DALLAS – The publicly funded Denver Health and Hospital Authority is running a $1 million deficit due to its status as the hospital for the uninsured and the sequester of federal funds enacted by Congress, according to financial statements.

Denver Health gets a city subsidy of $28 million per year but operates as an independent hospital.

The city reports a 9% increase in uncompensated charges so far this year to $151 million. Last year, the city reported $430 million in uncompensated charges.

The authority is rated BBB by Standard & Poor’s with a stable outlook.  Moody’s Investors Service withdrew its Baa3 rating in 2007 when the city refinanced most of its outstanding debt and was not asked to rate the new bonds.

DHHA's long-term debt is backed by revenue pledge.  The hospital had about $253 million outstanding at he end of 2011, according to S&P.

Denver Health chief financial officer Peg Burnette told the Denver Post that other hospitals that treat patients on an emergency basis routinely send those patients to Denver Health for follow-up care.  Denver Health takes those patients under “observation” rather than as in-patients, which means the facility gets less reimbursement from Medicaid.

Denver gets $5,000 less per Medicaid patient for observing rather than fully admitting them, and $10,000 less per Medicare patient, according to the Post. Last year, Denver Health paid $6.3 million to settle a case in which it was accused of admitting too many patients rather than keeping them in observation status.

The Denver area’s other hospital that treats the uninsured is the University of Colorado Health Sciences Center in the suburb of Aurora.  In 2011-12, the University Hospital received $45.1 million in subsidies for indigent care, while Denver Health received $84.5 million, according to the Post.

Officials at University said that its reimbursed inpatient days under the state indigent care program have risen, while those at Denver Health have fallen.

In 2012, Denver Health had operating income of $5.5 million on revenue of $744 million in 2012, down from $18.3 million in net income in 2011.  For this year, the hospital was expected to net $4.7 million but is running a $1 million deficit through April. Denver Health has not reported a full-year loss since it became an independent health authority in 1997.

Denver Health expects to benefit from the federal Affordable Care Act changes in 2014 when more of Denver’s uninsured will qualify for Medicaid coverage.

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