Many of us view our hospitals as trusted places to receive care when we need it most. Many local hospitals across the state work to put their communities first, but there are some big hospital systems that haven’t been operating with patients’ best interest at heart. A new report shows that Colorado hospitals saw unprecedented profits — second highest in the nation — while the cost of health care for everyday Coloradans rose steeply. While many of us were struggling to afford care and using our life savings to pay for services, Colorado hospitals were profiting bountifully.
The Colorado Department of Health Care Policy and Financing recently released its cost shift report, which details the profit margins of hospitals in Colorado compared to their costs. Hospital profits rose by more than 280 percent between 2009 and 2018 and yes, that includes nonprofit hospitals. This has hit the commercial insurance market the hardest. The report shows that the hospital profit margin was 1.7 in 2018. This means that if hospitals received $17 million in payments, they pocketed $7 million as profit.
Obviously, we need to ensure that hospitals are profitable and have healthy profit margins, but a 1.7 ratio on the commercial market is unacceptable, especially when a portion of those profits could have gone to lower the cost of care. The record high hospital profits went to the hospital systems' bottom lines. It did not go towards nursing and medical staff salaries, provider rates or to lower premiums.
The report also exposed the fact that hospitals are increasing payments while they are receiving millions of taxpayer dollars to offset uncompensated care. Uncompensated care accumulates when people are either uninsured or under-insured. This care then gets covered by the hospitals, often through cost shifting to other insurance markets.
Since 2008, Colorado hospitals have received an additional $3.85 billion to help cover the care that goes uncompensated. Instead of using those dollars to lower premiums, which is a national trend, Colorado hospitals pocketed those dollars and continued to shift the cost on the commercial market.
Coloradans, myself included, are very loyal to our hospitals, and I understand why. They offer livesaving care and provide help when many of us need it most. That does not mean that they do not have a responsibility to play their part in containing health care costs.
Pueblo is a good example of how our current structure does not always serve the best interests of consumers. It is often nearly impossible for consumers to determine what a hospital will charge for a given service. Getting served at St. Mary’s Corwin Medical Center on average will cost 284 percent of the Medicare rate. If you went to Parkview Medical Center just five miles away, it would cost 380 percent of the Medicare rate — an almost 100 percent increase.
Recently, hospital lobbyists and public relations firms have been working hard to squash proposed legislation that would help lower health costs for Coloradans. There is a debate brewing at the Capitol around a “public” or “state” option. This would create a first-of-its-kind Colorado solution to curb the skyrocketing cost of care while increasing competition and building the insurance market.
Hospital profits are at the center of this debate because the public option, as proposed by the Department of Health Care Policy and Financing, aims to hold hospitals accountable to what they charge people like you and me through a fair process that still maintains healthy hospital profit margins, but puts people first. This comes as we enter another year where health costs are going up and Coloradans cannot afford the out-of-pocket expenses and premiums.
We need Colorado hospitals to step up and support solutions that put people first. The status quo is unsustainable and out of line with the needs of Coloradans. It’s clear that all hospitals need to be well resourced and accessible to their communities. We can accomplish this while saving money for Colorado families.
Hillary Jorgensen serves as Healthier Colorado’s deputy executive director. Raised in rural Colorado, she is passionate about improving health outcomes in every corner of the state and in tackling health equity.