Polis, the state health care financing agency trade criticism with hospitals over profits | Governor

During his State of the State address Tuesday, Gov. Jared Polis took direct aim at the largest hospitals in the state, saying it’s time to hold them accountable for record profits, paying zero taxes and “sitting on huge reserves while overcharging customers”.

Polis stated, “Coloradans still pay some of the highest costs for health care, particularly hospital care. Unfortunately, we are among the top 10 states for hospital cost, price and profit. Let’s change that.”

On Wednesday, the Colorado Department of Health Care Policy and Financing added fuel to that fire by releasing reports covering fiscal years 2014-2021 that it claims showed those record gains.

The hospital trade association and UCHealth responded, claiming that the reports use old data that does not reflect the current environment.

Hospitals represent the largest component of the health care dollar, according to an HCPF statement, “so advances in hospital affordability are a top priority for the Polis-Primavera administration…Overall, The reports illuminate profits, reserves (days cash on hand), the impact of the $1.2 billion in federal stimulus received in 2020, the gap between rural, independent and megasystem finance and more.”

The HCPF’s analyzes say that patient revenues in that period grew faster than operating expenses, which they said led to increased profits.

From 2018 to 2020, Colorado hospitals were ranked in the top 10 nationally for cost, price, and profit. The HCPF statement said that specific hospitals, notably UCHealth and HealthONE, could make “more impactful strategic decisions to lower their prices to better the communities they serve.” Other hospitals noted for high profits included the University of Colorado Hospital, Poudre Valley, Centura-Common Spirit and St. Anthony Summit.

The statement claimed that UC Health had a total profit margin of 26.1% in 2021; The University of Colorado’s total profit margin was 31.3% in 2021; Poudre Valley’s margin was 45.1%, also in 2021; and the total profit for St. Anthony Summit in 2021 was 34.5%

By comparison, the statement said, Intermountain Healthcare, formerly known as SCL Health, which has five hospitals in the Front Range, had a total profit margin of 5.2%, while St. Mary’s Hospital in Grand Junction, also part of Intermountain, had a profit margin of 12.9%.

Hospital mergers have led to billions of dollars in bookings, the HCPF said, an average of 225 days of cash on hand in 2019, rising to 245 days in 2021. The statement claims that hospital bookings have increased compared to pre-pandemic levels and that the largest systems did not rely on those rainy day funds during the pandemic, as expected. Those reserves were boosted by federal stimulus dollars that were meant to offset lower earnings.

But the HCPF claims do not reflect current realities, particularly the past two years of COVID-19 and amid record inflation, according to the Colorado Hospital Association and UCHealth.

CHA’s response called the HCPF reports “an outdated narrative.” A 2022 Colorado Hospital Industry Update shows that Colorado hospitals “face a severe financial toll, with no further relief in sight. Hospitals have incurred unprecedented losses relative to the pre-pandemic level: approximately $ 1.8 billion through August 2022. Additionally, most Colorado hospitals are operating with unsustainable financial situations,” CHA said in a statement Wednesday.

Hospitals and health systems have recognized concerns about the affordability of health care, the CHA statement said, and are working on it. “Those efforts are beginning to show progress, as data shows Coloradans spend significantly less on health care than others in the United States.”

But “by using outdated data, HCPF does not present a complete picture and has very few substantive recommendations for improving access, affordability or quality of care,” said Jeff Tieman, CHA President and CEO. “Instead, they recommend disrupting community relationships with hospitals and increasing the reporting burden on hospitals, neither of which improves medical care. CHA invites HCPF to partner with us to make real progress on key priorities like supporting our healthcare workforce, providing sustainable Medicaid reimbursement, and improving affordability by reducing regulatory red tape.”

UCHealth also responded.

Dan Weaver, vice president of communications for UCHealth, said in a statement that the HCPF information is misleading.

“By misrepresenting the financial environment for hospitals and investments in Colorado’s health care workforce, research and community benefits, HCPF threatens health care, quality and access for patients in the state,” said the UCHealth statement.

According to UCHealth, the financial situation of its hospitals has changed significantly since 2021 and operating margins have shrunk considerably due to inflation and salary increases.

“Making financial or policy decisions based on misleading and outdated HCPF information could be disastrous for our state and result in reduced access to hospitals, fewer clinical trials, reduced support for education to train future nurses and doctors, and even job loss,” said UCHealth. the statement said.

UCHealth disputed the claims in the HCPF report, stating that its operating margin in 2021 was 9.9%. In 2022 it was 5.2% and they project an operating margin of 3.3% for 2023.

“As HCPF has done in previous reports, it uses old data, selects date ranges when investments increased, and uses methodologies that do not follow Generally Accepted Accounting Principles (GAAP),” the UCHealth statement said.

UCHealth pointed to a CHA report that said Colorado hospital expenses are 21% higher than pre-pandemic levels, and staff expenses are up more than 26%.

“Inflation has also increased the costs of the supplies, services and drugs that hospitals need to care for patients, resulting in significantly lower margins. The information our policymakers act on must be accurate and current.”

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