The Financial Health of Colorado Hospitals Trends 2011-2015 Table of Contents
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The Financial Health of Colorado Hospitals Trends 2011-2015 Table of Contents Introduction ............................................................................................................................................................................1 Background ............................................................................................................................................................................2 The Colorado Hospital Association’s Commitment to Transparency ...............................................................................2 Health Care Costs, Hospitals and Transparency ...............................................................................................................3 How Does Colorado Compare to the Rest of the U.S.? ....................................................................................................5 Financial Health of Colorado Hospitals...................................................................................................................................6 Hospitals are Key to Colorado’s Economy ........................................................................................................................6 Factors Influencing Hospital Financial Health ..................................................................................................................7 Pulling Back the Veil: A Closer Look at Hospital Revenues and Expenses ......................................................................10 Conclusion ............................................................................................................................................................................17 How to Read the Hospital Report .........................................................................................................................................18 The Medicare Cost Report ....................................................................................................................................................19 Hospital Data Reports ...........................................................................................................................................................20 Appendix 1 – 2017 CHA Transparency Resolution .............................................................................................................. A-1 Appendix 2 – 2014 CHA Transparency Resolution .............................................................................................................. A-2 Appendix 3 – Report Methodology .................................................................................................................................... A-3 Introduction Oct. 6, 2017 Dear Colorado Health Care Stakeholders, Since Colorado’s humble beginnings as a frontier mining outpost and land of opportunity for westward migrants, hospitals have been cornerstone institutions in communities across the region. And like Colorado, hospitals – and now often entire health systems – have evolved with the times to serve their patients, ever-changing in response to new populations, shifting demographics, new economic and political conditions and new market forces. In recent years, the public and policymakers have sought increased information from various segments of the health care sector – physicians and hospitals, insurance companies and pharmaceutical firms, just to name a few. Demands for increased transparency about health care quality and pricing are understandable, well-justified and reasonable, sought with a goal of better understanding the true costs and cost-drivers that now comprise 18 percent of the nation’s Gross Domestic Product (GDP) and nearly 10 percent of total household expenses. Colorado hospitals are often the focus of transparency discussions due to high state and federal government spending on hospital care and high costs of inpatient and emergency services. Colorado hospitals have been a consistent and strong partner in advancing Colorado’s health care transparency efforts – from helping to pass legislation to make hospital prices more readily available to patients to supporting the state’s All Payer Claims Database. But it’s also important to acknowledge that the health care system remains far from perfect in being able to provide all the information that patients, the public and policymakers want and need to be better and more informed health care consumers. The Colorado Hospital Association (CHA) involvement in transparency initiatives is guided by two critically important principles: First, transparency efforts must support Colorado’s culture of coverage, reflect a mutual buy-in of consumers, providers and payers and use existing public data sources whenever possible. Second, information provided must be meaningful, accurate and enable hospitals to provide fair, timely and accurate information to consumers about pricing and health care costs in order to promote informed consumer decision-making. While the Association remains supportive of efforts to improve transparency that meet these high standards, transparency is not the end-game, but rather a means to an end. The goal of transparency is ultimately to improve affordability: giving consumers better information enables them to make smarter decisions about the cost and quality of their care. This inaugural report on the financial health of Colorado hospitals furthers the Association’s commitment to be a leader in this field, among our state colleagues in health care, as well as nationally. By providing consistent and comparable information across hospitals – using only public data sources in the process – the public and policymakers will be able to better understand the importance of the hospital or hospitals in their communities: both as critical sources of care when people need it most and as major employers and economic drivers across Colorado. Like any initiative to improve transparency, this report represents a step in the right direction but will not be the “be all, end all” of our commitment. We believe future iterations will provide an opportunity to better integrate price and quality information, as well as be available in an interactive digital platform. In addition, we want to challenge other segments of Colorado’s health care economy to follow Colorado hospitals’ lead in providing meaningful ways to improve transparency in their lines of business. By working together, the health care industry, patients, consumer advocates and policymakers can move towards creating a more sustainable future health care spending framework. We welcome your input and your continued partnership to improve access to affordable, quality health care across Colorado. Sincerely, Steven J. Summer PRESIDENT AND CEO Page 1 Background Health care continues to be at the center of both national and state debates as policymakers grapple with how to improve value and make it affordable. While Colorado is nationally recognized for having implemented innovative and progressive approaches to health care transparency and ranks well for health care coverage and affordability, external pressure continues to surge in support of having even more transparency of health care prices and affordability for health care consumers. The changing health insurance landscape has left consumers responsible for understanding their health, an increasingly complex system and a greater share of their health care costs, now reaching nearly 10 percent of household expenses.1 These costs weigh heavily on many Coloradans, and individuals often feel they cannot access the information they need to make informed decisions about their individual care. At the same time, policymakers are seeking improved transparency to better understand the value of public investments in health care and how best to help their constituents navigate a complex system. Enhanced transparency is an important tool to help improve health care affordability, but transparency is not sufficient on its own. The complexities of the health care system are multifaceted, and a much broader system-wide effort must take place in order to successfully address the rising costs of health care in the long-run. THE COLORADO HOSPITAL ASSOCIATION’S insurers. Similarly, the Hospital Report Card is a joint project by CHA and the Colorado Department of Public COMMITMENT TO TRANSPARENCY 5 CHA has a longstanding commitment to health care price Health and Environment. It focuses on quality metrics transparency and a track record that proves a continued and was designed to allow stakeholders to easily compare commitment to increased consumer education. Under the health care services of hospitals throughout Colorado. leadership of the Association’s Board of Trustees, CHA has The Association has also spearheaded consumer education adopted two formal resolutions encouraging CHA members campaigns, including the “Where for Care” campaign, to adopt public pricing strategies to assist consumers in developed in response to public confusion about freestanding making informed decisions about the cost of their care emergency departments (FSEDs).6 “Where for Care” informs and to publicly post prices that lead to common consumer consumers about the most appropriate facility for various confusion and media attention (see Appendix 1 and 2). medical conditions and features additional online content The Association supported the creation of the Center to help consumers better understand insurance and for Improving Value in Health