Colorado’s hospital systems remained profitable last year despite canceling or delaying elective surgeries due to the COVID-19 pandemic, but small rural hospitals experienced significantly greater challenges, according to a new state report.
Federal stimulus money was a significant factor in keeping hospitals profitable, according to the report, which the Colorado Department of Health Care Policy and Financing released Wednesday. Colorado hospitals received a combined $1 billion in the first four months of 2020, and may have gotten additional funding in subsequent stimulus packages.
Banner Health, Denver Health, Children’s Hospital Colorado and SCL Health only recorded profits after the federal stimulus. UCHealth would have had substantially lower profits without federal money, but with it, the system came close to its 2019 margin.
HCA Healthcare, which owns the HealthOne hospitals in Colorado, returned its stimulus funding. Its Colorado hospitals were actually more profitable in 2020 than in 2019, even without the federal money. But even with stimulus, some hospitals lost money.
Kim Bimestefer, executive director of the Colorado Department of Health Care Policy and Financing, said hospitals were “hemorrhaging” money in spring 2020 when they had to cancel elective procedures, losing a significant source of revenue at the same time that they were facing increased costs for protective equipment like masks.
Since they didn’t know how long they might be losing money, she said, it made sense for them to seek help, even if they didn’t end up needing it.
The federal government’s formula for distributing its stimulus dollars didn’t take into account how much money hospitals had in reserve, Bimestefer said. The finding that large hospital systems remained profitable without the federal money could help target any future stimulus programs to the facilities that need it most, she said.
“The rural hospitals needed more. The big systems didn’t need to dip into their reserves,” she said.
Julie Lonborg, senior vice president at the Colorado Hospital Association, said the association hasn’t seen the data the state used, but hospitals are grateful for the federal help. About 40% of Colorado hospitals were operating in the red before the pandemic, so the relief funds were “critical” for their COVID-19 response, she said.
“It’s also important to recognize that this pandemic is not over, and that the impacts on utilization of hospitals was forecast to last through at least the end of this year,” she said in an email. “The longer this pandemic persists, the longer utilization may be impacted.”
The department estimated Colorado’s urban hospitals and other hospitals that were part of a system could have lasted a median of 238 days with no revenue — meaning half would run out of cash sooner and half could go longer. In the first months of the pandemic, employees of some hospital systems objected to furloughs or other measures to cut costs, pointing to their employers’ reserves.
Rural hospitals had a median of about 99 days’ worth of cash, meaning they would run into financial trouble well before their urban counterparts. There were exceptions, though, including one rural hospital that could last for more than a year and one urban hospital that would run out of cash in less than two months.
The federal stimulus narrowed the gap between rural and urban hospitals, though the average Front Range facility still had more cash on hand. Of course, it’s unlikely that a hospital would make no money for an extended period, but the “days of cash on hand” measure is a way of comparing how financially vulnerable different facilities are.
A separate report, released Wednesday as well, also showed disparities between rural and urban hospitals. It echoed previous findings that Colorado hospitals were near the top of the nation in prices, costs and profits, though it didn’t examine hospitals with fewer than 25 beds.
As of 2018, Colorado hospitals with more than 25 beds had the highest profit margins in the country, collecting an average of $2,891 above costs for each patient. The median profit nationwide was $963.
Prices for health services in Colorado were the sixth-highest in the country, and about 23% higher than the national median. Costs were also high, however, ranking ninth in the nation.
Lonborg, with the Colorado Hospital Association, said the report is a reminder of the work hospitals have done to lower costs since 2018. The state reinsurance program, the Colorado Option plan and other efforts have driven down monthly costs on the individual market to $25 or less for most people, she said.
“All of these efforts have been undertaken at the same time that every Coloradan, and many in neighboring states, counted on Colorado hospitals to ensure they could care for patients with COVID-19, provide COVID-19 vaccines for the community, and manage other health concerns that have emerged during this global pandemic like behavioral health and substance use disorders, while still providing ‘normal’ patient care as well,” she said in an email.
Bimestefer acknowledged that it’s difficult to ask hospitals to lower their prices while still responding to a pandemic, but encouraged high-profit facilities to work with their communities. Coloradans are “grateful” for the work they’ve done to beat back COVID-19, but also suffering from the high cost of health care, she said. While the cost of insurance on the individual marketplace has fallen, the same isn’t true for people who get insurance through their jobs.
“The prices that hospitals charge have a direct impact on the (insurance) premiums that consumers pay,” she said.
This content was originally published here.
