QUINCY - Quincy Valley Medical Center board members tentatively decided not to ask voters for a levy increase.

Administrator Mehdi Merred said board members are considering the district's options to address its revenue challenges, but for the moment any changes to the amount levied by the hospital district isn't on the list. The Washington Auditor's Office noted the hospital's precarious financial situation in its annual audit released last week.

At the end of 2013 the hospital owed Grant County about $3.5 million in registered warrants, according to the audit report. Warrants are issued by a county when a taxing district (like the hospital) doesn't have enough cash on hand to meet its obligations. The money is paid back, with interest. But Quincy hospital has been using warrants since 2009, and the balance has grown over time, according to the audit report.

"The hospital continues to treat more patients every year," Merred wrote. "Unfortunately, the charity care and bad debt expense percentages continue to grow significantly as well. In 2013 the hospital recorded $1.764 million in bad debt and charity care, approximately 12 percent of gross revenues," he wrote.

"In other words, the hospital is not struggling because of declining volumes but because patients simply cannot afford the care," Merred wrote.

In the hospital's reply to the audit report, officials said they were considering the levy lid lift as a way to raise revenue. Junior taxing districts (like the hospital district) have a maximum assessment they can levy from property owners, and a levy lid lift allows a district to get closer to that maximum.

But Merred said board members changed their minds after talking to Grant County Assessor Laure Grammer. "It appears the levy lid lift might be a less effective option than anticipated," he wrote.

Grammer talked to board members at a special meeting, Merred said, and "explained that seeking the lid lift doesn't guarantee a set amount of funds. In other words, the district would take the risk to campaign for a temporary solution that doesn't necessarily produce multiyear minimum guaranteed results."

Currently hospital officials are involved in ongoing discussions with Live Nation, owners of the Gorge Amphitheater. People attending concerts at the Gorge who need medical attention usually are sent to Quincy hospital.

"We feel that the resolution to the problems with Live Nation will not be based upon Live Nation's good intentions but on a requirement (legislative or contractual) that will be placed upon them to do so," Merred wrote. Hospital officials have contacted state legislators and met with the Grant County commissioners, he said.

The hospital also is following a suggestion from Grant County Treasurer Darryl Pheasant to ask the City of Quincy to take over some of the hospital's warrants. In an earlier interview, Pheasant said the city would receive a better return from the warrants than other investments available to them.

City officials said last week they would consider the request, but that the city is working on a proposal for a new water project. As a result they're hesitant about tying up that money, Quincy City Administrator Tim Snead said.