Valley Medical Center’s decision to close two of its Renton hospitals’ inpatient units and five nearby clinics is the result of a bleak financial reality facing cash-strapped health systems around the country. Disappointingly, the state Legislature added to the problem. The state’s biggest hospitals face both reimbursement cuts and millions of dollars in new taxes in the operating budget as passed along party lines by the Democratic-controlled House and Senate.
Gov. Bob Ferguson should veto these financial hits to Washington’s hospitals, or he can expect more atrophy within them that ultimately reduces patients’ access to quality medical care.
Hospitals in the state have hemorrhaged about $5 billion since the pandemic, according to the Washington State Hospital Association. The first nine months of 2024 were deemed an improvement because they were just $398 million in the red. Many have burned through all their reserves to keep the doors open, making them “fragile,” in the words of Hospital Association President and CEO Cassie Sauer.
A still-unknown number of health care workers will be laid off at Valley; so far nearly 100 jobs have been eliminated. The surrounding community of 600,000 — including many lower income and minority residents — will lose their current level of care. Many pediatric services, including specialists in neurology and sleep medicine, will close, as will urgent care and primary care facilities. This is an unacceptable financially driven outcome that lawmakers should have worked to prevent rather than exacerbate.
Sen. Ron Muzzall, R-Oak Harbor, ranking member on the Senate Health & Long Term Care Committee, said Thursday the Valley Medical Center announcement is also a sign of things to come if Ferguson signs the Legislature’s budget.
“Valley is the first major system to make drastic cuts, but more will follow if we don’t change course immediately,” Muzzall said in a news release.
Sen. June Robinson, D-Everett, chair of the Senate’s Ways and Means Committee, told The Times editorial board Thursday lawmakers were “careful and cautious” in how both policy and tax proposals impacted hospitals.
“It’s such a difficult balance to strike between putting consumers first and looking at the effects on the institutions,” Robinson said.
But in the end, the Legislature pushed through policies that increased costs on hospitals. That will harm both patients and the hospitals, forcing them to reduce or close certain services. Wait times will increase for all; the state’s most vulnerable have the most to lose as hospitals cut vital programs they can no longer sustain.
“We’ve warned the majority that this system is cracking,” Muzzall said Thursday. “Their response has been, at best, one of indifference. In one ear and out the other.”
The governor could consider a number of policies to veto, including Senate Bill 5083, which cuts reimbursement rates for patients carrying state school and public employee insurance. The hospital association estimates the bill will lead to a $100 million cumulative loss to larger hospitals in the state each year.
He could also use his veto power for hastily passed sales taxes for services and business and occupation taxes that not only impact hospitals but will ultimately raise the cost of living in Washington.
Finally, he still has time to veto SB 5041, which raids the state’s unemployment insurance fund for workers who choose to go out on strike. The law may lead to more and extended labor actions, including among hospital workers, that unnecessarily harm Washington’s economy. Ferguson can use his veto pen, just as California Gov. Gavin Newsom did in 2023 on a similar bill.
This course correction is more urgent given budget uncertainty at the federal level. Potential Medicaid cuts by congressional Republicans could impact hospitals further. Congress thus far has refused to increase certain reimbursements to reduce further strain. All the more reason at the state level for Ferguson to act by Tuesday, his deadline to make changes to the budget.
The moment requires bold leadership to head off painful consequences for patients in this state. It’s a test for the first-year governor, who should seek to prevent future cuts from spreading to other hospital systems in Washington.
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