Dave Brooks, Providence's chief executive, said the losses are part of the financial growing pains that come with the opening of its 12-story, $460 million medical tower in June of last year.
"We expected to be losing money right now," Brooks said. "We built the tower for decades. It won't break even the day, the month, or the year it opens."
The hospital has a $600 million budget and a workforce of about 3,500 full- and part-time employees.
Despite the first quarter results, Brooks said people shouldn't assume losses of that size will continue for the rest of the year.
In March, the hospital had positive numbers. It hoped to be $503,000 in the black and actually made $637,000 over expenses, Brooks said.
"Just like when you open almost anything new, there's a ramp-up period to make it economically productive," Brooks said.
The hospital hopes to break even next year, according to Sheri Feeney, chief financial officer.
One of this year's big financial hits, according to hospital officials, came from installing a new electronic medical records system, estimated to cost about $9 million.
Providence's financial losses this year come amidst a tidal wave of similar reports from hospitals in the Puget Sound region and across the state.
They include Seattle's Swedish Health Services, which announced it was losing $250,000 a day, amounting to a first quarter operating loss of $16 million.
Overall volumes, meaning the number of patients admitted to its hospitals in Seattle, Issaquah and Edmonds as well as those treated and released, decreased 8 percent in the first quarter, 144,000 patients compared with the 158,000 that was budgeted.
Surgeries declined even faster, down as much as 15 percent over what was budgeted at some of its hospitals, said June Altaras, chief nursing officer.
One reason may be that companies are changing their medical plans, with more out-of-pocket costs shifted to employees, she said.
As one recent example, a surgeon, who had five hernia surgeries scheduled for the next day, had three patients cancel after being told of their out-of-pocket costs, she said.
To reduce costs, Swedish is surveying its employees, asking if they're willing to voluntarily leave their jobs, Altaras said.
In Monroe, Valley General Hospital said last year's losses could hit $4 million. It was one of the reasons a for-profit Tennessee health care company pulled out of a proposed business partnership. The hospital is now looking for other business partners.
These trends among hospitals in the Puget Sound region are being experienced throughout the state.
In the past 18 months, at least 1,500 hospital employees across Washington have lost their jobs, according to the Washington State Hospital Association.
The slowdown in patient volumes is just one factor causing financial problems, said Scott Bond, the hospital association's president and chief executive.
Even emergency room volumes, which typically grow from year to year, generally have been flat or a little lower than in previous years, he said.
Hospitals have to absorb the losses from treating Medicare patients, which pays about 85 cents on the dollar for providing medical care, Bond said. Medicaid, the federal-state health care program for the working poor, only pays about 77 cents on the dollar of costs, he said.
Hospitals are required by federal law to treat any patient who comes to them for care, regardless of their ability to pay.
"The level of charity care or unpaid bills has gone up," Bond said. "It really puts the pressure on (hospitals) statewide."
Providence has had some positive trends, Brooks said. There were 8 percent more admissions in the first quarter this year than last.
And since January, there have been 39 days when the hospital had exceeded 90 percent of its bed capacity.
Trends have been more mixed, however, at its 55,870-square-foot emergency department. Overall there was nearly an 11 percent decline this year over last year's first quarter numbers.
It's impossible to know how much of the decline was caused by the opening of Swedish's satellite emergency department near the intersection of 128th St. SE and I-5 last year and how much is caused by the downturn in the economy and cost-conscious consumers, Brooks said.
Last year, Providence cut about 150 positions. It's too early to know if the hospital will have to cut more jobs this year, Brooks said
"I don't know if we responsibly can get any leaner in our expenses," he said. "We know our strategy is to grow."
Sharon Salyer: 425-339-3486; firstname.lastname@example.org.
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