Vermont hospital spending outpaces economic growth for second year in a row

On the heels of approving a major increase in hospital budgets for fiscal 2022, the chairman of the Vermont healthcare regulatory board said executives should expect cuts in future cycles budgetary.

The Green Mountain Care Board oversees health care costs and has set a cap for annual increases at 3.5%, in line with the state’s economic growth. In recent budget cycles, the board has allowed Vermont’s 14 hospitals to exceed that number due to pressures from the pandemic.

That approach has run its course, said board chairman Kevin Mullin. Over the past two years, the board has given hospitals leeway to get their finances back on track, “but that’s not something that’s going to continue to happen,” said Mullin.

Hospitals have requested a median growth rate of 6.1% for the current budget cycle. The board reduced that figure to 5.86% during its recent deliberations on fiscal 2022. For comparison, the average growth rate over the five budget cycles before the pandemic was 3.3. %. The new fiscal year begins on October 1.

Individual hospitalization rates varied considerably.

At a rate of 13.4%, Copley Hospital in Morrisville offered the highest rate hike from last year’s budget. The board of directors reduced this target to 12.4%. Springfield hospital officials initially asked for a 7.8% increase. The council ultimately denied that request and set Springfield’s rate at zero.

The board also slashed the prices that individual hospitals can charge to Vermonters who are either self-insured or have insurance coverage through small employers by $ 10 million. Insurance costs, which total $ 66 million in final hospital budgets, are low compared to revenues from other private insurance plans. But for Vermonters in the employer insurance group, the cuts could represent significant savings.

Mullin acknowledged that it was difficult to straddle the line between raising costs enough to support hospitals and making it unaffordable for Vermonters to see a doctor. The board has erred on the side of hospitals for the past two years, he said, and it is time to reverse that trend.

Several hospital administrators openly disagreed with this assessment.

John Brumsted, president and CEO of the University of Vermont Health Network, said in a statement Monday that the three hospitals in the network need all the resources they can get “to meet the needs of our communities and to make real progress in improving access to needed services. “

He wrote that the board cuts would make it “even more difficult to achieve these goals.”

In a recent interview, Brumsted did not answer questions about a payment of more than $ 140 million the network received from state and federal agencies to cover the costs of Covid – he also did not address a reservation. network-wide of nearly $ 66 million in fiscal 2020, according to an audited budget statement from that year. Despite all the difficulties in 2021 at the network’s flagship hospital, the University of Vermont Medical Center in Burlington – a cyberattack, the closure of an outpatient surgery center, staff shortages and the pandemic – the network is preparing to end the year in the dark.

UVM Health Network’s three Vermont hospitals – UVM Medical Center, Central Vermont Medical Center in Barre, and Porter Medical Center in Middlebury – are expected to generate $ 1.8 billion in collective patient revenue over the course of the year. fiscal year 2022, accounting for roughly two-thirds of health spending in Vermont. With around 700 beds in Vermont, the network, which also has three hospitals in New York City, is the region’s largest provider.

The board has been cautious in estimating Brattleboro Memorial Hospital’s fiscal year 2022 budget growth, based on current patient traffic. The hospital requested a 3% increase over last year’s budget, but the board reduced that request to 0.3%. Steven R. Gordon, president and CEO of the 61-bed hospital in southern Vermont, asked the board to reconsider the decision.

In a Sept. 10 appeal to the board, Gordon said the decision was “short-sighted” as increasing numbers of patients sought care there in the spring and summer, a trend he said , should continue.

The council dismissed Brattleboro’s appeal on Wednesday. Representatives from the Windham County Hospital were not immediately available for comment.

Mullin said on Wednesday that hospital executives could return for a mid-year readjustment if patient volumes continue to grow next year. He explained that growth goals determine a hospital’s spending in a given year. A missed one-year growth target, he added, could result in losses that endanger the longevity of a hospital system.

He pointed to Springfield Hospital, the only hospital in Vermont to file for bankruptcy in fiscal 2020. Windsor County Hospital ran a deficit for years before the pandemic and entered budget season. this year with less than a month’s reserve for hospital operations. Green Mountain Care’s board of directors voted to maintain the hospital’s growth target in 2022, a move that CEO Robert Adcock said would reduce its reserve to 11 days.

Adcock said in an email Wednesday evening that the hospital was awaiting the final written decision from the Green Mountain Care Board. In the meantime, the hospital has considered joining a larger network as a viable solution to the financial difficulties. The hospital administration has already taken steps in this direction, adding representatives to the board of directors of two major regional players – Dartmouth-Hitchcock Health and UVM Health Network – ahead of a possible partnership agreement.

Mullin said given the coronavirus help Springfield has received from state and federal governments throughout the pandemic, he has had every chance of surviving.

“We want people to be more realistic in the way they look at their budgets and not come up with an expectation of pie in the sky,” he added.

Senior Springfield executives are expected to submit a revised strategic plan at a later date.

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