Denver Business Journal: UCHealth growing to keep Colorado hospitals healthy, CEO says

UCHealth may seem well established as Colorado’s largest hospital system, but the organization was in its infancy when CEO Elizabeth Concordia started leading it in 2014.

Two years prior, UCHealth had just laid the groundwork to become a statewide health system. The UCHealth name was born in 2012 with an operating agreement struck between University of Colorado Hospital and Poudre Valley Health System, in Fort Collins.

“I was the newbie 10 years ago,” she said. “Now, the whole market has changed.”

Over the last decade, Concordia has guided UCHealth through exponential growth to become Colorado’s largest hospital system and the only major one headquartered in the state.

When Concordia started as CEO, UCHealth had no urgent care, no free-standing emergency departments and few primary care and outpatient facilities. Over the course of 10 years, the hospital system grew from five to 14 hospitals and from 15,000 to 34,000 employees.

UCHealth’s expansion has been less about gaining a strategic advantage than it has been about living the system’s mission to always “do right by the patient,” Concordia said in an exclusive interview with the Denver Business Journal.

That sometimes meant expanding care to new places or taking on services of hospitals that were struggling financially, she said. Those deals often drew the ire of state regulators and policymakers concerned consolidation is driving up the cost of care

With a decade of doing business in Colorado under her belt, Concordia told the DBJ about how she plans to tackle challenges ahead with the insights she has gleaned from UCHealth’s wins and losses in growth, financials and regulation. 

Colorado growth plans

Growth in Colorado has been a relatively organic response to demand for more access to UCHealth services, Concordia said.

The system’s growth decisions today are mainly driven by the fact that many Colorado facilities, particularly rural hospitals, are operating at a financial loss, she said. Concordia points to data from the Colorado Hospital Association that indicates 70% of the state’s hospitals have unsustainable operating margins.

“When you look at what the future is, I think we look at it in different buckets,” Concordia said. “One is, how do we make sure that the care in Colorado is stable as possible?”

She cited UCHealth’s absorption of Pueblo-based Parkview Health late last year as a response to exactly that question.

“We certainly aren’t looking to merge, integrate, acquire a large number of hospitals,” Concordia said.

Rather, she said she intends to find more ways to support rural hospitals and other facilities, such as help with remote and virtual care. 

Price pressures

Concordia said she strives to balance investment in new technologies with keeping costs lower for patients.

“We’ve tried to build more cost-effective facilities that are clearly less expensive than this high-end academic medical center,” Concordia said, referring to the University of Colorado Hospital, in Aurora.

Like other health systems, UCHealth is focused on enhancing outpatient and other facilities that cost less to operate, she said. But rising drug prices and an ongoing health care worker shortage are squeezing operations financially, Concordia said.

The end of a pandemic-era mandate that kept hundreds of thousands of Coloradans enrolled in Medicaid has further complicated the situation, she said.

After many Coloradans began losing their Medicaid coverage last year, she said UCHealth — like many other hospital systems in the state — is paying dramatically more for patient care that never gets reimbursed.

This year, UCHealth’s uncompensated care bill totals $600 million, Concordia said. That has been coupled with changes in state and federal regulation that worsen the system’s reimbursement rates for Medicaid, she said.

Concordia agrees health care costs for consumers are too high, she said, but the hospital system is up against too many price pressures.

“I think it’s unrealistic to think that costs are necessarily going to come down,” she said. “What we want to try to do is reduce the growth of the cost.” 

Carrier tension

Price pressures have been at the forefront of negotiations between health systems and health insurance carriers doing business in Colorado. The two sides have sparred this year over rate increases in their renewal agreements.

Concordia understands the conflict, she said, even though UCHealth isn’t facing big renewals of its insurance carrier contracts in the near term.

“When you see here, in Colorado, a 21% increase in wages over the last four years and increases that the insurance companies are willing to give you of 9% and less, it’s not a future that’s going to really work well,” she said. “We’ve got to figure out how to work on that.”

UCHealth and Intermountain Health are uniquely positioned to weather insurance changes because of a joint venture the systems signed last year. The agreement creates a clinically integrated network where providers share one operating system, called Trinsic. It also introduced a new health care plan to Colorado called Select Health.

The Select Health plan is offered in concert with the provider networks, which allows UCHealth to control its own destiny by having more say over how care is reimbursed, Concordia said.

“The biggest thing that that the Select opportunity provides is we are responsible for the entire dollar,” Concordia said. “If you run the plan […] you can do things to keep people out of the hospital that are going to be easier to do if you manage the dollar versus asking permission from a payer.” 

Tension with state regulators

With UCHealth’s scale comes greater scrutiny. The health system often takes the spotlight in state policymaker discussions on the rising cost of health care.

Ahead of several bills targeting hospital operations last year, UCHealth was highlighted in reports issued by the Colorado Department of Health Care Policy and Finance as a system that grew its patient revenue while maintaining billions of dollars in reserves. UCHealth countered that its margins were not as large as the report suggested, and that it needs reserves for strategic growth.

The system has also come under fire for the way it spends community benefit dollars, which is the money it is required to spend on behalf of community needs in exchange for having a tax-exempt status.

State regulators say they would like to see community members dictate more of how those dollars are spent. UCHealth has argued against more regulation of community benefit dollars, saying that would be redundant considering how deeply UCHealth is involved in community needs.

“Every dollar that drops to our bottom line, we reinvest in Colorado — 100% — and we don’t have stock, so there’s no profiteering at the end,” Concordia said. “Our operating margin gets reinvested into our communities and to our staff and to our facilities, and that should be appreciated.”

UCHealth is the largest provider of Medicaid services in the state, she said. The system handles about 30% of all Medicaid hospitalizations and saw patients from every zip code in Colorado last year.

“I think that despite whatever negative narrative there is, I think what we’re most proud of is we’ve continued to focus on serving patients,” Concordia said.

Concordia suggested that comparing UCHealth with other health system financials can be problematic because those systems are headquartered out-of-state. UCHealth is the sole hospital system still based in Colorado.

 Quality outcomes

Looking ahead to the next 10 years, Concordia continues to be motivated by patient success stories, she said.

The UCHealth system has counted 950 patients over the last 12 months who returned home from its facilities despite the fact that they were not statistically supposed to survive.

“When we talk about what makes us get up every morning and our passion, we really do want our patients to go back to lead their extraordinary lives,” Concordia said. “When we say 900-plus lives are saved, those are 1,000 families that now have their loved ones and everybody else that touches them.”