The country’s hospitals are facing an unprecedented situation financial losses as labor shortages, wage pressures and inflation follow a global pandemic, and the same is true in Montana.
Record hospitalizations during the spike in COVID-19 infections led to burnout among nurses and frontline workers, leading to an exodus from the field. To fill in, hospital administrators have resorted to itinerant or contracted staff, whose wages cost at least three times more than permanent workers.
During the first quarter of 2022, Bozeman Health reached its financial barrier, according to Brad Ludford, Bozeman Health’s chief financial officer. By June, the hospital was operating at a loss of nearly $15 million, pushing the hospital to its breaking point. As a result, CEO John Hill announced significant layoffs among leaders.
Last week, twenty-eight positions were eliminated and 25 open positions were frozen. In total, there are 53 sites affected in the hospital.
“We’re removing leadership to retain front-line workers,” Hill said.
According to Ludford, the monthly expense of the 55 working commuters now costs up to $1 million a month. While still significant, it’s a big improvement from December 2021, when the hospital was spending $1.2 million a week to cover the cost of 180 travelers.
The goal is to reduce the total to 25 travelers or less, Hill said.
With a severe housing crisis and the rising cost of living in Bozeman, where the median home price is about $900,000, wage adjustments to retain permanent staff have been critical.
While labor typically represents a significant portion of operating costs, right now labor expense is more than 50 percent of the hospital’s cost structure, Ludford said.
Financial challenges affect larger, urban hospitals more severely than those with a critical access hospital designation.
As prospective payment system (PPS) facilities, Medicare and Medicaid payments are reimbursed in a predetermined, fixed amount.
At Providence St. Hospital Patrick of Missoula, because 80 percent of revenue comes from government payers, there is little ability to adjust prices, said chief operating officer Kirk Bodlovic.
Providence St. Hospital is seen. Patrick from Missoula.
While Bodlovic did not elaborate, he did say that wages are taking up a much larger percentage of revenue than in previous years.
In fact, the financial situation in Missoula is very similar to the conditions at Bozeman Health. Travel staff costs are adding to a bill of about $1 million a month when, before the pandemic, there were no agency staff on campus.
Now, with so much money being spent on travelers, permanent staff have questions and concerns about wages, Bodlovic said.
“We are trying to ensure we have the right number of staff to care for patients and support permanent staff,” he said in a written statement after the interview.
Rising rent has forced some of its permanent staff out of Missoula, and other potential hires backed away after getting a whiff of the housing crisis.
“The number of (permanent staff) we’re losing is not keeping up with hiring,” Bodlovic said. “I can’t imagine there’s a hospital that doesn’t have staffing issues.”
The entire Providence health care system has seen a $500 million loss in the first quarter of 2022. And the Missoula campus is feeling its share of the loss, though Bodlovic did not share specific numbers.
limited specialized nursing beds it adds to the financial complexity, Bodlovic said. Last weekend, Providence had to admit patients to the emergency department because many beds were filled with long-term patients who would otherwise be discharged to skilled nursing facilities.
When patients cannot be discharged to long-term care facilities, the hospital must have the necessary staff to care for them.
Both hospitals have so far avoided minimizing the services available to the public. In general, maternal care and behavioral health are the first departments to see cuts because neither generate much revenue.
Benefis Health System in Great Falls managed to say goodbye to all of its traveling staff at the end of June, but the facility isn’t necessarily out of the woods.
Benefis Health System in Great Falls was able to eliminate its need for traveling staff members, but still faces challenges with nurse scheduling.
Benefis has a number of nurses who work in positions outside of the typical bedside role, said Director of Nursing Rayn Ginnaty. These nurses are encouraged to fill the gaps left by travelers.
To make this work and to avoid burnout, Benefis nurses have a lot of control over scheduling.
“You have to look at models to decentralize decision-making,” Ginnaty said, adding that each department has the ability to communicate closely with staff to create its own schedule.
Great Falls also hasn’t seen the population growth that Bozeman and Missoula have. Less pressure on the housing market and a more affordable cost of living are positively influencing hiring, Ginnaty said.
St. Vincent Healthcare declined to comment for this article, but Billings Clinic CFO Pirscilla Needham said the clinic has not been immune to financial challenges.
In this 2021 file photo, nurses at Billings Clinic prepare to turn a patient from his stomach to his back in the hospital’s intensive care unit.
An overall increase in net income and positive operating income put Billings Clinic in a better financial position than others, but drug, supply and labor expenses have doubled.
Needham confirmed that the hospital is paying more traveling workers than in previous years, but did not provide an estimate of how much the hospital was spending on travelers.
He also confirmed that the hospital has helped travelers find housing in Billings during their stay, but did not give a figure on how many travelers were currently on staff.
“Focusing on travelers is just one piece of a bigger picture,” Needhan said, adding that recruiting teams are doing everything they can to create a strong permanent job front.