Colorado’s hospital systems remained profitable last year despite the cancellation or delay of optional surgeries due to the COVID-19 pandemic, but small regional hospitals experienced significantly greater challenges, according to a new state report.
Federal stimulus money was a major factor in keeping hospitals profitable, according to the report, as published by the Colorado Department of Health Care Policy and Finance on Wednesday. Colorado hospitals received a total of $ 1 billion in the first four months of 2020 and may have received 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 significantly lower profits without federal money, but with that, the system came close to the margin for 2019.
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 the stimulus, some hospitals lost money.
Kim Bimestefer, executive director of the Colorado Department of Health Care Policy and Finance, said hospitals were “bleeding” money in the spring of 2020 when they had to cancel optional procedures and lose a significant source of revenue while facing increased costs for protective equipment as masks.
Since they did not know how long they could lose money, she said it made sense for them to seek help even if they did not end up needing them.
The federal government’s formula for distributing its stimulus dollars did not take into account how much money hospitals had in reserve, Bimestefer said. The discovery 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 did not have to dip into their reserves, ”she said.
Julie Lonborg, senior vice president at the Colorado Hospital Association, said the association has not seen the data the state used, but hospitals are grateful for the federal aid. About 40% of Colorado hospitals operated in red before the pandemic, so emergency supplies were “critical” to their COVID-19 response, she said.
“It is also important to recognize that this pandemic is not over and that the impact on hospital utilization was expected to last at least the end of this year,” she said in an email. “The longer this pandemic persists, the longer exploitation can be affected.”
The department estimated Colorado city 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 further. In the first months of the pandemic, employees at some hospital systems protested against deadlines or other measures to reduce costs, pointing to their employer’s reserves.
The rural areas had a median of about 99 days of cash, which means they would get into financial trouble well in advance of their city counterparts. However, there were exceptions, including a rural hospital that could last for more than a year and an 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 money available. Of course, it is unlikely that a hospital would not make money for a long period of time, but the measure “days with cash at hand” is a way to compare how financially vulnerable different facilities are.
A separate report, released Wednesday as well, also showed differences between rural and urban hospitals. It repeated previous results that Colorado hospitals were near the top of the nation in prices, costs, and profits, even though it did not study 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 cost per patient. The national average profit was $ 963.
Colorado health care prices were the sixth highest in the country and about 23% higher than the national median. The costs were also high, but became number nine in the country.
Lonborg, with the Colorado Hospital Association, said the report is a reminder of the work hospitals have been doing to reduce costs since 2018. The state reinsurance program, the Colorado Option Plan and other efforts have reduced monthly costs in the individual market to $ 25 or less for most people, she said.
“All of these efforts have been made at the same time as every Colorado, and many in neighboring states, reckoned that Colorado hospitals made sure they could care for patients with COVID-19, deliver COVID-19 vaccines to the community, and administer “other health concerns that have arisen during this global pandemic such as behavioral health and substance abuse, while also providing ‘normal’ patient care,” she said in an email.
Bimestefer acknowledged that it is 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 have done to beat back COVID-19, but also suffer from the high cost of health care, she said. Although insurance costs in the individual marketplace have decreased, the same does not apply to 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.
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