A rural Washington hospital’s roadmap to financial recovery

As rural hospitals across the nation continue to face mounting financial challenges and closures, East Adams Rural Healthcare’s Ritzville (Wash.) Hospital is emerging as a success story through aggressive operational and financial changes, with hopes to become the state’s first rural emergency hospital by April 1.

“We just don’t have a big enough population to support a critical access hospital,” Todd Nida, CEO of East Adams Rural Healthcare, told Becker’s. “The rural emergency hospital will be a saving grace.”

EARH issued a WARN notice in the fall of 2025 for the potential Jan. 7 closure or bankruptcy of the hospital, but improved its financial performance to avoid the deadline. Officials there moved toward an REH model after the hospital’s board approved a 2026 budget for the transition in late November 2025.

“One of our main purposes was to make sure we were here on Jan. 7, but to also make sure we are here on Jan. 7 for the next 50 years,” East Adams CFO Viola Babcock told Becker’s. 

As of Jan. 16, the hospital still had zero days of cash on hand, with vendors that have waited around six months for payment. However, November and December financial improvements provided a strategic path forward to keep the system afloat.

Mr. Nida, who became interim CEO five months ago and now serves in a permanent role, said workforce reductions were the primary driver of financial improvement for the hospital. The hospital conducted 12 layoffs in July 2025, eight in September and will be reducing four more provider roles in January or February. 

“The largest improvement was wages and benefits,” he said. “The impact of those layoffs drove the reduction in labor and benefits showing up in our November financials, which made a big difference. Next would be the increase driven by having a company like [Tacoma, Wash.-based] MultiCare handle our billing and revenue cycle work. Their proficiency greatly increased our revenue with that move. We also made sure that we had the right people in the right positions and paid correctly to ensure that nothing was missed after the layoffs that we had to do.”

The hospital’s conversion from a CAH to an REH will also greatly improve finances, with the facility targeting April 1 for CMS’s approval.

“Once CMS starts sending us the monthly check of $283,000, your cash on hand looks much better real fast,” Ms. Babcock said. 

The REH model will let the hospital keep patients for an average of 24 hours versus a required immediate discharge, allowing for flexibility in providing community care while eliminating inpatient and swing bed services.

Transparency has also been key to EARH’s turnaround strategy. The hospital held two community forums to address concerns and outline a path forward. 

“Everything we do we talk about, and share what the next steps are,” she said. “That includes the community…whether they asked a clinical, financial or legal question, they walked away from the meetings with answers.”

EARH COO Dallas Killian, who grew up in Ritzville, said the hospital has brought on an executive chef to open a cafe for inpatients while also offering employees meals, which has boosted morale. The hospital is also implementing scanning software to track inventory and is changing its group purchasing organization to secure stronger supply discounts.

“If you mind the pennies and the dimes, the dollars will take care of themselves, so just finding every way we can save the dime,” Mr. Killian said. “It’s been a great challenge for me, which I love a good challenge, but if we pay attention to the small things, the big things will take care of themselves.”

Looking ahead, EARH has two levy votes Feb. 10 that could bring $500,000 in additional annual revenue for the facility. Hospital leadership also plans to reissue bonds in 2026 to reduce interest rates and save anywhere from $200,000 to $500,000 yearly. 

Despite EARH’s financial challenges over the years, Mr. Nida expressed optimism in serving as a model for other rural facilities that might be struggling.

“We’re hoping that by our example of enduring what we had to and persevering through it and formatting a path forward, we hope there’s a positive message to everyone out there. We hope that we can at least be a little bit of a light in that journey they can look to.” 

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