Colorado hospitals posted $336 million in profits in 2022, down from $3.4 billion the year prior, according to a Feb. 5 report from the Colorado Department of Health Care Policy and Financing.
Five things to know:
1. In 2022, operating expenses grew 10.4% over 2021 while patient revenues grew 5.9%. From 2014 through 2021, Colorado hospitals' aggregate patient revenues grew "measurably faster" than operating expenses.
2. Operating expense growth was driven by the effects of the COVID-19 pandemic, including increased supply costs, "vastly increased labor costs, including an alarming increase in contracted labor expense (247.6% since 2019)," as well as inflationary pressure. These factors, combined with investment market downturns, resulted in narrowing profits and margins.
3. Uncompensated care costs rose between 2019 and 2022, driven primarily by increases in charity care. In 2022, there was $544 million in total uncompensated care costs, a 12.5% increase from 2021.
4. Kim Bimestefer, the executive director of the Colorado Department of Health Care Policy and Financing, said for 2022, the aberration of the year — downturns — shouldn't be used to justify inappropriate increases in commercial rates, according to a Feb. 6 report from the Colorado Sun. She said "profits went way down, but they got through it in a reasonable way."
5. But Tom Rennell, the senior vice president for financial policy and data analytics at the Colorado Hospital Association, said more than 70% of Colorado hospitals are operating at unsustainable profit margins, according to the news outlet. He said the state's hospitals are "not seeing a significant rebound in operating margins or revenues."
Read the full report here.