Dive Brief:
- Nonprofit hospital and health plan operator Kaiser Permanente announced Tuesday that it was committing $10 million to safety-net hospital and regional operator Denver Health, as the facility struggles with “unprecedented financial challenges” including increased expenses and a rise in uninsured patients.
- Denver Health provides care for around 30% of the city’s population — including the largest percentage of uninsured patients. The system has struggled with a rise in costs and a surge in sicker patients, with expenses totaling $1.3 billion for Denver Health in fiscal year 2022.
- The announcement comes as both nonprofit and for-profit hospitals across the country struggle with negative margins and pent-up financial challenges stemming from the COVID-19 pandemic, including persistent heightened contract labor costs, inflationary pressures and unfavorable payer mixes.
Dive Insight:
The funds from Kaiser include a $5 million grant to address immediate needs, in addition to a $5 million matching fund intended to incentivize local organizations to donate to the hospital.
Although there is no deadline to raising money, Denver Health CEO Donna Lynne told The Denver Post that she hoped the facility could collect the matching funds this year. The system had to recently stop taking new uninsured non-emergency patients from outside of the city, the report noted.
Denver Health’s operating loss totaled $23 million during its 2022 fiscal year, compared to a $9 million loss in the prior year period. In addition to a year-over-year increase in each of its itemized expense categories, the system reported providing $120 million in uncompensated care last year, double the amount provided in 2020.
Losses prompted the state legislature to fast-track $5 million to the facility in February.
“It is imperative for us to come together now to support Denver Health,” said said Mike Ramseier, president of Kaiser Permanente in Colorado, in a statement.
Kaiser’s donation announcement to the nonprofit comes a month after it announced it would acquire Geisinger Health and form a new nonprofit, called Risant Health, to buy and operate other nonprofit systems. Kaiser announced that it planned to spend $5 billion to build Risant over the next five years.
Hospitals have struggled to balance continued rising expenses with growing patient volumes this year. Systems including the Mayo Clinic, Cleveland Clinic, Providence, CommonSpirit and Ascension announced increased expenses during recent earnings announcements.
Last year, about half of all U.S. hospitals finished the year with negative margins, according to consultancy firm Kaufman Hall.