The Colorado Hospital Association released a report Monday on the cuts hospitals are likely to face in the upcoming year as a result of the $264 million reduction in the Hospital Provider Fee.
The fee, which is collected from hospitals and then matched by the federal government, is used to subsidize treatment of patients on Medicaid or without insurance.
The fee was cut in an effort to balance the state’s budget because the funds generated by it count toward the revenue limit placed on state government under the Taxpayer’s Bill of Rights (TABOR).
An estimated 80 percent of hospitals across the state face reductions in operating budgets as a result of the fee cut, including several in the Southwest.
Mercy Regional Medical Center is expected to see a $1,587,002 reduction, Southwest Memorial Hospital in Cortez is looking at a $2,251,398 cut and Animas Surgical Hospital would see its coffers shrink by $598,904. That means a reduction in provider fee payouts of 14 percent, 35 percent and 41 percent, respectively.
“That’s a huge amount of money for us, there’s no sugar coating it for us at this point,” said Haley Leonard, spokeswoman for Southwest Memorial Hospital.
The cuts could result in loss of services for Coloradans, but the impact also includes economic fallout for rural communities and potential job losses, Leonard said. “So many of these hospitals are the lifeblood of these communities – not just us, but across the state.”
While rural hospitals, which are generally favored by the fee distribution formula, would suffer, the largest cuts would be at hospitals in urban centers such as the Denver Health Medical Center. It would face a $52.5 million cut, more than 50 percent of what it received last year.
The release of the numbers comes on the heels of announcements last week that negotiations had stalled to change the classification of the provider fee so it would no longer count towards the revenue cap under TABOR.
An attempt to reclassify the Hospital Provider Fee also failed during the 2016 legislative session because of concerns by Republicans that it was an attempt to allow lawmakers to take more taxpayer money and grow government.
This year’s attempt, Senate Bill 267, aimed to soothe those concerns by lowering the revenue cap by $670 million, but that drew the ire of Democrats, who see it as freeing hospitals from the chopping block of balancing measures and placing other departments, such as education, there instead.
Sen. Jerry Sonneberg, R-Sterling and sponsor of SB 267, said he tried to meet Democrats halfway by limiting the revenue cap reduction to $335 million, but they were not willing to compromise and the negotiations have stalled.
With the economic and physical welfare of communities hanging in the balance, the Legislature’s ability to find a way forward could define the 2017 session as a whole.
“History will judge this Legislature with acclaim or with embarrassment, based on whether or not they finish the job of saving Colorado hospitals,” said Steven Summer, president and CEO of the Colorado Hospital Association.
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