The Salary Issue: Comparing Apples to Trucks

by Hamilton E. Davis

  In an earlier post I described the shift now underway from the theory of health care reform in Vermont to the practice thereof--planning giving way to execution. To me, the execution is problematical for many reasons, but one of the most troubling, and the one almost never remarked, is the performance of the state’s press corps. The latest example of that is now before the public in the form of stories about the salaries paid to executives of non-profit hospitals.
    The flash point of the current stories is the disclosure that John Brumsted, the Chief Executive Officer of the University of Vermont’s health network, was paid $2.2 million last year, based on the latest federal reports. The weekly newspaper Seven Days used the Brumsted salary, along with those of the other Vermont hospital CEOs to raise the question: “How Much Should Nonprofit Hospital CEOs Earn?”
   The story needs to be read in the light of a years-long campaign on the part of several players—the Left in the Legislature, some smaller hospitals, and some independent and primary care doctors—to disparage UVM as a dominating and nasty player in the health care community. The factual underpinning to that effort is bogus, but it has been effective.
    That effect is illustrated by the Seven Days story. While the story itself is competently reported and written, the framing of it—using the non-profit community in Vermont to assess whether UVM’s financial structure is justified—is simply preposterous.
   As the story says, the average leader of a non-profit in the state makes $83,000 per year. So, the idea that one of those non-profits could pay $2 million per year is shocking, unbelievable, who could credit it, the horror, the horror. Okay, this is comparing apples to tractor trailers. The average non-profit in Vermont is tiny; it has a handful of employees; and while many of those organizations do very good work and are an ornament to the state,they have no relationship to the UVM health network.
   Brumsted runs the biggest and most complex organization in Vermont. It consists of the UVM Medical Center, Central Vermont Medical Center, and is now integrating with Porter Medical Center in Middlebury; it also includes hospitals in Plattsburgh, Malone and Elizabethtown, New York. Nothing like that size and complexity exists in Vermont.  
  Every day, Brumsted has to manage an organization with a $2 billion budget and some 12,000 employees. He is responsible for the delivery of nearly 60 percent of all the medical care available in Vermont. And all of the most sophisticated, tertiary care in the state, as well as northeastern New York. Moreover, he has been the driving force behind the Vermont project to shift the reimbursement system in health care to block financing, the key to getting costs in health care under control. That is attested to by the federal government’s health management officials, who are asking that Vermont show the way to the rest of the country. UVM is willing to set hard spending targets within the Green Mountain Care Board caps--and guarantee to hit them. 
   There's more. The UVM system is often derided as more expensive than the rest of the hospital system in Vermont...the fact is that UVM is less expensive than the rest of the system on a cost per capita basis, the only metric that matters in getting costs under control.  
   So, is Brumsted’s salary too big? Who can say? The reality, however, as the
Seven Days story notes, is that Brumsted’s salary is routine in a national context. In the long run, therefore, Vermonters will have to decide whether they want a national class health care facility available in the population center of the state—or not.
   If they want it, they will have to pay for it. And it’s not just Brumsted that will get paid the rates prevalent in a national market. If you are going to manage a two-billion-dollar budget, you’re going to need a national class finance guy like Chief Financial Officer Todd Keating, and if you don’t want to pay high six figures you’re not going have him. If you need to recruit, retain and get high quality performance from 800 to 1000 doctors you’re going to need somebody like Chief Medical Officer Dr. Steve Leffler, and you’re going to have to pay him, too….
   Looked at in this context, the answer seems obvious: The UVM medical system is essential to Vermont’s economy, and to the quality of its society. If Vermonters decide they want to downgrade UVM, they will be able to do it. But they can then start traveling to Boston or New York to get care for the most difficult and often life-threatening problems. If they do that, the cost will be twice as high, not to mention how difficult it would be for lower and middle income people to access tertiary care at all.
   The problem, of course, is that many of the players don’t look at it that way. No one can expect the ordinary Vermonter to relate to a two-million-dollar salary. What is striking is that many of the central players in the health reform domain have been in the forefront of the denigrate-UVM campaign. One has been HealthFirst, the small organization made up of independent primary care and specialty care doctors, which has routinely testified to the legislature that the UVM system has been lying about its organization, as well as claiming UVM’s quality is bad. There is no evidence to support those claims. Another is the Champlain Valley Area Agency on Aging, whose chief told the Legislature that the problem with the Vermont health care system is that the “big fish is gobbling up all of the food.” There is likewise no evidence for that proposition. 
   A third, arguably the most important, is the Vermont Senate, which has been led into an anti-UVM posture by Sen. Tim Ashe, the Chittenden County Democrat/Progressive. Ashe has regularly promulgated the too-big, gobbling up theme.
   None of this means that UVM is beyond criticism; but much of it is simply wrong headed. Seven Days ran a cover story a couple of years ago arguing that the UVM Medical Center was just way too big and domineering, laying the foundation for the “gobbling up the little fish” theme. That story came at roughly the same time that UVM’s real and very serious shortcoming—the access problem posed by long wait times for elective services—was becoming clear. The real problem, in other words, was that the Medical Center wasn’t too big, it was too small…
   In any event, the public in Vermont gets nowhere near enough information from the Vermont press corps to begin to understand the stakes in the reform issue. A major reason of course is the general collapse of journalism generally owing to the fragmentation of its audience by the Web. In the light of that, it’s important that whatever coverage there is needs to be balanced, and we are not getting that. Not even close. That indictment runs across the board.
   The day after the CEO salary issue roiled the reform environment, Brumsted and his executive team spent four hours testifying before the Green Mountain Care Board about the UVM system’s plans to completely rework the way health care will be delivered and financed in its service area. That plan is the leading edge of the effort to render health care affordable not only in Vermont, but in the United States as well.
   Maybe it will succeed, maybe it won’t. But the readers of Seven Days won’t know anything about it all. Seven Days was nowhere to be seen. Neither was the rest of the press corps, the wire service, the major newspapers, the electronic media. The press drops in on an occasional health care reform issue, but there is no reliable coverage at all.
   The single exception to that conclusion is Vermont Digger, which delivers the only consistent and aggressive coverage on health care reform in the state. The problem with Digger is that its coverage is nowhere near balanced. 
   I'll get to that issue next.