Colorado hospital profits plunged 70% in 2022, but sector still made money, new report says

Hospital profits in Colorado dropped by 70% in 2022 as labor costs and uncompensated care rose, but larger facilities still made money on patient care.

Hospitals earned a combined $334 million on patient care in 2022, according to a report the Colorado Department of Health Care Policy and Financing released Monday. Facilities with 25 or fewer beds were in the red for at least the fourth straight year, losing about $115 million on providing care.

Profits were down significantly from 2021, when hospitals earned $1.2 billion on patient care.

Kim Bimestefer, executive director of the Department of Health Care Policy and Financing, said 2022 was an aberration because the cost of labor increased dramatically at the same time the bond and stock markets took a beating. Income from investments also dropped, though the hospital sector as a whole still came out ahead.

“2022 is a unique chapter, and 2023 should see pretty significant rebounds,” she said.

Counting investments, hospitals earned $336 million in profit in 2022 — a decrease from $3.4 billion in 2021, but still a net gain, Bimestefer said. Hopefully, hospitals won’t seek to pass on continued higher labor costs to patients and their insurance providers, she said.

Complete data from 2023 isn’t yet available, and the hospital industry and the Department of Health Care Policy and Financing have taken directly opposing views on whether 2022 was a blip for an otherwise profitable sector or part of a pattern of financial struggle.

The majority of Colorado hospital systems reported they had negative profit margins in 2022 as pandemic aid ended and costs increased. By fall 2023, however, most hospital systems were making at least modest profits, except for CommonSpirit Health, according to the report. Data about how independent hospitals fared last year isn’t yet available.

The Colorado Hospital Association reported hospitals’ profits on patient care were about 58% lower in the third quarter of 2023 than they were in 2019. That was comparable to the same time in 2022, when they were about 55% below pre-pandemic levels.

Three hospitals faced cash crunches in early 2023: the urban safety net hospital Denver Health, and small rural facilities St. Vincent Health in Leadville and Delta Health on the Western Slope. In January, Denver Health reported it came close to breaking even in the previous year with one-time money from the state, Kaiser Permanente Colorado and other donors, but would be in a bind again this year because of the cost of uncompensated care to migrants and other uninsured people.

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