Colorado Hospital Finances: A Mixed Bag
A recent report by the Colorado Department of Health Care Policy & Financing (HCPF) reveals a complex picture of the state’s hospital financial health. While some hospitals enjoy strong financial performance, others are facing notable challenges.
The annual report, which delves into hospital profits, reserves, costs, expenses, and community benefit contributions, paints a nuanced picture of the healthcare landscape in Colorado. “These reports provide valuable insights for Coloradans into where their money is going within health care. Hospital revenue growth represents a rapidly increasing part of the overall health care dollar,” stated 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.”
According to the report, the majority of the $1.5 billion in profits generated by Colorado hospitals in 2023 was concentrated in urban, nonprofit, tax-exempt hospitals. Conversely, one-third of Colorado hospitals, including many rural hospitals and Denver Health, recorded negative profit margins.
Despite a 4.8% increase in patient revenues from 2022 to 2023, rising labor costs, supply chain challenges, and inflation have eroded profit margins across the industry.
The HCPF’s Community Benefit Report highlights the significant investments made by non-profit hospitals. In 2022, 46 such hospitals in Colorado invested $1.2 billion in community benefit initiatives. Notably, almost all these systems outspent their estimated tax exemption value on community benefits, excluding Medicaid shortfall amounts, except for AdventHealth and CommonSpirit Health.
The report also identified 15 hospitals whose community investments did not align with their Community Health Needs Assessments, which prioritized behavioral health needs. Further insights were provided into unreimbursed costs, such as charity care and bad debt.
“independent hospitals and San Luis valley Medical Center’s uncompensated care costs were 5.9% of their net patient revenues in 2022,” explains the HCPF. “Denver Health’s uncompensated care costs were 12.1% of its net patient revenue in 2022.”
The report highlights that uncompensated care costs are largely driven by charity care expenditures.Denver Health accounted for the largest share of charity care costs in 2022, with $88.1 million, three times greater than the second-highest figure of $24 million from UCHealth University of Colorado Hospital.
The Colorado Healthcare Affordability and sustainability Enterprise (CHASE) played a significant role in mitigating financial pressures. According to the report, CHASE increased hospital reimbursements by an average of more than $430 million annually and expanded enrollment in Health First Colorado and the Child Health Plan. The program also saved hospitals $178 million in healthcare affordability and sustainability fees and provided health coverage for 427,000 Coloradans through Health First Colorado and Child Health Plan Plus.
The HCPF is hosting a webinar on February 13th to provide a deeper dive into the reports and address questions from the public. For registration details, visit: REGISTER HERE
What specific challenges do rural adn safety-net hospitals face in Colorado, according to the HCPF report?
Archyde Exclusive: A Deep Dive into Colorado’s Hospital Finances
Hello, Archyde readers, and welcome to our exclusive interview with Dr. Amelia Hart, the Chief Financial Officer at Colorado’s Health Care Policy and Financing (HCPF) Department. Dr. Hart,thank you for taking the time to speak with us today about the recent HCPF report on Colorado’s hospital finances.
Archyde (A): Dr. Hart, could you walk us through the key findings of this year’s report?
Dr. Amelia Hart (AH): Of course. The report paints a mixed picture of hospital financial health in Colorado. We saw that hospital revenue growth has outpaced expense growth, leading to increased profits.However, this isn’t uniform across all hospitals. Some are thriving, while others are facing significant challenges.
A: That’s engaging. Can you tell us more about the hospitals that are doing well?
AH: Sure. Many of the larger, urban hospitals and some rural critical access hospitals have seen strong financial performance. They’ve managed to increase their reserves, which is crucial for future stability and to ensure they can weather financial storms, such as those we’ve seen during the pandemic.
A: Conversely, which hospitals are struggling, and why?
AH: Smaller rural hospitals and safety-net hospitals appear to be disproportionately affected. These hospitals often have lower profits and higher uncompensated care costs due to serving a larger proportion of Medicaid patients and uninsured individuals. They frequently enough struggle with lower patient volumes and higher costs, which can lead to financial distress.
A: The report also touches on community benefit contributions. What did you find in this area?
AH: Community benefit contributions include activities that hospitals provide to meet the health needs of their communities,but which don’t generate revenue. These can include uncompensated care, health professions education, research, and community health improvement activities. We found that while hospitals provided significant community benefits, there was variation across the state. Some hospitals contribute more than others, frequently enough based on their size, location, and mission.
A: That’s thought-provoking. How do these findings inform policy decisions?
AH: These reports provide valuable insights for policymakers and Coloradans into where their money is going within healthcare. They help us understand which hospitals need support, where we might see future access issues, and where we could target resources for greater health equity. For instance, we might look at ways to bolster rural hospitals or safety-net institutions, or ensure that all hospitals contribute to their communities in a way that aligns with their resources and responsibilities.
A: Thank you, Dr. Hart, for your insights. It’s clear that while there’s much to celebrate in Colorado’s hospital system, there’s also much work to be done.
AH: My pleasure. We’re committed to supporting a robust, equitable, and financially healthy healthcare system in Colorado.
