Voters may be asked to raise city’s sales tax to help ailing Denver Health

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Denver Health in Denver on Thursday, April 25, 2024. (Hyoung Chang/The Denver Post)

Denver leaders may ask voters to consider raising the city’s sales tax in November to support Denver Health, the region’s safety-net hospital that has struggled financially as the cost of caring for uninsured people rises.

The City Council’s safety, housing, education and homelessness committee voted unanimously Wednesday to send a proposal for a 0.34% increase in sales taxes to the full council. A majority of council members will have to agree before the measure would go on this year’s ballot.

The city’s current sales tax rate is 8.81% and would rise to 9.15% if voters approved a tax to support the health system.

Denver Health has struggled since 2021 as the health system’s number of uninsured patients increased and they sought more care, while government funding to provide that care stayed roughly flat. The hospital lost $35 million in 2022 and earned a small profit in 2023, though it was enough to replace only the facility’s sprinkler system, CEO Donna Lynne told the City Council committee Wednesday.

The state Legislature approved $5 million payments to help stabilize the hospital in 2023 and 2024, but those didn’t offset the $140 million in uncompensated care the system provided last year.

Denver Health can get through this year and probably the first quarter of 2025 without making significant cuts to services, but not much longer than that, Lynne said.

She declined to name which clinics or service lines might have reduced hours or close in the future, but said Denver Health already had taken steps such as cutting travel and conferences, instituting a hiring freeze, deferring maintenance and limiting the circumstances where it would pay for employees to use expensive anti-obesity drugs.

“There isn’t a path out of where we are except for service cuts” or additional revenue, she said. “I’m committed to avoiding personnel cuts, but it’s possible that’s our future.”

The proposed sales tax, which would total 34 cents on a $100 purchase, could raise up to $70 million annually for Denver Health, Council President Jamie Torres said.

The city could use up to 2% of the proceeds for the cost of processing the tax money, and Denver Health would have to use the rest to maintain or expand certain services. They include:

• Emergency and trauma care

• Primary care

• Mental health care

• Addiction treatment and recovery services

• Pediatric care

The proposal, as written, would also forbid the city from reducing its contribution to Denver Health, Torres said. Annually, Denver provides about $31 million to partially offset the cost of care to uninsured people, as well as contracting with the hospital for services such as jail health care.

About 2.4% of Denver Health’s $1.4 billion budget comes from local government funding, compared to an average of about 11% in other urban safety-net hospitals, Lynne said. A task force that started meeting in the fall recommended trying to find a stable source of local funding, as well as seeking state and federal money, she said.

“This is not the only solution that Denver Health will be pursuing,” she said.

The committee on Wednesday heard from Denver Health supporters, most of whom were employees or worked for organizations that had partnered with the health system. Dr. Sonja O’Leary, who runs Denver Health’s school-based clinics, said additional funds could help the clinics expand beyond 19 sites, which serve about 16,000 Denver Public Schools students.

The one speaker not affiliated with the system was Denver police Sgt. Antonio Lopez Jr., who said knowing Denver Health has experience treating severe injuries gives officers confidence. He underwent emergency surgery there after he was shot six times during a traffic stop in late 2015, and said he and his wife were so pleased with his care that they asked his surgeon to be their son’s godfather.

“I’ve heard this quote many times: ‘If you make it to Denver General with a pulse, you’ll survive,’ ” he said, using an old name for Denver Health’s main campus. “I remember thinking (while riding in the ambulance), ‘I just have to make it to the hospital.’”

No members of the public spoke in opposition to putting a sales tax increase on the ballot, though Councilman Kevin Flynn, who represents District 2, said he was concerned about Denver residents paying a 9.6% sales tax if this and other proposed increases were to pass in November. He did not specify what those other tax proposals include.

A regional tax, like the ones that support museums and mass transit, would be more fair, he said.

“I’m concerned about burdening Denver taxpayers,” Flynn said.

Lynne said she also would like to see other parts of the state support Denver Health, but polling suggests that suburban voters would prevent a regional tax increase from passing, leaving no option but to make cuts.

Denver Health does care for people regardless of where they live, but the majority of the uncompensated care in recent years went to city residents. The health system estimated Denver residents received about $102 million in uncompensated care in 2023, and that the total could increase to $125 million in 2025.

Councilwoman Stacie Gilmore, who represents District 11, wondered whether the council should ask voters for a larger tax increase to fund service expansion in growing parts of the city.

“The need, the gap, is huge, and this is our moment,” she said.

Torres said polling suggested voters might not support a larger tax increase, but that the city could work on funding Denver Health in other ways, such as supporting bonds for construction projects.

“This does not cover everything,” she said. “But it probably is as much as we can do with going to voters for a sales tax initiative.”

This story was originally published by The Denver Post, a BusinessDen news partner.

TDP L denverhealthe042524 cha 757

Denver Health in Denver on Thursday, April 25, 2024. (Hyoung Chang/The Denver Post)

Denver leaders may ask voters to consider raising the city’s sales tax in November to support Denver Health, the region’s safety-net hospital that has struggled financially as the cost of caring for uninsured people rises.

The City Council’s safety, housing, education and homelessness committee voted unanimously Wednesday to send a proposal for a 0.34% increase in sales taxes to the full council. A majority of council members will have to agree before the measure would go on this year’s ballot.

The city’s current sales tax rate is 8.81% and would rise to 9.15% if voters approved a tax to support the health system.

Denver Health has struggled since 2021 as the health system’s number of uninsured patients increased and they sought more care, while government funding to provide that care stayed roughly flat. The hospital lost $35 million in 2022 and earned a small profit in 2023, though it was enough to replace only the facility’s sprinkler system, CEO Donna Lynne told the City Council committee Wednesday.

The state Legislature approved $5 million payments to help stabilize the hospital in 2023 and 2024, but those didn’t offset the $140 million in uncompensated care the system provided last year.

Denver Health can get through this year and probably the first quarter of 2025 without making significant cuts to services, but not much longer than that, Lynne said.

She declined to name which clinics or service lines might have reduced hours or close in the future, but said Denver Health already had taken steps such as cutting travel and conferences, instituting a hiring freeze, deferring maintenance and limiting the circumstances where it would pay for employees to use expensive anti-obesity drugs.

“There isn’t a path out of where we are except for service cuts” or additional revenue, she said. “I’m committed to avoiding personnel cuts, but it’s possible that’s our future.”

The proposed sales tax, which would total 34 cents on a $100 purchase, could raise up to $70 million annually for Denver Health, Council President Jamie Torres said.

The city could use up to 2% of the proceeds for the cost of processing the tax money, and Denver Health would have to use the rest to maintain or expand certain services. They include:

• Emergency and trauma care

• Primary care

• Mental health care

• Addiction treatment and recovery services

• Pediatric care

The proposal, as written, would also forbid the city from reducing its contribution to Denver Health, Torres said. Annually, Denver provides about $31 million to partially offset the cost of care to uninsured people, as well as contracting with the hospital for services such as jail health care.

About 2.4% of Denver Health’s $1.4 billion budget comes from local government funding, compared to an average of about 11% in other urban safety-net hospitals, Lynne said. A task force that started meeting in the fall recommended trying to find a stable source of local funding, as well as seeking state and federal money, she said.

“This is not the only solution that Denver Health will be pursuing,” she said.

The committee on Wednesday heard from Denver Health supporters, most of whom were employees or worked for organizations that had partnered with the health system. Dr. Sonja O’Leary, who runs Denver Health’s school-based clinics, said additional funds could help the clinics expand beyond 19 sites, which serve about 16,000 Denver Public Schools students.

The one speaker not affiliated with the system was Denver police Sgt. Antonio Lopez Jr., who said knowing Denver Health has experience treating severe injuries gives officers confidence. He underwent emergency surgery there after he was shot six times during a traffic stop in late 2015, and said he and his wife were so pleased with his care that they asked his surgeon to be their son’s godfather.

“I’ve heard this quote many times: ‘If you make it to Denver General with a pulse, you’ll survive,’ ” he said, using an old name for Denver Health’s main campus. “I remember thinking (while riding in the ambulance), ‘I just have to make it to the hospital.’”

No members of the public spoke in opposition to putting a sales tax increase on the ballot, though Councilman Kevin Flynn, who represents District 2, said he was concerned about Denver residents paying a 9.6% sales tax if this and other proposed increases were to pass in November. He did not specify what those other tax proposals include.

A regional tax, like the ones that support museums and mass transit, would be more fair, he said.

“I’m concerned about burdening Denver taxpayers,” Flynn said.

Lynne said she also would like to see other parts of the state support Denver Health, but polling suggests that suburban voters would prevent a regional tax increase from passing, leaving no option but to make cuts.

Denver Health does care for people regardless of where they live, but the majority of the uncompensated care in recent years went to city residents. The health system estimated Denver residents received about $102 million in uncompensated care in 2023, and that the total could increase to $125 million in 2025.

Councilwoman Stacie Gilmore, who represents District 11, wondered whether the council should ask voters for a larger tax increase to fund service expansion in growing parts of the city.

“The need, the gap, is huge, and this is our moment,” she said.

Torres said polling suggested voters might not support a larger tax increase, but that the city could work on funding Denver Health in other ways, such as supporting bonds for construction projects.

“This does not cover everything,” she said. “But it probably is as much as we can do with going to voters for a sales tax initiative.”

This story was originally published by The Denver Post, a BusinessDen news partner.

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