With record profits the past few years, why doesn’t Vail Health lower its prices? (letter)
December 6, 2018
To the editor: I applaud the Vail Daily for printing the recent Denver Post article regarding Vail Health ("Why are health care costs rising in Colorado?" Thursday, Oct. 11). Having studied Vail Health for years, I feel the Post did an accurate portrayal of the situation.
Doris Kirchner obviously disagrees, and in her recent response in the Daily, she cited several instances questioning assertions that Vail Health makes excessive profits ("Vail Health CEO responds to Denver Post story," Tuesday, Oct. 30).
One thing people need to understand is the list prices cited by Kirchner and the amount Vail Health gets paid (which she refuses to discuss) could be dramatically different. If the list price is $30,000 for a procedure by two providers and the competitor is getting paid $15,000 and Vail Health is getting paid $25,000, then it's clear what the problem is.
Kirchner also points the finger at other providers, such as surgeons and surgery centers, as part of the problem, and to an extent, she is correct. What she neglects to note is that Vail Health is one of those "other providers," via controlling interest in the surgery center, and directly employs many doctors.
As such, Vail Health has full control over those portions of a patient's bill, and those charges are not included in the list price comparisons she mentions (or the reimbursement rates she refuses to discuss).
Regardless of the rhetoric, at the end of the day an audited financial statement is the final word on the subject.
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A Congressional Budget Office study pegged typical profit margins for nonprofit hospitals at 3 percent to 5 percent; per the Post article (which agrees with my own observations in reviewing thousands of pages of documents), Vail Health is about 10 times that.
That bottom line at Vail Health shows excess revenues, which are gross receipts minus expense, aka profits. In 2017, Vail Health showed excess revenues of $100,397,391. After various adjustments, its increase in net liquid assets of $82,772,616 brought it to about $411 million. That is the amount, including investment income, it accumulated beyond their costs to provide services rendered.
Kirchner is correct that nonprofits need to build reserves for "once in a generation" projects. But the truth is that Vail Health has never touched its nest egg it had in 2015 that she purports was so necessary to the current project. In securities filings in 2015, the remodel of the hospital was estimated at $182 million. The Denver post cited the cost is now $263 million.
The glaringly inconvenient truth for Vail Health is that in spite of $81 million in cost overruns on the remodel since 2015, profits have doubled and net assets have sky-rocketed from about $230 million to $411 million. And that is after paying cash for the remodel to date.
To pose it should be congratulated for holding price increases to 2.35 percent (while refusing to discuss their reimbursement rates or show a published price list to back up that assertion) is simply not credible.
Why raise prices a penny, and why not lower them by double digits?