Southwest Memorial Hospital in Cortez is one of six hospitals in Colorado that could wind up closing if the federal budget reconciliation bill passes in its current form. That’s according to the Sheps Center for Health Services Research at the University of North Carolina at Chapel Hill.
In response to a request from Senate Democrats, the center provided a list of hospitals nationwide that would be most at risk of closure, conversion, or service reductions as a result of the $600 million in Medicaid cuts in the draft bill.
KSJD could not reach Southwest Memorial Hospital administrators for comment. But at a Cortez City Council workshop on June 10, Southwest Health System CEO Joe Theine told the board that the hospital did well in 2024 and is doing better so far this year.
However, Theine said Medicaid represents about 17 percent of all the cash the hospital expects to collect, and that percentage goes up to about 24 percent when other mechanisms that Medicaid funds are added in.
“This community is very dependent on that program being funded adequately,” he said.
The data from the Sheps Center says the so-called “Big Beautiful Bill,” which the president hopes to see passed by July 4, could place 338 rural hospitals at risk.
In addition to Southwest Memorial, the six in Colorado include facilities in Delta, Rifle, Lamar, La Jara, and La Junta. Fifteen hospitals in New Mexico, five in Arizona, and three in Utah made the list.
Kentucky was the state with the most hospitals at risk – 35.
Hospitals that derive a larger share of their revenue from Medicaid tend to have lower profitability, placing them at greater financial risk than those with smaller Medicaid shares,” wrote researchers with the Sheps Center in a June 10 letter to the Senators requesting the information.
“Medicaid cuts are likely to have a proportionate impact—meaning that hospitals most reliant on Medicaid are both more financially fragile and more vulnerable to revenue reductions,” the letter continued. “Substantial cuts to Medicaid or Medicare payments could increase the number of unprofitable rural hospitals and elevate their risk of financial distress. In response, hospitals may be forced to reduce service lines, convert to a different type of healthcare facility, or close altogether.”
The Congressional Budget Office has estimated that the budget reconciliation bill and other policies under the current administration would mean about 16 million people will become uninsured nationwide in the next decade.
The Sheps Center researchers based their list on two types of hospital – those that had three consecutive years of losing money, and those that are in the top 10 percent as far as the number of Medicaid recipients. Southwest Memorial was in the latter category, rural hospitals with a large proportion of Medicaid recipients.
At the June 10 workshop before the Cortez City Council, Theine explained that having fewer patients to treat does not save the hospital money.
“If we have fewer individuals with Medicaid, it doesn’t mean their health-care needs went away,” he said.
The hospital’s costs are generally fixed, at about $210,000 to $215,000 a day, Theine said. That’s what it costs to keep the facility staffed and running 24 hours a day.
“If we see a substantial change in Medicaid funding, what we would have to spend to keep the hospital open wouldn’t change much,” he said. “There would be maybe a few less meds and IV bags.”
The budget reconciliation bill is still being worked on in Congress.
“Conversations happening in the Senate are very material to how we operate our hospital today,” Theine told the council.
