When Dr. Ben Hughes arrived in Colorado in 2009 for his medical residency — a multiyear training period for new doctors — his plan was pretty simple.
He was going to complete his education, and then he was going to move back to his home state of Texas to pursue his career as a pediatrician.
“What I quickly realized,” he said, “was that I love the state of Colorado, and I love practicing medicine in Colorado.”
A rotation in Estes Park launched a special interest in practicing medicine away from the urban Front Range. So Hughes now works as a pediatric pulmonologist and sleep specialist out of a clinic in Grand Junction. He sees patients across the Western Slope, where pediatric specialists are few and far between, and also teaches new doctors to follow in his footsteps.
To him, this shows the value of medical residency programs not just for education but for workforce development. Across the country and especially in Colorado, doctors put down roots not where they go to school but where they train after graduation.
“If there had not been a large, world-class training program at Children’s Hospital Colorado, I myself would not have ended up in the state,” Hughes said.
Proposed cut to education funding
Now, as part of its plan to patch an $850 million budget hole, Gov. Jared Polis’ administration is proposing to cut about $50 million from a program that helps teaching hospitals pay for the added costs of training all those medical residents.
The cut would specifically impact a program that helps hospitals absorb the indirect costs of training new doctors — things like needing the facilities and equipment to do the training and accounting for more experienced doctors seeing fewer patients because they are spending more of their time teaching. A separate program, which is not proposed for cuts, directly pays the salaries of medical residents, who have graduated from medical school and do not pay tuition.
The proposed cut could be voted on by the legislature’s Joint Budget Committee as early as Monday. It shows the stark choices facing Colorado when trying to trim health care spending. And it also shows the crumbly math facing the state as it slices away specifically at Medicaid, where almost every state dollar spent pulls down at least another dollar in federal funding.
While the proposed cut is projected to lop off $50.6 million in funding for indirect medical education, the amount of savings to the state’s general fund — in other words, the actual dollars the state can put back in the bank to pay for other things — is only $14.6 million. The remainder is federal funding that Colorado would no longer be eligible to claim after pulling back state dollars.
“Difficult budget decisions are needed to balance the budget,” the state Department of Health Care Policy and Financing said in a statement. The agency, known as HCPF, administers Medicaid in Colorado and is backing the cuts.
Hospitals criticized the proposed cut as shortsighted, harming not just valuable education programs but also putting a massive dent in the workforce pipeline at a time when Colorado is already facing a physician shortage while an even bigger shortage looms down the road.
“This decision is generational,” said Dr. Richard Zane, the chief medical officer for UCHealth. “It will take a generation of physicians to recover from this decision if it goes forward.”
A “targeted reduction”
Colorado hospitals train about 1,800 medical residents a year. UCHealth, which trains about 1,200 residents annually, and Children’s Hospital Colorado, with around 350 residents, are the two biggest teaching hospitals, and they would also see the biggest funding cuts, according to a state fact sheet.
HCPF is proposing to slash the rate paid for indirect medical education by 80%. This means UCHealth’s University of Colorado Hospital would see a projected net cut of $18.1 million to its funding, while three other UCHealth hospitals would see a combined $1.5 million net cut. Children’s is looking at a net cut of $12.4 million.
In its statement, HCPF noted that the cut will only be applied to large hospital systems, while excluding Denver Health and rural hospitals.
“This targeted reduction is in lieu of a larger across-the-board hospital rate reduction proposal,” the agency wrote in its statement. “Such a reduction proposal would affect all hospitals indiscriminately. HCPF’s proposal allows for a targeted reduction to hospitals who have the most resources.”
Hospitals counter that this doesn’t reflect their financial reality of rising costs and increasing numbers of patients who are struggling to pay for care.
Children’s Hospital Colorado’s facilities in Aurora and Colorado Springs lost money treating patients in 2024, as did UCHealth University of Colorado Hospital, according to one independent analysis. The hospitals ultimately ended up profitable because of other income, which could include philanthropic support or investment income.
Zane said UCHealth already contributes a significant amount of its own money toward medical education — $714 million per year for education, research and support for the University of Colorado School of Medicine, according to one recent state report.
If the cut goes through, Zane said UCHealth would be looking at cutting around 208 resident full-time equivalent spots, which equates to 441 fewer trainee doctors per year. (Residents typically rotate through multiple hospitals during their residency, meaning their positions are distributed across multiple hospitals’ budgets.)
“There is no rational explanation for this,” Zane said. “It is such a generational decision that it’s not explainable.”
“The heart and soul”
Another way the cut could impact teaching hospitals is that residents aren’t just there to learn. They do a significant amount of work.
“We have a very resident-driven hospital,” said Dr. Alice Burgess, one of the chief residents at Children’s Hospital Colorado. “We are kind of the primary workforce for a vast majority of kids that are coming through. … Residents really are the heart and soul of a lot of the hospital.”
To Burgess, this is a good thing. It means more hands on deck to evaluate patients and help parents learn how to take care of their sometimes medically complex children. It also means hospitals would prepare fewer doctors to take on more responsibility as their careers and education progress.
“If we train fewer doctors, there are going to be fewer appointments available for kids who need care,” said Zach Zaslow, the vice president of advocacy and community health at Children’s Hospital Colorado.
The state doesn’t exactly dispute any of this. It just says these cuts are the best way it has found to deal with a massive budget crisis and the need for cuts to Medicaid — which makes up about one-third of the state’s budget — to play a role.
“This proposal strikes a balance between the need for savings and minimizing the effect of budget reductions on hospitals with weaker finances,” HCPF wrote in its statement.
But Hughes, the pediatrician in Grand Junction, said his experience shows that may not be the case. Sure, rural hospitals may not receive a funding cut. But they may also find it harder to recruit doctors in the not-too-distant future if there are fewer residents like him discovering a passion for rural Colorado.
“I do fear that that would hit kids the hardest, and especially kids who live in rural areas,” he said. “And so I think that this is a change that could have really long-lasting negative effects on children’s health care.”