Hospitals in Colorado Springs and the entire state have collected billions of dollars, while insurers have to bear more costs, which would likely lead to higher insurance prices, says a draft report written by officials of the state's health policy.

The findings, prepared for Colorado Healthcare's Abordability & Sustainability Enterprise, raise new questions about hospital spending practices in the context of a boom in the construction of hospitals in the state. And they mark the first turning point in the battle between state health policy makers and hospital systems, which account for most of Colorado's health care spending.

The issue appears to be of particular concern in Front Range North – Boulder, Fort Collins and Greeley – where annual operating margins, net income over costs, have increased six-fold since 2009, reaching $ 353.6 million. in 2017.

But the Pikes Peak area is not immune. More than $ 450 million has been spent on renovating and expanding hospitals in Colorado Springs in recent years, and construction is expected to exceed $ 1 billion over the next decade. with Penrose-St. Francis Health Services is considering the construction of a third campus and major renovations to its facilities.

St. Francis, Memorial North expansions opened in February

At the same time, hospital margins in El Paso and Pueblo counties skyrocketed, reaching $ 168.1 million in 2017.


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Chris Rael installed a supply trolley in one of the examination rooms at the new St. Francis Emergency Medical Center in Colorado Springs. He is the principal Critical Care Technician for St. Francis.

Kelsey Brunner, The Gazette

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The problem is that hospitals seem to benefit at the expense of insurance companies – which, in turn, are likely to charge higher premiums to healthy and sick clients, according to Colorado Department of Health Care officials. Policy and Financing. The report estimates that hospitals across the state could have saved about $ 11.5 billion from 2010 to 2017 to insurers, patients and policyholders, operating in a more conservative financial fashion.

Hospitals build expensive wings – some say redundant – for costly specialties such as cardiac or orthopedic care. Instead, they should meet the needs of their communities and use existing facilities for different services, such as behavioral and psychiatric health units, said Kim Bimestefer, executive director of the state agency.

"Building hard-built … at the moment big innovations in health care is probably a shortfall for our entire health care ecosystem," Bimestefer said.

In its report on factors contributing to rising health care costs, the Colorado Hospital Association has described as "miasma" any effort to link hospital construction expenditures to the rising costs of health care. Medicare – nothing more than "the quick response that will not solve the problem". problem."

He blamed the high cost of living in Colorado and the need to prepare for worst-case scenarios – such as influenza outbreaks – for high costs and rapid construction. The hospital association also suggested finding ways to reduce unnecessary care and emergency room visits for non-urgent cases, rather than targeting hospital construction and spending. administrative.

In a statement, the association said the state needed a "scalpel, not a hammer" because it is working to reduce health care costs.

"As we move forward, we need to approach solutions carefully to avoid unintended consequences that may affect the accessibility of high quality health care," the statement said.

Construction Projects From A Hospital In Colorado Springs Take Key Milestone

The draft report could be finalized at the monthly meeting of the Colorado Healthcare Board of Directors, which will be held monthly on February 26th. Its publication was first reported by the Colorado Sun.

The confrontation comes as Governor Jared Polis makes reducing health costs a priority of his new administration. In January, Polis created the Office of Saving People Money on Health Care, which sees increased hospital transparency as one of its goals of reducing health care and insurance costs.

Checking the high costs of health care is also a priority of the legislature. After a blue wave in November that gave Democratic lawmakers a supermajority on Capitol Hill, the first bill introduced by House Democrats called on every hospital to report financial data to the Department of Health Care Policy and Financing. of Colorado.

"What I see is a market failure," said Chris Kennedy, D-Lakewood, who sponsored the bill. "I'm not saying that hospitals do not care about costs. But they do not care as much about the issue as about upgrading their equipment or acquiring another group of doctors. "

The hospital association has traditionally opposed such measures. But he supported Kennedy's bill after the amendments changed certain reporting requirements.

Its support, however, has limitations. A bipartisan bill introduced this month would require a federal waiver to recover some of the money spent on hospitalization reimbursements and use it to stabilize the individual insurance market – a measure to which association opposes.

Democrats are also seeking to control health care costs by allowing Coloradans to import prescription drugs from Canada and by creating a pilot program of public options for people seeking health insurance. A bipartite measure also aims to reduce off-grid "surprise" medical bills.

Concerns about hospital spending practices come at a time when hospital systems are increasing more and more, which is essentially a non-profit organization.

Fees for hospital providers that began in 2009 helped to inject money into hospital coffers using matching federal funds to increase Medicaid reimbursement rates. This was important for hospitals because Medicaid had paid less than other sources, such as Medicare and commercial insurance companies.

Medicaid's expansion in 2014 under the Affordable Care Act also helped hundreds of thousands of low-income Coloradans who were uninsured to obtain coverage. As a result, hospitals eventually began to be partially compensated for care that historically was provided with little hope of reimbursement.

Yet despite these financial benefits, hospitals have never stopped overloading commercial insurance companies, according to the draft report. Instead, they have relied more on insurance companies to meet their costs, putting pressure on these companies to raise their rates.

Across the state, hospital costs increased by 60% between 2009 and 2017, from $ 9.1 billion to $ 14.5 billion.

But their incomes have also increased, especially those of the insurance companies. During this period, annual hospital margins increased threefold, from $ 417 million to $ 1.2 billion.

This increase is not solely due to the treatment of more patients, as the number of discharges has increased by 14%. The report reveals that insurers are bearing a growing share of costs, leaving hospitals with increasingly generous results.

For example, Medicare and Medicaid covered 69 cents for every dollar spent on its patients in 2017, while insurers paid $ 1.66 for every dollar spent by its customers, according to the report.

The hospital association blamed these poor Medicaid and Medicare reimbursement rates, which had recorded a $ 2.4 billion deficit in 2017, to have prompted hospitals to support them more. insurers to cover their costs. This, coupled with chaos in the hospital market due to state and federal uncertainty, has forced hospitals to "save for a rainy day" and "cautiously manage their limited resources." ". The operating margins of rural hospitals are particularly precarious, he said. .

State officials worry, however, of an "arms race" in the construction of a hospital.

Colorado has the country's second highest construction cost per adjusted output, which includes hospital and outpatient care, the report says. Only Alaska has higher construction costs.

This month, Memorial Hospital North is planning a $ 129 million expansion, with several new operating rooms and emergency treatment "bays". The Colorado Children's Hospital plans to open a $ 165 million hospital this year.

On Wednesday, St. Francis Medical Center plans to open its enlarged 48-bed emergency room. This is one of the last touches of a $ 102 million expansion, which included the addition of two floors and several operating theaters and the expansion of the neonatal intensive care unit.

A spokesperson for Penrose-St. Dr. Brian Erling, Executive Director of Francis, asked about the state's report to the hospital association.

Calvin Eisenach, director of the St. Francis Medical Center, championed the project, including the expanded emergency room.

"We had a blast," he said. "We did not have a place to place many of our patients for visits."

In a statement, UCHealth Memorial Hospital agreed, pointing out that he had experienced a "record demand for patients". Colorado Springs has fewer hospital beds than elsewhere in the state, with an average of 1.31 beds per 1,000 patients, compared to national and national averages of 1.98 and 2.76 , respectively.

Memorial also provided $ 102 million in unpaid care to uninsured and underinsured patients during the fiscal year ended June 30, the hospital system announced.

State officials say hospitals can do better.

The policy and funding of the Colorado Department of Health seeks to change the way hospital fees are allocated by encouraging hospitals to convert certain facilities it deems unnecessary – such as stand-alone emergency rooms – into treatment units. behavioral health more necessary, for example.

"Before the construction of the next cancer or orthopedic wing, where there is already room, did the health needs assessment in the community indicate that I needed more beds? mental health? "asked Bimestefer. "We have a significant deficit in the community of mental health providers, and hospitals have the opportunity to intensify and begin to fill this gap."

This need is particularly important, she said, considering that so many hospitals are non-profit organizations that must reinvest this money in the community.

"It's a non-profit organization," said Bimestefer. "The goal is to meet the needs of the community."