Financial Challenges are Growing for Colorado Hospitals
What You Need to Know:
The financial and operational impacts for hospitals over the past five 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%.
The cuts being that are forthcoming from the federal government will further harm hospitals at a time when 69% of them are financially unsustainable.
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.
- Nearly 70% of Colorado hospitals operate with unsustainable margins. That means:
Hospital Closures
Discharge Backlogs
Reduced Access to Care
Increased Costs
Reduced Services Lines
Further Distance to Care
- Charity care provided by hospitals has been increasing rapidly.
- The most recent update from Q3 2025 shows a $208 million (112% increase) in charity/ uncompensated compared to YTD Q3 2021.
- Government payers now dominate, but underpay.
- Medicare and Medicaid make up over 60% of hospital coverage.
- Reimbursement falls billions short of actual care costs.
- Expenses for Colorado hospitals continue to outpace revenues:
- Operating expense trends are running at the highest level over the last 5 years.
- Operating expenses have averaged 8.9% per year.
- 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.
Additional Resources
Colorado Hospital Industry Update - Year-End 2024
2024 Financial and Utilization Trends
Interested in learning more? Visit CHA’s pages on hospital financials to read more about how hospitals get paid and what hospitals are doing to make care more affordable.