Nearly 70% of Colorado hospitals ended 2024 with “unsustainable” margins, according to a new financial report by the Colorado Hospital Association.

Tom Rennell, CHA’s senior vice president of financial policy and data analytics, said hospitals’ expenses are outpacing their revenue as an increasing number of Colorado patients are losing their insurance coverage, partially due to the post-pandemic Medicaid unwind. Rural hospitals have it even worse: over 80% were unable to achieve sustainable margins, a 12% increase since 2019.

“Over the last several years since the COVID times and through the high inflationary times, hospitals have been experiencing some significant econmic turbulence,” Rennell said. “We don’t have the full picture yet, but I can tell you that what we’re seeing so far in 2025 is that there has been even more of a deterioration as expenses are up higher than revenue.”

According to the report, hospital expenses went up over 52% since 2019, while revenue only increased by 39%.

Financial instability has led many health care facilities in the state to take drastic measures, such as cutting certain programs and services and conducting mass layoffs. While none of the state’s acute care facilities have had to close their doors as a result of financial hardship, three behavioral health centers — West Springs Hospital in Grand Junction, Johnstown Heights Behavioral Health in Johnstown, and West Pines Behavioral Health in Wheat Ridge all shut down last spring, leaving about 500 behavioral health professionals out of a job.

Rennell said a combination of factors, including the Medicaid unwind, an increase in migrants arriving in Colorado in early 2024, and growth in the state’s Hospital Discounted Care program have led to a 123% increase in charity care, or medical care provided free of cost, since 2021.

While the unwind led to some 500,000 Coloradans losing Medicaid coverage, both programs have still seen a significant increase in enrollment in recent years, Rennell said, due in part to Colorado’s aging population. According to CHA’s report, Medicaid and Medicare make up over 60% of hospital coverage. However, reimbursements were nearly $4 billion short last year, a $385 million increase from 2023.

“In some cases, if you don’t get paid at cost or you lose money on Medicaid or Medicare, maybe you could charge a little bit more on commercial and try to make some of that up for the private payers, but a lot of hosptials can’t do that; they aren’t able to negotiate with the private carriers,” he said.

The number of uninsured patients is only going to increase in 2026 as the federal budget bill known as HR 1 takes effect — the bill cuts more than $10 billion from Colorado hospitals over the next five years, meaning over 100,000 Coloradans will lose Medicaid coverage, Rennell said.

“People will lose coverage and will try to access care wherever they can, hospitals will step up and provide that care to anyone who walks in and needs that care, of course we wil,” Rennell said. “But in the midst of shrinking reimbursements and people losing coverage, it’s just something we haven’t seen before, and I think the entire health care system is going to have some really significiant challenges ahead of us.”

HR 1 also implements work requirements for Medicaid recipients starting in 2027, phases provider fees down from 6% to 3.5%, and freezes existing provider fee programs.

While the legislature reversed a planned provider rate increase during a special session in August, the state hasn’t been able to do much else to help the health care industry prepare for what’s to come, Rennell said, because it’s too busy dealing with all of the other difficulties it’s currently facing with its budget.

As the impact of HR 1 comes into play, the state is already having challenges, and I think longer-term that the challenges to our health care industry, and to the Medicaid program a little bit more specifically, are going to mount and get bigger and bigger,” he said.

In this era where resources are so constrained, I think we would say, let’s look at some of the policies that have been put in place and some of the regulations that have been put in place and see if those don’t need to be in place anymore, whether they’re more administrative or they’re not leading to patient care improvements.”