REGIONAL: Gunnison Valley Hospital works to recoup insurance payments

The Gunnison Valley's only health care system is fighting to stay afloat amidst a slew of financial and staffing challenges that are plaguing all Colorado hospitals.

Gunnison Valley Health (GVH) continues to battle for reimbursements from private and public insurers, and to pay nurses and doctors enough to keep them here. Following the acquisition of several medical offices and an entire primary care practice in 2024, GVH is offering more medical services than it has in recent years. To keep these services alive, executives at the county-owned hospital will depend on the finance team — equipped with new software — to make ends meet.

Revenue has increased year-to-year, primarily from growth in the number of patients using the hospital system, in-patient hospital stays, radiology services, surgeries and maternity services, said CEO Jason Amrich. Surgeries, MRIs and other "high dollar" procedures are also trending upward, but at a lower rate, said Chief Financial Officer Angela Kobel.

"That's a sign that we are providing the right service to the community, the community is choosing us," Amrich told the Times.

However, operating expenses, or the money GVH is shelling out to procure medical equipment, pay staff and keep the lights on, is outpacing revenue. So while its net operating revenue is up 26% from 2021 to 2024 , expenses have risen 46% over that same time period. Salaries and benefits have risen 40% since 2021, as GVH competes with other regional hospitals to retain doctors and nurses.

Medical supply costs have also inflated, along with pharmaceutical drugs. To address the issue, GVH now works with Vanderbilt Health Purchasing Collaborative, a supply chain aggregator that helps executives review contracts to find better pricing. That relationship has proved effective, and supply cost increases have slowed over the last year, he said.

This year's net income, or the "take home" dollar amount that carries over into the next year, is positive at $2.6 million as of the end of November. However, that figure is declining each year and it becomes harder and harder to keep it in the black, Amrich said.

The financial adversity faced by GVH is mirrored across the state, in health systems large and small, public and private, said Tom Rennell, who specializes in financial policy and data analytics for the Colorado Hospital Association (CHA).

The rapid winnowing of net income and inflation in expenses plagues all Colorado hospitals. Since 2019, increases in operating expenses have exceeded revenues by over 8%, according to CHA data. Shrinking net incomes limit how much hospitals can invest into future growth, and bring some closer to the brink of closing. It forces some to go to taxpayers to make ends meet, like creating a local taxing district. For GVH, one way to shore up its future is expanding services.

In 2024, the health system acquired Gunnison Valley Family Physicians, and two locations of the private orthopedic practice, Vail-Summit Orthopaedics and Neurosurgery (VSON). While the acquisitions grew GVH offerings for both family medicine and orthopedics, and the revenue associated with these businesses, it has also taken on a significant amount of new expenses in the form of salaries, rent and supplies.

"I couldn't imagine such an important primary care practice like that going dark and then not having the community have access to primary care physicians," Amrich said. "But with that, GVH had to look at their financial structure and their losses and inherit that."

GVH also gets an inch of relief as a designated critical access hospital, wherein it gets paid based on the actual cost to treat the patient for both Medicare and Medicaid, rather than a flat fee schedule. Its primary care clinic is a designated rural health clinic, which also offers better reimbursement from the government, he said.

The insurance fight

When it comes to difficulties in negotiating claims payments with insurers, rural health care systems like GVH face similar challenges as individual policy-holders.

"We fight this game across so many levels of: Are we getting paid according to whatever policy or plan that there is … are we getting denied for a service that we should have actually gotten approved for? Did the physician have to change their note by two words to make sure that we get paid appropriately?" Amrich said.

GVH has individual contracts with its "payers," or private insurance companies, Medicare and Medicaid — health plan providers that set rates to reimburse GVH for the services it provides.

GVH is limited by both these payers, public and private, in just how much it can increase prices to recoup poor reimbursement. And within these contracts, GVH does not have the same bargaining power as Front Range health care systems, Amrich said.

Over the years, GVH has faced declining insurance reimbursements from Medicaid and Medicare, whose rates are set by the state and federal governments. Across Colorado, hospitals have absorbed almost $5 billion of un-reimbursed care provided to Medicaid patients since 2019, according to CHA data. This may be compounded next year, as Gov. Jared Polis' 2025-26 budget request called for no annual increases to the state's Medicaid provider reimbursement rates.

"From the commercial insurances, we have the same problems that any practice does," Kobel said. "We fight denials. We fight downgrades on our claims."

Even after all bills are paid, GVH could see hundreds of thousands of dollars retroactively siphoned away from the Medicaid recovery audit contractors (RAC) program — often going back as far as seven years. This state-mandated program involves combing through reimbursement data for any erroneous payments. That process, time consuming for hospital staff, has already been questioned. In 2023, the legislature passed a bill that required the Office of the State Auditor to audit Colorado's Medicaid RAC practices.

And for GVH, it's not just a matter of the insufficient reimbursements baked into insurance contracts, it's the reality that GVH is not getting paid according to the terms of those contracts, Amrich said. Right now, the financial office does not have the capacity or technology to account for every single claim. Staff looks hard at the largest claims, but for the thousands of lines of claims data for less expensive procedures it's not feasible for the office to go through with a fine tooth comb, Kobel said.

At the start of the year, GVH will onboard Epic, a new electronic health record software system that executives hope will help them resolve these issues.

"We have committed, smart, involved and engaged hospital leaders that are going to do whatever they can to help handle and offset these challenges," Rennell said. "Now, that could come with some trade offs. There's no magic bullet here."

This story was originally published by the Gunnison Country Times.