More than half of the sales tax that voters approved in November to fund Denver Health will go toward emergency care, with smaller amounts funding a new clinic in southeast Denver and beds for mental health treatment.
Denver voters agreed to increase the sales tax by 0.34 percentage points, which works out to 34 cents on a $100 purchase, to help the city’s struggling safety-net hospital.
Ballot question 2Q allowed Denver Health to use the proceeds for emergency and trauma care; primary care; mental health care; addiction treatment and recovery services; and pediatric care. All are services that typically don’t turn a profit for health systems.
Assuming the economy doesn’t fall into a recession, Denver Health expects to receive just over $5 million per month from the tax, which took effect in January.
The $65 million from the sales tax this year and the city’s annual $30.7 million contribution will help to offset some of the roughly $145 million in uncompensated care that Denver Health expects to provide in 2025, CEO Donna Lynne told a Denver City Council committee on Wednesday morning.
But it won’t be enough to make up for deep cuts to Medicaid if Congress follows through this fall, because a disproportionate share of the system’s patients rely on the program, she said.
“2Q lets us breathe for this eight-month period” before possible cuts, she told the committee.
House Republicans passed a budget calling for $880 billion in cuts over the next decade. Medicaid is the only program large enough for that level of cuts that Republicans haven’t promised to protect, though The Associated Press reported Wednesday that enthusiasm for deep cuts has waned as lawmakers confront the possibility that their constituents could lose their health insurance.
Denver Health has struggled financially since 2021 as the cost of uncompensated care rose faster than other revenues could offset it. The health system lost about $35 million in 2022, then turned a $17 million profit in 2023 – still a narrow margin for an organization with a budget that tops $1 billion.
One-time funds from the state and Kaiser Permanente helped keep Denver Health afloat, but hospital leaders pitched the sales tax as a more permanent, if incomplete, solution.
The largest share of this year’s sales tax revenue, estimated at $36.2 million, will go toward offsetting the cost of emergency care, including care to uninsured people and the roughly one-third of ambulance runs that Denver Health can’t collect payment for, Lynne said.
“Our goal… was to maintain our funding in what we call priority areas,” she said.
About $16.1 million will go toward primary care, including a new clinic planned for southeast Denver and services at existing outpatient locations, Lynne said.
Pediatric services will receive a smaller share, with about $2.5 million earmarked for a new school-based clinic and other services to children. The pediatric share is smaller because most care that children receive is relatively inexpensive, she said.
The system also plans to spend about $13.9 million on mental health care and $2 million on addiction treatment and recovery services.
A significant share of that will go to open 10 “med-psych” beds for people who need both inpatient mental health treatment and hospital-level care for physical ailments, Lynne said. When those beds open, possibly by the end of the summer, they’ll be the only option in Colorado for people with those needs, she said.
“We tried to balance what we need that the (city’s $30.7 million) medically indigent payment doesn’t cover with some new services,” she said.
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