New Transparency Reports Identify Opportunities to Help Consumers, Employers, Emergency Preparedness
FOR IMMEDIATE RELEASE
August 18, 2021
Data shows Colorado hospitals rank 1st in total profits nationally, 6th highest for price per patient, and 9th highest in costs per patient
Denver, CO - Today, the Department of Health Care Policy & Financing (HCPF) released the Colorado Hospital Cost, Price and Profit Review that provides summary insights and identifies the urban (non-rural) hospitals that have more work to do to improve cost efficiency and reduce prices to better align with their national peers and to better serve the interests of their communities.
Earlier this year President Biden took Executive Action to increase hospital transparency, just as Colorado did in 2019.
Using the publicly available Medicare Cost Reports submitted by hospitals with more than 25 beds (which removes the smaller, rural critical access hospitals), Colorado hospitals rank 1st in total profits nationally, 6th highest for price per patient, and 9th highest in costs per patient. These findings are based on 2018 data -- the most current, self-reported data hospitals provide to the federal government.
An accompanying report titled COVID-19’s Impact on Colorado Hospitals’ Finances reveals that with the help of federal stimulus, all Colorado hospital systems (defined as 3 or more hospitals) recorded operating profits in 2020 and did not need to dip into their rainy day reserves, built from years of accumulated profits.
Colorado Hospital Cost, Price and Profit Review Key Findings:
- In 2018, Colorado hospitals ranked 1st in the nation in total profit margin. Colorado’s total profit per patient of $2,891 was approximately three times higher than the 2018 national median of $963. Colorado hospitals generated $1.5 billion in profits from patient services in 2018 but nearly the same amount, $1.4 billion, was generated by non-patient sources, such as investment income. This $2.9 billion in 2018 profits represents a 15.6% total profit margin (15.3% when adjusted for cost of living), the highest profits in the country and significantly higher than the national median of 6.5%.
- Colorado hospital prices ranked 6th highest in the nation in 2018 while the rate of price increases is outpacing the nation. In 2009, the average price per patient was 9.2% higher in Colorado than in the rest of the country. By 2018, the average price per patient in Colorado had increased to 22.8% higher than the national median.
- Hospital costs per patient in Colorado ranked 9th highest in the nation in 2018 and have consistently exceeded national averages for the previous nine years. Had Colorado hospitals incurred overhead at the national rate, operating expenses would have been $474 million less.
HCPF’s preliminary review of 2019 data shows that hospital prices -– which fuel individual and employer insurance premiums -- are trending in the wrong direction. Nationally, the state’s price ranking moved from 6th highest to 3rd highest. Hospital consolidation and market power continue to grab attention at the national level because of the higher prices they propel. In May, the New York Times reported on hospital consolidation in the wake of the COVID-19 pandemic and the higher prices for medical care that will likely follow.
“We appreciate the actions that some hospitals have taken to lower prices over the last few years,” said Kim Bimestefer, executive director for the Department of Health Care Policy & Financing. “The reports released today, and the transparency insights they provide, can help communities and hospital leadership identify further opportunities to lower prices, costs, and profits to bring needed savings and relief to Coloradans and employers. Our smaller, rural hospitals are in a very different place - ripe for innovation and modernization investments.”
The COVID-19 pandemic significantly disrupted operations and created considerable financial uncertainty for hospitals nationwide. HCPF prepared a separate, second analysis titled COVID-19’s Impact on Colorado Hospitals’ Finances, which reviewed publicly available 2020 financial and utilization data, information and reimbursement rates to examine:
- Colorado hospitals’ financial preparedness for the pandemic,
- The impact of federal COVID-19 stimulus dollars on Colorado’s hospitals, and
- The overall financial impact of the pandemic on Colorado’s hospitals.
Colorado hospitals differed in financial preparedness, with rural hospitals having fewer reserves than urban hospitals, mountain resort and hospital systems.
- Median urban hospitals or hospital systems had enough cash reserves to operate for 238 days without revenue, while median rural hospitals could operate for 99 days without revenue
- As of April 2020, Colorado hospitals had accepted an estimated $1.02 billion in non-repayable federal COVID-19 aid.
- With federal stimulus, all Colorado hospital systems (organizations owning three or more hospitals) recorded operating profits in 2020 with no need to dip into reserves.
- HCA Healthcare, Colorado’s largest for-profit hospital system, has committed to returning all federal COVID-19 aid.
Both the COVID-19 Impact on Colorado Hospitals’ Finances report and the full Colorado Hospital Cost, Price and Profit Review report, appendices, and Hospital Cost Reporting Tool can be accessed under "Hospital cost, Price & Profit Analysis” on the Department’s Hospital Reports Hub webpage.
On Thursday, August 19th, join Lt. Gov. Dianne Primavera, Health Cabinet Executive Directors and industry leaders for further discussion on state trends in hospital costs, solutions and other affordability topics. Register online for the Summer Health Cabinet Summit hosted by the Department of Health Care Policy & Financing.
About the Colorado Department of Health Care Policy & Financing: HCPF administers Health First Colorado (Colorado's Medicaid Program), Child Health Plan Plus, and other programs for Coloradans who qualify. For more information about HCPF, please visit Colorado.gov/hcpf.
About the Colorado Department of Health Care Policy & Financing: The Department administers Health First Colorado (Colorado's Medicaid program), Child Health Plan Plus, and other programs for Coloradans who qualify. For more information about the Department, please visit HCPF.Colorado.gov.