‘No Rational Explanation’: Hospitals Warn Colorado Budget Cuts Will Shrink Physician Pipeline

Hospital leaders across Colorado are urging lawmakers to reconsider a proposal that would cut approximately $50 million from a state program supporting physician training at teaching hospitals.

The proposal targets funding for Colorado’s Medicaid indirect medical education (IME) program, which helps hospitals offset the additional costs of training medical residents. Because the funding also qualifies for federal matching dollars, the reduction would trigger further losses in federal support.

The measure was included in a broader state budget package approved by the Colorado Senate in late February, as lawmakers work to address an estimated $850 million state budget shortfall.

Why the funding matters

IME funding helps hospitals cover the hidden costs of physician training, including maintaining teaching infrastructure, equipment, and reduced patient volume when attending physicians supervise residents instead of seeing additional patients.

Hospital leaders say eliminating the funding could significantly weaken Colorado’s physician workforce pipeline and worsen existing healthcare staffing shortages.

Dr. Ben Hughes, a pediatric pulmonologist at Children’s Hospital Colorado, warned that cuts could directly reduce pediatric physician training capacity.

“If the number of trainees decreases, access to pediatric care across the state will suffer,” he said in comments reported by regional media.

Potential impact on training programs

Teaching hospitals across Colorado train about 1,800 medical residents each year, according to state data.

Two of the largest training institutions expected to be most affected are

• UCHealth, which trains around 1,200 residents annually
  
• Children’s Hospital Colorado, which trains about 350 residents each year
  

State estimates suggest the funding reductions could result in:

• Approximately $18.1 million in cuts to UCHealth’s University of Colorado Hospital
  
• Around $12.4 million in cuts for Children’s Hospital Colorado
  

UCHealth leaders say the proposal could force the system to eliminate about 208 resident full-time equivalent positions, which would translate to roughly 441 fewer physicians in training each year.

Dr. Richard Zane, chief medical officer at UCHealth, criticized the proposal, describing it as a decision with long-term consequences for the healthcare workforce.

State officials defend the proposal

The Colorado Department of Health Care Policy and Financing said the funding reduction is intended to help close the state’s projected budget gap while focusing cuts on hospitals with stronger financial resources.

Officials said the approach aims to minimize the impact on smaller hospitals with weaker financial positions while still achieving necessary budget savings.

The broader concern

Hospital leaders warn that reducing funding for medical education could have long-term consequences for the state’s healthcare system. Fewer residency positions mean fewer physicians entering the workforce, particularly in high need specialties and rural communities.

As Colorado’s population continues to grow, healthcare organizations say protecting physician training programs will be critical to maintaining patient access to care.

Source: Becker’s Hospital Review  Erica Cerutti, ‘No rational explanation’: Hospitals warn Colorado budget cuts will shrink physician pipeline (March 2026).