The severing of a hospital network that has united Catholic and Adventist health care systems for 27 years will occur Aug. 1, a month later than CommonSpirit Health and AdventHealth initially told employees.

A statement from Centura Health, the management company since the joint venture formed in 1996, provided no answer as to the reason for the delay.

“We are continuing to work through key aspects of the transition,” reads an emailed statement. “We are all committed to a smooth transition for our caregivers and patients and remain committed to delivering safe, high-quality whole person care for our patients and our communities.”

The Catholic-affiliated nonprofit CommonSpirit will operate 15 hospitals and related clinics in Colorado, Utah and western Kansas. CommonSpirit’s holdings include 140 hospitals in 21 states.

Seventh-day Adventist-affiliated AdventHealth, based in Altamonte Springs, Fla., and the nation’s largest nonprofit Protestant healthcare provider, will operate and manage five Adventist hospitals and related clinics in Colorado. The organization runs facilities in nine states.

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Centura has not released details on how the disaffiliation will affect local hospitals, saying in its announcement in February that the groups “collaboratively agreed that they can best serve their communities and health care ministries without a partnership,” and instead use a model in which each organization directly manages its locations.

Meanwhile, Centura opened the emergency department and general medical unit at its newest hospital, St. Francis Hospital — Interquest, in Colorado Springs earlier this month, after three years of construction. Along with Penrose Hospital and St. Francis Hospital, the new hospital at 10860 New Allegiance Drive will be operated by CommonSpirit Health following the split with AdventHealth.

The new direction comes as a quarterly report released Monday shows Colorado hospitals have not rebounded from the toll of the pandemic, and the collective financial health of the state’s nearly $20 billion hospital services industry did not improve in the first quarter of 2023.

What that portends for CommonSpirit and AdventHealth facilities is unknown, said Tom Rennell, the Colorado Hospital Association’s senior vice president of financial policy and data analytics.

“We have a more unstable and a vulnerable economic set of conditions here in Colorado that continues to grow into 2023,” he said.

“I think all hospitals — whether you’re an independent, a rural, a critical access, a large safety-net hospital or part of a system — across the board are experiencing significant economic challenges.”

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High inflationary costs, difficulty hiring and retaining employees, new regulatory requirements from state-level health care policymaking, increasing amounts of charity care, reduced numbers of patients and sicker patients who need longer-term hospitalization because they delayed care during the pandemic are among the reasons Rennell cites in a first-quarter financial and utilization trends report released Monday.

From January through March of this year, the “troubling set of economic conditions” identified in 2022, which included financial deterioration and unsustainable operating margins, are continuing and worsening in some cases this year, he said.

“There’s uncertainty, instability and vulnerability in the industry,” Rennell said.

For the first three months of this year, operating profit margins were 65% lower than pre-pandemic levels, following a 52% decrease in 2022, as increasing expenses continue to outpace patient revenues, according to the new report from the Colorado Hospital Association.

The trade group compiles data from 53 of Colorado’s 84 acute care hospitals, with smaller hospitals not reporting quarterly.

Nearly half of all Colorado hospitals posted negative operating margins in the first quarter, the report concluded.

Since 2019, Colorado hospitals collectively have seen a $3.4 billion reduction in income, according to the data.

Two factors primarily have contributed to the situation, Rennell said.

“We’re in a high-inflation environment, with Colorado higher than other places in the country,” he said.

An inflation rate of 5.7% in March in the metro Denver area exceeded the national average of 5.0%, and a high rate hasn’t receded. As of May, the inflation rate of 5.2% in metro Denver was above the 4.1% national average, according to the Common Sense Institute.

Rennell also cites expenses running 30% higher this year than in 2019 as a problem for hospitals.

Increasing costs for medical supplies, pharmaceuticals, administration to fulfill regulatory changes and staffing are ratcheting up expenses, he said.

The biggest expense  for hospitals is labor, Rennell said, which increased by 18% last year and another 6% in the first quarter of this year.

“They’re continuing to trend very high,” he said, “and are driven by what’s going on in our Colorado economy.”

Outsourcing and contracted labor costs have started to ease up this year, but hospitals are spending more to retain and recruit employees, the report says.

Among Centura’s benefits, for example, are sign-on bonuses, child care assistance, tuition reimbursement, loan forgiveness programs and annual salary boosts.

The cost of charity care rose to $282.1 million last year for Colorado hospitals, and the $70.4 million spent in the first quarter of this year is mirroring 2022, the report shows.

Since 2019, charity care provided by hospitals has increased 32%, for a collective total of $1.1 billion.

Unreimbursed Medicaid costs also are rising steadily, with more than $4 billion provided by hospitals since 2019.

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Rennell predicts that longer lengths of stay in hospitals and patient utilization may not change, as “the delayed and deferred care through the pandemic begins to really show itself.”

To help straighten the tilted picture, Rennell said hospitals need to increase revenue to offset increased expenses, which “may or may not be able to happen.”

Some hospitals in the state have asked municipalities for tax support to help stabilize or continue operations, he noted.

Managing expenses by potentially shutting down or constraining some services is another route, Rennell said, with closure as a last resort.

At least two hospital systems were on the brink of closure last year but rallied under restructuring. St. Vincent, in Leadville, has had significant financial challenges, nearly missing payroll and being subject to insolvency. Delta Health, in Delta, had minimal cash on hand, but after reorganization bolstered its financial standing.

Also last year, Parkview Medical Center, in Pueblo, closed its inpatient psychiatric unit. In January, Aurora-based UCHealth announced it would acquire Parkview Health System this year and spend $200 million to upgrade the Pueblo hospital, which posted a $17.5 million operating loss in the first quarter of 2023, according to an unaudited balance sheet.