DENVER — Gov. Jared Polis has focused on health care costs in part of his state speech and has worked in good faith with industry to reduce costs, but not everyone is waiting for the end of the negotiations. said.
“Several large hospital systems are making record profits, cutting taxes to zero, and overcharging customers while holding huge reserves. , the cost will rise and there will be fewer options for Coloradan,” said Polis.
The governor went on to say that it is time to hold these hospitals accountable and that nonprofit hospitals need to work with their communities to deliver mental health and other social support and keep their promises. I said there is.
Police then passed legislation to build on some work from previous legislative sessions to ensure that nonprofit hospitals actually use community benefit dollars to benefit communities. asked to do it.
Following those sharp words, the Colorado Health Policy and Finance Office (HCPF) released a series of reports outlining hospital revenues in recent years.
“What we’ve seen is patient income increased, costs decreased, net income increased through mid-2021, and reserves increased further,” said HCPF executive director One Kim Bimestefer said:
A report that looked at financial data from 2014 to 2021 found that hospital profits, reserves and patient costs increased significantly during those years. , Colorado hospitals ranked top 10 nationally in the cost, price, and benefit metrics tracked.
The report also concludes that inpatient revenue grew faster than operating costs.
HCPF has identified opportunities for these hospitals to better invest in their communities.
“We tell large systems not to raise prices to protect profits. Let’s keep prices the same,” Bimestefer says.
What is a non-profit hospital?
Most of the state’s hospital systems are non-profit. That doesn’t necessarily mean the hospital isn’t making a profit, it’s just that it’s not paying federal, state, or local taxes.
“They all have to provide an investment in the community in return for paying taxes. However, there are no specific requirements. This is a federal requirement and there is no requirement as to the minimum amount of investment in the community.” said Nancy Dolson, Director of Special Financing at HCPF.
She said the value of the community benefits the state would have made with taxes from hospitals and the need to look critically to determine if they were fair or if change was needed. I believe there is
Dolson further said these hospitals’ investments in communities are not aligned with the support that communities are looking for.
“UCHealth, for example, believes that nearly half of its investment in the community will support CU medical schools and professional education,” said Dolson.
According to Dolson, the community surrounding UCHealth is calling for more mental health services as a top priority.
hospital struggle
The rosy financial picture of hospital revenues reported by HCPF has been quickly and sharply criticized by the hospital community.
Jeff Tyman, CEO of the Colorado Hospital Association, said the data did not include recent financial records, nor did it include inflation and staffing issues that many face. says.
“Hospital costs in Colorado are 21% higher than before the pandemic. Labor costs are up more than 26%. Healthcare costs have risen since the pandemic,” he said.
Labor shortages, as well as inflation and rising supply prices, are forcing many hospitals to turn to staffing agencies, Tieman said. These staffing agencies charge high fees, increasing the financial burden faced by hospitals.
He claims the report leaves out important context about the pandemic and the fact that hospitals have lost more than $2 billion by August 2022.
“Many hospitals in Colorado operate with low or no operating margins, which means they don’t have much money to give back to their facilities and communities,” says Tieman.
It is important to note that HCPF data will continue through 2021. This is because it is the latest financial record that the department has. Data outlining hospital revenues for 2022 will not be received in the next few months.
That’s why Dolson says there needs to be more transparency, perhaps switching to quarterly reporting rather than annual reporting.
Tieman also challenged the picture the governor and HCPF have drawn about profitable investment in communities and said he was proud of the work hospitals across the state have done.
denver health
Donna Lynne, CEO of Denver Health, says the hospital authority is more unique than most, financially operating more like a rural hospital than a large hospital system.
Denver Health sees itself as a safety net hospital, treating everyone in the community regardless of their ability to pay, according to Lynne.
“It’s a very different environment than most hospitals and a difficult environment to manage from a financial standpoint,” said Lynn.
Hospital authorities are a $1.4 billion business. However, half of the patient has Medicaid, another 20% of him have Medicare, and 12% are uninsured. As a result, hospitals are now under enormous pressure, he said.
“Actually, we’re going to lose money in 2022, which has just ended,” Lin said.
The pandemic has only exacerbated financial problems. Elective surgeries were canceled, many patients chose not to come to hospitals, and the workforce began to dwindle. As Lynne explains, all of this has made hospital finances a roller coaster over the last three years.
She also disagrees with the HCPF’s prediction of an even workforce.
“I don’t think the workforce problem is temporary. I think it’s a permanent one,” Lin said.
It has a total reserve of 86 days and says it will do its best to keep patients in, but its financial situation is far from ideal.
hospital profit
According to the report, UCHealth had a gross profit margin of 26.1% in 2021 and a patient services profit margin of 8.5%. In the same year, the University of Colorado Hospital, part of UCHealth, had a patient margin of 11.4% and a gross margin of 31.3%.
“What we’re looking at is gross profit. And the reason we look at gross profit is because many of the larger systems have billions of dollars in reserves.
However, UCHealth says the data misrepresents the financial environment facing hospitals. In contrast to HCPF data, UCHealth said he had an operating margin of 9.9% in 2021, dropping to 5.2% in 2022 and 3.3% in the first few months of fiscal 2023. bottom.
The hospital’s system accused HCPF of using outdated data, deliberately choosing specific date ranges for increased investment, and not following Generally Accepted Accounting Principles (GAAP) in data reporting.
The system is concerned that misleading data could lead to misinformed policies made by legislators.
A press release from UCHealth states that the Lown Institute, a bipartisan group, recently ranked UCHealth the highest in the country for social responsibility, community benefit, value, and patient outcomes. Officials also said the hospital had increased its investment by $150 million.
The hospital system reported investment losses of approximately $200 million, primarily due to the stock market decline.
But the HCPF notes that hospitals in the state have been given more than $1.2 billion to help them weather the pandemic.
What about hospital stockpiles?
Another criticism of the HCFP report is excessive hospital emergency funding. Hospitals have racked up billions of dollars in reserves, according to reports, because patients and employers have paid unnecessarily high prices over the years.
On average, Colorado city and system hospitals saved 245 days of contingency in 2021, up from 225 days in 2019. federal help.
Bimesteffer argued that labor costs and stock market losses, the two biggest factors affecting the current financial situation of hospitals, should level off and hospitals should not increase patient prices for profit. I’m here.
“Don’t worry too much about reserves and market share. Worry about taking care of people,” Bimestefer said.
But Tieman says it only takes one cyberattack or another pandemic to wipe out these hoards. He disputes the idea that hospitals leave large sums of money in emergency funds.
“We have a strong hospital system and we want to keep it,” he said.
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