Montana Hospitals Face Unprecedented Financial Crisis |

Hospitals across the country are facing an unprecedented situation financial losses as labor shortages, wage pressures and inflation follow a global pandemic — and so does Montana.

Record hospitalizations during outbreaks of COVID-19 infections have led to burnout among nurses and frontline workers, leading to an exodus from the field. As a replacement, hospital administrators have turned to itinerant or contract staff, whose salaries cost at least three times more than permanent employees.

During the first quarter of 2022, Bozeman Health hit its financial barrier, according to Brad Ludford, chief financial officer of Bozeman Health. In June, the hospital was operating with a loss of nearly $15 million, pushing the hospital to its breaking point. As a result, CEO John Hill announced major executive layoffs.

Twenty-eight posts were cut last week and 25 vacant posts were frozen. A total of 53 positions are affected in the hospital.


“We’re eliminating leadership in order to retain front-line workers,” Hill said.

The monthly expenses of the 55 working travelers now cost up to $1 million per month, according to Ludford. While still significant, this is a big improvement from December 2021, when the hospital was spending $1.2 million a week to cover the cost of 180 travellers.

The goal is to reduce the total to 25 travelers or fewer, Hill said.

With a severe housing crisis and the skyrocketing cost of living in Bozeman — where the average house price is around $900,000 — salary adjustments to retain permanent staff have been essential.

While labor typically accounts for a significant portion of operating costs, labor expenses are currently at or above 50% of the hospital’s cost structure, Ludford said.

Financial challenges hit larger, more urban hospitals harder than those with a critical access hospital designation.

As facilities of the Prospective Payment System (PPS), reimbursement of Medicare and Medicaid payments are made on a predetermined fixed amount.

At Providence St. Patrick’s Hospital in Missoula, because 80% of revenue comes from government payers, there’s little opportunity to adjust prices, chief operating officer Kirk Bodlovic said.

St. Patrick's Hospital

Providence St. Patrick’s Hospital in Missoula is seen.

Although Bodlovic didn’t give details, he said salaries made up a much larger percentage of income than in previous years.

In fact, the financial situation in Missoula is very similar to Bozeman Health conditions. Traveling staff costs are a bill of around $1 million per month whereas before the pandemic there were no agency staff on campus.

Now, with so much money being spent on travellers, permanent staff have questions and concerns about salaries, Bodlovic said.

“We are trying to ensure that we have the appropriate number of staff to care for patients and provide support to permanent staff,” he said in a written statement following the interview.

Rising rents forced some of its permanent employees out of Missoula, and other potential hires stepped back after feeling the housing crisis.

“The number of (permanent staff) we are losing is not keeping up with recruitment,” Bodlovic said. “I can’t imagine there is a hospital that isn’t struggling with staff.”

The entire Providence health system suffered a loss of $500 million in the first quarter of 2022. And the Missoula campus is feeling its share of the loss, though Bodlovic did not share specific numbers.

Limit qualified care beds adds to the financial complexity, Bodlovic said. Last weekend, Providence had to board patients from the emergency department because many beds were occupied by 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 staff to care for them.

Both hospitals have so far avoided minimizing services to the public. Typically, Maternal Care and Behavioral Health are the first departments to take cuts, as neither brings in much revenue.

find stability

Benefis Health System in Great Falls managed to say goodbye to all of its traveling staff at the end of June, but the facility is not necessarily out of the woods.

Benefis Great Falls Health System

The Benefis Health System in Great Falls was able to eliminate its need for traveling staff members, but still faces challenges with the nurses’ schedule.

Benefis has a number of nurses working in positions outside of the typical bedside role, director of nursing Rayn Ginnaty said. These nurses are encouraged to fill in the gaps left by travelers.

To make this work and to avoid burnout, Benefis nurses have a lot of control over the schedules.

“You need to look at models to decentralize decision-making,” Ginnaty said, adding that each department has the ability to communicate closely with staff to create their own schedule.

Great Falls has also not seen the population growth of Bozeman and Missoula. Less pressure on the housing market and a more affordable cost of living are positively influencing recruitment, Ginnaty said.

St. Vincent Healthcare declined to comment for this article, but Billings Clinic chief financial officer Pirscilla Needham said the clinic is not immune to financial difficulties.

Nurses at the Billings Clinic

In this 2021 file photo, nurses at the Billings Clinic prepare to transform 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 puts the Billings Clinic in a better financial position than others, but spending on drugs, supplies and labor has doubled.

Needham confirmed that the hospital was paying more traveling workers than in previous years, but she did not provide an estimate of how much the hospital was spending on travellers.

She also confirmed that the hospital had helped travelers find accommodation in Billings during their stay, but would not give a figure on how many travelers are currently on staff.

“Focusing on travelers is just one piece of a bigger picture,” Needhan said, adding that recruiting teams are doing their best to create a strong permanent position.

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