State Budget Cuts Put Colorado Hospitals at Risk

Bipartisan legislative support for Senate Bill 17-267 could provide the solution

GREENWOOD VILLAGE, COLO. – April 24, 2017 – This year’s state budget legislation proposed a $528 million reduction to the Hospital Provider Fee (HPF), a fee paid by hospitals that allows the state to draw down federal matching funds for Medicaid. The HPF funds are used to support coverage for more than 480,000 Coloradans and increase reimbursements for hospitals, reducing health care costs for all Coloradans. The proposed reduction to the HPF in this year’s budget is $264 million, which doubles to $528 million with the federal match, will immediately jeopardize the future of as many as a dozen Colorado hospitals. In addition to potential closures, many hospitals in the state will have to consider layoffs, service line closures and delaying facility upgrades or service additions.

The Colorado Hospital Association (CHA) completed the analysis, which compares the HPF payments made to Colorado hospitals last year with the estimated payments that would be made under this year’s HPF model with the proposed $264 million reduction. The full report is available here. Significant findings include:

80 percent of Colorado hospitals face cuts this year: thirteen Colorado hospitals will see a cut of more than $5 million and six Colorado hospitals face a reduction of more than $10 million.
Colorado’s rural and critical access hospitals also face significant cuts, which may be smaller by comparison to urban hospitals, but will be devastating to the hospitals because they already operate on a smaller budget.
Denver Health, a key part of the city’s safety net, will see the most significant cuts with more than $52 million in cuts.

Legislation has been introduced that could negate the HPF cut proposed in the state budget – Senate Bill 17-267. The bill has bipartisan sponsorship in both chambers, with sponsors Sens. Jerry Sonnenberg (R-Sterling) and Lucia Guzman (D-Denver) and Reps. KC Becker (D-Boulder) and Jon Becker (R-Fort Morgan). Among other provisions, it would move the HPF to a separate fund so that it is not part of the state’s General Fund and thus subject to the TABOR cap.

“History will judge this legislature with acclaim or with embarrassment based on whether or not they finish the job of saving Colorado hospitals – by coming to consensus on a deal that passes SB 17-267,” said Steven Summer, president and CEO, CHA. “Failure is not an option for Colorado hospitals, communities, and the patients they serve. All legislators have a responsibility to those with so much riding on this issue. It’s time to put aside the antics and partisan speak and get this deal done.”

“Lincoln Community Hospital is the only hospital along a 160-mile stretch of I-70 and is the top employer in our 722-person town,” said Kevin Stansbury, CEO, Lincoln Community Hospital (Hugo). “The proposed cut to the Hospital Provider Fee would immediately move our hospital from operating in the black to operating in the red. We are grateful to our Senator, Sen. Sonnenberg, for

representing the 11 hospitals – including Lincoln – in his district and helping to protect the crucial role we play in our communities and the care we provide for our neighbors.”

“San Luis Valley Health Regional Medical Center is the only hospital that delivers babies in a five-county region in south-central Colorado and is the largest employer with more than 650 employees,” said Konnie Martin, CEO, San Luis Valley Health (Alamosa). “This cut would mean that our hospital would lose more than $3.8 million this year. It will profoundly change the face of a rural community when you make these kinds of cuts, so we are hopeful that legislators will work together to get this deal done in this year’s session.”

About the Colorado Hospital Association

The Colorado Hospital Association (CHA) is the leading voice of Colorado’s hospital and health system community. Representing more than 100 member hospitals and health systems throughout the state, CHA serves as a trusted, credible and reliable resource on health issues, hospital data and trends for its members, media, policymakers and the general public. Through CHA, Colorado’s hospitals and health systems work together in their shared commitment to improve health and health care in Colorado.

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Media Contact: Cara Welch, CHA director of communications, [email protected] or 720.330.6073.