Colorado hospitals doubled overhead spending over 7 years

Average capital and administrative costs of a hospital visit in Colorado increased at nearly double the rate of the national average from 2009-16, The Denver Post reported, citing preliminary information collected for the Colorado Department of Health Care Policy and Financing.

The average overhead costs of a hospital visit in Colorado increased 64.6 percent, from $2,408 to $3,964, during that period. That's compared to the national average, which increased 32.8 percent, from $2,244 to $2,980.

While the overhead costs of a Colorado hospital visit were significantly above the national average, so were Colorado hospital profit margins, according to the report. Preliminary data show the median Colorado hospital profit margin was 10 percent in 2016, which includes investment revenue. The median profit margin nationally was 5.9 percent in 2016.

"The state's [profit margins] are highly reflective of a good economy in Colorado and a good investment market, but all those things can change, and those percentages can drop down to even negative levels for a long period of time," Chris Tholen, executive vice president of the Colorado Hospital Association, told The Denver Post.

Amid Colorado hospital overhead costs and revenue, privately insured patients are increasingly on the hook, The Denver Post reported, citing the preliminary data. Colorado hospital revenues per patient, accounting for outpatient volume, increased from $36,551 in 2009 to $64,225 in 2016. This 76 percent increase is above the 53 percent increase in revenues per patient nationally during that period.

"That cost shift is occurring and putting pressure on hospitals to drive prices higher for private insurance, which then gets passed on to employees and their employers," Kim Bimestefer, executive director of the department of Health Care Policy and Financing, which oversees Colorado's Medicaid program, told The Denver Post. "We are trying to align with our employers to understand their pain and drive the price down for the good of the entirety of the state."

But the Colorado Hospital Association has taken issue with the preliminary Health Care Policy and Financing data, noting other studies that found the state's health spending per privately insured beneficiary is near or at the national median, according to the report.

The association also said increased prices for privately insured patients is partially because of Medicaid expansion, which Colorado implemented in 2013.

The state's consultants have agreed to refine the preliminary data more, but consultants and Colorado officials are confident the final results will be similar, according to the report.

Read the full story here.


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