Colorado lawmakers aim to stave off Denver Health 'death spiral'

The Colorado Legislature's Joint Budget Committee gave initial approval to give Denver Health a $5 million infusion for the second time in just over a year, but acknowledged the funds are not enough to solve the safety-net hospital's long term challenges, The Denver Post reported March 8. 

The Colorado Department of Health Care Policy and Financing requested the funds for Denver Health, according to the report. The department said that after reviewing financial measures and year-over-year trends, it determined that "without significant structural changes to its business operations, Denver Health will continue deteriorating financially into failure. This is commonly referred to in business as a 'death spiral.'" 

The Joint Budget Committee also directed the department to work with Denver Health on a long-term solution to its financial challenges and try to match the state's funds with federal funding, according to the report. 

The $5 million payment is expected to be allocated in the coming months through the Legislature's budgeting process, according to the report. Steven Federico, MD, Denver Health's chief government and external community relations officer, told the Denver Post the hospital plans to use the funds to "help backfill the uncompensated care costs we took on in 2023, particularly targeting costs from out-of-county patients, which totaled about $40 million last year." He also said preliminary data show that Denver Health is already behind budget for 2024. 

Rising uncompensated care costs have been a major challenge for Denver Health. CEO Donna Lynne, DrPH, told city and county leaders in January that Denver Health lost $60 million from uncompensated care in 2020, which doubled to $120 million in 2022. Dr. Federico said uncompensated care costs in 2023 totaled $140 million. 

In February 2023, legislators approved $5 million for the hospital, which was struggling with paying uncompensated care and had only approximately 80 days of cash on hand.

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