed because they couldn't consider how few people there can be here, and we have one organization trying to meet the basic needs of that area. That's a disconnect, and it will continue to be a challenge."
The immediate impacts of the pandemic — described by Jones as "the staggering loss of life" and "the staggering toll on the caregivers to care for patients" — have already been felt.
Health care leaders said they are unsure about the lingering impacts of the virus itself, whether it will become a seasonal concern, like the flu.
"We need to be able to sort of flex up and flex down for staffing through that," Jones said. "That's something health care has done forever. We can figure that out."
Eventually, he said, current staffing shortages and inflationary concerns will stabilize and the focus will shift to longer-term goals, including being an economic driver for the community.
Some of that is already happening.
Blake, Cascade Medical’s CEO, said the state and county entered the pandemic without enough behavioral health resources.
"And the demand for that, I think, has increased greatly due to stress and pressure and a whole host of other things," she said.
Navarro said behavioral health services is a priority for CVCH, which has expanded its behavioral medicine internship program from two to four slots. It's also building a new $27 million clinic in East Wenatchee — providing medical, behavioral health, dental and pediatric services — which is slated to open mid-2023.
Navarro said the focus now is for growth, but to also change the way the public perceives health care.
"I always tell people, the best time to find a primary care provider is when you're not sick, because when you're sick, you're not going to find a primary care provider," he said. "And then that creates the challenges and they go to the ER, an affirmation of problems."
In the long-term, it'll be less expensive for providers and improve overall health for patients to develop the relationship with their provider.
A previous version of this story misstated the number of total employees in Cascade Medical and misstated Manuel Navarro's hometown.