Southwest Health reports operating gains, warns of federal reimbursement headwinds

Southwest Health officials told the Montezuma County Board of County Commissioners that the hospital system has returned to operating gains in 2025 and is expanding outpatient services locally, while cautioning that federal policy changes could create revenue headwinds in coming years.

“Mister Thine” — representing Southwest Health in the workshop presentation — said audited 2024 operating income was $1,700,000 and that year-to-date 2025 operating income already exceeds all of 2024. He attributed the improvement mainly to rising patient volumes and higher staff retention. “We’ve put ourselves in a good position to have a runway, to prepare for that,” Thine said.

The hospital is tracking several operational indicators. Management reported that adjusted patient days grew faster than forecast (about 5% actual growth versus a 4% plan, through May) and that nursing retention was above 90% through the end of last year. Officials said some recent staffing changes reflected payroll cleanup of PRN employees who had not worked in months.

Finance details presented to commissioners included the hospital’s revenue mix: 17% of expected collected cash from patient care comes from Medicaid; including federal matching provider fees the share rises to about 24%. Management said the hospital retains a sales-tax contribution used primarily to service bond debt and to support capital.

The system’s days-cash-on-hand was reported as effectively 84 days when excluding restricted capital-infrastructure funds; the county’s bond covenants require 60 days. Thine said the board and hospital plan to use some of the cash for planned capital moves — including migrating physician-clinic electronic records to mirror the hospital system — while keeping a prudent reserve.

On services, Southwest Health said it had accelerated several initiatives. The Mancos clinic is now open on Fridays and has added prenatal care, supported in part by foundation donations to purchase ultrasound equipment. Oncology visits and infusion referrals increased after Mercy clinicians reviewed the county infusion center and began referring patients locally. Conversely, outpatient cardiology has not yet grown as expected; the hospital is cooperating with Montrose Regional Health to provide visiting cardiology coverage while recruiting a full-time cardiologist and nurse practitioner to be based locally.

Thine warned of three federal policy headwinds that could affect revenue over the coming years: an increase in Medicare sequestration tied to pay-go provisions (a possible increase from current 2% sequestration), potential work requirements affecting Medicaid enrollment beginning in 2027, and reductions to state provider-fee matches scheduled to change in 2028. Separately, he noted that if enhanced marketplace premium tax credits lapse, Colorado’s individual-market premiums could rise and raise the county’s uninsured rate.

Hospital leaders said the near-term plan is conservative budgeting and keeping additional cash reserves while prioritizing investments likely to support local care — especially in oncology and cardiology.

Commissioners asked clarifying questions about the Medicaid share and retention figures. Thine said the 17% figure reported is the percentage of collected cash expected from Medicaid this year, and that a headcount measure of patient mix would show a higher share of patients on Medicaid because Medicaid reimburses at a lower rate per service.