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  • David Heitz

    Taxpayer support for safety net hospitals: Denver Health ballot initiative

    2024-09-14
    https://img.particlenews.com/image.php?url=1qgTBs_0vWMLqRl00
    Photo byDenver Health

    As the Mile-High City’s safety net hospital, Denver Health never turns anyone away because of their inability to pay. That can get expensive for a health care provider.

    Denver Health expects to provide $124 million in uncompensated care in 2025, according to Denver Health CEO Donna Lynne. In 2023, the loss was $103 million, she said. The city in the past few years has made up about $30 million of that annually in payments to Denver Health, she explained.

    Denver Health operated at a $32 million loss in 2022 on a $1.4 billion budget, according to figures presented during the City Council’s 2024 budget hearings. The hospital's cash on hand would last 90 days, up from 75 days last year, according to the presentation.

    Voters will be asked in November whether to approve a sales tax increase to benefit Denver Health. The idea for the sales tax came from a community panel of stakeholders. It is not something in place in cities elsewhere.

    “Our research did not find any hospital systems that specially called out being funded by sales taxes,” Denver Health reported in a statement. “Texas is a state where there are dedicated ad valorem taxes for some of the hospitals. Denver Health chose sales taxes based on input from our task force and polling results.”

    The City Council advanced a plan to increase the sales and use tax by 0.34%, if approved by voters. The tax would raise about $70 million annually and help bridge the gap created by uncompensated care, according to bill sponsors Jamie Torres and Serena Gonzales-Guttierez.

    The city sales and use tax is currently 4.81%. The increase would raise the amount paid in tax by 3.4% on a $10 purchase, Torres said.

    Public funding comes in different ways

    The statement explains that safety net hospitals, for which there is no clear definition, receive public funding in a myriad of ways. “We also did some independent research to see if we could find more details for other specific safety nets across the country to better understand their funding relationships with the city, but every relationship is different, and most cities or counties have a different distribution mechanism for funding the hospitals. It is very difficult to get apples to apples comparisons.”

    Some ‘safety nets’ are still part of a city budget, like any city agency, according to the statement. “Denver Health was considered a city agency until 1996. Some have formed their own hospital districts, so they can have taxing authority. Others are 501c3 entities that get an allocation from the cities or counties they serve. And then, some might be considered the regional safety net, but they also have a larger proportion of commercial payers.”

    A ‘true’ safety net hospital

    It is important to understand that Denver Health is a “true” safety net hospital, the statement emphasized. “There is a rule called EMTALA (Emergency Medical Treatment and Labor Act) which protects patients' rights to access emergency services, regardless of their ability to pay,” according to the statement. “But this is only for emergency services. Once a person is at least temporarily stabilized, they can be discharged, even if they are not ‘cured,’ they just have to be stable.

    “Hospitals that are true safety nets, like Denver Health hold true to their safety net mission,” the statement continues. “Like all hospitals we have to treat anyone that comes through the emergency room, but if they are from Denver, we are committed to also caring for and ideally healing them with the services we provide across our ten community health clinics, specialty care, pediatric care, or behavioral health care.”

    Expenses skyrocket, overtime eliminated

    Denver Health has seen expenses rise 550% since 1996, Lynne said. About half of its patients, or 49%, are on Medicaid, Lynne said, and another 9% are uninsured.

    “There is not a world I would live in that would see Denver Health not survive,” council member Shontel Lewis said at a meeting in June in supporting the tax.

    Lynne said the hospital already has eliminated overtime and reduced employee benefits. Capital projects also have been deferred, she said, and travel budgets have been slashed.

    Collecting bad debt

    Some wonder if hospitals should just do a better job of collecting bad debt. But the American Hospital Association says, “Hospitals do make a ‘reasonable’ effort to collect unpaid deductibles and coinsurance,” according to the association’s website. “Doing so is required by law in order for Medicare to reimburse hospitals for a portion of this bad debt. However, the simple fact is that most Medicare beneficiaries have very modest incomes: In 2006, almost two-thirds of Medicare beneficiaries had incomes of less than $30,000. Hospitals are simply not willing to go beyond making a ‘reasonable’ effort to collect payments from these low-income beneficiaries. They are unwilling to aggressively pursue payment of these debts simply because the Medicare program is unwilling to reimburse for its unpaid deductibles and coinsurance.”

    A 2023 study published in Journal of the American Medical Association concluded that hospitals that rely heavily on Medicare and Medicaid compensation have little profit margin. “In this cross-sectional study of 4219 hospitals, higher levels of uncompensated care, low-compensation care, and area socioeconomic disadvantage were associated with lower operating margin, while providing more essential services or being a critical access hospital were not.”

    An ‘A’ for fiscal responsibility

    Denver Health, meanwhile, has received accolades for its fiscal responsibility despite challenges with uncompensated care. According to the statement, Ernst and Young and America’s Essential Hospitals concluded:

    · “Denver Health is an efficient system. Our adjusted cost per discharge was the lowest of all the peers.

    · “Despite our financial challenges, Denver Health is outperforming most of its peers in terms of overall quality, patient experience, and readmissions.

    · “Other peers received support for close to 11% of their budget from their municipalities. Denver Health received 2.4% of their budget from the City and County of Denver.

    · “Over 60% (of 21) of the identified ‘safety net’ providers are owned by the county, which means the county has the responsibility of covering all costs.

    · “As the sole safety net health system in the region, Denver Health has a relatively large burden compared to many other safety net providers in other states across the country.”

    Local support for safety net hospitals

    Across America, communities are coming to the rescue of their safety net hospitals, even if they are not instituting a sales tax. In Jacksonville, Fla., according to the Times Union, “Mayor Donna Deegan is proposing $56 million as a subsidy for University of Florida Health Jacksonville's daily operating expenses, up from $40 million this year and double what the city's contribution was just five years ago. Her budget proposal adds another $38 million next year for building improvements.”

    Some cities, counties and states have used property tax levies to benefit hospitals. "In 2003, the Arizona state legislature referred a measure to the voters of Maricopa county to form a health care district to levy a property tax for a period of 20 years," according to the statement from Denver Health. "This tax is revenue used for general operating funds for Valleywise (in Phoenix). In 2020, the health care district referred a measure to reauthorize the property tax to fund general operating expenses for Valleywise for another 20 years."

    Some states have called upon non-profit hospitals receiving tax breaks to provide more local charity, according to Life Sciences Medical News. “For many hospitals — after dozens of closures over the past 20 years — "just keeping your doors open is a clear community benefit,” Melinda Reid Hatton, general counsel for the American Hospital Association, told the website. "You can't focus entirely on charity care" as a measure of community benefit, she said. Hospitals deliver nine times the community benefit for every dollar of federal tax avoided, Hatton added.


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    Comments / 5
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    Rebecca
    30d ago
    Lol ..."just increase or create a tax for those who can pay still"........ Lol Democrats just will never learn.
    JollyGreenGiant
    30d ago
    VOTE NO. THIS WILL ONLY BENEFIT THE ILLEGALS WITH YOUR TAX DOLLARS
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