by Hamilton E. Davis
The health care reform movement in Vermont was born 46 years ago in the first administration of Gov. Richard Snelling. The focus then was getting hospital costs under control, since they were the biggest and most rapidly growing element in the broader healthcare system. Payments to independent doctors and such social services as nursing homes were also important, but not as immediately pressing.
From the early 1980s, reform moved forward only fitfully, with regulators, the hospital industry, and the health policy community figuring out how medicine was practiced and paid for, and wrangling over how the system might be improved. The central questions in those early years were how to get enough money into the delivery system, and how to make sure everybody was insured so that residents could afford it.
After years of wandering, the focus by the mid-teens has shifted to a close examination of how the hospital-doctor system actually works—or in so many cases, doesn’t work. The engine of the system is the way that providers get paid. The system that prevails in most of the country, and in most of Vermont except Medicaid, is called fee-for-service, which means that doctors and hospitals get paid if they do something, but don’t get paid if they don’t. Believe it or not, that financial incentive for overuse ensures that we overpay the system by 30 percent, at least, per year. That represents $300 to $500 million down the drain.
The remedy is to shift to capitation, which means insuring sizeable blocks of patients for a single fixed price. The actual numbers must be negotiated between providers of service and payers, such as the federal government, the states, insurers such as Blue Cross, employers, and individuals. Once the numbers are set, however, there is no more money. That shift eliminates the huge financial incentive for hospitals and doctors to overuse their services—some of that overuse is simply greed, but especially in small hospitals, it can be an effort to just keep the doors open.
That dynamic is very significant in Vermont because we are so rural: of our 14 hospitals, only two are really full size, the 500-bed Medical Center in Burlington and the 144-bed facility in Rutland in the center of the state. All the rest range from the eight very small 25-bed Critical Access Hospitals in places like Newport, Springfield, and Morrisville to just plain small facilities in Bennington, Berlin, Brattleboro, and St. Albans, with fewer than 100 beds.
How well have we done?
Better than anyone else, but not good enough, yet. And the outlook is bleak. Vermont’s cost per capita is the lowest in the country, but that is due entirely to the financial performance of the UVM Health Network hospitals in Burlington, Berlin, and Middlebury. Moreover, the quality of the UVM Network as measured by national consultants is markedly superior to the performance of the 11 non-UVM facilities. I’ll get into the evidence for that conclusion in a later post, but on the debit side are the Green Mountain Care Board’s relentless campaign to drain the financial strength of the UVM Network’s financial position, and the Board’s refusal to face the need to rationalize the non-UVM hospitals.
Yet another discouraging factor is that the public is completely in the dark about what is really going on, and the potential damage it poses to health care across the entire state, as well as to the state’s economy. That failure is not solely the responsibility of the Scott era reform machinery—it goes back to the Shumlin era as well.
The Legislature passed the reform enabling law (Act 48) in 2011, but the lawmakers stuffed the thing with every blue-sky fantasy they could think of. Every person would get all the care they need, when and where they need it. Every person would have his or her own primary care doc. Everybody could afford it all. They called it the “All Payer Model And until the late teens, the reform players who had to talk about reform would repair to the ultimate shill:
The All Payer Model means we will take care of medical problems early before they get serious, so Vermonters won’t have to go to the hospital in the first place.
At a stroke, this claim erased inconveniences like heart attacks, strokes, potentially lethal cancers, car wrecks, traumas of all sorts, and a whole array ills that threaten the human body and that the untrained person couldn’t recognize, let alone spell. Why would we need a Mohs surgeon, and how much did you say we would have to pay her? And what exactly is a physiatrist? How many of those do we need, and where? Plus, how do we find enough primary care docs to serve 625,000 people?
Somewhere, somehow, somebody is going to have to start figuring out how to wrangle this policy conundrum into submission, or, every Vermonter is going to be the loser. We’re getting no leadership now from the Governor, the Green Mountain Care Board, the Legislature, the UVM Network itself, or the non-UVM hospitals.
So, any volunteers?