Colorado’s hospitals are facing a financial paradox. While the state’s urban, nonprofit hospitals are thriving, rural hospitals and safety net institutions like Denver Health are under significant strain, according to the latest Hospital Financial Openness Report released by the Department of Health Care Policy and Financing (HCPF).
The report reveals that Colorado’s hospital industry generated $1.5 billion in profits in 2023,with the majority concentrated in urban,tax-exempt hospitals. However, about one-third of hospitals, including many rural facilities and Denver Health, reported negative profit margins. “these reports provide valuable insights for Coloradans into where their money is going within health care,” saeid HCPF Executive Director Kim Bimestefer.”The billion-dollar annual increase shown in this report is reflected in the insurance premium rate increases that Coloradans, employers, and the state pay every year.”
Despite a 4.8% growth in patient revenues from 2022 to 2023, rising labor costs, supply chain expenses, and inflation have squeezed profit margins. Denver Health, the state’s largest safety net hospital, is particularly vulnerable. Its uncompensated care costs reached 12.1% of net patient revenue in 2022, driven largely by $88.1 million in charity care costs—three times higher than UCHealth University of colorado Hospital’s $24 million.
The HCPF’s Community Benefit Report highlights the $1.2 billion invested by 46 nonprofit, tax-exempt hospitals in community benefits in 2022. However, 15 hospitals failed to align their community investments with their Community Health Needs Assessments, which prioritize behavioral health needs. “Notably, almost all systems spend more on community benefits without including Medicaid shortfall amounts than their estimated tax exemption value, other than AdventHealth and CommonSpirit Health,” the HCPF noted.
The Colorado Healthcare Affordability and Sustainability Enterprise has been a lifeline for many hospitals, increasing reimbursements by over $430 million annually and expanding coverage for 427,000 Coloradans through Health First Colorado and the Child Health Plan Plus. The programme also saved hospitals $178 million in fees.
To delve deeper into these findings, the HCPF will host a webinar on February 13. Health Charity Care Costs | $88.1 million |
| community Benefit Investments | $1.2 billion |
| Uncompensated Care Costs (Denver Health) | 12.1% of net revenue |
Colorado’s healthcare landscape is a tale of two systems: one flourishing, the other fighting to survive. As the state grapples with these disparities, the HCPF’s reports offer a critical roadmap for addressing the financial challenges facing its most vulnerable hospitals.
Headline: Colorado’s Healthcare Divide: An Interview with Hospital Finance Expert Dr. Amelia Hartfield
Introduction:
Colorado’s healthcare system, while generating billions in profits for urban hospitals, is grappling with a financial paradox that threatens rural hospitals and safety net institutions. Dr. Amelia Hartfield, a renowned healthcare economist and frequent advisor to Colorado’s Department of Health Care Policy and Financing (HCPF), joins us today to shed light on this critical issue and discuss the latest HCPF reports.
Senior Editor (SE): Dr. Hartfield, thank you for joining us today. Let’s dive right in. Colorado’s hospital industry generated $1.5 billion in profits last year, yet many rural hospitals and safety nets like Denver Health are struggling. How do you explain this paradox?
Dr. Amelia Hartfield (AH): Thank you for having me. This paradox is indeed concerning. The profit concentration in urban, tax-exempt hospitals is influenced by several factors. These hospitals frequently enough have larger patient volumes, better payer mixes, and can negotiate higher rates with insurers. Conversely, rural hospitals face unique challenges like low patient volumes, an aging population with complex health needs, and a high reliance on Medicaid reimbursements, which generally reimburse at lower rates then private insurers.
SE: The HCPF reports reveal that about one-third of Colorado’s hospitals, including many rural facilities and Denver Health, reported negative profit margins. What’s driving these losses?
AH: Rising labor costs, supply chain expenses, and inflation are important drivers. Additionally, rural hospitals often have higher proportions of uninsured or underinsured patients, leading to increased uncompensated care costs. Denver Health, as a notable example, had uncompensated care costs reaching 12.1% of net patient revenue in 2022. This financial strain is exacerbated by the fact that these hospitals frequently enough can’t pass cost increases onto patients due to their charitable mission.
SE: Speaking of Denver Health, it’s the state’s largest safety net hospital and is particularly vulnerable. Why is that?
AH: Denver Health serves a disproportionately high number of Medicaid and uninsured patients. In 2022,its charity care costs were $88.1 million, three times higher than UCH’s $24 million. This high reliance on funding sources with lower reimbursement rates, combined with the high volume of complex cases it treats, makes Denver Health exceptionally vulnerable.
SE: The HCPF reports highlight $1.2 billion invested by nonprofit hospitals in community benefits in 2022. However, 15 hospitals failed to align their community investments with their community Health Needs Assessments. How concerning is this misalignment?
AH: It’s quite concerning. Community Health Needs Assessments (CHNAs) are crucial tools for understanding and addressing the most pressing health needs in a community.If hospitals are not aligning their community benefit spending with these assessments, it suggests that resources might not be going where they’re most needed. This misalignment could lead to health disparities persisting or even widening.
SE: The Colorado Healthcare Affordability and Sustainability Enterprise (CHASE) has provided a lifeline for many hospitals. How has it helped, and what more needs to be done?
AH: CHASE has indeed been a lifeline, increasing reimbursements by over $430 million annually and expanding coverage for nearly half a million Coloradans. It’s a commendable effort, but the financial struggles of rural hospitals and safety net institutions persist.We need to explore more innovative solutions,such as shared service models,telehealth expansions,and targeted funding to enhance these hospitals’ financial stability and ensure equitable access to care.
SE: Dr. Hartfield,your insights are invaluable. What final thoughts do you have for our readers?
AH: Colorado’s healthcare landscape is not just a tale of two systems; it’s a stark reminder of the urgent need to address health disparities and ensure that every Coloradan has access to affordable, quality care. The HCPF’s reports provide a critical roadmap for addressing these challenges, and policymakers, healthcare providers, and communities must work together to build a healthier Colorado for all.
