Denver Health outlines 2Q sales-tax spending plan and warns federal changes could cut coverage and revenue

Denver Health executives presented a midyear spending plan for the city’s 2Q sales-tax funds to the Denver City Council Health & Safety Committee on Aug. 20 and warned that pending federal changes could significantly increase the number of uninsured people and reduce hospital revenue.

Donna Lynn, chief executive officer of Denver Health, told the committee that the health system had received regular monthly 2Q payments and that the current-year projection the presenters referenced is about $64 million. Lynn and other presenters outlined how they intend to use the funds across five priority areas set by voters: emergency and trauma care, primary medical care, mental health, drug and alcohol use recovery, and pediatric care.

Key allocations and operational changes described:

- Emergency and trauma care: Denver Health said it would direct roughly $36 million toward emergency and trauma services, including staffing increases for clinical-decision units and paramedic/ambulance equipment and remounting. Presenters said 2Q funding supports hiring clinical teams that allow more timely disposition decisions.

- Primary care: The plan earmarks about $16 million for primary-care expansion and sustainment. Presenters cited funding for mobile medical units (two currently supported by grants), expansion of dental services at the Westside clinic (referred to in the presentation as the Sam Sandoz/San Sandoz Westside clinic), and a new clinic in southeast Denver scheduled to open by the end of the year.

- Mental health: Denver Health described $14 million for mental-health programs, including a psychiatric emergency service and inpatient psychiatric beds. CEO Donna Lynn and others said Denver Health currently has 78 licensed inpatient psychiatric beds (57 adult, 21 adolescent); the system had previously kept roughly 50 open because of staffing and financial constraints, has increased operational beds to 63 and plans to open an additional roughly 10 combined medical/psychiatric beds in November (bringing operational capacity close to 73). Presenters said staffing will expand using 2Q funds and other sources.

- Pediatric care: The presentation listed inpatient pediatric staffing and school-based expansions and said 2Q will support virtual urgent care and foster-care medical-record services in additional clinics.

- Substance-use treatment: Presenters allocated about $2 million to substance-use treatment programs and related services.

Budget context and payer mix: April Ladade, Denver Health’s chief financial officer, and Donna Lynn explained that Denver Health’s payer mix is weighted toward public payers: about 47% Medicaid, about 20% Medicare, roughly 16% commercial, and about 10% uninsured. Lynn and staff said Denver Health received about $31 million in city subsidy payments in 2024 and about $110 million in uncompensated-care costs attributable to city residents (with a further roughly $36 million from patients outside Denver). The presenters said recurring 2Q funds help stabilize operations and allow hiring clinical teams that otherwise would not be affordable.

Federal policy risk: Denver Health officials warned that federal changes under HR 1 could reduce coverage and increase uncompensated-care costs. Presenters, citing an external estimate prepared by a third party (Third Wave), said the health system could face a roughly $64 million annual shortfall if millions of people lose coverage through more frequent Medicaid recertification and exchange-subsidy reductions; they urged the committee to consider the potential fiscal impacts on city partners and the hospital.

Administration and oversight: Luis Mautal, the city’s newly appointed 2Q fiscal administrator in Denver Department of Public Health and Environment, said the city is budgeting conservatively for administrative costs (well below the contract cap of 1%), that the city will return any unspent administrative funds in reconciliation, and that a financial-services consultant contract will be executed to help with invoicing and oversight next year.

Council requests and next steps: Councilmembers asked for a clearer public reporting package that ties spending to measurable outcomes (visit volumes, service hours, quality metrics and demographic breakdowns). Multiple councilmembers requested a mid-October follow-up presenting the operating agreement and a half-year report that maps metrics to the spending plan. Presenters agreed to return with more detailed metrics and a reconciled spending plan tied to the projected $64 million revenue figure.

No formal committee votes were taken during the briefing.