A psychiatric hospital providing mental health and addiction services to people across 23,000 square miles in western Colorado could shut down within weeks if it can’t find the funding it needs to stay open.
Persistent financial challenges, problems hiring staff, intense scrutiny from regulatory agencies and trouble getting paid by insurers could cause West Springs Hospital in Grand Junction to close, facility leaders announced earlier this week.
The closure of the hospital would mean the loss of its emergency psychiatric department, a vital resource for law enforcement officers who bring people in crisis there to help keep them out of jails and prisons, the hospital’s online announcement says.
“We have less than 30 days’ cash on hand,” said John M. Sheehan, president and CEO of Mind Springs Health, the owner of West Springs Hospital. “This is the only psychiatric facility between Denver and Salt Lake City. It’s literally providing care in a desert, and if it goes away, patients will die.”
Mind Springs says it needs $6.6 million from the state to stabilize hospital operations and hire additional nursing staff. But state leaders said they have worked with the hospital to help it improve its finances and quality of care, and insurer Rocky Mountain Health Plans says it has given West Springs millions in advance cash payments.
If West Springs closes, its patients would need to drive more than four hours for similar care on the Front Range. Just over 200 staff members would lose their jobs if the facilities close, Sheehan said.
West Springs Hospital has faced problems for years, and has tried to resolve many issues, but financial shortfalls still threaten the hospital’s closure.
A Colorado News Collaborative investigation in 2021 found problems at the state’s 17 community mental health centers including West Springs, which primarily serves 10 northwestern counties but accepts patients from any part of the state.
The investigation found the centers lacked competition, transparency and accountability and that millions of state and federal tax dollars have been unaccounted for, leaving Coloradans in crisis without the mental health care they desperately need.
Colorado hospitals have reported their revenue has declined by billions of dollars because of increased labor costs and other operational expenses that outpace their income, according to a 2023 report by the Colorado Hospital Association.
Each month, spending at West Springs Hospital exceeds income by about $500,000, Sheehan said. This means the hospital taps the profits of Mind Springs Health to cover the shortfall.
Reimbursement problems with insurers are contributing to the hospital’s financial struggles, Sheehan added.
About two years ago, Rocky Mountain Health Plans began denying the hospital’s claims for reimbursement about 20% of the time, up from 9% the years before, Sheehan said.
About 60% of West Springs Hospital’s funding comes from reimbursements from Rocky Mountain Health Plans for people with Medicaid, Sheehan added.
Rocky Mountain Health Plans has provided millions in advance payments to Mind Springs Health and West Springs Hospital to help alleviate the organization’s financial challenges, Jon Fenech, a spokesperson for UnitedHealthcare, wrote in an email Wednesday to The Colorado Sun.
Rocky Mountain Health Plans, which merged with UnitedHealthcare in 2017, is in full compliance with timely and accurate processing of reimbursement claims, Fenech wrote in the email.
Sheehan said West Springs Hospital is currently serving an unprecedented number of indigent patients, who are uninsured or underinsured and have incomes under 300% of the federal poverty level, Sheehan said.
This fiscal year, which ends July 1, West Springs Hospital has provided about $1.4 million in uncompensated care for 357 indigent patients, Sheehan said.
Some of those patients are people who had Medicaid coverage but no longer qualify.
The federal government suspended periodic eligibility reviews for Medicaid during the pandemic to help people maintain coverage during the public health emergency. But the pause ended March 31 and now, Colorado’s Medicaid program is redetermining who is eligible for its programs.
No patients have been turned away
West Springs has not turned away patients who recently lost their Medicaid coverage, Sheehan said. “That has made the financial model very difficult for us.”
West Springs has asked the Colorado Behavioral Health Administration to provide $1.4 million to help it recuperate that uncompensated care, Sheehan said.
In December, West Springs asked the Colorado Medicaid program for $6.6 million in advance payments to help it hire more nursing staff, provide services and continue operating.
Cash advances from the state are not permitted for behavioral health services based on state and federal Medicaid financing laws but Rocky Mountain Health Plans has provided West Springs $23,846,804 in prepayments this fiscal year, The Colorado Behavioral Health Administration and the state Medicaid program wrote in a statement to The Colorado Sun.
The Colorado Behavioral Health Administration and the state Medicaid program will help ensure health services are available if the hospital closes, the two agencies wrote in a statement to The Sun.
The state has worked to support West Springs including by issuing it a conditional license to help improve quality of care and by supporting the facility financially through advance payments, the statement says.
“The state is unable to offer more financial assistance,” the statement says. “There are 11 freestanding psychiatric hospitals in Colorado and all of them accept Medicaid. We have not in recent history heard of financial challenges so dire they lead to imminent closure of that psychiatric hospital.”
West Springs has been audited monthly by the Colorado Department of Public Health and Environment since July 2022, Sheehan said.
“An anonymous complaint gets made to CDPHE, and the hospital gets a full audit, which has been incredibly disruptive,” he said. “We’ve been cited for things like giving patients more than one sheet, and things that, in my experience having run psych facilities for 30 years, are regulatory overreach. It’s like there’s this blanket audit that’s in place that we can’t escape.”
The audits have drained the hospital’s reserves, he said. West Springs has spent more than $10 million since August 2022 to comply with the audits.
Each time there’s an audit, West Springs hires consultants to review the hospital’s policies. West Springs also limits the number of patients admitted to the hospital and trains and fires staff to comply with the investigations, Sheehan said.
“We had to almost shut the entire hospital down because of all of this audit activity,” Sheehan said. “We couldn’t attract staff and it’s been really difficult to get this hospital to the stability it has now.”
Inspections of West Springs have been prioritized because the hospital must improve care, CDPHE wrote in a statement to The Sun.
After inspections at West Springs showed patient safety and infection control issues, among others, CDPHE in May 2023 issued a conditional license that required West Springs to hire a temporary management company to assist the hospital in achieving compliance. Since the management company was hired in August, CDPHE inspections have identified no deficiencies in patient care. “The management company has helped the hospital provide improved patient care,” the statement says.
CDPHE said it issued another conditional license on Wednesday in response to West Springs’ announcement about its financial problems. The license will be in effect until Nov. 30. “We are hopeful that West Springs can resume successful management of their facility during this time frame.”
Wednesday afternoon West Springs said it would prefer financial support from the state.
West Springs is working with Rocky Mountain Health Plans to negotiate a new contract that could help stabilize the hospital, Sheehan said.
Colorado Medicaid reimburses psychiatric hospitals an average of $907.52 per day, according to a report released by the Colorado Medicaid office.
West Springs receives $1,700 per day from Colorado Medicaid. It costs $2,543 per day to provide care at West Springs Hospital, a spokesperson said.
West Springs leaders say if the hospital closes, its outpatient and residential programs that provide group therapy and other in-home services would stay open.