Most Colorado hospital systems had a profitable start to 2024, a financial rebound following a difficult year when expenses grew faster than their incomes.
Only two of the six health systems that operate in Colorado reported a loss in the first three months of 2024: Denver Health, the region’s financially strained safety-net hospital, and CommonSpirit Health, which owns the Catholic hospitals in the former Centura Health partnership, including St. Anthony Hospital in Lakewood.
The four profitable systems reported financial improvements over the same period in 2023, as did CommonSpirit. Denver Health said it lost a similar amount in the first months of 2023 and 2024.
Last year, hospital incomes dropped by a combined $1.2 billion across the state, the Colorado Hospital Association estimated. The association also said about 70% of all hospitals in Colorado had profit margins below 4% — the level it considers sustainable — as of September.
The Colorado hospital sector as a whole saw improvement in the first quarter, earning an average of 5% profit on patient care and related operations, compared to 3% in early 2023, said Tom Rennell, senior vice president of financial policy and data analytics at the hospital association.
The stock market’s strong start to the year also helped raise investment income, and the federal government had to make a one-time payment to hospitals it previously underpaid, he said.
Overall, expenses rose 5% and revenues rose 7%, Rennell said. That was a switch from recent years, when the cost of labor and supplies went up faster than revenue. For unknown reasons, more people needed inpatient care in the first quarter than would be typical, which temporarily increased hospitals’ incomes, he said.
“One quarter,” he noted. “I don’t want to say this is the new norm.”
Here’s a look at the financial state of each of the six health systems:
AdventHealth
The system, which owns the Adventist hospitals that used to be part of Centura Health, posted a $341.4 million profit on patient care and related operations in the first quarter, or about a 7.5% margin.
AdventHealth also earned about $142.3 million from investments in the first quarter.
The system made a profit in the first three months of 2023, though it was smaller. During that period, it earned about $171.9 million on operations, for a 4.3% margin. Investment gains were down this year, however; the system had made about $228.4 million on them in the first quarter of 2023.
AdventHealth’s Colorado hospitals fell short of their financial goals for the first quarter because of one-time expenses related to the Centura breakup in early 2023, spokeswoman Chloe Dean said. She didn’t specify how much they made or lost.
“AdventHealth has a strong financial foundation, and we will continue to invest in patient care, quality and safety, technology and the well-being of our team members so that we will always be able to provide exceptional, whole-person care,” she said in a statement.
The system as a whole earned a profit of about $1 billion in 2023, for a margin of about 6.1%. It also posted about $528.7 million in gains from investments.
CommonSpirit Health
CommonSpirit spent about $365 million more than it made systemwide in the first quarter, for a negative 3.9% margin on patient care and related operations.
Still, it was an improvement from the first quarter of 2023, when the system lost about $619 million, for a negative 5.6% margin.
CommonSpirit moved into the black when it added investment income, which brought it to a $244 million profit in the first quarter. During the same period last year, it still lost $207 million, even with investments added in.
The system recently resolved a dispute with Anthem BlueCross BlueShield of Colorado, though neither disclosed the terms. CommonSpirit had gone out-of-network for about two weeks after the two sides couldn’t agree on rates. When a hospital isn’t in an insurer’s network, patients are responsible for a larger share of their medical bills.
CommonSpirit Chief Financial Officer Dan Morissette said in a news release that the company was pleased with the financial improvement so far this year.
“Our teams are squarely focused on maximizing our opportunities for growth, while simultaneously minimizing our costs. By making these strategic adjustments, we are ensuring that our mission to provide care to all in our communities, especially the underserved, will continue today, tomorrow and for decades to come,” he said.
CommonSpirit posts financial data by fiscal years, which end in June. In the year that ended in June 2023, it lost about $1.4 billion on patient care and related operations, for a negative 4.1% margin. Investment gains shrunk the total loss to $314 million.
Denver Health
Denver Health hasn’t released full first quarter numbers, but associate chief financial officer Ansar Hassan reported the health system lost about $12 million between January and April, counting income and expenses related to patient care and core operations, and interest it had to pay on old bonds issued for construction. That number doesn’t count stock-market gains.
CEO Donna Lynne told a Denver City Council committee Wednesday that Denver Health was under a hiring freeze and had stopped paying for expenses like travel. April was better than the previous three months, so the “belt-tightening” seems to be helping, and the system could break even this year, Hassan said.
“We’re hoping we’re on the uptick,” he said.
Denver Health made about $17 million in 2023, which was just over a 1% margin on its $1.4 billion budget, Hassan said. (Previous reports showed smaller gains, or even losses, because they included a large debt to Denver’s employee pension fund that the system didn’t actually have to pay all at once, he said.)
That said, the picture would have been significantly gloomier without one-time donations of $10 million from Kaiser Permanente Colorado and $5 million from the state, Hassan said. Denver Health received an additional $5 million from the state this year as well.
Colorado’s only urban safety-net hospital has struggled financially since 2021, as uncompensated care costs rose faster than revenues.
“The reason we made a little money is we got a lot of one-time donations,” Hassan said.
HealthOne
HCA Healthcare, which owns the nine HealthOne hospitals in Colorado, reported $1.6 billion in profit in the first quarter, compared to $1.4 billion for the same period in 2023. The company also owns 177 hospitals in other states.
Unlike the other health systems in Colorado, HCA is a for-profit company, so it pays taxes and doesn’t submit the same filings that nonprofits do. A summary of the information reported to shareholders said revenues were up, but didn’t include the profit margin or information about expenses. Executives felt confident enough in the results to pay a dividend of 66 cents per share to people who own HCA stock, though.
HealthOne spokeswoman Stephanie Sullivan couldn’t share specific numbers from the Colorado hospitals, but said they generally weren’t as financially successful as the company overall in the past year.
Colorado has been “aggressive” in recouping accidental overpayments and in removing recipients from Medicaid at the end of the COVID-19 public health emergency, which has led to an increase in uninsured patients, she said.
“The health care industry across Colorado is experiencing difficult financial conditions,” she said.
HealthOne paid about $480 million in state, local and federal taxes in 2023, and spent about $250 million on construction projects and equipment, Sullivan said.
HCA posted a $5.2 billion profit in 2023, down from $5.6 billion in 2022. It also paid a 66-cent dividend at the end of the year.
Intermountain Health
Utah-based Intermountain Health, which merged with the former SCL Health, reported a $134 million profit on operations in the first quarter, for about a 3.2% margin.
Both were slightly higher than in the first quarter of 2023, when Intermountain made about $104 million on operations, for a 2.6% margin.
Investment gains also increased, from $445 million in the first three months of 2023 to $623 million in the first quarter of this year.
Intermountain spokeswoman Sara Quale said the system couldn’t discuss the finances of individual hospitals or state-level groupings.
Intermountain made about $137 million on patient care and related operations in 2023, and about $1.6 billion after including investment income, according to Becker’s Hospital Review. Operating income was up slightly from 2022, when the system earned about $121 million on care, but total profits were down from $2.6 billion.
UCHealth
UCHealth had a $200.7 million profit on operations in the first quarter of 2024, for a 9.6% profit margin. It also earned about $320.7 million on investments.
Both were an improvement from the same period in 2023, when the system made about $61.8 million on operations, for about a 3.6% margin, and earned about $235.1 million from investments.
Spokesman Dan Weaver said some UCHealth hospitals received one-time payments from the federal Centers for Medicare and Medicaid Services, to make up for times they were underpaid. That temporarily raised the margin in the first quarter of this year, and the average over the last three quarters is closer to 6.4%. While the rising cost of labor and supplies has leveled off somewhat, demand for care to the uninsured is still growing, he said.
“This temporary increase shouldn’t be considered an indication that we’re past the inflation and expense challenges we’ve been facing over the past few years,” he said in a statement.
For the fiscal year that ended in June 2023, UCHealth reported $331.7 million in profits on patient care and related operations, or about a 4.8% margin. Operating profits had gone up from fiscal year 2022, when the system made about $323.8 million, but the margin was down slightly, from 5.2%.
Investments added about $507.4 million in income in fiscal year 2023. The system had lost about $641.3 million on investments in fiscal year 2022, when the stock market underperformed.
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