Olympic Medical Center has made safe investments and has little outstanding debt but will become "collateral damage" in the nation's financial crisis anyway, CEO Eric Lewis told the hospital district's board of directors at last week's meeting.
"We did the right thing but it's going to affect all of us," he said.
Lewis described the nation's current financial turmoil as "the biggest crisis in my lifetime."
It has included wild swings of the stock market, the collapse of major financial institutions including Washington Mutual and a federal government bailout with a potential price tag of $700 billion, an amount greater than the federal government's entire budget in 1981.
Lewis said the financial crisis was caused by a lot of borrowed money, including short-term borrowing for long-term expenses, something that Olympic Medical Center hasn't done.
The hospital district used a 10-year, 3.7-percent fixed-rate bond issue in 2006 to finance its new campus in Sequim, which is its only outstanding debt, Lewis said.
In contrast, other hospital districts have used short-term debt with a variable interest rate, he said. That debt gets rolled over from month to month with a new interest rate, leaving one Seattle area hospital paying 12-percent interest, Lewis said.
The hospital district also has invested conservatively, he said.
John Lowe, in the hospital's finance department, said years ago no investments would be made in either Fannie Mae or Freddie Mac, Lewis said.
"I want to compliment (chief financial officer) Julie Rukstad and John Lowe. I wish Wall Street had more people like them," Lewis said.
But given the size and scope of the financial crisis and federal government bailout of the financial industry, everyone will feel the impact, Lewis said.
"There will be collateral damage to everyone," he said, explaining that hospital likely will see more uninsured patients, more bad debt and more charity care as the crisis continues, he said.
The government spent almost $1 trillion on the various bailouts, which will affect the hospital's rate of Medicare and Medicaid reimbursement, Lewis said.
"It's one of the biggest problems," he said.
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