Aurora Mental Health and Recovery announced it will lay off 111 employees, mostly in administrative and support positions, effective June 30, citing Medicaid funding reductions at federal and state levels. Only four roles providing direct client care will be eliminated. CEO Kelly Phillips-Henry stated that changes to Medicaid at the state and federal levels represent a $13 million hit to the organization’s budget, which operates on a break-even payment model. “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,” Phillips-Henry said.
The facility will close programs without 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. Behavioral health residential services for Mrachek House and Thomas Houses will end, though residents will continue living at Mrachek, managed by the U.S. Department of Housing and Urban Development. In an effort to reduce layoffs, the organization implemented other cost-saving measures including mandatory furloughs for leadership, reduced paid holidays, and eliminated travel, saving 22 positions and $1.4 million. Phillips-Henry said the organization is performing ahead of budget and has cash available but is limited by the state’s payment model, which pays providers at cost with no operating margin.
State officials dispute Aurora Mental Health’s claims, with Governor Jared Polis’s spokesperson Eric Maruyama stating that providers are paid rates intended to cover costs in advance with a reconciliation period. “Providers like Aurora Mental Health are overpaid, and the state had to recover that overpayment, which is why they are facing this financial situation,” Maruyama said. However, the Colorado Behavioral Health Council, representing healthcare providers, raised formal concerns about the payment model. According to a March 2026 survey of the council’s member organizations, 77% are operating at break-even or at a loss, while 62% have reduced services or frozen hiring.
The layoffs come after Aurora Mental Health opened Potomac Pavilion earlier this year, a $38 million walk-in access facility offering same-day, non-emergency mental health services and 24-hour crisis services. Impacted employees will receive a 60-day notice period, severance, and outplacement services. Aurora Mental Health indicated it will continue seeking sustainable funding to restore closed services in the future.
This article is an AI-assisted summary. All facts and figures are drawn from the original report: https://sentinelcolorado.com/metro/aurora-mental-health-to-lay-off-111-employees-citing-medicaid-funding-cuts/