High Country cost of health care, Part 2: Health care costs rise higher in the mountains
Colorado Mountain News Media
Hospital price comparison for minor knee joint replacement surgery (average charge; average length of stay) 2010
Aspen Valley Hospital: $74,322; 2.7 days.
Denver Health Medical Center: $42,241; 3 days.
Rose Medical Center (Denver): $55,649; 2.4 days.
St. Anthony Summit Medical Center: $75,895; 2.9 days.
Vail Valley Medical Center: $51,715; 3.2 days.
Valley View Hospital: $51,936; 3.1 days.
Source: Colorado Hospital Association Hospital Charges and Average Length of Stay Report, August 2011.
Editor’s note: This is the second part in a three-part series examining health care costs and reform in the mountain-resort region.
Health care in the Colorado mountain-resort region is so expensive that businesses and organizations have started offering incentives to employees who go to Denver for medical procedures.
An Eagle County School District employee who needed knee arthroscopy could get it done for roughly $6,000 at Rose Medical Center in Denver versus more than $20,000 locally, said the district’s human resources director, Brian Childress. So the school district covered the out-of-pocket costs incurred in Denver from the procedure and subsequent rehabilitation — it just made the most sense under its self-funded insurance structure.
The district is switching its insurance coverage this year to a trust, which doesn’t allow for that same strategy, Childress said. And while only a couple of district employees ever took advantage of the incentive to seek care in Denver, the fact that the district offered it illustrates how individuals and businesses try to get creative in the mountains in response to exorbitant health care costs.
Medical inflation is running about 10 to 12 percent per year, but businesses in the mountains are getting group health plan renewals coming in as high as 16 percent more than last year, said Keith Thom, an insurance broker with Associate Health Group who works with businesses in Eagle County and the Roaring Fork Valley. He and business partner Matt Naylon try to help businesses with 10 or more employees navigate the nuances of providing health benefits for their employees.
They’re seeing more and more business owners in the mountains offering incentives to go to Denver. Health-insurance carriers can’t negotiate legally with the insured on matters like waiving deductibles or co-pays, but nothing prevents companies from doing it, Naylon said.
For those who don’t have an employer offering such incentives, there’s typically no personal incentive to seek out the cheaper care in Denver because people have a deductible to meet no matter what, he said.
“They’re paying that deductible regardless,” Naylon said. “You’re generally going to do what’s most convenient for you.”
Why is mountain health care so expensive?
Rural resort hospitals are equipped with the latest technology, and they’re ready to serve everyone from local community members to rich and famous celebrities. The four major hospitals that serve the resort region — St. Anthony’s Summit Medical Center in Frisco, Vail Valley Medical Center, Valley View Hospital in Glenwood Springs and Aspen Valley Hospital — often charge rates much higher than Front Range hospitals, however, and hospital officials offer the same explanation for higher charges: Everything is just more expensive in this region.
Another explanation is there’s simply a lack of competition in the region to keep prices in check.
Smaller populations that swell only for a few peak months during ski season are also a factor.
“When you’re a small organization, you can’t spread your fixed costs over a much wider base like a larger system can,” said Vail Valley Medical Center Chief Financial Officer Charlie Crevling. “When you provide state-of-the-art equipment in a rural setting, you have to recover those costs over a lower volume of patients.”
Crevling and Vail Valley Medical Center CEO Doris Kirchner say physician-retention rates are great in Vail, but being a rural resort doctor isn’t for everybody. Sure, attracting quality physicians to beautiful resort towns like Aspen and Vail is relatively easy, but they don’t always choose to stay.
“The cost of living here is quite high, and many specialists are required to live near Aspen because they are on call for emergencies — that is challenging to say the least,” said Aspen Valley Hospital spokeswoman Ginny Dyche, adding that the hospital has a strong recruitment and retention record for its 25 medical specialties.
But these rural hospitals have an impressive list of doctors on their payrolls. Vail Valley Medical Center became what it is today because of Dr. Richard Steadman, the doctor who moved his practice to Vail and turned the town into a world-renowned center for orthopedic care. Walk through Vail in any of the professional-sports offseasons, and you’re likely to see a professional athlete limping down Meadow Drive on crutches. In recent years, the Steadman Clinic has operated on 26 athletes from professional soccer, 45 from the NFL, 23 from Major League Baseball, eight from the NBA and 26 snow skiers, according to the practice’s website.
“When Dr. Steadman came two decades ago, the emphasis was how do we remain year-round medical center with year-round quality staffing,” Kirchner said. “The Steadman Clinic group brought to Vail the opportunity to have year-round staffing and services at Vail Valley Medical Center. It made us a full-fledged hospital.”
At Valley View Hospital in Glenwood Springs, specialties include neurology, oncology and cardiology, to name a few. When you have great physicians, other great physicians want to join, said Stacey Gavrell, executive director of community relations and development at Valley View Hospital.
“I challenge you to find a town with 9,000 people with three cardiologists, two neurologists and comprehensive cancer care at its hospital,” she said.
Some rural hospitals, like St. Anthony’s Summit Medical Center in Frisco, also have access to larger networks of care. Summit Medical Center is part of the Centura hospital system. Because physician retention is more difficult in rural hospitals, sometimes physicians from the Centura system’s other hospitals come to Summit when there’s a need, said Sharon Burnette, spokeswoman for Centura’s Mountain North Denver operating group.
The rural resort region is home to a large number of undocumented residents. Massive $10 million homes are commonplace, but so are families living at or below poverty level.
“There’s a very high percentage of uncompensated care in Summit County,” Burnette said.
Hospitals are required by law to provide emergency care to every patient who walks through their doors. When some of those patients can’t pay, the hospital has to make up its costs elsewhere.
Uncompensated care includes charity care, which is free care provided to patients unable to pay, and bad debt, which is when a hospital cannot collect because a patient is either unable or unwilling to pay and did not request or receive financial assistance.
Summit Medical Center provided $3.5 million in uncompensated care last fiscal year, said hospital CEO Paul Chadkowski, adding that the hospital calculates the cost of providing the service, not what the hospital would have charged. That number would be much higher.
“And that’s just for our little hospital here in Summit,” he said.
Aspen Valley Hospital provided about $3 million in charity care in both 2011 and 2012, Dyche said.
At Valley View Hospital, Gavrell said the hospital had $20.4 million in write-offs and $13.5 million in charity care in 2012.
The Vail Valley Medical Center writes off about $15 million per year in bad debt and provides more than $2 million in charity care, Crevling said. About 7 percent of the hospital’s patients are uninsured.
“And that’s probably going to increase due to people who choose not to insure,” he said.
When hospitals have to give health care away, they have to do what’s called cost sharing, meaning they spread the costs out to other patients.
“When hospitals raise their rate to cover unpaid costs, private insurers inevitably follow suit and pass the cost on to employers in the form of higher insurance premiums,” according to the Colorado Hospital Association.
The Colorado Hospital Association released a statement in January after Gov. John Hickenlooper’s decision to expand Medicaid under the Affordable Care Act. The association cited more than 161,000 Coloradans as newly eligible for Medicaid coverage.
“In Colorado, we know that expanding coverage reduces uncompensated care. In 2009, hospitals partnered with the business community, advocacy organizations, provider groups and the state to pass the Medicaid provider fee, which has already enabled more than 66,000 uninsured Coloradans to gain access to care,” the association’s statement read. “The provider fee has demonstrated that expanding coverage for the uninsured and increasing Medicaid provider payments leads to a reduction in the cost of uncompensated care being shifted to insured patients and the business community.”
The problem in the mountain-resort region is that high health care costs have pushed insurance premiums up so high that people are choosing to go without coverage. And because of the large undocumented population in the region, who aren’t required to get health coverage under the Affordable Care Act, the so-called shifting of cost to insured patients might not happen the way health care reform intended it to happen.
In 2011, Colorado hospitals received $253 million less for providing care for Medicare patients than in 2009, according to the association.
All four hospitals in the region already receive Medicaid and Medicare reimbursements that don’t cover their costs. Throw in health care reform that has jacked up insurance rates in the region, combined with a slew of new sign-ups for the federal assistance programs that already don’t reimburse hospitals enough for care, and hospitals fear they’re going to have a lot more costs to cover in the near future.
“If the public won’t sign up (for health insurance), it will cost the hospital more dollars,” Kirchner said. “It will take anywhere from two to seven years to see all of the local impacts. Another concern we have is that some local employers of 50 or less employees are seriously considering dropping their health plans and expecting staff members to buy their own plans, which could be detrimental to all (of our mountain hospitals) if employees do not purchase health plans and take the risk of being uninsured.”
Lauren Glendenning is the editorial projects manager for Colorado Mountain News Media. She can be reached at 970-777-3125 or firstname.lastname@example.org.
The chief operating officer of RH recently said the retailer’s presence will invigorate downtown Aspen by day and wake it up at night, but they’ll need some help from the Aspen Historic Preservation Commission.
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