![\"\"](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/cover.791-Chambers-Stith-Bldg.web_.jpg\")
Aurora Mental Health will be opening a Crisis and Acute Care Center on South Potamac Street. The center will be completed in three phases and will include an acute care facility, a health clinic and affordable housing. Pictured is the Stith Center, Elmira Counseling Center and Intensive Services Medical, located at 791 Chambers. Road.
Photo provided by Aurora Mental Health<\/p>\n
AURORA | Aurora\u2019s mental healthcare provider announced this week it will lay off more than 100 staff members because of Medicaid funding reductions at the federal and state levels. State officials, however, dispute Colorado has contributed to the provider\u2019s financial struggles.<\/p>\n
Aurora Mental Health and Recovery officials said the program is reducing its staff by 111 employees, mostly administrative and support positions, as of June 30.<\/p>\n
Only four roles providing direct client care will be eliminated, officials said. Additionally, the facility plans to reduce some of its services.<\/p>\n
CEO Kelly Phillips-Henry said in a statement changes to Medicaid at the state and federal levels represent a $13 million hit to the organization\u2019s budget, which it can\u2019t afford because it operates on a break-even payment model.<\/p>\n
Aurora Mental Health and Recovery \u201cis taking this action with a heavy heart,\u201d Phillips-Henry said.<\/p>\n
Aurora Mental Health will also close programs that don\u2019t have sustainable funding, including adult education, victim assistance, a youth leadership academy and Aurora Sustains, a mental health screening initiative partnered with the municipal court system.\u00a0<\/p>\n
Behavioral health residential services for Mrachek House and Thomas Houses will end as well, though residents will continue living at Mrachek, which will be managed by the U.S. Department of Housing and Urban Development.\u00a0<\/p>\n
Phillips-Henry said the organization is \u201ccommitted to ensuring that no client experiences a gap in care as a result of these closures.\u201d<\/p>\n
In an effort to reduce the number of layoffs, the organization also instituted other cost saving measures, including mandatory furloughs for leadership, reducing paid holidays and eliminating travel. Aurora Mental Health was able to cut expenses by $1.4 million, which translates to saving 22 positions.<\/p>\n
Phillips-Henry said the organization is performing ahead of budget for the year and has cash available but is limited by its payment model, which is directed by the Colorado Department of Health Care Policy and Financing. The model pays providers at cost with no operating margin.<\/p>\n
\u201cColorado\u2019s 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,\u201d Phillips-Henry said. \u201cSafety net providers need stability in order to continue serving our communities, especially the most vulnerable among us.\u201d<\/p>\n
State officials strongly dispute Aurora Mental Health\u2019s claims that budget cuts or the state\u2019s payment program contributed to financial woes.<\/p>\n
\u201cThe assertion that these reductions are due to state and federal budget cuts simply isn\u2019t true,\u201d Eric Maruyama, a spokesperson for Gov. Jared Polis, said. \u201cProviders like Aurora Mental Health are paid a rate that is intended to cover their costs, in advance, with a reconciliation period. Ultimately, they overestimated their costs, meaning they were overpaid, and the state had to recover that overpayment, which is why they are facing this financial situation.\u201d<\/p>\n
The governor\u2019s office also provided an April 14 letter sent to Aurora Mental Health from the Department of Health Care Policy and Financing.\u00a0<\/p>\n
The letter defended the state\u2019s payment model as a way \u201cto preserve the broadest possible array of services for vulnerable Coloradans, provide stable funding that can be tracked month over month, and remain in compliance with federal regulations and approvals.\u201d It said the department doesn\u2019t have the resources to support additional provider payments.<\/p>\n
The department also said it is working on creating new ways to support providers and offered to ensure Aurora Mental Health could take advantage of \u201call of the resources we have set up to support and educate providers, and to understand what additional technical assistance would be helpful beyond what we have available.\u201d<\/p>\n
![\"\"](\"https:\/\/www.newsbeep.com\/us\/wp-content\/uploads\/2026\/05\/Potomac-Pavilion-Blog-Header-1024x576-1.jpg\")
Artist rendering of the Potomac Pavilion, 1290 S. Potomac St.<\/p>\n
Aurora Mental Health isn\u2019t the only provider struggling with the state\u2019s payment system, according to the Colorado Behavioral Health Council, a nonprofit representing healthcare providers. The council has formally raised concerns about the payment model with the state legislature\u2019s Joint Budget Committee and the state\u2019s Department of Health Care Policy and Financing.<\/p>\n
In a statement, Colorado Behavioral Health Council CEO Kara Johnson-Hufford said the state\u2019s payment model has not kept pace with the obligations of healthcare providers.\u00a0<\/p>\n
\u201cThe fact that (Aurora Mental Health and Recovery) have reached this point is not a reflection of their performance,\u201d Johnson-Hufford said. \u201cIt reflects a payment model that, as currently designed, is not fully aligned with the demands placed on comprehensive safety net providers.\u201d<\/p>\n
A March 2026 survey of the council\u2019s member organizations found that 77% are operating at break-even or at a loss, while 62% have reduced services or frozen hiring.<\/p>\n
Colorado\u2019s Medicaid Interim Committee plans to discuss the state\u2019s payment model this summer and Johnson-Hufford said the council hopes to help work toward \u201ca payment architecture that can more effectively support and sustain the system Colorado has built.\u201d<\/p>\n
Aurora Mental Health\u2019s Phillips-Henry said the cuts are devastating, adding the organization will continue to look for sustainable funding to bring the services back in the future.<\/p>\n
The impacted employees will receive a 60-day notice period, severance and outplacement services. Aurora Mental Health will allow them to apply for remaining vacant positions in the next fiscal year.<\/p>\n