by Hamilton E. Davis
Some weeks ago, I put up a post comparing the Vermont health care reform project to climbing Mount Everest, one of the supreme challenges of world mountaineering. In the analogy, the state reformers had reached Camp Three, with three more legs to go to reach the summit—a mature state delivery system that regularly produces high quality care at a sustainable cost.
The most difficult problem to solve on the track ahead is recasting the community hospital system in the state: 13 small facilities, eight of which are classified as Critical Access Hospitals, a designation that qualifies them to get federal financial help in meeting their costs. Porter in Middlebury, Gifford in Randolph, Springfield, North Country in Newport, Northeastern in St. Johnsbury, Copley in Morrisville, Mt. Ascutney in Windsor, and Grace Cottage in Townshend carry the critical tag.
And many of them are in trouble, to various degrees. Some are losing patients or money or both. In several cases, their expenses are going up while their business is declining. Regulators are beginning to question whether the smalls are doing more sophisticated care than they can reasonably handle.
The problems with the small hospitals burst upon the public consciousness several weeks ago when Springfield Hospital disclosed that it was on the brink of bankruptcy. It would have closed already if Al Gobeille, the Secretary of the Agency of Human Services, hadn’t bailed the hospital out with an $800,000 loan, which kept the doors open. But it wasn’t clear that Springfield could stanch its money hemorrhage, running at $150,000 dollars a week. The hospital did jettison its crown jewel, a new maternity unit, and it has cut some staff; but it is still not clear whether the facility can avoid bankruptcy.
The Springfield management may be able to right its ship, but the crisis there has put the small hospital travails at the top of the priority list for state’s political and regulatory apparatus. Last week, the Green Mountain Care Board, which regulates the hospitals, held a seminar on the whole problem of small rural hospitals; the House Health Committee, is preparing legislation to cope with the emergency; and, of course, there was the AHS loan to Springfield.
One of the most important developments in my view was the interview that Gov. Phil Scott gave to WCAX’s Neal Goswami on Vermont Public Television a few weeks ago. Scott has been, at best, a diffident advocate for health care reform since he took office in 2017. The reason Scott was even in office was that his predecessor, Pete Shumlin, had blown up his own political career by mishandling the reform project.
Scott had no good political reason to jump on board something that felt far short of a bandwagon. But quietly, and behind the scenes, he has been working hard at getting informed on the mechanics and implications of reform. And in the Goswami interview, Scott stepped out from behind the curtain.
In what was a very wide-ranging interview, Goswami had the perfect lead-in to the Springfield debacle and the potential implications for the health care delivery system. The lead-in was a question from a viewer in Lincoln:
I was wondering if Governor Scott thinks there is a problem with the consolidation of hospitals and clinics in Addison and Chittenden counties as part of the UVM medical system?
I have described that as a “perfect” lead-in to Springfield and small hospital issue. And I can hear my tiny corps of brilliant readers saying, “Wait a minute, I thought this was about small hospitals…what has UVM got to do with it?”
Well, a very great deal, as it turns out. In fact, the question to Scott was an invitation to endorse the quite wide-spread anti-UVM theme that has been pressed by a variety of players, including leading state senators, the Vermont Health Care Advocate and others.
Scott turned down the invitation flat.
There’s lots of consolidation across the country, and not just in hospitals. And actually, I think that’s part of the answer. I’m concerned about some of our small hospitals—we’ve seen this in Springfield. Unfortunately, some would see that (the UVM network) as somewhat of a monopoly, but I see it as a way to improve the system. Community hospitals can’t be all things to all people. They have to focus on what they do best. They have to focus; they have to evolve.
The Scott comments, which ran directly counter to the narrative that has held sway in the press and the legislature for the last several years were the leading edge of a gathering new narrative that has developed over the last several months. In the hospital budget hearings late last summer, the Green Mountain Care Board began to bore in on the community hospital infrastructure as a major issue for the reform project.
Maureen Usifer, a board member with considerable expertise in corporate finance, repeatedly criticized some of the stressed hospitals for maintaining high expense levels at a time when their patient flow was dropping. “That’s just not sustainable,” she kept insisting.
And Jessica Holmes, another board member, began to raise the issue of the types of services that are being delivered in small hospitals. Last week’s seminar at the Board meeting threw a spotlight on the whole rural infrastructure. The centerpiece of the three-hour event was an address by Eric Shell, a national expert, the burden of which was that the current health care payment system is a death trap for rural critical access hospitals. (Changing that system is the engine driving Vermont reform; I’ll do a full post on the seminar soon.)
The problems are clear enough. Small rural hospitals across the country, especially the critical access facilities with 25 or fewer in-patient beds, are going out of business entirely, or affiliating with bigger academic or tertiary centers that deliver a full range of complex care, and, not incidentally, have much bigger revenue streams. Neither Scott nor the Green Mountain Care Board have said they want any of Vermont’s small facilities to vanish, but they are clearly focusing on either cutting back the complexity of the service offerings, or encouraging affiliation with a larger system, or both.
In fact, the rationale for such a course correction has been building for years. Beginning in the late 1980s, some small Vermont hospitals began to ramp up their specialty services. That seemed to make sense to many of the local boards and managements. You’ve got a little hospital, say 20 beds. You can do some minor surgery, and you may have bought some primary care practices to ensure yourself a flow of patients. But the big-money items go the big centers, like UVM and Dartmouth. Nasty cancers, open heart procedures, knee and hip replacements, gnarly spine problems—all heading out of town and taking the big reimbursement dollars with them. For a small community hospital, a handful of serious orthopedic operations could change red ink to black. In recent years, Vermont, with just 625,000 people, has been doing hip replacements at 12 hospitals.
Why is it so clear in the health policy world that the infrastructure needs to be recast? Here’s why:
When a small hospital tries to overreach, it creates all sorts of negative incentives. It is harder to recruit high quality docs to a small place that the outside world has never heard of. Becoming a professor of whatever at UVM or Dartmouth medical schools is one thing, becoming a spine surgeon in a small Vermont town is something less.
Once there, the new doc will be under heavy pressure to earn his keep, a powerful incentive to overuse the procedure. And even if high quality can be maintained, there is seldom sufficient volume to achieve economies of scale. So, the unit cost is often higher.
These dynamics are at work in Vermont every day. In Springfield, for example, the community extended itself to build a superb maternity unit, bright, cheerful rooms, fully staffed. But when Quorum, Springfield’s consultant, came in to pick up the pieces a few months ago, he found that the unit was delivering one baby every three days. No one on God’s green earth could make any sense of that: one baby every three days was nowhere near enough to permit the staff to retain its skills, and the cost was ridiculous. They had no choice but to close the unit.
Another case in point is Copley Hospital in Morrisville. A few years ago, a couple of very capable UVM orthopedic surgeons migrated to Copley and began replacing knees, hips and shoulders. Based on their practice, Copley built expanded surgical suites and began to attract patients from well outside the Lamoille County area. A few years ago, the then-Copley president told the Green Mountain Care Board that if it wasn’t for the orthopedic team “there wouldn’t be a hospital in Morrisville.”
The problem with building a whole hospital around a couple of ortho stars was what happens when you lose one of them. Which happened when one of the team became ill and had to stop doing surgery.
The hospital is now losing money. And, in fact, Copley’s costs have been serious outliers for years, and those chickens are now coming home to roost. Copley got a new president, Art Mathisen in April of 2016; he replaced Mel Patashnick, who led the Morrisville facility for 30 years. A few weeks ago, Mathisen bailed out after just three years to run a hospital in northern New Hampshire. One of the issues in the Copley case was whether it should affiliate with the UVM health network. The Copley Board wouldn’t hear of it.
Affiliation, however, is clearly what stands between oblivion and a continued, if reduced future, for many of Vermont’s community facilities. There is huge question, however, how that process will play out in Vermont. In that regard, it is worth noting that affiliation can work in this area. Case in point: northeastern New York.
A few years ago, the UVM network was invited to extend its reach to the four hospitals operating in what New Yorkers call the North Country, Essex, Clinton and Franklin counties, snugged into the northeast corner of the state between the Canadian border and Lake Champlain. Medically speaking, the place was kind of a mess, which is what occasioned the New Yorkers to approach UVM.
The big hospital in the area is Champlain Valley Physicians Hospital in Plattsburgh; it was losing money regularly when the UVM network arrived. In even worse shape was Moses Luddington Hospital in Ticonderoga; it was hemorrhaging red ink. Alice Hyde in Malone was just so-so. The best by far was the small critical access hospital in Elizabethtown; E-Town had rung up several years of solid financial performance.
One of the network’s first moves was to shift the heart bypass operations from Plattsburgh to Burlington. Plattsburgh was averaging just a couple of the heart operations a week, not enough to keep up its skills, and the low volume made the cardiac service a money loser. Another was to recast Moses Luddington as a clinic, with a strong foundation in primary care and high-quality emergency room, supported by lab and imaging services. Management of the new Ti campus shifted to the strong unit at E-Town. Yet another significant factor in the refashioning of the North Country system was enthusiastic participation by Hudson Headwaters, a Federally Qualified Health Center, with 18 primary care sites across a huge swatch of northeastern New York.
The New York State Health Department obviously loves what the UVM network is doing in one of the most socially and financially disadvantaged portions of the Empire State. Once UVM affiliated with the four regional hospitals, the Health Department coughed up $22 million to repurpose the failing hospital at Ti.
According to John Remillard, the CEO of E-Town Hospital, the state would never have done that without the involvement of UVM. Getting the smaller community hospitals into an affiliation with an academic medical center means that the various units can share resources in all kinds of ways that help them all. “Whenever I have a problem,” said Remillard, “I can call Brumsted, and I always get a respectful hearing.” There are some 200 hospitals in New York State, and at any given time dozens of them are on the financial dole. New York health officials are betting that the affiliates of the UVM network won’t be in that company. “Without UVM, we don’t get any of that state money,” Remillard says.
The same impulse—link small rural facilities with big tertiary centers—is animating reorganization efforts across the country. And in the broader northeast it’s moving rapidly. There are some 30 hospitals in New Hampshire, and nearly all of them are in or contemplating affiliation; the same is true in Maine, where small community centers are beginning to orbit around Maine Med, the big tertiary center in Portland.
That isn’t always a good thing: integration can confer huge economic power on a collaborative unit. But 50 years of competition in health care have delivered stratospheric cost increases, and the kinds of steps being taken in the North Country of New York, in much of Vermont, and across New Hampshire and Maine are the most promising solutions to stem the cost tide.
No state is as well-equipped as Vermont to stay on the integration track, without running into the weeds of corporate exploitation. The Green Mountain Care Board has virtually unlimited power to prevent it. And while the process hasn’t been perfect, the state hospital system has costs that are at least one third lower than the rest of the country.
None of this guarantees high performance by the Vermont apparatus, taken as a whole. UVM, beloved in New York State, is hated by elements of the political left and the press here. The Legislature routinely throws up proposals that range from unworkable to bizarre. OneCare Vermont, which represents most of the hospitals and a majority of the doctors, is so far not really engaging in the issue of the services that should be delivered in small hospitals.
Still, the Scott comments on public television, and the gathering Green Mountain Care Board momentum in the direction of small hospital analysis, and the hints that the Legislature may be starting to figure out health care reform are hopeful auguries.
Taken together, they amount to a tailwind for reformers, and anyone who has climbed as much as Camel’s Hump, or Mt. Philo for that matter, knows what a blessing a tailwind can be.