Financial Challenges are Growing for Colorado Hospitals

What You Need to Know:
The financial and operational impacts for hospitals over the past four years have been staggering and continue to build. Facing an intense combination of growing expenses, changing patient utilization, new state and federal regulatory requirements, and increasing administrative and reimbursement challenges from health insurance companies, hospitals are facing strong financial headwinds.

Hospitals need to earn at least 4% operating margin after accounting for expenses to remain sustainable and continue providing care for their community for years to come. In Colorado, hospital margins have fallen significantly since the start of the pandemic, with the average statewide margin now at about 3%.

What hospitals are seeing:

Hospitals need to earn at least 4% operating margin after accounting for expenses to remain sustainable and continue providing care for their community for years to come.
More than 70% of Colorado hospitals operate with unsustainable margins. That means:

More than 70% Colorado hospitals have unsustainable operating margins
CHA Hospital Industry Update2023 Financial and Utilization Trends
Operating margins in 2023 are 58% lower than pre-pandemic levels, following a 50% decrease in 2022
CHA Hospital Industry Update2023 Q3 Financial and Utilization Trends
Total expenses so far in 2023 are 31% higher than pre-pandemic levels, nearly 8% per year
CHA Hospital Industry Update2023 Q2 Financial and Utilization Trends
Colorado hospitals are providing increasing support for Medicaid and Medicare patients with reimbursement that does not cover the cost of care
CHA Hospital Industry Update2023 Financial and Utilization Trends

Hospital Closures

Discharge Backlogs

Reduced Access to Care

Increased Costs

Reduced Services Lines

Further Distance to Care

Expenses for Colorado hospitals continue to rise at near double-digits, surpassing national and local inflation rates.
- Labor expenses have increased 30%+ since 2019.
- Supply expenses have increased 35% since 2019.
Patient utilization of hospital services has changed significantly, with higher lengths of stay and fewer discharges. That could mean:
- Patients are sicker.
- Options for discharging patients to other levels of care (like skilled nursing or rehab facilities) are fewer/harder to find.

Coloradans deserve access to affordable, quality care, close to home. Colorado hospitals are committed to serving their communities, but they are facing significant financial burdens. As policymakers consider new laws and regulations, they must first consider the impacts of the hundreds of new laws enacted in recent years and the financial health of Colorado’s hospitals.