After approving a significant increase in hospital budgets for fiscal 2022, the chairman of the Vermont Healthcare Oversight Committee said executives should expect cuts in future budget cycles.
The Green Mountain Care Board oversees healthcare costs and has capped annual increases of 3.5% in line with the state’s economic growth. Over the past several budget cycles, the board has allowed Vermont’s 14 hospitals to exceed this number due to pandemic pressures.
That approach has taken its course, said CEO Kevin Mullin. For the past two years, the board has given hospitals leeway to get their finances back in order, “but it won’t continue,” said Mullin.
Hospitals asked for an average growth rate of 6.1% for the current budget cycle. The board of directors reduced this number to 5.86% during the deliberations of the last financial year 2022. By comparison, the average growth rate over the five budget cycles before the pandemic was 3.3%. The new fiscal year begins on October 1st.
The individual hospital rates varied considerably.
At a rate of 13.4%, Copley Hospital in Morrisville proposed the highest rate increase from last year’s budget. The board of directors has reduced this target to 12.4%. Springfield Hospital executives initially called for a 7.8% increase. The board eventually denied this request and zeroed Springfield’s course.
The board has also cut $ 10 million from the rates individual hospitals may charge Vermonters who are either self-insured or covered by small employers. Insurance costs, which add up to $ 66 million in final hospital budgets, are small compared to income from other private insurance plans. But for Vermonters in the employers’ insurance group, the cuts could mean significant savings.
Mullin acknowledged that it was difficult to bridge the line between increasing the cost of hospital assistance and making it unaffordable for Vermonters to see a doctor. The board has been wrong on the hospitals side in recent 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 network’s three hospitals need all the resources they can get “to meet the needs of our communities and make real progress in improving the health Gaining access to the necessary services. ”
He wrote that the cuts in the board of directors would “make it even more difficult to achieve these goals”.
In a recent interview, Brumsted didn’t answer questions about a payout of more than $ 140 million that the network received from state and federal agencies to cover Covid costs – nor did he speak of a network-wide reserve of nearly $ 66 million. Dollars in fiscal 2020 an audited budget from this year. Despite all of the struggles at the network’s flagship hospital, University of Vermont Medical Center in Burlington, in 2021 – a cyberattack, outpatient operations center closure, staff shortages, and the pandemic – the network is poised to end the year in the black.
UVM Health Network’s three hospitals – UVM Medical Center, Central Vermont Medical Center in Barre, and Porter Medical Center in Middlebury – are expected to have total revenue of $ 1.8 billion from patients in FY2022, which is about two-thirds of health expenditure in. is Vermont. With around 700 beds in Vermont, the network, which also includes three hospitals in New York, is the largest provider in the region.
The board of directors has been conservative in estimating the growth of the Brattleboro Memorial Hospital’s budget for fiscal year 2022 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, urged the board to reconsider the decision.
In an appeal to the board on September 10, Gordon said the decision was “myopic” as the spring and summer saw a growing number of patients seek care there, a trend that is expected to continue.
The board rejected Brattleboro’s appeal on Wednesday. Windham County Hospital officials were not immediately available for comment.
Mullin said Wednesday that hospital executives could return for a mid-year readjustment if patient volumes continue to grow over the next year. He explained that growth goals determine a hospital’s spending for a given year. Missing one year growth target, he added, could result in losses that jeopardize the longevity of a hospital system.
He referred to Springfield Hospital, Vermont’s only hospital to file for bankruptcy in fiscal 2020. Windsor County Hospital was in deficit for years prior to the pandemic and entered this year’s budget season with less than a month’s reserve to run the hospital. The Green Mountain Care Board voted to keep the hospital’s growth target for 2022, a move that CEO Robert Adcock said would reduce its reserve to 11 days.
Adcock said in an email on Wednesday evening that the hospital is awaiting the final written decision from the Green Mountain Care Board. As a viable solution to the financial need, the hospital is now considering joining a larger network. The hospital administration has already taken some steps in this direction, adding board representatives from two major regional players – Dartmouth-Hitchcock Health and UVM Health Network – ahead of a possible partnership agreement.
Mullin said Springfield had every chance of survival given the coronavirus aid Springfield received from state and federal governments during the pandemic.
“We want people to be more realistic about their budgets and not go to heaven with expectations,” he added.
Springfield’s top executives are due to come up with a revised strategic plan at a later date.
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