Moving into 2023, major health care systems in Spokane are projecting continued financial losses while working to stabilize margins after struggling through two years of COVID-19 surges, ongoing shortages of medical personnel, and rising costs.

“In 2023, we will begin a multiyear journey to return to a sustainable margin,” says Shelby Stokoe, chief financial officer for Providence Inland Northwest Washington, an arm of the Renton-based Providence health care network.

Unlike 2020 and 2021, this year has been largely unaffected by COVID surges, with the last such surge ending last February, Stokoe says. The financial performance since then will be a new starting point from which to build, she says.

“We are currently operating in a net-loss position, but for the first time since 2019, we have nine months of operating performance to use as our new baseline looking forward,” says Stokoe. 

Revenue for Providence Sacred Heart Medical Center for the first three quarters of the year was up 1.2% over the year-earlier period, while expenses have increased by 7.8%, she says.

“This has resulted in more than a $60 million deterioration in operating losses over the first nine months of the year,” she says.

The national shortage of health care personnel was also a big challenge for the health care provider in 2022, says Stokoe.

Through September, labor costs in the Inland Northwest are about $40 million higher than originally was budgeted for 2022, she says.

The other major health care provider in Spokane, MultiCare Health System Inc., is projecting losses in 2023 within the Inland Northwest region of its Tacoma-based health care network, says Kevin Maloney, MultiCare media relations manager.

MultiCare, like hospital systems across the country, is facing unprecedented financial challenges in 2022, contends Maloney. The biggest increases in expenses are attributed to workforce costs, both in higher salaries and wages for in-house employees and for hiring traveling nurses due to staff shortages.

Although MultiCare’s revenue increased by $144 million systemwide through the first nine months of the year, compared with the year earlier period, MultiCare also saw a net loss of about $282 million, he says.

Alex Jackson, MultiCare’s Inland Northwest chief executive, says the health care provider is implementing plans to mitigate losses.

“We have reduced our reliance on traveling providers and are continuing to aggressively recruit permanent members of our team,” he says. “Additionally, we have streamlined our operations for efficiency without compromising the care of our patients. Since we have implemented these plans, we have already seen positive financial improvements over the last couple of months.”

While the health care industry has suffered financial losses, it has not prevented providers from entering the market. 

Seattle-based Kinwell Medical Group is a new health care provider that is emerging in Washington, having recently opened three clinics and a training center in the Spokane area.

Dr. John Espinola, who heads Kinwell’s physician network, says the group has opened 14 clinics throughout Washington state and plans to complete its expansion by adding three additional clinics in Western Washington, bringing the total to 17 clinics by February.

Kinwell is still in its startup phase, says Espinola. He predicts, however, the medical group will begin to sustain itself financially by the end of 2024.