Aurora Mental Health & Recovery is the latest community mental health center to drastically cut its workforce, eliminating 111 positions and reviving a conversation about the state’s funding model shake-up that centers warned would cause them problems.
The Aurora center, which is the local safety net provider for mental health and substance use treatment, said that between the new state payment system and the reduction in the number of people who are eligible for Medicaid, the center is expecting a $6.5 million loss in revenue next year.
The 111 positions account for 14% of the center’s workforce and add to the list of behavioral health layoffs at a time when Colorado is trying to improve access to mental healthcare. Some of the lost Aurora jobs are administrative, but the layoffs include four licensed therapists as well as employees who help clients transition from psychiatric hospitals to living on their own, and who work with refugees and immigrants who have been trafficked, the center said.
On top of the loss of $6.5 million in revenue, the center said it must return $7.2 million to the state this year because it did not spend as much on care as predicted. The repayment is due because Colorado has changed the way mental health centers that serve low-income and uninsured Coloradans are paid. For the first two years of the new model, the state is pre-paying to cover the anticipated cost of care, and then mental health centers have to return any surplus. The budget forecasting has been extra challenging, the centers say, because the Medicaid reimbursement rates for caring for patients on the government insurance program have been reduced throughout the year.
Aurora Mental Health asked the state in an April 3 email if it could forgo paying back the surplus, and state officials at the Colorado Department of Health Care Policy and Financing said no. Then the center notified the state labor department last week that it would reduce its staff by 111.
“We simply can’t afford a $13M-plus hit to our bottom line and a future predicated on a break-even payment model without making significant changes to our expenses, including staffing,” CEO Kelly Phillips-Henry said in a news release.
The layoffs come after staff reductions in the past couple of years at other community mental health centers, including WellPower in Denver, SummitStone Health Partners in Fort Collins, Mind Springs Health in Grand Junction, Centennial Mental Health Center in the northeastern corner of the state, and Jefferson Center for Mental Health in Jefferson, Clear Creek and Gilpin counties.
Last year, about 500 other behavioral health care workers, including nurses, therapists and cleaning staff, were laid off in the span of three months. Those included employees of West Springs Hospital in Grand Junction, West Pines Behavioral Health in Wheat Ridge and Johnstown Heights Behavioral Health.
Safety net providers who went through layoffs a few years ago blamed those cuts mainly on fewer people eligible for Medicaid after a post-pandemic rollback, but Aurora Mental Health is the first to point toward the state’s two-year-old repayment model.
“We are the first big center to have to do this,” Phillips-Henry said in an interview Monday. “I don’t think we’ll be the last. I think there are a lot more to come. We’re all going to be adjusting, cutting back, asking, ‘How do we preserve the services that are our core mission?’”
State says say Aurora Mental Health mismanaged its finances
State officials, meanwhile, accused Aurora Mental Health leaders of “financial mismanagement” and say that blaming the new state funding model is “misleading.” While some other mental health centers realized earlier in the year that they would end up having to return surplus funds and asked for an adjustment in their payments, Aurora did not.
“We know that Medicaid providers across the state are facing financial pressure and we are working with community partners to do what we can to provide support,” said Marc Williams, a spokesperson for the healthcare policy department. “However, their characterization of their financial challenges is completely misleading. It’s unfortunate that Coloradans will be impacted by their financial mismanagement.”
The payment model is a national one that has worked elsewhere, he said. For the first two years of the new system, the state healthcare department is required to dispense the funds, then reconcile at the end of the year to recoup any overpayments. Mental health centers were notified by the state in March 2024 about strategies to track their payments and how to make adjustments throughout the year if needed.
Funding for safety net behavioral health providers in Colorado has more than doubled in the past five years, Williams said.
The mental health center’s required repayment is about $5.7 million, not the $7.2 million the center reported last week, he said Monday.
Gov. Jared Polis, who has worked to improve the state’s system of mental health care, also pushed back on Aurora Mental Health’s claims.
“The assertion that these reductions are due to state and federal budget cuts simply isn’t true,” said Polis spokesperson Eric Maruyama. “Providers like Aurora Mental Health are paid a rate that is intended to cover their costs,” and the state cannot afford to “add an additional margin for providers like this one, to cover profits above the actual costs of care.”
In a letter to Aurora Mental Health, the chief financial officer of the Department of Health Care Policy and Financing dismissed the center’s request that it forgo its repayment of the surplus funds. Besides the fact that repayment is required by a state and federal arrangement, the state doesn’t have the money to give to Aurora Mental Health, Joshua Block wrote.
“We do not have the resources to support additional provider payments at this time,” he wrote, adding that the state could work out a payment plan.
About three-quarters of the state’s safety net community mental health centers are operating at breakeven or a loss, according to a survey by the Colorado Behavioral Healthcare Council. And the majority of the state’s about 20 centers are either on a hiring freeze or have eliminated staff positions.
In an April letter to the legislature’s Joint Budget Committee, the council asked lawmakers to take a serious look at the funding model. “This is not a request for new funding,” the council wrote. “It is a question of whether existing state investment is structured to support system stability, meet statutory obligations, and maximize available federal funding.”
The council’s CEO, Kara Johnson-Hufford, told The Sun that the financial instability of the system is not just an Aurora problem, but a question of whether Colorado has set up its funding model in a way that can sustain major state investments in behavioral health that were meant to increase access and crisis response. Colorado is missing out on tens of millions of dollars in federal Medicaid funding because of its rate structure, she said.
“It’s designed to recover cost, not sustain the system or allow providers to plan, invest, or retain efficiency gains,” Johnson-Hufford said via email. “That mismatch is starting to show up in tangible ways.”
Besides layoffs, some centers are shrinking capacity, including in crisis care and 24/7 response, she said. “It’s a signal that the system is under structural strain. And when that capacity shrinks, the impact doesn’t disappear, it shifts to emergency departments, law enforcement, and county systems.”
Residential services, other programs closing too
Aurora Mental Health said it is requiring its leadership staff to take unpaid time off, leaving open positions unfilled, eliminating two paid holidays and reducing travel and other administrative expenses. Those efforts saved $1.4 million and 22 jobs, CEO Phillips-Henry said.
She blamed the current funding model, saying it is designed to “pay providers at cost with no operating margin.”
“Unfortunately, those cost savings are not enough to fill the gap we face,” she said. “Colorado’s safety-net behavioral health system rests on a payment model that threatens our ability to serve the people who need us most. That must change. Safety-net providers need stability in order to continue serving our communities, especially the most vulnerable among us.”
In addition to the staff cuts, the center is closing a few programs, including a short-term housing program for people transitioning from psychiatric hospitals to the community. The center is also closing a program that helps refugees and immigrants who are new to Aurora and have experienced human trafficking.
“We know that if we help them preventively, it helps other costs down the line,” Phillips-Henry said.
Employees were given a 60-day notice that their jobs are ending June 30, and staff are working to connect affected clients to other local providers.
Type of Story: News
Based on facts, either observed and verified directly by the reporter, or reported and verified from knowledgeable sources.