Denver Health Ended Up On A List Of At-risk Hospitals — But It’s Not As Bad Off As You Might Think

Nine Colorado hospitals could see service cuts, or even close their doors, due to the health cuts made last year by Republican Congressional majorities, signed by President Donald Trump.

That’s according to an analysis from Washington, D.C.-based nonprofit consumer group Public Citizen.

It defined “high-risk” as hospitals with a payer mix of at least 20 percent coming from government programs like Medicaid, CHP and other programs and with, on average, negative profit margins, using 2022-24 data.

Nine most at-risk Colorado hospitals, according to Public Citizen:

CPR interviewed Donna Lynne, CEO of Denver Health, the state’s flagship safety net hospital, about the report. The worst is not going to happen, she said.

“We’re not in any danger of cutting services or closing,” though federal cuts combined with those from the state are a double whammy that will require belt-tightening.

Lynne said due to the federal cuts, “20,000 of our patients will lose their Medicaid coverage despite all the efforts that we’re going to do to keep them insured.” She said the hospital is working with members of the state’s Congressional delegation to head off the worst impacts.

About 70 percent of the state’s hospitals operate with thin or negative margins after many years of increasing supply costs, regulatory requirements, and growing administrative and reimbursement challenges, said Cara Welch, the Colorado Hospital Association’s communications director.

After more than 40 years without a hospital closure in the state, she said Colorado has seen facility closures, service line eliminations, and workforce reductions.

Welch noted that while CHA can’t confirm Public Citizen’s methodology or list of at-risk facilities, “it is in line with some of the trends we have observed.”

The following is an interview Lynne did with CPR Health Reporter John Daley, which was edited for brevity and clarity.

Daley: What’s your response to this report and Denver Health being listed as one of the Colorado hospitals that’s under some pressure from what’s happening now?

Lynne: Absolutely, we are under pressure. Forty-seven percent of our patients are on Medicaid. We also enroll people into Medicaid, and (last year’s federal budget bill) H.R. 1, beginning in January, is going to mean that they have to come in with work requirement documentation that they’re working 80 hours a month and they also have to do that twice a year and we lose some retroactivity. I like to use the example, let’s say we enrolled somebody on January 1st, but the paperwork wasn’t processed. We used to have 90 days, so you could go back and let’s say they were in the hospital on that day or in a clinic now that HR one shortens that to 30. So those are the three big things that impact us, and because we have so many patients, we’re certainly worried about it.

In terms of the report though, I would say that first of all, we’re not in any danger of cutting services or closing. So I think it was right for the report and certainly for Senator Hickenlooper (whose office issued a press release) to raise the concerns about federal funding. But today we’re not planning any of those things and in fact, we’re trying to work with Sen. John Hickenlooper, Sen.Michael Bennett, others in our congressional delegation to see if there’s other solutions to some of these cuts. But they will be devastating to organizations that are serving a lot of patients who are on Medicaid.

Daley: I think some people might’ve been surprised to see Denver Health on that list because we’ve seen other lists from other organizations that are similar, and I haven’t seen Denver Health make the list of the ones the group considers to be most at risk.

Lynne: Public Citizen didn’t talk to us to ask us the question. I think they must have just looked at profiles of hospitals and health systems that have a high number of government payers. So I appreciate the fact that they’re raising the concern. Also, we have some concerns, as you certainly have covered, with the state Medicaid budget cuts, which are, first of all, they take effect sooner. They take effect July 1st, and that’s a 2 percent direct cut in the fees, the provider fees that are paid to us. So I think we sort of have the double whammy in Colorado, although I think many states are facing similar things. Medicaid costs are going up, state budgets are under pressure, but we’re going to continue to try to work on how do we keep providing the level of service that we do, and I’m hopeful that we’ll be able to talk to some of our congressional representatives. By the way, I should say this happens to everybody regardless of whether you’re a red state or a blue state. I mean, it happens. This is happening. In fact, there have been a number of studies that show the impact on some of the red states is even greater than the blue states.

A lot of the talk prior to this report has really been around rural hospitals and rural hospitals are under a very different kind of strain because their communities in some cases are shrinking. The hospitals are a large source of employment and to keep open 24-7 or to have the kind of staffing that they need in a rural area is challenging just because of workforce shortages, but the economies of scale aren’t there. So I think it was right, as I said, for the report to raise a concern, but the conversation around service disruptions is certainly premature and something we’re going to work to avoid.

Daley: What steps can and is Denver Health taking to manage the financial constraints that you’re now under if you have the same level of demand as you’ve always had, but now you’ve got less money to address those needs? How do you do that without making cutbacks?

Lynne: One thing, as you well know, is that 2Q, which the voters passed in November of 2024, was specifically to help us with uncompensated care.

Daley: This is the ballot measure in Denver where you asked voters to support Denver Health financially. (Voters approved the measure, which is expected to bring in tens of millions of dollars annually.)

Lynne: It was a sales tax of 3.40 cents on a $10 purchase, and it was not designed to allow us to do things, build a new hospital, which someday we were going to have to do. It was designed not for administrative expenses, but it was designed for the areas where we have the highest uncompensated care, meaning people who are uninsured completely or people who are on Medicaid. And it was devoted and is devoted to primary care, pediatric care, emergency and trauma care and mental health and substance use. The irony is that that amount of money was supposed to deal with the fact that we already have a large amount of uncompensated care, but when we get into 2027 in subsequent years, we’ll have even more. The 2Q money was a fabulous support from the Denver community for Denver Health, but the other cuts that are coming in Medicaid are going to eat away at that pretty substantially. We do think over the period of the H.R. 1 implementation that 20,000 of our patients will lose their Medicaid coverage despite all the efforts that we’re going to do to keep them insured.

Daley: That’s a lot.

Lynne: It is a lot. And we see 280,000 patients a year. So 20,000 of them losing coverage is really, it’s very significant. But as I said, I think the pressure is going to come on Washington from other states as well as what we’re going to try to make sure that our delegation understands, and quite frankly, this is going to hit the Republican members of the delegation and people they represent equally; it’s not, again, many of them represent rural areas, which will be severely hit.

Hospitals — and patients — brace for fallout from federal health funding cuts as new report paints a bleak outlook

Daley: Are you asking Congress to make changes now to head off some of the worst impacts of the cuts to Medicaid that are in the pipeline?

Lynne: Yes, absolutely. I mean, we meet routinely with the entire delegation. We meet with the entire eight members of the House and the two senators and even lobby and talk to the people who are on the administrative side in health and human services to let them know. And I’m a firm believer that people who are uninsured delay care, avoid care. And then what happens is they end up in the emergency room where the care is more expensive. The other thing that happens is they may not be able to work if their medical condition is so severe. So there’s a business argument as well. I think from a productivity point of view and from being present at work that if you don’t have people insured, whether they’re through their employer or they’re through Medicaid or Medicare, they’re just not going to be as productive as if we were providing insurance across the board.

Daley: How big will these cuts be if everything goes into effect for Denver Health? And I’m talking about both the federal cuts, but also the state cuts.

Lynne: Forty-seven percent of our patients are on Medicaid. We still also have a pretty significant portion that are completely uninsured. The estimate was done by a third-party consulting firm, was that the annual impact to Denver Health would be $64 million, which is kind of ironic because the sales tax initiative is just about the same amount of money. But as I said, the sales tax initiative was to deal with uncompensated care that we already had, not this additional burden. So I think our strategy is mostly going to be focused sort of in three areas. One, seeing if Congress can see their way through the devastating impacts that these cuts are going to have, not only in Colorado but across the country. The second is to make sure that we keep as many people on Medicaid as we can, so making sure that they sign up and they have the documentation for work requirements or making sure that they come in twice a year.

So we will be working very diligently to make sure that the folks that do this enrollment work at Denver Health are connecting with the patients. And then the third is there probably will be some necessary belt-tightening that we have to do. And belt-tightening shouldn’t come at the expense of the healthcare workers, quite frankly, because they are already a little stressed post-COVID. And some of it is going to be maybe more use of technology to hear a lot about AI these days. But we are trying to use technology where we can and make those kinds of investments. But we want to be here for the people of Denver, and quite frankly, of the entire state. We do serve people from 61 of 64 counties.

Daley: What’s your main message to both your patients and also your providers as they look ahead to some challenging times potentially and some leaner times financially?

Lynne: I think my message is, first of all, we as the leadership of Denver Health, our board and our leaders are going to do everything we can, whether it’s to impact change in Washington or impact change in the state. There was a discussion, actually, at the state level that the cuts would be even bigger. At one point, we were facing 3.9 percent cuts. So I guess the fact that we got a 2 percent cut was a little bit of a victory. But the bigger message is that I think there’s a misconception that people that don’t have healthcare somehow don’t have a broader impact in the community, and they absolutely do. So the more people that we can get aligned with a doctor, get preventive exams, get immunized, the better their health is going to be. So taking healthcare coverage away from people is not; there’s no cost-benefit analysis to this. They’re going to cost the system more money, and as I said, impact businesses as well.