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Colorado hospital systems’ finances rebound after difficult 2023
Doctor Anuradha Paranjape tends to a patient at Denver Health in Denver on Thursday, April 25, 2024. Denver Health was one of two hospital systems to lose money in the first quarter of 2024. The other four were profitable due to increased demand for care, and in some cases, one-time federal payments. (Photo by Hyoung Chang/The Denver Post)
Most Colorado hospital systems are off to a profitable start in 2024, a financial rebound after a difficult year in which expenses grew faster than revenues.
Only two of the six health systems operating in Colorado reported losses in the first three months of 2024: Denver Health, the region’s health hub hospital with financially strained safety netand CommonSpirit Health, owner of the Catholic hospitals in the former Centura Health partnership, including St. Anthony Hospital in Lakewood.
The four profitable systems reported financial improvements during the same period in 2023, as did CommonSpirit. Denver Health said it lost a similar amount in the first months of 2023 and 2024.
Last year, hospital income fell for a total of $1.2 billion statewide, the Colorado Hospital Association estimated. The association also said that about 70% of all Colorado hospitals had profit margins below 4% — the level it considers sustainable — in September.
Colorado’s hospital sector as a whole saw improvements in the first quarter, averaging a 5% profit in patient care and related operations, compared to 3% in early 2023, said Tom Rennell, senior vice president of policy. financial and data analysis of the hospital association.
The stock market’s strong start to the year also helped boost investment income, and the federal government had to make a one-time payment to previously underpaying hospitals, he said.
Overall, expenses increased 5% and revenue increased 7%, Rennell said. This was a change from recent years, when the cost of labor and supplies rose faster than revenues. For unknown reasons, more people required hospital care in the first quarter than would otherwise be normal, which temporarily increased hospital revenues, he said.
“A room,” he observed. “I don’t want to say this is the new norm.”
Here’s a look at the financial status of each of the six health systems:
AdventHealth
The system, which owns the Adventist hospitals that were part of Centura Health, recorded US$341.4 million profit from patient care and related operations in the first quarter, or about 7.5% margin.
AdventHealth also earned about $142.3 million from investments in the first quarter.
The system made a profit in the first three months of 2023, although it was smaller. During this period, it earned around US$171.9 million in operations, with a margin of 4.3%. However, investment gains have declined this year; the system earned around US$228.4 million from them in the first quarter of 2023.
AdventHealth’s Colorado hospitals fell short of their financial goals for the first quarter due to one-time expenses related to the separation from Centura in early 2023, spokeswoman Chloe Dean said. She did not specify how much they won or lost.
“AdventHealth has a strong financial foundation and we will continue to invest in patient care, quality and safety, technology and the well-being of our team members so that we can always provide exceptional, comprehensive care,” she said in a statement .
The system as a whole made a profit of around US$1 billion in 2023, for a margin of around 6.1%. It also recorded about $528.7 million in investment gains.
Health of the Common Spirit
CommonSpirit spent approx. $365 million more than it raised systemwide in the first quarter, to a negative margin of 3.9% in patient care and related operations.
Still, it was an improvement over the first quarter of 2023, when the system lost around $619 million, for a negative margin of 5.6%.
CommonSpirit went into the black when it added investment income, giving it a profit of $244 million in the first quarter. During the same period last year, it still lost US$207 million, even with added investments.
The system recently resolved a dispute with Anthem BlueCross BlueShield of Colorado, although neither disclosed the terms. CommonSpirit was off the grid for about two weeks after the two sides were unable to reach an agreement on fees. When a hospital is not in an insurer’s network, patients are responsible for a larger portion of their medical bills.
CommonSpirit Chief Financial Officer Dan Morissette said in a press release that the company was pleased with the financial improvement so far this year.
“Our teams are completely focused on maximizing our growth opportunities while minimizing our costs. By making these strategic adjustments, we ensure that our mission of providing care to everyone in our communities, especially those most disadvantaged, will continue today, tomorrow and for decades to come,” he said.
CommonSpirit publishes financial data by fiscal years, ending in June. In the year ending June 2023, it lost about $1.4 billion in patient care and related operations, for a negative margin of 4.1%. Investment gains reduced the total loss to $314 million.
Healthcare in Denver
Denver Health did not release full first-quarter numbers, but Associate Chief Financial Officer Ansar Hassan reported that the health system lost about $12 million between January and April, counting revenue and expenses related to patient care and operations. principal, and the interest he had to pay. old bonds issued for construction. This number does not include stock market gains.
CEO Donna Lynne told a Denver City Council committee on Wednesday that Denver Health was frozen in hiring and stopped paying expenses like travel. April was better than the previous three months, so “belt-tightening” appears to be helping, and the system could break even this year, Hassan said.
“We hope to be on a roll,” he said.
Denver Health made about $17 million in 2023, which represents a margin of just over 1% on its $1.4 billion budget, Hassan said. (Previous reports showed smaller gains, or even losses, because they included a large debt owed to Denver’s employee pension fund that the system didn’t have to pay all at once, he said.)
That said, the picture would have been significantly bleaker without one-time donations of $10 million from Kaiser Permanente Colorado It is $5 million from the state, Hassan said. Denver Health received another US$5 million of the state this year too.
Colorado’s only urban safety net hospital has been struggling financially since 2021, according to uncompensated care costs rose faster than revenues.
“The reason we made any money is we got a lot of one-time donations,” Hassan said.
HealthOne
HCA Healthcare, owner of the nine HealthOne hospitals in Colorado, reported profit of $1.6 billion in the first quarter, compared with $1.4 billion in the same period in 2023. The company also owns 177 hospitals in other states.
Unlike other health systems in Colorado, HCA is a for-profit company, so it pays taxes and does not report the same records as nonprofits. A summary of information reported to shareholders said revenue increased, but did not include profit margin or expense information. However, executives felt confident enough in the results to pay a dividend of 66 cents per share to people who own HCA shares.
HealthOne spokeswoman Stephanie Sullivan couldn’t share specific numbers for Colorado hospitals, but said they generally weren’t as financially successful as the company overall last year.
Colorado has been “aggressive” in recovering accidental overpayments and removing Medicaid beneficiaries at the end of the COVID-19 public health emergency, which has led to an increase in uninsured patients, she said.
“The healthcare industry across Colorado is facing difficult financial conditions,” she said.
HealthOne paid about $480 million in state, local and federal taxes in 2023 and spent about $250 million on construction projects and equipment, Sullivan said.
HCA recorded a profit of $5.2 billion in 2023, down from $5.6 billion in 2022. It also paid a dividend of 66 cents at the end of the year.
Intermontane Health
Utah-based Intermountain Health, which merged with the former SCL Health, reported revenue of $134 million profit from operations in the first quarterfor a margin of around 3.2%.
Both were slightly higher than in the first quarter of 2023, when Intermountain earned about $104 million from operations, for a margin of 2.6%.
Investment earnings also increased, from $445 million in the first three months of 2023 to $623 million in the first quarter of this year.
Intermountain spokeswoman Sara Quale said the system could not discuss the finances of individual hospitals or state groups.
Intermountain earned about $137 million from patient care and related operations in 2023, and about $1.6 billion after including investment income, according to Becker Hospital review. Operating profit was up slightly from 2022, when the system made about $121 million in care, but total profits were down from $2.6 billion.
UC Health
UCHealth had $200.7 million profit from operations in the first quarter of 2024, for a profit margin of 9.6%. It also earned about $320.7 million in investments.
Both were an improvement over the same period in 2023, when the system earned about $61.8 million in operations, with a margin of about 3.6%, and earned about $235.1 million in investments .
Spokesman Dan Weaver said some UCHealth hospitals received one-time payments from the federal Centers for Medicare and Medicaid Services to make up for times they were underpaid. This temporarily raised the margin in the first quarter of this year, and the average for the last three quarters is closer to 6.4%. Although the rising cost of labor and supplies has leveled off somewhat, demand for care for the uninsured is still growing, he said.
“This temporary increase should not be taken as an indication that we have overcome the inflation and spending challenges we have faced in recent years,” he said in a statement.
In the fiscal year ending June 2023, UCHealth reported profits of $331.7 million from patient care and related operations, or a margin of about 4.8%. Operating profits increased from fiscal 2022, when the system earned about $323.8 million, but the margin fell slightly, from 5.2%.
The investments added about $507.4 million in revenue in fiscal 2023. The system lost about $641.3 million in investments in fiscal 2022 when the stock market underperformed.
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