The long-term financial viability of Denver Health, the region’s public safety-net hospital, is crucial to the stability of Colorado’s health care system.
That’s why news of Denver Health’s first- quarter losses of $845,000 is troubling. Projections show the year-end shortfall will be $16 million.
It’s a sobering state of affairs for an institution that has operated largely in the black as it has provided billions of dollars worth of care for the uninsured. The losses, attributed to reduced Medicaid reimbursements and rising expenses, mean Denver Health will cut $5.5 million from its $500 million operating budget.
But if that were the extent of the problem, the hospital could make cuts, raise revenues, dip into reserves, and the situation wouldn’t be as bleak as it truly is.
However, Denver Health, a public hospital that was part of city government until 1997, in September will run headlong into a change in government rules that threatens to send the hospital into a yawning budget deficit.
Safety-net hospitals like Denver Health have come to rely on what are called “disproportionate share payments” in order to care for high numbers of uninsured and still make ends meet. A proposed change in those payments, which flow through Medicaid, would mean that only hospitals with taxing authority would get them.
Denver Health, an independent government authority but without taxing powers, would no longer qualify for the payments, and that would mean a loss of $65 million this fiscal year. As such losses compound, it’s clear that the hospital’s $125 million of cash on hand would quickly be depleted.
You may wonder why you should care about the viability of Denver Health.
Many of those who turn to the hospital for treatment have nowhere else to go. None of the other metro hospitals come close to providing as much care to people without insurance or other means to pay for health care.
If Denver Health had to dramatically cut service, those patients would turn to other hospitals, which don’t have the cost-effective assortment of clinics and other services to treat the poor. The cost of their care ultimately would be added to your insurance bill.
“If we’re not here, it will destabilize the whole health care system in Colorado,” said Patty Gabow, Denver Health’s chief executive.
The hospital has been working with Colorado’s congressional delegation to support a one-year moratorium on the change in disproportionate share payments.
It is a reasonable request as Denver Health and other hospitals that rely on these payments try to figure out a way to fulfill their missions while staying solvent.
