PORT ANGELES — Citing “significant and unprecedented” financial challenges, Olympic Medical Center’s top administrator said the public hospital district should delay its emergency room expansion by one year.

Chief Executive Officer Eric Lewis told commissioners Wednesday night that OMC needs to cut capital spending and raise revenue to remain financially viable in 2012 and beyond.

The Port Angeles-based hospital district is barely breaking even in the bad economy, with cuts to Medicare, Medicaid and other programs, while uncompensated care — $9.5 million in 2011 — and the cost of operations continue to rise.

To make matters worse, OMC faces a potential $6 million-a-year reduction in state money, Lewis said.

“There are no easy answers to these challenges we face, but we’re going to need to address them because they are real and they are significant and they are not going away,” he said.

Lewis presented a proposed financial stability plan for 2012 at the bimonthly board meeting in the hospital’s Linkletter Hall.

OMC commissioners will consider approving the plan Feb. 15.

The proposed plan does not include cuts to patient services, outsourcing or layoffs.

“It’s really a commitment to our employees to maintain a stable workforce,” Lewis said. “And that’s a big deal.”

It includes the following:

■ Delay the ER expansion by one year. Open an urgent care clinic in Sequim, probably this fall, to help with crowding at the hospital’s emergency room.

The ER will temporarily absorb three nearby examination rooms that had been used by orthopedics.

The $8.3 million ER expansion was previously scheduled to be completed in the summer of 2013.

A one-year delay would reduce the 2012 capital budget by $4.5 million, Lewis said.

■ Cut an additional $1 million in capital spending this year.

■ Focus on legislative advocacy for adequate reimbursement from the state and federal government.

As the state works to close a $1.4 billion shortfall, OMC faces a $1.9 million-a-year hit from a potential loss from the state’s Certified Public Expenditure Program, which takes advantage of a federal Medicaid match.

OMC also gets funding through the state’s Basic Health Plan and the Disability Lifeline Program.

“Cuts to rural health care centers like OMC would be devastating to our community,” said state Rep. Kevin Van De Wege, D-Sequim.

OMC has a “legislative advocacy” link on its home page at www.olympicmedical.org.

“I think it’s time for the public to weigh in on how are we going to fund our health care system because it is a big deal,” Lewis said.

“Those decisions that [legislators] make will affect us in the future.”

■ Generate $1 million in new revenue by growing services in areas such as neurology, cardiology, sleep medicine, orthopedics, cancer care and primary care.

“Basically, we want to earn people’s business,” Lewis said.

“If they’re leaving the community, we’d like to give them a better option local: better quality, better service at a better price.”

■ Control costs by reducing new hires, overtime and limiting pay raises.

Lewis said the goal is to cut expenses by at least $1.5 million from budgeted amounts.

■ Expand the affiliation with Swedish Medical Center.

OMC aims to install electronic medical records by 2013 and expand local clinical services.

■ Adjust employee benefits to market.

OMC’s net margin — the “profit” that a nonprofit hospital makes to pay down debt and invest in capital — tumbled from 4 percent in 2009 to 2.4 percent in 2010 to 1.4 percent last year.

Hospital officials said they need to maintain a 4 percent margin to remain financially viable over the long term.

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Reporter Rob Ollikainen can be reached at 360-417-3537 or at rob.ollikainen@peninsuladailynews.com.