Rural hospitals may be hurt

Facilities could lose millions of dollars as part of deal that trims payments for uncompensated care

From his modest office at Lincoln Community Hospital, 90 minutes east of Denver, Kevin Stansbury views the state budget from a different lens.

At the Capitol, the debate is focused on balancing $26.8 billion. In Hugo, population 750, the dollar signs are people. “This community is very invested in this hospital,” said Stansbury, the hospital’s CEO. “And it all starts with family.”

Dr. Mark Olson, the chief of staff, has delivered 800 babies at the Eastern Plains hospital. It’s the only one on the Interstate 70 corridor between the Denver metro area and Burlington, drawing patients from more than an hour away. And it has employed multiple generations: mom, then daughter, then granddaughter.

Now Lincoln Community faces the prospect of cuts to services, layoffs or worse. It is one of a dozen or so rural hospitals poised to lose millions as part of a deal at the Capitol to balance the budget by trimming hospital payments for uncompensated care.

If lawmakers want to talk dollars and cents, hospital officials in Hugo know the numbers.

In 2015, the hospital finished with $150,000 at the end of the year. The books are still being finalized for 2016, but officials hope to break even. And next year doesn’t look good.

A new analysis from the Colorado Hospital Association estimates that Lincoln Community would lose $283,000 under the state budget plan for the year starting July 1. A separate state analysis pegs it closer to a $300,000 reduction from the prior year.

“It’s always been a struggle,” Olson said. “We live on our margins, and our margin is always thin.”

Three of every four Colorado hospitals are looking at cuts in payments from the provider fee program under the current budget plan, according to the association’s projections set for release Monday, with the average hit a 50 percent reduction from a year ago.

An effort to revamp the program to protect hospitals is stuck in the political mud after negotiations between Democrats and Republicans broke down last week. But the new analysis is expected to add urgency to the debate before the session ends May 10.

The latest projections show the largest cuts in dollar terms are felt along the Front Range at large hospitals that treat the most patients on Medicaid, the government-funded health coverage for lower-income residents.

Denver Health will see a $53 million loss and Memorial Hospital in Colorado Springs an $18 million hit, the hospital association estimates. Boulder Community Hospital received $16,000 from the program a year ago, but now will pay an estimated $2 million more in fees and receive nothing in return.

“If you don’t change anything that you are doing, meaning cut back programs or adjust, it’s essentially a bottom-line cut,” said Jamie Smith, the CEO at Saint Joseph Hospital in Denver, which stands to see a $7 million reduction in payments, a 30 percent decrease.

Hospital officials suggest that an alternative — passing the costs along to customers — would be difficult to do, as people with private insurance would bear the brunt.

The greatest impact is expected in rural Colorado, where less than a million dollars can mean life or death for a hospital.

The association identified at least 10 hospitals, most of them in remote parts of the state, at risk for significant reductions in services, staff or facility upgrades under the proposed budget. And several could face potential closure in the next few years if the payment cuts continue.

“There is not a symbol out there that is more recognized to the public than that blue H,” said Steven Summer, the state’s hospital association president. “It’s hard for me to imagine what it’s going to be like in those communities when those most in need of aid no longer have those signs out there.”

Political pressure

The dilemma for hospitals is not new.

Colorado lawmakers began discussing how to change the system to avoid cuts in the 2015 session. In 2016, a bill to overhaul the program failed and hospitals took a $70 million cut in payments to help balance the budget. And this year the reduction is $264 million — which balloons to a $528 million impact when the program’s federal matching dollars are added to the equation.

The cut is a reluctant one for legislative budget writers. But the fee is pushing the state’s revenues over the Taxpayer’s Bill of Rights cap, and without reductions, it would prompt a taxpayer refund and spending cuts in other areas, such as education and transportation.

Gov. John Hickenlooper and Democratic lawmakers want to reclassify the program to exempt it from TABOR restrictions. But Republicans won’t agree to the move unless the state’s spending cap is simultaneously reduced — which Democrats are refusing to do because it would allow less spending on priority areas in the future.

The association’s new numbers are designed to personalize the impact for lawmakers in each district and amplify the political pressure for change. “For us, this is just such a critical issue that we don’t even consider failure to be an option,” Summer said.

To add confusion to the process, a separate analysis compiled by state health policy and budget officials suggests the cuts to some hospitals are not as dire.

Hope for compromise

In rural communities, both projections are troubling.

To lobby state lawmakers, small-town hospitals have banded together around something that Konnie Martin, the CEO of San Luis Valley Health in Alamosa, said during one of their meetings: “Where you live shouldn’t determine if you live.”

Colorado House Speaker Crisanta Duran, a Denver Democrat, traveled this month to Hugo and hospital workers showered her in success stories.

There was the young woman rushed to care for a pulmonary embolism and revived three times at the hospital before being flown to Denver. There was the crop-duster pilot who crashed and survived because of the hospital’s emergency department. There was the cancer patient who lived out her final days in a hospice center in her home community surrounded by her family, rather than a far-away plan.

“These people are not just passing through,” said Cerina Cunningham, the director of the hospital’s attached long-term care center. “They become part of our family.”

Down the hall, patient Carleen Theel, a retired school teacher, said she was grateful she could stay in a hospital near to her plains home.

“It’s been a godsend,” she said.

Asked what she would do if the hospital had to close or cut back services, Theel paused.

“I honestly don’t know,” she answered.