Denver Health regains financial footing

By Katie Kerwin McCrimmon

Denver Health is back in the black after a tough year in 2013.

The return to financial health is a result of a boost in payments from the City of Denver to the safety net health system, reforms under the Affordable Care Act and aggressive job cuts last year — some of which have been restored this year.

Since the beginning of 2014, Denver Health has seen a dramatic conversion of patients who were once uninsured and now have health coverage through Medicaid, the government health insurance program for low-income people and the disabled. Last year, more than one of every four Denver Health patients was uninsured. That percentage has shrunk from 27 percent in 2013 to about 14 percent this year. At the same time, about half of Denver Health’s patients now have Medicaid, up from 36 percent last year.

Denver Health is back in the black this year, thanks in part to more patients who qualify for Medicaid. Here, an enrollment guide spoke with patients outside of Denver' Health's Westside Family Health Center. Primary care clinics like Westside have seen a spike in use.

Denver Health is back in the black this year, thanks in part to more patients who qualify for Medicaid. Here, an enrollment guide spoke with patients outside of Denver’ Health’s Westside Family Health Center. Primary care clinics like Westside have seen a spike in use.

“One of the things that we were pleasantly surprised about was how rapid the new enrollment was,” said Denver Health’s Chief Financial Officer Peg Burnette.

While more patients have health insurance, the number of patients seeking care is also on the rise. As of the end of July this year, about 141,000 patients had sought care at Denver Health and its network of clinics. That compared to about 127,000 by the same time last year. The total number of patients for 2014 will certainly rise. By year’s end in 2013, Denver Health had cared for 190,223 patients. The total number this year could exceed 200,000.

At the low point for financial stability in August of last year, Denver Health posted an operating loss of about $7.2 million.

“Typically, we wouldn’t be operating at a loss. It was a challenging year for us,” Burnette said.

But the financial turnaround has been relatively swift.

The City of Denver has increased its annual payment to Denver Health this year from $27 million to $30 million. And by year’s end in 2013, Denver Health had recovered to about break even. As of the end of July of this year, the most recent data for which financial information is available, Denver Health posted operating revenues of $20.4 million.

“We’re financially healthy, especially for a safety-net system,” Burnette said, citing health reform as a key reason for the rebound.

“You’ve seen the direct change as a shift in coverage such that people who were uninsured are now covered by Medicaid. We have a payer….versus no payer.”

The operating revenues as of late July have resulted in a 4 percent margin, with total revenues of $506.2 million.

“It’s not stellar,” Burnette said. “The average Colorado operating margin is about 10 percent. If we stayed at 4 percent, I’d be quite happy, but we’ll probably wind up around 2 or 3 percent.”

Even breaking even marks a dramatic turnaround from last year. To help trim costs, Denver health cut about 267 full-time jobs in 2013. About 33 people were laid off, but the rest of the cuts came through retirements and attrition, Burnette said.

With an increase of patients this year and the sharp cut in those who are uninsured, Denver Health has had to hire additional staff. They’ve restored about 176 full-time jobs. Fifty of them are in nursing and 70 have come in Denver Health clinics.

Denver Health last year added a new IT system that helps manage productivity. The program overlays patient counts with staffing and managers can quickly adjust if they need more or fewer workers.

“Since we didn’t have a tool like that (in the past) it was harder to accurately staff,” Burnette said.

The biggest growth has come at clinics. Patients at Denver Health seem to be doing what health policy experts want most: they’re seeking care in lower-cost primary care clinics rather than flooding the hospital ER.

“We’ve seen a 12 percent increase in visits to clinics year over year, which is about 31,000 additional visits. A big share is Medicaid,” Burnette said. “Many of our patients who were uninsured were already in our clinics. When they got Medicaid coverage, they wanted to continue coming here, which is good.

“Our ideal state is for people to get care in the primary care clinics. In the past we’ve had a waiting list and it’s been difficult to get in. We’ve been working for better access,” Burnette said.

Patients wanting to get in for primary care now should not have to wait longer than eight days. Waits for specialty care can be longer, but providers are trying to see patients within 30 days.

Visits to Denver Health’s ER are up this year just 2.6 percent over last year. That’s a smaller increase than many other hospitals where larger share of Medicaid population has translated into increases in ER visits, according to the Colorado Hospital Association. (Click here to read New sicker Medicaid patients boosting ER usage.)

And visits to Denver Health’s urgent care have dropped 14 percent.

Burnette said there are certainly challenges on the horizon related to reimbursements from Colorado’s Hospital Provider Fee and Medicare reimbursements for hospitals that see a disproportionate share of indigent patients.

“Because we’re 69 percent funded by federal, state or local (taxes), we’re always subject to cuts that could come quickly,” Burnette said.

And while the percentage of uninsured patients has declined, one of the biggest hardships is that 14 percent of Denver Health’s patients still have no coverage.

“That’s more than twice as much as any other hospital in the metro area,” Burnette said.

She said uncompensated care for the first seven months of 2014 has amounted to about $130 million. That’s down significantly from $260 million in the first seven months of 2013.

“It’s way down,” said Burnette. “But $130 million in charity care is still a big number.”



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