Photo: Pagosa Springs Medical Center CFO Chelle Keplinger presents some financial implications at a meeting at Pagosa Peak Open School, March 31, 2025.
I attended a well-attended, informative meeting on Monday evening, hosted by the Archuleta County Democrats and featuring a presentation by Pagosa Springs Medical Center (PSMC) CEO Rhonda Webb and Chief Financial Officer Chelle Keplinger, giving an overview of the possible financial impacts of decisions coming out of Washington DC.
The public meeting was held at Pagosa Peak Open School, and the news was not good.
On Tuesday evening, I attended the regular meeting of the Pagosa Springs Town Council, and heard a discussion about the cost for replacing underground utilities during the Highway 160 reconstruction currently underway in downtown Pagosa.
Once again, the news was not good.
Earlier on Tuesday, the Archuleta Board of County Commissioners discussed a proposed multi-million-dollar administration building, and we heard some vague ideas about getting the community involved in deciding how that project might get financed.
Not “whether it will be financed'” mind you. Only, “how it will be financed.”
Later this month, the Archuleta School District’s Master Plan Advisory Committee will consider a recommendation for abandoning older school buildings and getting the voters to approve a bond for brand new buildings.
This afternoon at 3pm, the Pagosa Area Water and Sanitation District (PAWSD) board of directors will discuss a $120,000 proposal for testing the community’s fire hydrants. This amount was not included in the approved 2025 budget.
So many government needs, and desires.
Let’s begin with the Monday evening presentation by the PSMC officers, Rhonda Webb and Chelle Keplinger. The Democrats had invited them to share their thoughts about recent funding changes on the horizon, as the Trump administration continues turning Washington DC upside down.
CEO Webb explained that she had come to the meeting thinking she would simply introduce CFO Keplinger and the main topic of concern to the Democrats — cuts to Medicaid — but she had then been asked to address a couple of other topics.
“You should know, my background…I never started out wanting to be CEO of a small rural hospital and keep it open — especially during COVID? My husband [surgeon Bill Webb] drove me out here, kicking and screaming. In 2014, is when we moved here permanently, and this is my eighth year of being his boss…”
This comment elicited some laughter from the audience.
“…but here I am. I will tell you we are a Special District. I have seven publicly-elected board members and I am their one employee, and my job is to operationalize PSMC. We’re one of six hospitals in Colorado that operate an ambulance service, and ambulances lose money. So most hospitals don’t have own them. But we have magic here, and we don’t want to give that up.
“We also operate a health clinic that’s on our campus. And we are a Critical Access Hospital…”
The ‘Critical Access Hospital’ designation was invented by the federal government in 1997 to serve rural communities, and PSMC would probably not be able to survive without that designation. Critical Access Hospitals (CAHs) are reimbursed for Medicare services at a higher rate than other hospitals — and with the average age in Archuleta County approaching 55 years, a significant percentage of PSMC patients are enrolled in Medicare.
We will get to the other significant population served by PSMC — Medicaid — in a moment.
CAHs may maintain no more than 25 inpatient beds; maintain an annual average length of stay of 96 hours or less per patient for acute inpatient care; and furnish 24-hour emergency care services 7 days a week.
CEO Webb:
“Even though we’re a Level 4 trauma center, we get Level 1 traumas when they happen…”
PSMC has seen more trauma cases at the ER this year, than last year by this point.
“So we are busy. When you see things in the newspaper, that have happened, quickly they are going to come our way…
“We do get a mill levy. I was asked to bring that up… it has never been increased; it’s based on property taxes. It’s about $2 million a year that we receive. That’s 16 days of operating cash for us. We spend $124,000 a day. But that’s just the business of running hospitals. Rural hospitals run very lean margins; that’s just the way it is. We follow all the same rules — or most of the same rules — as bigger hospitals.
“We work with systems; we believe in systems; but we are independent, and hope to remain independent…”
$124,000 a day adds up to $45.3 million per year.
When Dr. Webb uses the word “systems” she is referring to “healthcare systems” that operate one or more hospitals — in some cases, hundreds of hospitals. Pagosa Springs Medical Center is operated by a government Special District, which allows for the collection of property taxes. It’s my understanding that most hospitals in Colorado are run by “systems”. The state’s largest hospitals are Presbyterian St. Luke’s Medical Center (Denver; 680 beds); Centura Health St. Anthony Hospital & Medical Center (Lakewood; 593 beds) and UCHealth Memorial Hospital Central (Colorado Springs; 583 beds).
PSMC has 11 beds.
The Colorado Healthcare Affordability and Sustainability Enterprise (CHASE) collects a fee from general hospitals and uses it to claim matching funds from the federal government, increasing health care funding overall. CHASE published a report in January 2025 that included this chart:
What we see here is Colorado hospitals retaining — on average — about $1,300 per patient served, above their cost, in 2019.
The average amount dropped in half in 2020, as people began avoiding hospitals during the COVID crisis in 2020.
Then the federal government backfilled the health care industry during 2021, and ‘payment less cost’ rose back up to 2019 levels. But something else happened in 2021. A large number of employees began leaving the health care industry, while at the same time inflation hit the supply chain. In order to attract employees, hospitals had to increase salaries.
According to CHASE, in 2023, Colorado hospitals were retaining only $8,64 per patient, in payments less costs. That’s not a typo. Eight dollars and 64 cents.
PSMC’s margin per patient could be even less this year… Especially if the Trump administration makes significant cuts to Medicare and Medicaid…