Coloradans are getting crushed between hospital profits, insurance company profits and rising uncompensated care. These three insatiable drains on our health care system have broken medicine and made the cost of care for middle-class Americans who aren’t on Medicaid or Medicare unbearable.
Not all of the responsibility for this failed system falls on hospitals, but Colorado’s non-profit health care providers are uniquely positioned to be able to help during this difficult time if they embrace the charitable nature of their business.
According to The Denver Post’s award-winning health reporter Meg Wingerter, most Colorado hospitals saw a profit in 2024. But the most profitable hospitals tried to argue that their profits were untouchable because the money came not from patient care but from returns on investments — we assume that means the trusts and foundations that help support the hospital saw impressive investment gains that were reinvested into the market rather than realized and withdrawn.
UCHealth — a network of non-profit hospitals and clinics across the state affiliated with the University of Colorado — reported a $1.2 billion profit. HCA Health One, the state’s only for-profit hospital network, reported $616.8 million in profit, and CommonSpirit Health reported $22.2 million.
A spokesman for UCHealth said most of the profit came from returns on investments in the stock market, rather than from the 4% return on investment it makes from patient care and hospital operations. However, given that UCHealth is a tax-exempt system required to spend money on charitable activities, we do not think it’s unreasonable for the system to be expected to return some of that profit to its patients in the form of out-of-pocket discounts before deductibles are met.
Most hospitals already write off a huge amount of uncompensated care, and that charitable gift to the poor who are truly unable to pay and have no insurance counts toward their required charitable activities.
But we also know that hospitals like UCHealth are not spending as much of their revenue proportionally on charity care as other organizations. UCHealth does deserve credit for serving the most number of Medicaid patients and having the highest uncompensated care. But when compared to the system’s size of operations, the distinction for taking on “the largest proportion of charity care costs within the state” rests with Denver Health. Colorado’s annual report on charitable care notes that Denver Health “has the largest value for charity care costs with $88.1 million. This is three-fold more than the next largest figure of UC Health University of Colorado Hospital’s of $24 million.”
Meanwhile, Allan Baumgarten, a researcher who compiles data annually about health care in a handful of states, reported that HMOs in Colorado reported a combined net profit of $89.1 million. Yes, that seems paltry compared to the hospital profits, but remember that health insurance doesn’t actually produce anything; it is a middleman, pass-through business operation designed solely to reduce the risk of those it insures.
Ironically, HMOs are covering less and less risk. The high deductible plan ensures that unless an illness or injury requires thousands of dollars in care during a single calendar year, the insurer won’t have to cover any of the costs. And, the deductible resets Jan. 1 every year, meaning that patients can nearly meet their deductible — of say $5,000 — only to have it reset in the new year. A patient could spend $10,000 before their insurance company picks up a dime of the cost for their care.
Meanwhile, non-profit organizations are clearly misunderstanding their mission.
Obviously, we want UCHealth’s investments to grow, and not all of the gains should be realized in a single year. The hospital system is also aggressively growing and purchasing other clinics and hospitals around the state. Given the quality of care we know UCHealth provides, that is great news.
But hospitals need to be much more transparent about how much of their profits are being poured into growth and increased profitability, and how much is going to actual charitable work, like reductions in costs for low-income and middle-class patients who face crippling deductibles.
Yes, USHealth is a teaching hospital, and we know that much of its charitable work goes toward preparing the next generation of doctors and nurses. There is a shortage of health care providers in America, so we are not suggesting this work stop.
But a balance is needed when the hospital system reports $1.2 billion in profit in a single year.
Greater transparency from the state-affiliated system, and from all the nonprofit hospitals enjoying tax-exempt status, would go a long way to alleviate the bad taste patients have in their mouth when their care is completed and the bill arrives.
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