The UVM Health Network Abandons any Effort to Protect Vermont’s Academic Medical Center

April 23, 2025 Laurie Davis

by Hamilton E. Davis

         Last fall, the senior management of the UVM Health Network sued the Green Mountain Care Board on the grounds that the state’s regulator had not allowed UVM to make the case for its 2025 budget. The Board had allowed the Network’s flagship Academic Medical Center in Burlington to take in significantly more patient revenue, but refused to allow the hospital to charge Vermont Blue Cross and other insurance companies enough to actually get that revenue. The shortfall to UVM was about $122 million; At least that was one number that got tossed around.

   The decision to appeal to the courts was a head-snapping U-turn for the company, not just because hospital resistance to the regulator was rare in the 30-history of reform, but because it was so out of character for Sunny Eappen, the Network CEO, who had ascended to the top job two and a half years ago. Eappen tended to praise the GMCB extravagantly and then simply accept whatever he was dealt by the Board; in fact, at one point he suggested the Board could have pressed the hospital even harder to cut costs…

   Still, the UVM case looked strong. The hospital retained Shap Smith, a former Speaker of the Vermont House of Representatives and one of the state’s premier litigators, to manage its case; and when Smith filed his first brief, many of the state’s health policy mavens were impressed. Bill Gilbert, the lawyer who anchored former Governor Dick Snelling staff, and has studied health policy ever since, said he didn’t see how Shap could lose.

That was then.

On March 25, Sunny Eappen pulled the plug on resistance to overreaching regulation, and in effect turned the management of the Academic Medical Center over to a congeries of consultants, advocates, and bureaucrats who, taken as a whole, have no ability to carry out such a scheme. UVM apparently voluntarily withdrew the suit. Eappen’s proposal basically replaced the Green Mountain Care Board with a “Working Group” made up of two members of the current five-member GMCB, one member from the UVM Health Network board, and a second from the UVM Medical Center Hospital Board, and a fifth person, free-floating “liaison” to manage the group.

The powers of the Working Group are so extensive as to render the actual management team of the flagship Medical Center Hospital of Vermont irrelevant. The two UVM members of the Working Group do not include Sunny Eappen, who gets paid $1.3 million per year, or any of the high six-figure salaried senior managers who report to him—the Chief Operating Officer, Chief Counsel, Chief Financial Officer, or key doctors. The members are drawn from the UVM hospital and network Boards, who are unpaid folks drawn from the community, and who may or may not have any serious health policy credentials.

In any event, the Working Group will take command of the UVM system for 16 months, then dissolve. There are a half dozen or more specific issues wrapped up in the whole issue. A Vermont Journal will lay those out over the next few weeks. They will be available in the normal channels to my tiny corps of brilliant readers, and in my national Substack platform: Policy meets Politics.

The agreement between the Green Mountain Care and the UVM Health Network will undermine and potentially destroy the medical integrity and financial health of the Vermont hospital system. The process will take 16 months. It is simply astonishing that such a threat is not the most impactful dimension of the news. The truly jaw-dropping fact is that the whole unprecedented mess will be carried out in total secret. Really, the press, the legislature, the whole health care industry at large and the general public will be enjoined from hearing a word about it. Enjoined in formal legal language. Consider:

The Green Mountain Care Board meeting in mid-April where members discussed the UVM initiative was held in executive session. Nothing substantive was ever disclosed about the content of the debate. And then, buried deep in the seven-page document produced by UVM is the following:

Section 8E: “The workgroup will agree to a policy of confidentiality to the extent consistent with Vermont public meetings and access to public records laws; and (8F) The independent Liaison and other professionals will have no media connections unless specifically authorized by the workgroup”; and 8G “the work group and independent Liaison will exist for 16 months…After that, the Parties will return to the generally applicable processes set forth in statute and rule for sharing information.”

In six decades of following government policy, I have never seen anything quite as grotesque as that. It turns constitutional press protections into a joke, and it makes a mockery of all the pious commentary at every level about transparency in government.

And there hasn’t been a peep about it from the Scott Administration, including the Agency of Human Services, the Legislature, the Health Care Advocate, or the Auditor.

And most amazing of all—the Press itself.

Green Mountain Care Board Implodes, Leaving Reform on Life Support

December 6, 2024 Laurie Davis

by Hamilton E. Davis

The Green Mountain Care Board is imploding, almost certainly ending Vermont’s decades-long effort to regulate and reshape its doctor/hospital system.

In the span of just a few weeks this fall, the Board ordered the UVM Health Network, which delivers 60 percent of all the hospital care in Vermont, to operate under a money-losing budget it could not possibly survive. The amount below breakeven was $122 million.

In November, the Network senior management, in a doormat mode for two years, challenged the budget order and threw the whole mess into the Vermont court system, where it will take at least a year to resolve, if not longer. A consequence is that no one in government or the industry has reliable figures for the fiscal year we are now two months into, not to mention the need for hospitals to begin building their Fiscal year 26 budgets in February.

Meanwhile, the consultant hired by the Board to actually design a viable hospital system, a project far beyond the Board’s staff, turned in a report that was so filled with errors and dumbness, that its credibility vanished on sight. The Secretary of the Agency of Human Services, Jenney Samuelson, immediately issued a statement reassuring Vermonters that the report’s recommendations, including closing four of the 11 small community hospitals, would never be executed. Mike Del Trecco, the boss of the Vermont hospital trade group, demanded an apology…

Just days later, the UVM Health Network announced that it would cut a number of money-losing services, including kidney transplant and dialysis, close a 50-bed safety net where other hospitals could send difficult patients during the Covid crisis, close a psychiatric unit in central Vermont, and shutter OneCare Vermont, the structure designed mainly to shift reimbursement in the payment system from fee-for-service to capitation, the key to sustainable cost containment.

The Board never evinced any interest in shifting away from fee-for-service, but the collateral is likely to be devastating. OneCare Vermont has been the vehicle for providing a lifeline for the state’s primary care providers, contributing about $20 million a year to the state’s 700 or so primary care docs. That number dropped in the last couple of years, but it was a vital financial lifeline that took money from surgery-rich hospitals to primary care docs, especially those with Medicaid-heavy patient panels. No OneCare, no lifeline.

Facing a catastrophe, Owen Foster, the chair of the Green Mountain Care Board, and his team put out a statement that the UVM Network had never warned the Board that it might make severe service cuts. The Network replied that it had fact warned Foster personally, in person and in writing. If Foster can be shown in a legal proceeding to have lied about having been blindsided, it could put his job at risk.

The extraordinary Meeting Today

The severity of the mess facing the healthcare delivery system galvanized the Vermont Legislature, which scheduled for this morning a rare meeting of the Health Reform Oversight Committee, the chairpeople of the six committees in the House and Senate that deal with healthcare—House Health Care and Senate Health and Welfare, House and Senate Appropriations, the tax-writing House Ways and Mean, and Senate Finance committees. These folks will have to decide in 2025 what might be done to solve the problem, how much the state should spend to execute a plan, and how to raise the money.

This group will spend four hours grilling the three most important players in the delivery system: Owen Foster, the chair of the Green Mountain Care Board; Jenney Samuelson, the Secretary of AHS, who works for Gov. Phil Scott, but who under federal law is a signatory for Vermont in any agreement with federal health care officials; and Dr. Steve Leffler, who runs the 500-bed UVM Medical Center in Burlington, and is the spokesman for the UVM Health Network.

You can never rule out a lightning strike, of course, but there is little likelihood that today’s HROC session will conclude with a clear path forward for the reform project. At a minimum, however, the lawmakers should be able to clear away the jungle of magical thinking that has enveloped the system.

Moreover, four hours on the grill for Foster of the GMCB, Samuelson of the Scotties, and Steve Leffler of the UVM Network should illuminate, or at least provide some insight into the factors that have led these leaders into the weeds. There is enough complexity and even weirdness in the reform space to test even the best policy analysts, but there has also been plenty of palpable political irresponsibility and outright incompetence. The temperature on the grill could get really high.

UVM Network Finally Stands up to the Green Mountain Care Board and Opens Health Care Reform to Great Opportunity and Great Risk

October 30, 2024 Laurie Davis

by Hamilton E. Davis

For the first time in the tenure of Gov. Phil Scott’s Green Mountain Care Board, the senior management of the UVM Health Network stood up in mid-November, and said, in effect, Enough is Enough. The Network said it would appeal the full range of the Board’s recent decisions on its FY 25 budget. The first challenge is to the Board’s enforcement action on an earlier UVM revenue overrun; that will be heard in a Superior Court. The second will ask the Vermont Supreme Court to void the Board’s severe cuts to this year’s spending at UVM Medical Center Hospital in Burlington.

According to the Network’s press release, the appeals will seek to restore $122 million to the Medical Center Hospital’s revenue stream in the fiscal year that began Oct. 1. The first UVM action is to ask the Board to stay its $80 million dollar penalty for exceeding its spending cap in 2023. The second will be to appeal the Board’s $42 million cut to its FY25 budget. Failure to reverse that drain, the release said, would force the Network to begin cutting vital medical services to Vermonters. The first step in that process took place a few weeks ago when the Network “paused” the construction of half a dozen new surgical beds in its South Burlington facility. The Board permitted the requested beds, but attached financial conditions that rendered the project unaffordable.

The Network did not indicate any other specific cuts, but over the summer I laid out the money-losing services the Network now delivers: the state’s only Level One Trauma Center; the Vermont Children’s Hospital, the state’s only source of specialty pediatrics; all kidney transplant and dialysis services in Vermont; the state’s only high-risk pregnancy management services; and pediatric outpatient services. Moreover, the UVM Network operates and pays the largest share of the cost of OneCare Vermont, which contributes roughly $20 million a year to support primary care across the state; without that support, primary care in the state would collapse.

In response to the UVM action, the Green Mountain Care Board issued a statement saying that “UVMMC’s statement is inaccurate and a disservice to the community and the many hard-working employees of the hospital.” In other words, Game On: The Vermont courts will determine the course of the Vermont doctor/hospital system for the new fiscal year, now a month old; the lead-in to the 2025 session of the Legislature; and the shape of the Vermont medical system; and, indeed, the state’s entire economy, into the coming decades of the new millennium.

So, what should we think about this irruption of new developments in the 50-year track of Vermont’s healthcare reform movement?

The first and most obvious thing to say is that no one can predict the outcome. The second is that it will be cataclysmic; and third, not quite as certain, it’s fairly fast-moving. The UVM senior management that has been in doormat mode since Gov. Phil Scott took office in 2017, turned into a tiger in a matter of days and in the process wrecked all the places for the players to hide.

Scott himself has been hiding from reform since taking office, and his top aide, Jason Gibbs, is even further out to lunch on reform. Scott/Gibbs are now looking straight into the mouth of a cannon that could blow their administration to pieces. The business community is just beginning to realize that the foundation they’ve been standing on is beginning to crumble.

Actually, it’s already crumbling. Beta, the electric plane maker, is in the process of hiring 500 new employees—and the UVM medical system can’t take care of them. The same thing is true of the other tech companies that represent the economic iron in the Chittenden County area. Since summer, UVMMC has been sending some of its senior docs to work at the Network hospital in Plattsburg, N.Y., simply to get away from the GMCB wrecking ball. There is a stubborn backlog of 4,000 colonoscopies that can’t be performed in a timely way…there is simply no way these developments make any sense.

There is a commonplace rule in much of the legal community that a private entity should never challenge its governmental regulator. “Even when they win, they lose,” the saying goes.

The legal community could be in for a shock, however, in the current situation. One piece of evidence for that came in page 15 of the UVM Network’s formal notice to the Board. It was signed not by by the Network’s Chief Counsel Eric Miller, but by Shapleigh (Shap) Smith, a former Speaker of the Vermont House, and two of his colleagues at the Dinse law firm, Anne Rosenblum and Alexander Hunter.

Shap Smith is one of Vermont’s top litigators; if anyone in the Scott administration or the Green Mountain Care Board thinks that the UVM challenge can be brushed aside as a pro forma effort they are kidding themselves. None of the Green Mountain Care Board lawyers, nor those in the Attorney General’s office, can stack up against Smith. A very interesting question, therefore, will be whether Owen Foster, the chair of the GMCB, can persuade the governor to authorize using tax money to hire a credible law firm to represent his Board…don’t bet on it.

Yet another shift in the healthcare reform space is the advent of a new chairperson at the UVM Network itself. He is Tom Golonka, a private sector finance and governance expert, who will ascend to the chairmanship formally on Jan. 1. I am speculating here, but I believe Golonka is already turning out to be a new sheriff in town. He first came to notice as the chairperson of the local board of the Central Vermont Medical Center. In 2023, the local chairs of the Network wrote a mildly challenging letter to the Legislature about the way the Green Mountain Care Board was regulating hospital budgets. Nothing came of it, but the buzz inside the Network was that it was Golonka who urged the move and helped draft the letter.

I am not speculating when I say that Golonka was the one that jolted Sunny Eappen, the CEO of the Network, out of his doormat mode and into the leadership of what amounts to an insurrection, a shift that occurred in the last month or so. The UVM Network leadership had been struggling for a decade to reverse the toxic narrative that the Medical Center Hospital in Burlington was a bullying force with high costs and poor quality.

Beginning in October of 2021 and continuing into February of 2022, half a dozen national consultants filed reports and analyses showing that in fact UVMMC was the highest quality, most cost-efficient provider in Vermont, and one of the best such players in the U.S. For three years, the Green Mountain Care Board has been hiding that data from the public. They won’t be able to hide it much longer—there simply is no other data bearing on the adjudication of UVMMC’s performance.

Still, the whole exercise promises to torment the justices at both the Superior and Supreme Court levels. The first step will be easiest. The UVM claim that they had been denied the due process of a hearing and the opportunity to defend themselves against an $80 million penalty for taking in that amount of extra revenue in 2023 seems obviously true, if for no other reason than I had never seen or heard of such a hearing. Chapter and verse on the issue were laid out both in Eric Miller’s letter to the GMCB, and in Shap Smith’s formal petition to the Board. Owen Foster, the chair of the GMCB, has already announced that the Board will contest the issue aggressively, but if you are inclined to bet, bet on Shap—ultimately. UVMMC is not likely to prevail at the first level so the appeal from that would be to the Superior Court, which would have to establish the facts and make a judgment on the law. If UVMMC did not prevail in Superior Court, it could appeal to the Vermont Supreme Court, where those justices would rule on the decision laid down below.

The issues on the penalty are not very complicated: they involve questions like whether a hearing was held, was the hearing made known to the public, were the witnesses sworn in…minutiae like that.

The UVM appeal on the $42 million it hopes to rescue from the Board’s cuts to its current annual budget will be much harder. That appeal will have to begin at the Superior Court level, and will be based not on Mickey Mouse questions like whether somebody bought a newspaper ad, but rather on huge existential issues like how to design a whole Hospital/Doctor system: Do we need 14 full-service hospitals, or just four-or three? How can we ensure the availability of primary care for rural areas, or urban, for that matter? How should we distribute obstetrical care? That doesn’t even get mentioned now.

Lurking behind the legal back and forth are the difficult structural issues that plague the actual Vermont medical system. Like, when will the people who run our systems shift from episodic counting to per capita rates, which is how we actually pay for care? And when will we extend capitation reimbursement from Medicaid, which is small and low cost, to Medicare and private insurance, which could save north of $500 million a year?

And who is going to manage all of this? There isn’t single person on the Green Mountain Care Board, or its staff who is remotely capable to doing that. One of the reasons for that is that neither Gov. Phil Scott and his wingman, Jason Gibbs has any idea either, and they picked the Green Mountain Board members.

The Board bet all its marbles on Bruce Hamory, a consultant, to sort all of this out, and Hamory produced a 144-page map that is so bad that it’s already a political corpse. Jenny Samuelson, the Secretary of Human Services, wrote it off the other day when she “reassured” Vermonters that the administration wouldn’t allow anyone to wreck their health care system…

The abrupt UVM Network shift in posture opens up the whole system, from top to bottom: how many hospitals do we need, and what should each one of them do? How do you ensure medical quality while cutting costs by a third? And how do we assess the performance of the people charged with making those decisions—the governor and the executive branch, the individual regulators and their staff, the Legislature, the Health Care Advocate, the Vermont Auditor, the business community?

In other words, huge opportunity at the cost of huge risk.

And a plea to the players:

Could you resolve these dilemmas very quickly, please?

Consultant’s Report Vanishes into the Weeds

October 18, 2024 Laurie Davis

by Hamilton E. Davis

In my last post, we took an overview of Bruce Hamory’s 144-page recommendations to the Green Mountain Care Board on how to recast Vermont’s 14-unit hospital system. In the process, we cast aspersions on that effort—overly broad, impossibly expensive, filled with internal contradictions, and just too complicated to execute in the real world. That took us through page 12 of the report.

The job today is to parse the evidence in the remaining 132 pages. It’s critically important: The GMCB is taking a wrecking ball to the system, and it has to be reined in this fall. If no one can do that, Vermonters will pay the price in an existential threat to not just their health care system, but to the state economy itself.

The first thing to understand is that there are two Hamory reports to the GMBC, not one. The second thing is that the second report contradicts the first. In my view that demonstrates that Hamory’s latter report, the detailed 144-page map for a rebuilt Vermont doctor/hospital system, is a total sham. I suggested in my previous post that Hamory’s performance resulted not from his expertise, but from his ability to read his client—he can see that Owen Foster, the GMBC chairperson, is determined to take down the UVM Health Network. Of course, that is just speculation; teasing out motivation is always chancy. So, let’s look at the hard evidence:

Look at what Hamory concluded from his work on the Board’s Sustainability Project, launched in 2019. The basis for that work was very broad—seven national-class health policy consultants, whose work flowed into the Board beginning on Oct. 27, 2021 and concluding in February of 2022. Hamory’s presentation in February opened like this:

PROBLEM STATEMENT FOR SMALL VERMONT HOSPITALS

Eight of 14 Vermont hospitals have Operating revenue ranging from -0.9% to – 12.8% (GMCB)
The Proportion of Total hospital revenue (ED and Inpatient) in these facilities from potentially avoidable admissions ranges from 21.5% - 37%. (Mathematica)
Average daily census (ADC) in Small Vermont hospitals averages 15 inpatients. (GMCB)
Analysis of bed needs for 2026 in Vermont hospitals showed reduction of 153 beds for hospitals other than UVM (BRG)
Model of basic support personnel costs for a 20 bed hospital with ADC of 5 inpatients and a skeletal ED staff yields total cost of $2,200,000.00 This does not include any medical support for ED, OR or inpatient care. (OW analysis) (OW means Oliver Wyman so Hamory is quoting his own work)

How can Health Services be provided to these communities understanding these and other constraints?

The answer to that is they can’t. A fair reading of Hamory’s 2022 report is that he is broadly endorsing the work of his professional colleagues, but he didn’t mention a word of that in his fall 2024 report. Look at what he says there:

Focus on the numbers on the far right: The top one in black is 2.4 percent. That is what Gifford Hospital, a 25-bed facility in Randolph, would achieve as a margin in 2028. The remaining 13 hospitals are shown drowning in red ink, ranging from 1.5 percent to 14.4 percent. Hamory doesn’t identify which number goes with each hospital. It would be possible to suss that out by tying the percentage loss to each specific hospital to the budget orders, but it would be a waste of time, which you can infer from the Hamory diagram below:

There may be people out there who would spend a fun afternoon wandering through that maze, but I’m not one of them. The central point is not the map—it’s the fact that the whole Hamory document is DOA, dead on arrival, and the real question is what the hospitals themselves and the Legislature decide to do about it. Still, the state is paying for this report, and Vermonters deserve to get at least some sense of what they bought.

The overarching problem with Hamory’s 144-page report is that it ignores the reality of what’s happening on the ground today. For example, Hamory lays out his recommendations for each hospital in the state, but he ignores how the whole eastern part of the state gets its most sophisticated care from the Dartmouth-Hitchcock Medical Center in nearby New Hampshire. He also ignores the extent to which small and very small hospitals rely on the tertiary care from the 500-bed academic medical center hospital in Burlington.

Take Brattleboro Memorial Hospital for example. The southeast anchor for the system, Brattleboro has just 47 staffed beds—far too small for a modern full-service facility. Yet, Hamory recommends trying to make it a center for orthopedics, including spine surgery which belongs in tertiary centers. And Dartmouth sits just an hour’s drive north.

That kind of just plain bad analysis taints Hamory’s analysis of hospitals in Newport, St. Johnsbury, White River, Randolph, and Grace Cottage in the east, and St. Albans in the UVM Network patient shed. But does it matter?

Among the official responses to the Hamory study, two stand out. The first came earlier this week from Jenny Samuelson, the Secretary of the Agency of Human Services. She sounded polite but underwhelmed:
I want to reassure Vermonters that any solutions we identify will be thoroughly evaluated, she wrote. They will be both fiscally sound and operationally feasible. We will make sure our next steps improve patient access, quality, and affordability for Vermonters, and make sure that our local community health systems are strong and viable into the future.

Mike Del Trecco, the CEO of the Vermont Hospital Association, by contrast, excoriated the whole Hamory effort:
Many of the recommendations are deeply concerning. Cutting, consolidating and closing services across Vermont will have devastating impacts to our patients and communities. The report essentially calls for the closure of four hospitals, creating healthcare deserts in rural regions. It has no compassion or acknowledgment for the damaging healthcare outcomes that will result from delayed care and long drives in emergency situations or the ripple effects on community healthcare and the local economy. It calls for the consolidation of orthopedics to northern and southern Vermont, leaving Vermonters along the spine of the Green Mountains with nowhere to go but to drive hours or leave the state.
It suggests women should have no choice but to give birth in yet-to-be-built stand-alone birthing centers with no assurances of higher-level care in an emergency. And the list goes on.

Del Trecco did not return a call asking whether he would recommend that any of his member hospitals challenge the budget orders entered by the GMCB. Nevertheless, that is the existential question facing the decision-makers in the state’s hospitals. Resist an ignorant, dangerous board or what—abandon their missions, just die? This post is going up on October 18. Unchallenged, the Board’s orders lock in on Oct. 31, 13 days out…

The decision is critical for many of them, but by orders of magnitude it is most apposite for the UVM Health Networks hospitals in Burlington, Berlin and Middlebury. Since the Scott administration took office in 2017, its Green Mountain Care Board has drained hundreds of millions of dollars from the UVM facilities, an effort in service to the idea that the only way to keep private insurance rates closer to affordable is to get all the money they can out of UVM.

The question, therefore, is the one I posed for the Network in a recent post, Leader or Doormat: Will the University of Vermont’s Health Network be the leader of Vermont’s healthcare delivery system, or a doormat for a failing state government and regulatory system? To lead, the UVM Network would have to appeal the budget decision in the next 13 days. So far they have been moving far too slowly to get that done. The question remains open for another couple of weeks, but there hasn’t been a hint out of Sunny Eappen, his Board, or his senior management about whether they’ll just complain or for the first time challenge the Green Mountain Care Board.

A Consultant’s Utopian Fantasy Imperils VT Healthcare Reform

October 4, 2024 Laurie Davis

by Hamilton E. Davis

The single most important document that has been published over the five-decade life of Vermont’s healthcare reform movement is the 144-page report delivered to the Green Mountain Care Board a few weeks ago by Bruce Hamory, a consultant to the Board. Hamory, a medical doctor, learned his trade running a very large hospital system in rural Pennsylvania called Geisinger; he left Geisinger to become a principal in the Oliver Wyman consulting firm, which advises clients on how to navigate the modern doctor-hospital environment.

Oliver Wyman was one of seven national consulting firms that did an extensive analysis of the Vermont hospital system under the umbrella of a Sustainability project launched by the Board in 2019. Yet, Hamory’s report ignored the Sustainability findings, including his own, and offered instead a breathtakingly broad set of recommendations that would completely remake not just Vermont’s healthcare system, but the state’s infrastructure, including housing, transportation, and the operations of government itself.

Of course, Hamory’s study never mentions what it would cost to implement even a portion of this scheme because that would make it clear that the whole contraption is a utopian fantasy. That should be reason enough to write the whole thing off—hey, it’s just a study. What’s truly alarming, however, is that the Hamory effort describes what the Green Mountain Care Board is trying to do to the hospital system itself. In fact, I will argue in a later post that the report was written, not out of Hamory’s real expertise, but to underpin the Board’s wishes. Successful consultants after all read their clients before they do anything else.

It is unfortunate that Vermont’s health care system, and indeed its whole economy is being held hostage to the Scott administration’s cack-handed management of the regulatory system and the obvious inability of most ordinary folks, our part-time legislators or even policy professionals to dredge through a 144-page miasma of graphs, tables, charts and wonderous speculation about stuff that’s never going to happen. I hate to impose it on my brilliant readers, but I don’t know any way to move the reform needle without just wading in. So, I’ll break an analysis into 1,000-word posts to make it more palatable.

Hamory Lays Out His Changes

You can skip the first 10 pages of the report, they’re just throat-clearing. The meat starts on page 11, where we are told how we need to rebuild the state machinery itself, how to configure the hospital system as a whole, and what needs to happen to each individual hospital. I was particularly interested in Hamory’s instructions on how to remake the state itself. The Vermont legislators would certainly appreciate that.

Anyway, lightly edited, here we go:

Vermont must support development of infrastructure and legislation to enable a robust workforce, greater access to transportation and an affordable housing supply all tightly linked to hospitals. The Agency of Human Services’ community care models will require reconfiguration to better coordinate health and social service needs at the community and individual level.

That all sounds sort of reasonable, but it has no connection to financial or political reality. There is no such thing as a “robust” medical workforce anywhere in the United States. There are shortages of doctors and nurses across the country and it’s getting worse—provider burnout is endemic. Moreover, the idea that the Vermont government can simply order up “affordable housing” either in Chittenden County or our rural counties is just silly. The only people who can actually build new housing are private developers and their carpenters. And affordable? By whom? Housing developers get their money banks or other lenders whose focus is unlikely to be on recasting the health care system.

And rejigger the transportation system? What does that even mean? The Vermont transportation system has been just fine since the 1960s, when the Feds financed the Interstate system: I-91 in the east from Brattleboro to the Canadian border, and I-89 from White River northwest to Burlington, then north to St. Albans and the western crossing into Canada. Route 7 from Burlington through Rutland to Bennington is not an interstate, but it’s pretty easy driving. The key reality is that 12 of the state’s 14 hospitals lie along the fast road network, as does Dartmouth Hitchcock Medical Center, which provides tertiary care all of eastern Vermont.

Hamory Rewires the Hospital System

New regional specialized centers of care should be identified…Community-based care, primary care, mental health care, and housing capacity should be increased to divert care to lower cost settings…Healthcare workforce affected by system changes could be redistributed or retrained to perform services needed by the community…

Several hospitals are at risk of closing their inpatient beds and should consider repurposing their facilities to options like Rural Emergency Hospital, Community Ambulatory Care Center, or Care at Home support program…UVM needs to examine current overhead and administrative costs, especially the proportion of providers supporting non-patient care activities.

This grab bag of ideas has been floating around the health policy space for the last 30 years or so, and they sound sort of reasonable; but are in fact totally impractical. Once you get beyond the 500-bed Medical Center Hospital in Burlington, and possibly Rutland with 144, the rest of Vermont’s hospitals are just too small to be “centers of excellence.” Eight of the 14 are 25 beds or fewer, and the rest are under 100. One, Copley in Morrisville, is already a specialist in orthopedics, but Copley is clearly a black swan, as I’ve described in the past, and then only for orthopedics. Centers of excellence are possible in cities like Rochester, N.Y., Boston, or Portland, Ore. But not in the boondocks.

Moreover, the idea of getting a few very expensive subspecialists to move around to hospitals where they might be needed is never going to work. It does work in the Vermont legal system where circuit-riding judges move from courthouse to courthouse, but all judges need is a good car and a briefcase. Doctors by contrast need lots of expensive infrastructure: labs, imaging, operating rooms packed with complex equipment, skilled nursing teams. The idea that you can take a cardiothoracic surgeon, a gastroenterologist, or a national-class urologist and bounce them around from Bennington to Newport to Springfield and back is just plain dumb.

And who would manage such a system? The Green Mountain Care Board? Oh, please. Neither the members nor the staff of the Green Mountain Care Board have any experience or expertise in running a 21st-century healthcare delivery system. The only credible source of the expertise necessary to run a large, vertically integrated medical delivery system lies in the UVM Network, and if you want to get a sense of how that appeals to the 11 non-UVM facilities, wear earmuffs. Not happening.

Okay, so much for page for 11 in the Hamory report.

In my next post, we will go deeper to see what kind of evidence Hamory can bring forward to support his plan.

Green Mountain Care Board Loses its Collective Mind, Puts Vermont Hospitals, Big and Small, at Risk

September 30, 2024 Laurie Davis

by Hamilton E. Davis

In late July, I put up a post assessing the state of health care reform in Vermont. It was quite bleak without being hopeless. There was zero leadership from Gov. Phil Scott and his avatar, Jason Gibbs, and Scott’s Green Mountain Care Board was just getting everything wrong. The members refused even to look at what really needs to be done: shifting our data systems to a per capita basis rather than fee-for-service, which incentivizes overutilization and bad quality; and restructuring a wildly out-of-whack hospital system that features 14 hospitals when we need at most four, which is wasting $500 million or more a year.

Their worst blunder was focusing all their regulatory firepower on draining every nickel they could out of the University of Vermont’s three-hospital Health Network that delivers 60 percent of all the acute care in the state and is—by a huge margin—the highest quality and most cost-efficient element in the system. There is a wealth of consulting data sleeping in the Green Mountain Care Board’s archives that support those assertions.

Still, there were couple breaks in the clouds. One was the fact that in 2019, Jessica Holmes, the intellectual leader of the Board, had persuaded the other members to adopt what she called a Sustainability effort that would give shape to the necessary restructuring. The central idea was to assess each major service line in the individual hospitals to ensure that each had enough cases each year to satisfy a quality standard and a unit cost that made sense. High quality and reasonable unit costs are the touchstones of any viable system in the 21st century.

A second glimmer of light, I thought, was the prospect that Owen Foster, who had assumed the chairmanship of the Board two years, earlier might actually start to get it. He seemed smart enough and in answer to some questions in the Board’s public comment time, he assured the public that he understood the value of the consulting data, and that he would include it in Board deliberations—he wasn’t afraid of it.

That was then.

The August hearings on $4 billion of spending by 14 Vermont in the hospital fiscal year 2025, which starts Oct. 1, were the usual miasma of a zillion numbers and analysis by the GMCB staff, mediated by random questioning by the Board members. The real deal, however, went down on the few days before the legal deadline for the Board’s decisions, which was Friday, Sept. 13.

And the Board lost its collective mind. Egregious overspending hospitals got what they asked for. Not a syllable of the data in the archives was mentioned. Four independent hospital CEOs said the cuts to their proposed budgets meant their hospital couldn’t deliver the care the people of their community need. The Board did another hatchet job on Copley Hospital in Morrisville, the highest performing facility among the non-UVM indies.

By far the most significant decision, however, was to force UVM’s Medical Center Hospital in Burlington to spend less in FY 2025 than in 2024, a decision that would convert the Medical Center to an ordinary a community hospital, serving just Chittenden County. It is impossible to overstate how dumb an idea that is. Vermont is the financially weakest state in the union, and the UVM Network is one of its most important assets, medically and economically, and the Board showed it is dead set on destroying it.

In the face of that threat, the senior management of the UVM Network finally firmed up and pushed back. The response came in the form of a blistering letter from Eric Miller, the Network’s Chief Counsel, attacking the Board’s performance in legal terms. Almost immediately, however, Dr. Steve Leffler, the top boss at the UVM Medical Center Hospital and the primary spokesperson for the Network, wrote a letter to the Network staff walking back the Miller letter, conceding that, depending on the actual wording of the final order, the Network could have to “reduce services.”

That striking juxtaposition—Miller going hard in one direction, and Leffler backpedaling in the other—raised an equally troubling question—is Sunny Eappen, the CEO of the whole Network, really in control of his own ship?

From an aerial view, the above survey resembles the smoking ruins of a war zone. Every major player is playing badly, and doing serious damage to the health of all Vermonters, as well as the 162,000 residents of northeastern New York served by the Network. I mean to include in that indictment the Scott Administration, the Green Mountain Care Board, the Vermont Legislature, the Vermont hospitals’ trade group, and the senior management of the UVM Health Network.

The marginal groups like the Vermont Auditor and the Vermont Health Advocate are similarly clueless. And while some of the Anvil Chorus of commentary on health care reform is well intentioned and sometimes even well informed, much of it is simply howling at the moon. The whole mess is amplified by the complete failure of what’s left of the state’s press corps to inform the public.

Can this catastrophic trajectory be reversed? If so, what would it take? What would that process look like; is there a model? I have described these questions as existential because the answers, or lack of answers, will determine whether Vermonters will get high quality, affordable cost health care, or not. Moreover, the issue is existential for the state as a whole because the Vermont economy depends on the availability of national class health care and the UVM Health Network is the only way to get it. Lose that, and serious businesses will have no reason to come here, or even stay. Our gross state product already ranks 50 out of 50 in the United States. Lose the international airport as well as high quality and affordable health care, and the question will be, who turns out the lights?

How might the UVM Network senior management reverse this trajectory? I outlined an approach in my July 23 post, and it’s repeated here:

What if the management team at the University of Vermont decided: Enough is Enough, and they would fight to maintain their institution, along the lines of the Eric Miller letter? Could the senior management do that? Actually, they could. It would not be technically hard, but it would be politically very contentious. Nevertheless, it has been done before, and it could be done again. It might look like this:

The leadership would set up a team to manage the project. The key people would be the current CEO, Sunny Eappen, and his Senior Vice President for External Relations, Jason Williams. They would both have to be skillful and determined, about which, more below. The other major players from the C-Suite would be the Chief Financial Officer, the Chief Counsel, the Chief Medical Officer, and necessary staff.

The team would determine the total Net Patient Revenue the Network will need in FY2025 to pay the full cost of its operations, plus a four percent margin, an excess of revenue over expenses. (That would be more than the FY25 request). In addition, the Team would determine the 2025 increment of the amount it would take for the Network to recover over a three-to-five-year period the north of $200 million the Board has drained out of the UVM Medical Center in Burlington since 2018. That number is a rough estimate—the Network has not provided a total of the total drain on its finances since 2018.

Finally, the Board would be asked to approve UVMMC spending adequate to hire enough new doctors and support staff to eliminate the excessive wait times for patients needing care. The latter increment could be spread over three to five years.

If the assurances from Governor Scott and the GMCB were not forthcoming, the Network would begin taking the following steps:
- Network planners would assemble a list of services UVM provides to the state that do not contribute to the bottom line—regular money losers, in other words. They would include The Level One Trauma Center, the only one serving half the state’s population; the Vermont Children’s Hospital, which provides the state’s only specialty pediatric services; all kidney transplant and dialysis in Vermont; and the state’s only inpatient psychiatric services, high risk pregnancy management, and pediatric outpatient services. The Network would begin to drop those money losers until it achieves its four percent margin by 2028. No law says that a medical provider has to deliver a specific service line of care. Of course, the effect of even taking the first step down that road would be terribly damaging, but Scott and his GMCB are guilty of magical thinking if they act as though Vermonters can have those services without paying for them.
- In addition to putting the UVM Network at financial risk, Scott and his Green Mountain Care Board have completely botched their management of OneCare Vermont, the single statewide Accountable Organization. OneCare is the only player in the reform space that has performed flawlessly on its core mission: to enable the state to shift its health care system away from fee-for-service to capitation. Vermont Medicaid used capitation under OneCare to keep its costs under control. Moreover, OneCare has been the vehicle for directing $18 to $20 million per year in hospital revenues to support primary care in the state. Take that away and primary care, already badly stressed, collapses.
- However, neither Blue Cross nor the Scott Administration nor the Green Mountain Care Board nor the Feds would permit that to happen in the Medicare system or the private sector insurance business. So, if necessary, the Network would close OneCare, or bring it entirely inside its own structure, and put the tens of millions of dollars in savings toward the four percent margin.
- Assuming that the Board and the Governor persist in failing to meet their responsibilities, the UVM Net War Room would mount a broad-based project to inform the Vermont public and the American health care system about their failures. Instruments would include press conferences, newspaper and television advertising, appearances by doctors and researchers at community meetings around the state, and submissions by UVMMC doctors and researchers to various professional health care and health policy journals. (I personally know doctors who are itching to contribute to such a campaign.)
- All of that would cost money, of course, and the UVM Network would pay it. The Green Mountain Care Board could issue orders prohibiting one or another or all of the above steps, but the Network would not accept any of them. It would challenge every GMBC overreach in the Vermont Supreme Court, along the lines already set forth in the Sept.23, 2023 letter from the Network board chairs to the GMCB, which asserts that the Board has routinely overreached its legal powers. The Miller letter put sharp edges on the legal framework for such a challenge.
- The Network would sue in the Vermont Supreme Court to recover the north of $200 million that the GMCB’s overreaching of their legal powers has already drained from the Network. The grounds could include the claim that the Board’s budget decisions denial of a regulated non-profit entity’s right to get a reasonable return on its investment constitutes a “taking,” which contravenes Vermont law, federal law, and the U.S. Constitution.
- A significant factor in the reform space since Governor Scott took office in 2018 has been the posture of the Vermont hospital industry itself. Operating under the heading Vermont Association of Hospitals and Health Systems, the hospitals have focused all their efforts on fending off any effort to rationalize the small hospital structure in the state. No competent health policy analyst would assert the VAHHS position that Vermont’s 625,000 people need 14 full service hospitals. Some 400 pages from a half dozen national firms attest to that. Governor Scott is right that Vermont has nowhere near enough money to confront its many challenges so that recovering a piece of the hundreds of millions of dollars wasted annually on our overbuilt system is essential. Unless VAHHS stops blocking reform by fronting for wasted spending and poor quality, the three UVM hospitals would withdraw its financial support from VAHHS. That would finish off the hospital group because they would lose 60 percent of their revenue over night.

Of course, the mere discussion of such a plan would freak out the dominant reform players in the state, not to mention the public at large, but in fact is it has been done before. In the early 1990s, the rise of Health Maintenance Organizations (HMOs), a new kind of insurance company, put a sudden clamp on health care spending, which had been rising much faster than inflation in the broader economy. Between 1994 and 1997, the rate of inflation dropped in half; we called it a “fixed revenue environment.”

The new model insurance companies got greedy, however, and they began to arbitrage between the payers, who would buy their insurance, and the doctors and hospitals that would deliver the care. The HMO would lean on the payers to pay more for the insurance and on the hospitals and docs to take less. The difference would enrich the HMO.

It was the doctors and other providers who blew up the whole scam. Doctors began to tell their patients that the HMO wouldn’t allow them to give the patients the care they needed. It wasn’t the system’s leaders, or their lawyers and administrators, or government that revolted—it was the doctors themselves. And their patients supported them. It got so bad that if a character in a movie mentioned the word HMO, the whole theater would erupt in boos. The result: Bye, bye Mr. HMO. Now HMOs have reverted to just plain old insurance companies. And hospitals generally have reverted to the inflation rate that had obtained since the early 1970s.

A second example occurred in the late teens when the UVM system got a spike in one year’s normal traffic and made about $20 million over what had been approved by the Board. The Network and the Board agreed that UVM could use the money to build (some) mental health inpatient beds at its Berlin unit, the Central Vermont Medical Center. As the planning for the psych beds proceeded, however, the Board cut the Networks’ annual budgets so heavily that it could not afford to continue the project. So, the desperately needed new capacity went glimmering. The Board itself acknowledged that the numbers wouldn’t work.

These two examples show at least provisionally that an aggressive political offense, added to the Miller legal thrust, could reverse the UVM slide toward mediocracy, or selling itself to a big national like UnitedHealth Group, with $273 billion in assets and $23 billion in income in 2023. That process is happening now all over the country.

Of course, serious offense as opposed to the UVM Network’s current posture of supine defense would be difficult and possibly protracted over some years. There would be huge hyperventilating over cutting some or any of the current loss-leaders. One charge would be that the company, the provider of 60 percent of all the care in the state, was playing the bully.

A reply to that would be pretty obvious. The UVM Network has been falsely charged with being a bully for the last nine years. Nine years, count ‘em. From June of 24, 2015, when a reporter for the Seven Days newspaper in Burlington, on the strength of driving past the looming bulk of the Medical Center and thinking, Wow, That’s a big sucker, wrote a cover story about UVMMC “gobbling up” all the small and independent docs and hospitals in the region. The term ‘gobbling up” by the UVM facility became the meme for the reform years. It still is…

Okay, okay, the above extended sketch should persuade at least some of my tiny corps that what they are looking at is a system failure that is threatening their health care as well as Vermont’s economy. Given the poor performance of all the institution involved, the only way to find our way out of the morass is if the public demands it, and the Legislature gets the message and responds. What would people need to look at?

This post is going up today, Monday, Sept. 30. Tomorrow, Oct. 1, the law calls for the Green Mountain Care Board to deliver their budget orders to the state’s 14 hospitals. That action will provide the grounds for a techy but very important decision: How much of each budget cut flows from the Board’s power to cap a hospital’s budget, and how much flows from a Board “enforcement action” if a hospital has flouted a previous Board order. If a hospital challenges a budget order, the appeal goes to the Vermont Supreme Court; an appeal to Enforcement goes to a Superior Court. Experienced lawyers will tell you those two venues often react differently to the same set of facts.

What we know today is that Eric Miller’s letter on behalf of the UVM Network appears clearly designed to counter Enforcement. Miller’s argument is that the Board has failed to give the Network the chance to provide evidence supporting its case, “due process” aa required by state law. The UVM Network will have, I think, 30 days to appeal or to eat the huge cuts by the Board. I said “think” here because neither the GMCB nor the Network respond to requests for information. Nevertheless, we’ll know soon whether Sunny Eappen, the top Network boss, will take on the budget cuts or Enforcement or both.

That decision is important, but to an extent beyond my experience, the complexity and variety of issues arising out of the Vermont reform project, and the need to save the system are unprecedented. The roots of the reform initiative lie in the 1970s, but the reform effort only fully matured over the last six months. Over the next several weeks, A Vermont Journal will lay out a selection of the most crucial issues facing the state:

One of the most far reaching and egregiously flawed factors in the mix is the 144-page study published recently by Bruce Hamory, a consultant for the Green Mountain Care Board, who has taken over effective control of a path forward for the whole Vermont medical system. Hamory’s work is very light on the realities of actually delivering medical care but is rife with pie-in-the sky directions to solve the state’s housing and transportation problems in the next three years, a wish list that would cost money that the State couldn’t dream of finding. And Hamory’s own reckoning is that his project would leave 13 of Vermont’s 14 hospitals financially under water by 2028. Of course, the UVM Health Network would take the biggest hit.
The Green Mountain Care Board has given itself a significant makeover the last couple of months. In addition to turning the helm over to the consultant Hamory, it has brought in a new top lawyer, apparently to replace the incumbents; and a new policy director, newly fledged from college, who announced his presence by rudely shushing a fellow staff member.'
Moreover, the dynamic among the Board members shifted during the budget process. Jessica Holmes aggressively denounced the UVM Network performance for the first time in her Board tenure. And Owen Foster, the chair of the Board, toggled back and forth between trashing the UVM performance and saying the Board hoped to work cooperatively with the Network. One result was an unusual number of 3-2 votes on budget decisions.
The big new thing in the reform space is AHEAD, a meaningless acronym for a federal program that calls for using global budgets for hospitals to get costs under control. The result nationally will be harmless, but in Vermont the effect would be to lock in the worst inefficiencies of the current system. That did not deter the Green Mountain Care Board, OneCare Vermont, and the management of the Network from signing on…

There are more bits and pieces, but it seems to me a fair conclusion that health care in Vermont is at serious risk, and that none of the responsible institutions has a grip on where we’re headed. A consolation is that we won’t have to wait long before finding at least some certainty. Sunny Eappen and his senior management team at the UVM Network will have to decide in the next 30 days whether to save their own bacon by challenging the Board actions. If they do not, the Network Board needs to replace him. Paying Sunny $25,000 a week for the occasional platitude doesn’t make any sense.

Gov. Phil Scott and Jason Gibbs, his main man, have already demonstrated that they can’t play in this league.

That leaves the doctors and hospitals, the Legislature, and the public to defend perhaps Vermont’s most valuable asset.

The UVM Health Network Has to Choose Now—Leader or Doormat

July 23, 2024 Laurie Davis

by Hamilton E. Davis

The University of Vermont’s Health Network faces an existentially important decision over the next few months: Will it be the leader of Vermont’s healthcare delivery system, or a doormat for a failing state government and regulatory system? The Green Mountain Care Board has steadily drained money out of the Network since 2018 to the point where it isn’t close to meeting the demand for its services; its physician researchers often can’t meet their grant requirements, or even clean their labs; and some of its best doctors are beginning to vote with their feet. Attracting highly skilled new doctors into the Network, difficult in the best of times, will become increasingly rare.

Can this catastrophic trajectory be reversed? If so, what would it take? What would that process look like; is there a model? Where are we today? I have described these questions as existential because the answers, or lack of answers, will determine whether Vermonters will get high-quality, affordable cost health care, or not. Moreover, the issue is existential for the state as a whole because the Vermont economy depends on the availability of national-class health care and the UVM Health Network is the only way to get it. Lose that, and serious businesses will have no reason to come here, or even stay. Our gross state product already ranks 50 out of 50 in the United States. Lose the international airport as well as health care, and the question will be, who turns out the lights?

The above reality sits atop the policy and political agenda for the next six months. The hospitals submitted their budgets for Fiscal Year 2025 to the Green Mountain Care Board on July 1. The staff is analyzing the spending plans and will begin holding hearings in mid-August. The Board will make its decisions by Sept. 15, which will take effect Oct. 1. The hospital budgets are the keystone to the whole health policy edifice, but there will be important follow-on matters to be decided through the rest of the fall.

The Green Mountain Care Board will have to rule on the Calendar Year 2025 budget for OneCare Vermont, the state’s Accountable Care Organization, a piece of bureaucratic machinery invented in the federal Obamacare legislation to link federal and state reform efforts. That whole sector of reform has been the dog’s breakfast—an unremitting mess. It will have to be untangled by the end of the year or written off as a total loss. Finally, the Legislature will have to actually figure out health care in its 2025 session, or write itself off as just one more loser among the key players.

The Real World

It’s important, before you even start to confront the giant hairball called health care reform, to understand what’s actually going on in that space. The key to the puzzle is the reimbursement system, the way we pay doctors, hospitals and the various medical providers. In most of the American system, the prevailing system is called fee-for-service: doctors and hospitals get paid if they do something, and don’t get paid if they don’t. Real-world example: older individuals can experience narrowing of the arteries that serve the kidneys. That can lead to back pain, high blood pressure and damage to the kidneys; in serious cases, it can require kidney dialysis or even the need for a kidney transplant.

Conservative treatment is fairly common in cases of renal stenosis—changes in diet, exercise, medication for high blood pressure. But if these fail, then a vascular surgeon can operate to install a stent, or even fashion a bypass graft if the artery is blocked. Surgical intervention, however, is godawful expensive; total costs can run $100,000 to $300,000. The go-no go decision is going to be made by the doctor, and her share of that is going to run to about $12,000. Those numbers are rough, but close enough to illuminate the problem.

So, in a fee-for-service system, the choice for the doctor is not just go-no go, it’s $150 versus $12,000. Anyone who can’t see that fee-for-service is a huge monetary incentive for overuse is living in a cave. Fee-for-service is the reason why health care in the United States is one-third more expensive than in the rest of the developed world.

There is, however, one sector of the delivery system that lies outside the borders of fee-for-service land. That sector is the American academic medical center. There are something like 150 medical colleges in the U.S., and while some of them may be infected to some extent by fee-for-service, their multiple roles argue against it. Faculty docs in medical schools treat patients, but they also have to teach medical students and residents, and they also are expected to do research. That’s why so many med school docs work on salaries, not piecework rates. Real-world example:

In 2018, Vermont’s Medicaid agency signed a contract with OneCare Vermont to deliver all necessary care to 31,000 Medicaid recipients in northwestern Vermont. The total cost was estimated to be about $90 million. Half of the care would be delivered in Vermont; the other half would be delivered to providers outside the state who delivered care to Medicaid recipients who were traveling. The out-of-state dollars could not be fixed, but the in-state money could be. It would work like this:

The individual Medicaid recipients are known to the State Department of Vermont Health Access (DVHA), the Medicaid agency, because they couldn’t get the benefits if they weren’t. The actual care would be delivered first by primary care doctors, then by smallish hospitals as the patients’ needs increased, and finally by UVM’s Medical Center Hospital in Burlington, the only provider of tertiary care in Vermont. (If a patient needs something really rare, like a new heart, he or she has to go out of state).

DVHA and each provider also have records showing how much care Medicaid recipients have received in previous years. So, both the payer, DVHA, and the doctors and hospitals can estimate what a Medicaid patient might cost going forward. The transmission machinery for the actual process, which was enacted as part of the national Obamacare program, is OneCare Vermont, the state’s Accountable Care Organization. The stage is now set for serious reform.

The doctors and hospitals calculate how much money they will need to treat the Medicaid patients their actuaries tell them are likely to come through their doors in the coming year. At the beginning of each month, the payer (in this case Medicaid) sends the agreed-upon amount of money to OneCare Vermont, which distributes the money to the various providers. The doctors and hospitals have the money they need at the beginning of the month, prospectively, as they say in the biz. And now the iron: There is no more money. If more patients than expected arrive or need more care than normal, the doctors and hospitals have to eat the loss. They are now at risk for the system that they run. Every extra test they run, or unnecessary therapy or surgery they perform comes out of their own hide.

The term for this piece of machinery is “Capitation.” Many in the health policy space dislike the label. The public doesn’t understand it for one thing, and for another docs and hospitals hate it because it effectively closes off their way to milk the system for whatever they think they need. The United States now spends about $4.3 trillion a year on its healthcare system. The country could save a third of that, about $1.4 trillion, by shifting to capitation. Vermont could save about $1.4 billion. That’s a lot of money in a state of just over 600,000. I would personally be willing to call it an ice cream sundae if it would help, which it wouldn’t. For now, capitation.

UVM Network's Business Model is Completely Different from Small Hospitals

The difference between fee-for-service and block financing or capitation is what divides the 14 Vermont hospitals into two diametrically opposed systems—the three hospitals of the UVM Health Network that deliver 60 percent of the care in the state, and the 11 much smaller independents that deliver the other 40.

The UVM Network hospitals have eliminated the financial incentive for overuse by paying their doctors salaries, so the docs can’t take in extra money by knocking out a few, or even a lot of questionable tests, surgical procedures, or medical therapies. The smaller units pay fee-for-service, and the Dartmouth Health Atlas shows that the smalls are increasing the state’s healthcare cost by a third per year.

Treating the two business models as one lies at the root of the failure of the Scott Administration and its Green Mountain Care Board to competently manage the medical care system in the state.

It is fair to ask at this point whether the Governor and the Board are simply just ignorant or obtuse. There is no shortage of ignorance in the reform space, of course, but it is the view of A Vermont Journal that the problem is simply fear of the political blowback that would ensue if the small Vermont hospitals were forced to meet the quality of care and cost performance of the Network’s three units. There is no doubt that those differences exist. Some 400 pages of analyses for the Green Mountain Care Board by a half dozen national consultants attest to that.

Owen Foster, the chair of the GMCB, has said his Board doesn’t fear the blowback, but talk is cheap. Every vote and every decision taken by the Board in the Scott era (he took office 2017; FY18 was its first budget) has drained at least $100 million out of the Network, the high-quality and low-cost performer; while the small independents, with dodgy quality and very high per capita costs, have been getting a pass to overspend by $300 to $500 million per year.

What would happen if the UVM Health Network leadership just said, “Enough is Enough?” Could they refuse to let a missing-in-action Governor and his clueless Green Mountain Care Board undermine the foundation of Vermont’s health care system? Actually, they could. And it wouldn’t even be technically complicated. It would be politically tenuous, but it gets done every day. Here is how:

The leadership would set up a team to manage the project. The key people would be the current CEO, Sunil Eappen, and his Senior Vice President for External Relations, Jason Williams. They would both have to be skillful and determined, about which, more below. The other major players from the C-Suite would be the Chief Financial Officer, the Chief Counsel, the Chief Medical Officer, and necessary staff.
The team would determine the total Net Patient Revenue the Network will need in FY2025 to pay the full cost of its operations, plus a four percent margin, an excess of revenue over expenses. In addition, the Team would determine the 2025 increment of the amount it would take for the Network to recover over a three-to-five-year period the north of $100 million the Board has drained out of the UVM Medical Center in Burlington since 2018. Finally, the Board would approve UVMMC spending adequate to hire enough new doctors and support staff to eliminate the excessive wait times for patients needing care. The latter increment could be spread over three to five years.
If the assurances from Governor Scott and the GMCB were not forthcoming, the Network would begin taking the following steps:
- Network planners will assemble a list of services UVM provides to the state that do not contribute to the bottom line—regular money losers, in other words. They will include The Level One Trauma Center, the only one serving half the state’s population; the Vermont Children’s Hospital, which provides the state’s only specialty pediatric services; all kidney transplant and dialysis in Vermont; and the state’s only inpatient psychiatric services, high risk pregnancy management, and pediatric outpatient services. The Network will begin by dropping those money losers until it achieves its four percent margin by 2028. No law says that a medical provider has to deliver a specific service line of care. Of course, the effect of even taking the first step down that road would be terribly damaging, but Scott and his GMCB are guilty of magical thinking if they act as though Vermonters can have those services without paying for them.
- In addition to putting the UVM Network at financial risk, Scott and his Green Mountain Care Board have completely botched their management of OneCare Vermont, the single statewide Accountable Organization. OneCare is the only player in the reform space that has performed flawlessly on its core mission: to enable the state to shift its healthcare system away from fee-for-service to capitation. Vermont Medicaid used capitation under OneCare to keep its costs under control. Moreover, OneCare has been the vehicle for directing $18 to $20 million per year in hospital revenues to support primary care in the state. Take that away and primary care, already badly stressed, collapses.
  However, neither Blue Cross nor the Scott Administration nor the Green Mountain Care Board nor the Feds would permit that to happen in the Medicare system or the private sector insurance business. So, if necessary, the Network will close OneCare, or bring it entirely inside its own structure, and put the tens of millions of dollars in savings toward the four percent margin.
- Assuming that the Board and the Governor persist in failing to meet their responsibilities, the UVM Net War Room would mount a broad-based project to inform the Vermont public and the American healthcare system about their failures. Instruments would include press conferences, newspaper and television advertising, appearances by doctors and researchers at community meetings around the state, and submissions by UVMMC doctors and researchers to various professional health care and health policy journals. (I personally know doctors who are itching to contribute to such a campaign.)
- All of that would cost money, of course, and the UVM Network would pay it. The Green Mountain Care Board could issue orders prohibiting one or another or all of the above steps, but the Network will not accept any of them. It will challenge every GMCB overreach in the Vermont Supreme Court, along the lines already set forth in the Sept. 23, 2023 letter from the Network board chairs to the GMCB, which asserts that the Board has routinely overreached its legal powers.
- The Network will sue in the Vermont Supreme Court to recover the more than $100 million that the GMCB’s overreaching of their legal powers has already drained from the Network. The grounds would be the claim that the Board’s budget decisions denial of a regulated non-profit entity’s right to get a reasonable return on its investment constitutes a “taking,” which contravenes Vermont law, federal law, and the U.S. Constitution.
- A significant factor in the reform space since Governor Scott took office in 2018 has been the posture of the Vermont hospital industry itself. Operating under the heading Vermont Association of Hospitals and Health Systems, the hospitals have focused all their effort on fending off any effort to rationalize the small hospital structure in the state. No competent health policy analyst would assert the VAHHS position that Vermont’s just over 600,000 people need 14 full-service hospitals. Some 400 pages from a half dozen national firms attest to that. Governor Scott is right that Vermont has nowhere near enough money to confront its many challenges so that recovering a piece of the hundreds of millions of dollars wasted annually on our overbuilt system is essential. Unless VAHHS stops blocking reform by fronting for wasted spending and poor quality, the three UVM hospitals will withdraw their financial support from VAHHS. That would cripple or finish off the hospital group because they would lose 60 percent of their revenue overnight.

The mere discussion of such a plan would freak out the dominant reform players in the state, not to mention the public at large, but in fact, it has been done before. In the early 1990s, the rise of Health Maintenance Organizations (HMOs), a new kind of insurance company, put a sudden clamp on healthcare spending, which had been rising much faster than inflation in the broader economy. Between 1994 and 1997, the rate of inflation dropped in half; we called it a “fixed revenue environment.”

It was the doctors and other providers who blew up the whole scam. Doctors began to tell their patients that the HMO wouldn’t allow them to give the patients the care they needed. It wasn’t doctors or hospital leaders, or their lawyers and administrators, or the government that revolted—it was the doctors themselves. And their patients supported them. It got so bad that if a character in a movie mentioned the word HMO, the whole theater would erupt in boos. The result: Bye, bye Mr. HMO. Now HMOs have reverted to just plain old insurance companies. And the hospitals reverted to the inflation rate that had been obtained since the early 1970s.

These two examples show at least provisionally that an aggressive offense could reverse the UVM slide toward mediocracy or selling itself to a big national like UnitedHealth Group, with $273 billion in assets and $23 billion in income in 2023. That process is happening now all over the country.

A reply to that would be pretty obvious. The UVM Network has been falsely charged with being a bully for the last nine years. Nine years, count ‘em. From June 24, 2015, when a reporter for the Seven Days newspaper in Burlington, on the strength of driving past the looming bulk of the Medical Center and thinking, Wow, That’s a big sucker, wrote a cover story about UVMMC “gobbling up” all the small and independent docs and hospitals in the region. The term ‘gobbling up” by the UVM facility became the meme for the reform years. It still is.

A major question facing the UVM Network, however, is whether Sunny Eappen’s senior management team is prepared to mount a real offense. Eappen, who spent his early career at big Boston hospitals, took the helm at the Network on Dec. 1, 2022. As of today--mid-July, 2024—Eappen and his senior management are obviously having trouble navigating the roiling political seas they’ve been pitched into. Press management and the politics of regulation have been particular challenges.

The result of nearly a decade of bungling and mismanagement of the healthcare delivery system in Vermont:

We have 14 full-service hospitals when we need at most four.
The dominant narrative is that our small (25 beds or fewer) hospitals are doing just fine, whereas most are losing money and except for Middlebury and Morrisville, have very shaky quality.
The consensus of an array of national experts is that we have somewhere between 154 and 180 too many hospital beds in the small and medium hospitals, and at least 60 and probably 100 too few beds in UVM’s Medical Center Hospital in Burlington.
UVMMC is the crown jewel of our tiny system and since 2018 it has been below investment grade by the national rating agencies. It has been saved from formal downgrade by Covid.
The UVM Network is routinely described as one of the most expensive systems in the U.S. whereas it is the least expensive, as well as delivering some of the highest quality. In Vermont, UVMMC’s quality of care far exceeds any of the non-UVM facilities.

Following is a list of the official players now on the field, and a brief comment on how well they have played so far:

Governor Philip Scott. He is clueless about the health policies involved. His direct involvement so far has been to appoint members to the Green Mountain Care Board. Nearly every appointee has been a failure.
Jason Gibbs, functioning as something of an alter ego to Scott, is a hard-core conservative, and as far as I can tell he doesn’t pay any attention to reform.
Jenny Samuelson, the Secretary of the Agency of Human Services, is clueless about reform and has botched her only major assignment, which was to assemble a small group of experts to advise on reform. She blew the group out to include every possible suspect and it didn’t produce any useable advice.
Owen Foster, Chair of the Green Mountain Care Board. He took office on Oct. 1 of 2022 and virtually every word he has uttered in that position constitutes evidence that he has no understanding of how the healthcare system operates or how it might be reformed.
The four part-time members of the Green Mountain Care Board—Jessica Holmes, Robin Lunge, Thom Walsh and David Murman—play varying roles in the Board’s regulatory processes, but they are united in refusing to even acknowledge, let alone confront the large cache of consulting reports in the Board’s archives.

The above illuminates a strikingly bleak environment for reform. What are the prospects for a reversal? Well, obviously not good, but perhaps not impossible. They rest, ironically I think, with Foster himself. He’s gotten virtually everything wrong so far, but he seems determined to set the hospital on a sustainable path, which means taking the 11 non-networks per capita costs down by a third, repairing their questionable quality, and simply facing up to the fact that the only 21st-century medicine available now is coming from UVM’s Medical Center Hospital in Burlington.

That hasn’t happened yet, but the game isn’t over. Foster has until mid-August to figure it out, with a hard deadline of Sept. 15. I have no idea whether Foster will actually get it. I believe he is intellectually capable of doing so, and he strikes me as one of the few players who wouldn’t be intimidated by the inevitable political blowback. I hope those two assets will render the odds at least even.

Failure would wreck the delivery system, with huge downstream damage to Vermont’s economy. Those threats are not on the horizon. They are directly overhead and will be explicit in the Fiscal Year 2025 gets that will lock in on Oct. 1 of this year.

Sunny Eappen appears to be trying to get a grip on the issues. He is meeting regularly with his staff to develop workarounds to move patients through his system more rapidly. He apparently is also moving to look outside his staff to gain insight into his challenges from the non-medical, political world. That at least has been bruited around Montpelier for the last year or so. The dimensions and effects of that effort are not known now.

As it happens, all the issues listed above were on display on May 20 and May 22 of this year when the GMCB held two very lengthy hearings on first, the UVMMC’s request for permission to build new outpatient surgery beds at its Tilley Drive location, and then a similarly lengthy examination by the Board of the new federal government plan to get a grip on Medicare spending by imposing a Global Budget mechanism on hospital spending. As for the Green Mountain Care Board and its staff, there was a clear aura of magical thinking about the future of reform. And as for OneCare, stumbling around and being flummoxed by obvious lines of questioning seemed to be the order of the day.

A Vermont Journal will lay out those two meetings in future posts.

Holmes Demonstrates How to Hide Health Care Reform from the Public

May 14, 2024 Laurie Davis

by Hamilton E. Davis

The Vermont Legislature is now marking the 13th anniversary of its history-making healthcare reform project. In its early years, former Governor Pete Shumlin’s Single Payer project riveted the health policy community in Vermont and nationally; but since the late teens the project has faded into irrelevance, the victim of a lack of political leadership, regulatory incompetence, and opposition from vested interests in the medical community, among other forces.

Tracking the delamination of the project is difficult even for specialists, but every once in a while, something pops up that illuminates the intellectual bankruptcy that permeates the reform environment. Case in point: on February 1 of this year, the Addison County Independent, a weekly newspaper in Middlebury, published an interview of the Green Mountain Care Board’s Jessica Holmes by its reporter, John Flowers.

The Independent has a natural interest in Holmes’s views. She lives in Cornwall, just southwest of Middlebury, and she is a tenured full Professor of Economics at Middlebury College. Moreover, she is the longest serving member of the Green Mountain Care Board, and to many of those who watch the Board’s proceedings, she is that body’s intellectual leader. Hence, John Flower’s question:

“The Independent has been covering a lot of school budget deliberations of late,” Flowers said. “Here in the Addison Central School District, they’ve budgeted for a 16 percent increase in employee health insurance premiums. It seems like there are double-digit increases each year.

“What’s your reaction to this” Flowers continued, “and is there anything the GMCB or other state officials can do about it?”

In her answer, Holmes briefly reviewed the national situation where many rural hospitals have gone out of business, or been forced to join larger systems. Most of them, she said, have trouble bringing in enough revenue to stay financially viable. Then this:

Many rely on commercial price increases to achieve positive margins, with larger hospitals and health systems commanding the highest price given their leverage with insurers.

Well. What to make of that? Holmes is right about big hospitals and health systems in the other 49 states, but Flowers wasn’t asking about them—he was asking about the Addison Central School District.

In Vermont. Where the big hospitals and health systems have no leverage whatsoever with insurance companies. The reason: The Green Mountain Care Board has total control over how much hospitals and health systems can charge insurance companies, which Holmes knows perfectly well since she has been casting her vote on those questions for years.

For example, in the Green Mountain Care Board’s deliberations on the current year’s hospital budgets, the Board authorized the University of Vermont’s Medical Center Hospital in Burlington to increase its revenue intake by about 10 percent. However, when the Board shifted to the amount it would allow to increase its charges to Blue Cross and other commercial payers, the Board limited the increase to about 3.5 percent. The effect was to cut UVMMC’s FY2024 revenue by some tens of millions of dollars.

If those numbers sound a little mushy, it’s because they are—the result of the continuing failure of the UVM Network’s public communications apparatus to tell the Network’s story.

That is a story I’ve told before and will do so again, but the point for today is that the Green Mountain Care Board is responsible not only for overseeing reform but also for the day-to-day performance of the delivery system itself. And the Vermont system is far from healthy. The small and medium-sized hospitals are spending far more than is necessary, and their quality is dodgy at best. That is not simply my opinion. It flows from national analysts’ reports in the Board archives.

Anyway, to get back to Holmes, when I brought up the Addison Independent story at a recent Green Mountain Care Board hearing, in what I assume was a rebuttal, she simply read from the Indy story. The only thing my comments at the hearing left out was a line in the story saying that there had not been any formal studies of the budget process under consideration.

The kindest thing I can think of to say about that is it’s disingenuous. Of course, it’s true there is no such study because there is no need for one. People carry out studies to gather information they don’t have and need to know. In the case of the GMCB’s use of its statutory powers to limit hospitals’ charges to insurance companies, all the players—especially insurance companies and hospitals—know all about the “commercial ask” because they face it in every annual budget session, and they live with the consequences every day…

What Holmes was doing in the article is what she has been doing for the last six years: Sounding very measured and wise, while bailing out every time the tough decisions come up or fail to come up.

In 2019, it was Holmes who initiated and persuaded the Board to adopt a “Sustainability” project that would challenge each service line at a Vermont hospital to show that it could meet the most basic tests of cost efficiency and medical quality. A half dozen nationally credentialed analysts studied those questions and reported their findings in the fall of 2021. Those findings were stunning.

By far, the highest quality and most cost-efficient medicine in Vermont is being delivered by the UVM Health Network hospitals—the Medical Center Hospital in Burlington, the medium-sized Central Vermont Medical Center in Berlin, and Porter Medical Center, the small hospital in Middlebury. The per capita costs in the other 11 hospitals in Vermont were a third to a half higher. Moreover, the quality of care in the UVM Network was far better than anything else in Vermont…

Well, you get the idea. The point is that these critical data have been assiduously, not to say religiously, ignored by all the major players, the Green Mountain Care Board the Scott administration, the Legislature, the Press, the Health Care Advocate, and the Vermont Auditor.

And with a dollop of irony—by Jessica Holmes herself.

So, a sad 13th birthday for Vermont’s reform project, the most promising such effort in the U.S. And the most advanced, now dead in the water.

Can Vermont Find a Path Forward on Health Care Reform?

December 13, 2023 Laurie Davis

by Hamilton E. Davis

Over the last few months, I have put up a series of short posts on the status of Vermont’s healthcare reform project, which has been underway since 2012. For the most part, it has been a litany of failures by all the major players—the Governor, his staff, the hospital industry itself, and most importantly, the Green Mountain Care Board.
Does that mean there is nothing left but to write the epitaph of what was once the most promising initiative in the country? Not quite, not yet, but a rescue mission will have to be mounted in the Legislature by mid-January. It will be a very heavy lift. Still, the coming legislative session will be very interesting, indeed.

At least part of what the lawmakers will confront will be an effort to radically recast the Green Mountain Care Board, stepping it down from any role in what amounts to health policy planning, and limiting it to enforcing policy decisions that would be made by the executive branch. Such a step would transfer political accountability for arguably the state’s most important social institution to the Governor, who is directly responsible to the voters of the state.

Over the last few years, a movement in that direction has been stirring under the surface. A handful of experienced players have been discussing a plan advanced by Gretchen Morse, a former legislator and Agency of Human Services Secretary, who has been at the center of the healthcare reform effort for 50 years.

In the early 1980s, as a member of the Vermont House, she worked closely with former Gov. Richard Snelling to develop the Vermont Hospital Data Council, the first effort to corral out-of-control healthcare costs. She later served as then-Gov. Madeleine Kunin’s Secretary of Human Services; her duties there included serving on the Data Council and administering the Doctor Dynasaur program, a landmark Kunin achievement. After retiring she spent several years on the board of UVM’s health care system.

In the last year or two, she has pressed an initiative she calls “Back to the Future,” which I have described above. In letters to Governor Scott and the Green Mountain Care Board and pretty much anyone who would listen, Morse has laid out the case for returning health planning to the Vermont Health Department, where it originated in the 1970s. She argues essentially that the current version of the Green Mountain Care Board has departed from the original legislative intent of Act 48 (Title 18 in Vermont law) which was drafted as the vehicle for former Gov. Peter Shumlin’s Single Payer initiative; Single Payer collapsed in 2014.

Following is a lightly edited version of the Morse case.

Vermont law requires the Department of Health in the state Agency of Human Services to conduct studies, develop state plans, and administer programs and state plans for hospital surveys and construction, hospital operations and maintenance, medical care and treatment of substance abuse…
Today, more than 10 years, later there is no comprehensive State Health Care Plan for hospital services. There is no big picture. Testimony at GMCB appears to me as opponents versus proponents,“he said, she said.” There is no objective independent analysis that goes beyond the financial “bottom line" and considers the impact on how and where care should be delivered…

It is not unreasonable for the Legislature in its next session to expect the Scott Administration to organize resources for the distribution of the largest expense in Vermont's budget more efficiently with transparency, community involvement, and accountability. Vermont has done it with the utilities. The Public Service Department does this for utility planning and policy distinct from the Public Service Board’s role of regulating budgets and rate setting.

Vermont has a long history of health reform and strong institutions, public and private, which have collaborated to achieve outcomes that contribute to making Vermont a healthy place to live. What keeps me up at night, is a premonition that Vermont’s health care system is at a tipping point. It is time to turn it in a better direction toward a healthier future for Vermonters.

The question going forward is how the Legislature will deal with the issue. The key players will be Lori Houghten, the Essex Democrat who chairs the House Health Care Committee; Sen. Ginny Lyons, a Chittenden County Democrat; Jill Krowinski, the House Speaker; and Phil Baruth, the Chittenden County Democrat, who is President Pro Tem of the Senate. Add in Jane Kitchel, the Democrat from Danville, who chairs Senate Appropriations, and who The Vermont Journal considers the strongest single player in the Vermont state house.

No one knows what, if anything, will come of all of this. I expect to see bills from both Houghton and Lyons, which will be different from one another and which are probably being drafted now by Legislative Counsel.

On a broader reach, there is an interesting state political backstory at work. Governor Phil Scott, a Republican, is now in his fourth two-year term and is expected to seek a fifth next November. As far as I know, however, no one has asked him, so anything is possible. Meanwhile, two prominent Democrats—Lt. Gov. David Zuckerman, and State Treasurer Mike Pieciak—have been unofficially auditioning for a gubernatorial run when Scott steps down. Neither has shown any inclination to challenge Scott in 2024…although there is now a wild card in the game: Burlington Mayor Miro Weinberger, a Democrat, is walking away from City Hall, and is clearly interested in the top state job. There might be enough gravitas in the healthcare reform space to turn the 2024 gubernatorial election into something other than a stroll to a fourth term for Phil Scott.

Finally, there is an historically unprecedented project afoot in the Legislature itself that could provide a framework for a full reexamination of the healthcare reform project. In the last session, both House and Senate signed onto a project they called “Accountability,” aimed at exploring the body’s fundamental role in state policy. What is each policy committee actually doing? What issues should each be focusing on, and in what direction should it head?

The director chosen to steer that effort was Rep. Jessica Brumsted, a Democrat whose district is Shelburne-St. George. Over the fall, Brumsted’s group of senators and representatives met three times to discuss the issues. The results of that effort will be on the agenda when the Legislature convenes on Jan. 3 of the new year.

The health reform issue is certain to be part of that, somehow.

UVM Health Network has to Choose: Leader or Doormat

December 12, 2023 Laurie Davis

by Hamilton E. Davis

Friday, Dec. 1, marked the first anniversary of Dr. Sunil Eappen’s stewardship of the University of Vermont Health Network, including, not incidentally, the presidency of the UVM Medical Center Hospital in Burlington. By happenstance, that anniversary fell in the middle of the most challenging and perilous year for UVM’s hospital system since it entered the modern era in the early 1970s.

The risk arises from the seven-year effort by the Green Mountain Care Board to squeeze the UVM Network financially to the point where its ability to function as the lynchpin of the state’s hospital system is badly compromised. The most obvious effect of that is a catastrophic increase in the wait times for patients to get needed care across a variety of disciplines. It can take four to six months or more just to get an appointment.

The extent of the Board’s campaign against the UVM system has markedly increased in the tenure of its new chairperson, Owen Foster, who took command on Oct. 1 of last year. In the budget hearing for UVMMC earlier this fall, the Board grilled UVM’s budget team for nine hours in public, and another three in executive session. Anyone who wonders how that went can check out the Board’s formal budget order, which was a torrent of abuse:

First, as a result of responses that were incomplete, did not address the questions asked, or did not provide the required information, UVMMC failed to provide GMCB with information critical to support UVMMC’s budget submission, including its requested change in charge. Several examples of this are highlighted in this Order.

Second, in critical respects, UVMMC’s representations to support aspects of its budget submission were not credible, as further described throughout this Order. Given time and resource constraints, the Board is unable to comprehensively evaluate and ensure each representation by a hospital is accurate and reliable. Nor should such an effort be necessary as GMCB expects and relies on regulated entities to provide candid, accurate, and straight responses to Board questions and requests for information.

When regulated entities make one-sided and self-serving adjustments while failing to make necessary corresponding adjustments, it degrades the credibility of the hospital’s entire submission. GMCB review of UVMHN’s budget submission and responses found a number of instances where UVMHN’s assertions were not sufficiently supported and/or were simply not credible. UVMMC’s efforts to request a large rate increase were undercut by failures to provide the Board with critical information, use of data as both a sword and shield and unreliable responses to Board questions.

That kind of hostility translates into real money. In the period 2018 to 2023, the Green Mountain Care Board shorted the UVM Medical Center by a total of about 100 million dollars. In its budget for the Fiscal Year 2024, UVMMC got cut by something a little over $130 million. A single example of the effect: the hospital needs four cardio-thoracic surgeons to adequately attend to the million or so patients it serves in Vermont and northeastern New York. It currently has two, which means that it has to bring in two such surgeons from away to meet the need—at a ferocious cost. The reason why cardiology, along with a number of units, can’t keep up with demand is that they don’t have enough money to pay market wages for that service.

I’ve used some mushy words here about the dollar amounts involved because the UVM Network senior management won’t take my questions about them. The one who knows the numbers inside and out is Rick Vincent, the Chief Financial Officer. Vincent is a national class numbers guy, but neither he nor anyone of his senior management colleagues qualifies as adequate at communication.

So, the public at large never gets a clear picture of what’s going on at the single most expensive and socially and politically important institution in the state.

The signal vulnerability to assaults like the one suggested above is just the centerpiece of a nine-year anti-UVMMC that has cast the Network flagship as too big, too dominant, too expensive—a bully that is “gobbling up” all the small independent docs and hospitals and badly damaging the whole Vermont system. Every syllable of that indictment is false, but the anti-UVM campaign has been remarkably successful.

Moreover, senior management team of the UVM Network has raised scarcely a peep in its own defense. The one indication there was at least a pulse in its external affairs apparatus came during the budget hearings earlier this fall. A small group of its Board leaders wrote a moderately worded letter to legislative leaders and the GMCB protesting the stance of the regulators.

The real question facing the Network, however, is what its new CEO, Sunny Eappen will do. He has been at his new post for a full year. During that period, he has talked to people at all sorts of forums, and he has been impressive. People who have heard him say he is highly intelligent, knowledgeable about the forces engulfing modern medicine, and apparently sincere in his determination to lead the Network past its current travails.

None of that has deflected the effort to cripple the Network financially. A cynic might object that platitudes about how the Network is doing its best are not up to the task. Certainly, there has been no diminution of the vitriol lapping at the hospital’s doors.

The real test, though, lies immediately ahead. There is a concerted effort underway beneath the surface to find a path toward saving the academic medical center, and at the same time finally to get beyond the stasis of the last several years and put Vermont back at the forefront of modern health care reform in the U.S.

He appears to be trying to figure that out himself. Over the last couple of months, he has been talking privately to various opinion leaders in the state, away from the campus and apart from his senior communication leaders. There has been no reporting about the substance of those conversations, but the whole process is certain to become visible when the 2024 session of the Legislature opens in early January.

What is clear is that Sunny holds in his hands the future of the Network in responding to the depredations of an irresponsible regulator. Not a single member of the Green Mountain Care Board, nor any of its staff have the faintest idea how to steer modern medicine into the new millennium.

So, will Eappen provide bold leadership in defending his organization in its role as the keystone of the hospital system in the state, or will he meekly surrender to the attacks? The answer will be critical not just to the Network itself, and not just to the heavily populated northwestern quadrant of the state, but to the delivery system from one end of the state to the other.

N.B. I’ll post tomorrow what is known so far about the proposed path. At a minimum, by midwinter, the public should have a complete picture of the health of and outlook for their health care delivery system.

The Green Mountain Care Board is Killing Vermont’s Black Swan

December 1, 2023 Laurie Davis

by Hamilton E. Davis

In earlier posts, I have been critical of the Green Mountain Care Board for draining too much money out of the UVM Health Network hospitals in Burlington, Berlin and Middlebury; and equally for failing to hold the 11 non-UVM hospitals to any financial or quality standards. The Network hospitals, however, have not been alone in getting a raw deal from the Board.

Copley Hospital, a 25-bed facility in Morrisville, isn’t just getting a raw deal from the Board—it has been driven to the edge of bankruptcy by a Board whose process has been just plain irresponsible. I know that is a harsh indictment, but let’s look at the evidence.

Copley is something of a black swan in the Vermont hospital space. By black swan I mean an outlier small hospital with low costs and high quality, in sharp contrast to its non-UMV Network peers. Take a look at the chart below:

The chart sets out the 2018 Medicare per capita spending for each of Vermont’s eight Critical Access Hospitals (CAHs). Those facilities are limited to 25 beds or fewer, and their costs are subsidized by the federal government. Porter Hospital in Middlebury is the most efficient, but that is owing to a business model designed by the UVM Health Network, which is already operating at a fully reformed level. The only other CAH hospital operating at anywhere near the financial level of the UVM facilities is Copley.

Beyond controlling costs in the health care delivery system, a second imperative is to ensure that the health care Vermonters receive is high quality. The best quality care, according to consultants retained by the Green Mountain Care Board, is delivered by the UVM Health Network facilities in Burlington, Berlin in central Vermont, and Porter in Middlebury. Take a look at the next graph, which I have published many times in the past.

The consultant who drew the chart used a common quality metric called PQI (Prevention Quality Indicators), which draws on state and federal databases to compare Vermont hospitals against national peers in avoiding unnecessary care (note that the low numbers are best).

The single respectable number in that chart is the quality rating for Copley.

A possible reason for that is something called “Mansfield Orthopaedics,” which provides arguably national-class quality surgery for joint replacement, especially shoulders, knees, and hips. That makes it markedly different from the other small hospitals in Vermont, a reality that has apparently escaped the Board.

In the recent budget hearings, Copley budgeted a $3.4 million bottom line for FY2024 in a $111 million total budget. The Board cut that that margin, plus another $3 million, for a total denial of $6.4 million. That drops the hospital’s Days Cash on Hand to an average of 48 for the first nine months of 2023, far below the 125 level that the hospital’s auditors believe is a marker of financial health. Copley now is not at the edge of a financial abyss, but part way over.

These characteristics support my characterization of Copley as a black swan in our reform environment, and that the Green Mountain Care Board’s regulatory process has left it flat broke. But there is more to the story.

The CEO of Copley is a guy named Joe Woodin, who has a long history in hospital management, both large and small. In his comments to the Green Mountain Care Board at his budget hearing, he took a highly idiosyncratic stance.

He didn’t complain. He said the Board was doing a terrific job, in very difficult conditions. “Maybe we don’t give you guys enough accolades, but I really do appreciate that this is tough stuff and we’re all trying to figure it out,” he said.

The problem, he continued, is that Copley’s rates are so low now, and have been low for so long, that the hospital simply can’t catch up. Other hospitals have such higher rates that they can live with relatively modest annual increases, but he can’t.

When we get eight percent and other people get four percent, but their number is so high: Four percent of $200 versus eight of our $40 ($8 v. $3.20)—I just can’t make it work…I’m going to ask you to treat us like the UVM Network and meet with us monthly and try to help me to figure this thing out because I don’t know the answers.

Are we managing our expenses? We’re asking our people to cross train, we are doing everything possible…if this year I’m going to have a negative operating margin, next year I’m going to have a negative margin, that’ll be nine years of negative margins, except for one year when I had help from the Feds because of Covid. Nine years of negative margins doesn’t work.

Maybe there are folks out there who think we should join the UVM Network, or close the doors, you know, go into bankruptcy like Springfield. I don’t think those are good ideas…

I’m not angry, but I’d love some help…I’d love the Green Mountain Care Board or consultants you might use to understand what we are doing…

There was more in the same vein, but you get the idea. What Copley needs is a one-time fix to get its charges up to some rough parity with other hospitals in the state for the same type of services. And there is precedent for that: In the mid-teens, Dr. John Brumsted, then CEO of the UVM Health Network, asked for a one-year six percent increase, after which he pledged to deliver five years of budgets that would limit increases to the increases in inflation. He got the six and delivered the five budgets pegged to the inflation rate.

Of course, that was a different Green Mountain Care Board, chaired by Al Gobeille, and including very serious medical experts like Dr. Allan Ramsay, who had 30-plus years of experience in the hospital system. As I have asserted earlier, however, the current Green Mountain Care Board just isn’t getting it done.

Consider Board Chair Owen Foster’s comments at the time of the decision on the Copley budget:

I have a high degree of confidence in Copley. I think they are a high performer and I view the rate increase as an investment in that performance, and I do want to give additional resources to places that perform high…

The problem, as Woodin noted in his comments, is that other hospitals are so far ahead of Copley in their base charges that they never get an adequate margin of revenues over expenses. So, they are broke. If Foster is right that Copley is a high performer and doing a good job for his community, then there must be something wrong with the regulation.

We’ll deal with that in a later post.

Vermont Care Board Morphs from Tragedy to Farce on OneCare

November 27, 2023 Laurie Davis

by Hamilton E. Davis

In my last post, I sketched a brief sonnet on the theory and practice of Accountable Care Organizations (ACOs), which are a minor but still important offshoot of the federal Obamacare law that deals with health care reform. As it happens, Vermont has a single, state-wide ACO called OneCare Vermont. It is one of about 850 ACOs nationwide; and OneCare is unique in that its operations are under the direct control of our state regulator, the Green Mountain Care Board.

That makes it an unusually complex factor in the state’s healthcare reform space. As I noted in my last post, an ACO’s essential function is to galvanize the shift of reimbursement to doctors and hospitals from fee-for-service, which incentivizes overuse and poor quality, to capitation, block financing for large cohorts of patients for a fixed price. Capitation holds out the prospect of saving as much as a third of the cost of complex, hospital-based care. In Vermont that could run to $300 to $500 million per year, or more.

What is happening on the ground, however, is nowhere near the ACO’s potential. OneCare has built a solid piece of capitation machinery that has enabled some minor savings on Medicaid spending, but the big money in the hospital biz comes from federal Medicare and the private insurance market, which means mostly Vermont Blue Cross. And those payers will not permit capitation to function. That failure is critically important in Vermont because the delivery of health care is the state’s most important industry. In terms of its gross state product, Vermont is one of the poorest states in the country.

The engine of its economy is Chittenden County and its exurbs in northwest Vermont. UVM’s Medical Center Hospital generates around $1.8 billion a year, and the faculty of the UVM College of Medicine brings in some $250 million in research grants annually. Moreover, the availability of national class medicine is essential to attracting and keeping high-quality employers—take away national class healthcare and an international airport and business people would start turning out the lights and closing the doors.

OneCare itself is marginal to the course of health care reform, and the operation of the hospital industry in Vermont. The Board could use OneCare to begin rationalizing profligate spending in the 11 non-UVM hospitals, but its members are treating that issue like a live bomb. At a minimum, they could begin to ratchet back the low-quality surgery that has been flagged by their consultants, but they won’t touch that either.

The OneCare issue, therefore, functions now as a canary in the mine, as a marker of how well or badly the Green Mountain Care Board is performing on its twin responsibilities, regulating costs and reorganizing the hospital system so that it will be sustainable over the remaining early decades of the 21st century. So far, it doesn’t look that good.

Let’s go to the evidence.

Unlike the hospital system, ACOs like OneCare operate on a calendar year. That means the Green Mountain Care Board grapples with the OneCare budget in the late fall, after their main-force effort on all the hospital budgets is complete in mid-September. The latest iteration of the Board, which was formed last year, absolutely trashed OneCare in its 2022 proceedings. In the process, the members got all the important facts wrong. The single most troubling aspect of the entire reform project is the strong likelihood that they did so deliberately. Owen Foster, the then-new chairman of the Board, said that OneCare was responsible for how the hundreds of millions of dollars were spent by hospitals to deliver care to patients, and they had obviously failed to accomplish their mission.

Foster and member Thom Walsh (sic) dripped scorn over what they described as OneCare’s failure to turn the cost needle. Foster asked then-OneCare CEO Vicki Loner whether she might do something worthwhile if she got paid more.

That whole construct was patently false. OneCare Vermont doesn’t deliver so much as an aspirin or a band-aid. It is a pure middleman: each payer, whether it is Medicaid, Medicare or an insurance company negotiates with doctors and hospitals to determine the per capita payment they should pay that provider, based on the amount of care each has delivered in the past. Based on that agreement, the payers send monthly allotments to OneCare and the ACO aggregates the money and disperses the totals to each provider unit.

The amount of money each hospital gets from delivering care, and the quality of that care, is entirely, 100 percent, totally, did I say 100 percent, up to the provider and payer. OneCare has roughly 50 employees, and not one of them, nor all of them together, have the faintest idea of how to determine the ideal amount of care in each episode. And while the reform players talk about it all the time, none of them has the capacity to measure the actual quality of the care.

There is a huge pile of details surrounding the above analysis, but that is the essence. Moreover, whatever anyone’s analysis shows, it really doesn’t matter because any hospital that becomes unhappy about its treatment by the regulators can simply withdraw from OneCare and send their bills to the payers in the way doctors and hospitals have done for the last 100 years, and the way virtually all of them outside Vermont do so today.

So much for the current Green Mountain Care Board’s management of the ACO over the last year.

On Wednesday, Nov. 8, the Green Mountain Care Board, having devoted the last year to excoriating OneCare Vermont for failing to control hospital costs, flipped over completely and praised the ACO for doing a terrific job. No, really, it’s true. The very same Green Mountain Care Board that abused the former CEO Vicki Loner and drove her to take another (better) job, buried her successor, Abe Berman, in flowers. Foster, particularly, and member Thom Walsh were perfectly effusive. They said they were delighted and gratified that OneCare was out there working so hard and effectively to solve the hospital cost problem.

Every one of the adepts I talked to after the session was simply flabbergasted. I know I was. Where did that come from? What changed on the ground that would turn the Board 180 degrees, up versus down, black v. white? I didn’t and still don’t have a clue.

What was even more curious to me was that it just isn’t true. OneCare Vermont hasn’t actually saved Vermonters a dime. The savings have been there, but they have been achieved by the University of Vermont Health Network, and its reorganization of a full 60 percent of all the care delivered in the state.

Two of the 11 non-UVM Network facilities in Vermont had solid financial performances, but both were outliers in that regard. Mt. Ascutney in Windsor operates essentially as a rehab hospital for nearby Dartmouth-Hitchcock Medical Center, whose performance as an academic medical center is similar to UVM’s Medical Center in Burlington; and Copley Hospital in Morrisville, which is something of a black swan, owing to its regional class orthopedic services. Neither had spending profiles that matched the UVM system, but they were pretty close.

The other eight non-UVMers had far more profligate spending patterns. Hospitals in Bennington, Rutland, Brattleboro, St. Johnsbury, St. Albans, Newport, and Randolph are all members of OneCare, but neither their financial performance nor their clinical quality results are anywhere near the UVM system. I haven’t mentioned Grace Cottage Hospital in Townshend, which is so small it doesn’t matter.

Yet another puzzling theme in the Nov. 8 hearing was the discordant note struck by Abe Berman in a letter to the Board on June 26 of this year. A couple of months earlier, OneCare had named Berman its interim CEO. At the time, OneCare had announced that it would challenge the Board’s order that the ACO trim back the salary of its CEO. If the Board insisted on its point, the issue would be adjudicated by the Vermont Supreme Court. It would be the first such challenge in the 10-year history of the reform project.

The June letter, however, broke new ground on the whole reform structure. Berman opened by saying decisions on salaries went beyond the Board’s legal authority. But then he continued:

Nor do we believe that it is properly within the Board’s statutorily-defined purview to cap individual expenses by an ACO as part of the budget-setting process, particularly when those expenditures implicate strategic decisions reserved exclusively to an ACO’s governing body.

We understand…the GMBC staff is currently preparing an analysis of the legality and wisdom of the Board setting budget guidance that purports to set limits on individual ACO spending decisions, the details of which will appropriately not be within a regulator’s knowledge or expertise.

These two sentences constitute a cruise missile aimed at the Green Mountain Care Board, its staff, and its entire posture. Which proved to be entirely clear to the Board members. So, while they were slathering praise on Abe they also kept sliding in questions about whether he still believes what he wrote.

He never clearly said. I am now getting a transcript of the actual dialogue, but if I understood him he was saying that what he wrote was “in the past” and “part of the process.” If there was a balloon over his head, however, Abe was obviously thinking, can we please, please, please go back to saying how great I am and forget that damn letter…

In a day of adjectives, it was sad, pathetic, amusing, ironic. But, it was, importantly, a clear picture of just what a hash the regulatory system is making of our hospital system, which is the single most vital medical, cultural, financial, and economic institution Vermont has.

The actual responsibility for controlling costs in Vermont lies with the Green Mountain Care Board, which has all the power that exists in the system. OneCare has set up a structure that can handle capitated reimbursement perfectly well, but it depends entirely on the payers whether they want to use it. And in Vermont, except for Medicaid, they don’t.

That dismal recitation is just one more element in a complex mosaic that will lead to the final post in this series—whether there is a path forward for Vermont’s health care reform.

Coming up first: a couple more milestones along the way.

Obamacare Offers a Route to Save a Full Third of Vermont and U.S. Health Costs

November 20, 2023 Laurie Davis

by Hamilton E. Davis

Arguably the most misunderstood component in the state’s health care reform landscape is OneCare Vermont, the state’s only Accountable Care Organization (ACO). Almost no one, even in the professional health policy community, seems to understand what OneCare is or what it is supposed to do. Really. It is the most pathological entity in a 360-degree bizarro world. And it isn’t even particularly complicated.

I wrote in a recent post that the most reliable path to sustainable costs in the American health care system is to shift reimbursement to doctors and hospitals from fee-for-service to capitation, where a group of medical providers deliver all necessary care to a block of patients for a fixed price. The federal government’s 2010 Obamacare legislation invented ACOs as a way to accomplish that without running afoul of the price-fixing, antitrust provisions in federal law.

The cost containment effect is achieved by removing the huge financial incentive in fee-for-service medicine to overuse, and by shifting the risk of poor performance by providers from the public to the doctors and hospitals who run their own systems. The system is perversely weird, because in American health financing alone, competition can take costs up, not down. The simplest way to grasp that is an example. Consider the following:

A few years ago, a Vermont state senator named Dick McCormack from Bethel fell down a flight of stairs and broke his arm, badly. His local primary care doctor sent him to Dartmouth-Hitchcock to get it fixed. Whatever the reason, the D-H docs worked on it for about six months without success—the bone was broken completely through. So, Dick’s primary care physician sent him to Gifford Hospital, a 25-bed unit in nearby Randolph; an orthopedic surgeon there put in a bone graft.

Which fell out a week later. So, Dick’s doctor sent him to Alice Peck Day Hospital, a 25-bed facility near D-H in nearby New Hampshire. Doctors there considered it carefully and decided it was too big a challenge for them. So, he went north to the UVM Medical Center Hospital, where over a couple of years and multiple surgeries, doctors fashioned a circular cage over the arm, with links surgically attached to both ends of the broken bone. Dick could adjust a knob regularly to inch the ends closer until they finally closed.

Dick’s wife kept the bills for all that work, and she estimated that it ran to something like $300,000. For one broken arm. A schematic of the process looks like this:

The $300,000 figure isn’t precise: In our tangled system it’s difficult to track actual costs across various payers and the private discounts that flow from contract negotiations. I have run the number by experienced health finance experts, however, and they have told me the cost estimates are very conservative. In any event, look now at the schematic of a putative ACO, the dotted line.

If Dartmouth-Hitchcock, Gifford Hospital in Randolph, Alice Peck Day Hospital in nearby New Hampshire, and the UVM Medical Center Hospital in Burlington were functioning as if they were a single, integrated unit, the cost would have run to a third less, an enormous saving. And if each participant was losing its collective shirt on a particular case or cases, they would have a huge incentive to fix it. If Toyota or Boeing or Microsoft spotted a problem like the one that afflicts the Vermont hospital on a Monday morning, they would be working on it by lunch. And if they hadn’t corrected it ASAP, some people would lose their jobs.

Dick McCormack’s arm and the putative ACO that delivered the care are just examples—there is no such ACO. OneCare Vermont, however, is real and has been delivering capitated care to blocks of Medicaid patients in Vermont since the late teens. The agreement between state Medicaid officials and Vermont providers, with OneCare as the middleman, is working just fine. The larger problem is that the only fixed price contract is for Medicaid.

The big hospital spenders —Vermont Blue Cross and the federal Medicare program—have refused to participate in the program. They profess to be all in on reform, but that is simply eyewash. Both Blue Cross and the feds make prospective payments to hospitals on a capitated basis, but they require doctors and hospitals to maintain a full set of fee-for-service episode records, and once the year is over, they reconcile all the actual payments to fee-for-service, thereby draining all the virtuous incentives out of the system.

Passing up those savings is dispiriting enough, but there is much worse news in the OneCare/ACO space: the Green Mountain Care Board, which has full control over hospital costs, the amounts hospitals can charge private sector payers, and the amount that insurers like Blue Cross can charge their customers, is making a hash out of regulation, so that the Obamacare machinery is actually losing money.

I’ll look at that problem in the next post.

The Green Mountain Care Board is Just Not Getting It Done

October 30, 2023 Laurie Davis

by Hamilton E. Davis

The Legislature broke new policy ground in 2011 when it established the Green Mountain Care Board with a mandate to both regulate and recast the Vermont hospital system. The state has long regulated entities like electric utilities, and it has performed planning functions through agencies such as the Health Department and the Department of Financial Regulation. Combining the two, however, has been something new.

In an earlier post, I described the Board’s performance in that role as “atrocious.” I want to be clear at the outset that I am referring here to the third iteration of the GMCB, the one constructed by the Scott Administration in 2017, and modified, much for the worse, in 2022. The two biggest responsibilities the Board has to discharge are, first, ensuring the financial viability of the UVM Health Network, which delivers 60 percent of all the care in the state, and all of the most complex care, and second rationalizing the non-UVM network of 11 small hospitals that now waste $300 to $500 million per year. On the basis of the record so far, the Board is failing to ensure the survival of the UVM Network as a national class academic medical center.

The question for today, however, is the Board’s performance on the small network. The Board’s failure there is equally as bad as in the UVM Network, with the added malpractice on the Board’s part of hiding the questionable quality in the small network. I’ve written all of this before, but today I want to just remind my readers about the devasting indictment sleeping away in the Board’s archives over the last two years.

The indictment consists of the findings of half a dozen national consultants, delivered to the Board on Oct. 27, 2021. The consultants were Mathematica, Berkeley Research Group, Dartmouth Health Institute, Burns and Associates, and Oliver Wyman.

The following is a selection of graphics that set out their findings:

The above chart shows the 2018 quality performance of the Vermont hospitals by Service Areas against a national benchmark. (Note that the lower numbers are highest quality) The results are striking. The most dramatic is the huge quality advantage that UVM’s Medical Center Hospital shows against the national figures, and more important, against the smaller hospitals in Vermont—5.96 against the benchmark of 13.06; and the two smaller units in the Network, Porter in Middlebury and Central Vermont in Berlin, are just a little higher.

Then look at the top group, Southwest in Bennington, Gifford in Randolph, and Rutland, whose quality is just plain bad, all with unacceptable national rankings. In the budget hearings, the Green Mountain Care Board never even mentioned these findings. Of the rest, hospitals in Newport, Springfield, St. Albans, St. Johnsbury and Brattleboro need work, although they won’t hear that from the Board.

A major problem in the small Vermont Hospitals is that many of them deliver big-money procedures that are too complex for their capacity. A measure of that is called the Leapfrog readings, which determine for surgical procedures how many a doctor needs to do in a year to keep up his or her skills. An example: hip and knee replacements.

Pretty obvious here that Gifford in Randolph, North Country in Newport, Springfield and Northwestern in St. Albans are putting patients at risk with these lucrative surgeries.

A more broad-based metric considers patients that are admitted from a hospital’s Emergency Room and from its inpatient population. The buzzword is Potentially Avoidable Utilization. Those numbers, shown below, are quite high in the small network.

When the consultants summed over the findings, they recommended that the total number of beds be dramatically reduced. Eight of the 11 non-UVM hospitals need a total of 140 fewer beds in 2026 than they have now, the consultants found.

And some of those cuts were severe. Look at Southwestern in Bennington, for example. That hospital had 78 beds in 2020, and they only need 43 in 2026, a reduction of 35 beds. And in the broader perspective, Southwest has also been a real problem child. Its Medicare cost per capita in 2018 was $9,822, the highest in the state. UVMMC by contrast was $6,524. Plus, their quality performance in 2018 as shown in the chart above, was 16.4, the highest (lower is better) in the state, and well over the national benchmark of 13.06.

Yet in the recent budget deliberations, Southwestern’s spending got rubber-stamped: none of the above information even got mentioned. Which was also true of most of the small, non-UVM network hospitals in the state. There is simply no justification for that. It has been obvious for at least five years that the current makeup of the Vermont system makes no medical or financial sense.

After watching the reform project for 40 years, in 2020 I wrote the following Manifesto:

Vermont needs five fully elaborated hospitals—in Burlington, Lebanon, N.H., Rutland, Central Vermont, and Bennington. Smaller hospitals now operating in St. Albans, Newport, St. Johnsbury, Windsor, Springfield, Randolph, Middlebury, and Morrisville should be stepped down to some level of clinic, whose basis would be strong primary care, a strong emergency room, a few inpatient beds for patients transitioning from hospitals to home, and possibly maternity services, depending on travel times in their regions. The smallest hospital, Grace Cottage in Townshend, shouldn’t be a hospital at all, a fact known to everyone except the people of Townshend. A right-sized hospital system could save Vermonters hundreds of millions of dollars a year, and its quality would be better. Failure to do so will leave us with an unsustainable medical and financial mess.

I wrote at the time I didn’t have evidence to prove my contention. I didn’t know it then, but the Green Mountain Care Board’s consultants were working on that specific issue, and they reported their findings on Oct. 27 of 2021. My tiny corps can judge for themselves how close I was.

As of today, October 30, 2023, the Green Mountain Care Board is still hiding from the reality it is charged with reforming.

Phil Scott is MIA on Health Care Reform

October 28, 2023 Laurie Davis

by Hamilton E. Davis

There is no shortage of complexity involved in Vermont’s healthcare reform project. Act 48, passed by the Legislature in 2011 ran to 141 pages. In 2022, the lawmakers added another 19 pages in Act 167, which after just 11 years of work provided some touching up and encouragement. A total wonk fest and lawyers’ dream. No section or subparagraph, however, counts for as much as the political support for the substance of reform itself. And in Vermont, no political voice can match up with that of Governor Philip Scott.
So, where does Scott stand on reform of the state’s doctor-and-hospital system, which accounts for 10 percent of Vermont’s state product and constitutes arguably the biggest prop under the Vermont economy? Well, it’s hard to say—and that’s a huge problem, for the health care system and for the state as a whole. Let’s look at the record.

As I’ve discussed often in this space, the reform project encompasses two major problems—the financial standing of the UVM Health Network, and specifically the flagship Medical Center Hospital in Burlington; and rationalizing the non-UVM small hospital network, which operates 11 very small and pretty small facilities across the state. The Medical Center is the most critical issue, and it is in serious trouble, which Phil Scott knows.

Evidence. On June 1 of 2022, Scott wrote a blistering letter to the Green Mountain Care Board, saying their performance was unacceptable, and that he was ordering that body to address the problem immediately. Immediately clearly referred to the FY 2023 hospital budgets, which were about to undergo their annual review. To drive the point home, Scott said that he was ordering his Agency of Human Services to set up a “Committee” to oversee that process, to be managed by his Secretary of Human Services, Jenny Samuelson. The Committee members were to be a small group of senior physicians and hospital managers to advise on where the system should go; the process was to be entirely transparent, and the decisions of the Committee would be released to the public.

Virtually all the specifics set out in the Governor’s June 1 letter went glimmering in the first few days—the envisioned membership of eight or nine blew out to 26 as every lobbyist and advocate in town howled at the moon; and over the summer the whole Committee scheme slid into irrelevance. Samuelson had no idea how to manage a gnarly political process and neither did her chief deputy, Shayla Livingston. That wasn’t the worst of it, however.

In the late summer of the 2022 budget process, the Green Mountain Care Board made as big a hash of the budget process as it had each year since 2018—grinding down the UVMMC budget while ignoring the much higher spending and markedly worse quality in the 11-unit small hospital system. Yet, when Scott was asked his reaction, he responded that he had “full confidence in the Green Mountain Care Board to carry out its duties in a responsible way.” Okay, wow, so much for aggressive oversight.

And Scott’s hands-off treatment of the single most financial, cultural and politically significant issue facing the state continues. The latest example is totally inside baseball—the public won’t even notice it, let alone care about it. Nevertheless, it confirms the proposition above: that in complicated matters, the Scott Administration simply doesn’t play. The event was the announcement a few days ago that Scott was reappointing Robin Lunge to her seat on the Green Mountain Care Board.

Lunge served as the Director of Health Care Reform in the early years of the Shumlin Administration; Shumlin named her to fill a vacancy on the Board in the mid-teens. Her term was to expire on Nov. 1 of this year. In early 2022, Lunge collaborated with Board Member Jessica Holmes in an effort to get Lunge appointed the new chair following the retirement of then-Chair Kevin Mullin, who was retiring in August of 2022.

The Scotties, however, informed Lunge that she could forget the chairpersonship, and that, in fact, they wouldn’t even let her keep her current seat…which they just did. Lunge is of no particular importance one way or another, but Scott’s disinterest in the mechanics of healthcare reform is of enormous importance to the future of the hospital-doctor system in the state.

As of today, nobody has his or her hand on the political tiller of the state. It is unmistakable on health care, and it is pretty obvious, too, on issues like the state colleges, where we are running three when we can afford one, on the outlook for Lake Champlain, where we have no idea how to both maintain the dairy industry and cure the Lake’s ills, or the problem of how to maintain our rural high schools when they have lost half their students, or to manage our rural counties when you can run your computer only with difficulty and your phone is worse than cranky…

All 645,570, give or take, Vermonters need to be concerned about that.

Vermont Reformers Discover a Viable Path Forward, but They Don’t Want You to Know About It

October 27, 2023 Laurie Davis

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?

Vermont Reform: Leading the League, but Dead in the Water

October 25, 2023 Laurie Davis

by Hamilton E. Davis

The Vermont healthcare reform project is about to enter its 13th year, shrouded in a miasma of uncertainty, fear, misinformation, sheer incompetence across the playing field, and risk to both the hospital system and the state’s economy itself. It is a panorama of paradox: there has been considerable progress made, more than in any other state. Yet every player is playing badly—the Governor is not involved; the Green Mountain Care Board is deeper in the weeds than it has ever been; the Legislature is deeply concerned, but has no trajectory; the press is clueless.

That bleak prospect does not mean that the issue is hopeless, only that getting the project on track will be very hard. Many of the issues will have to be resolved this fall, and it is possible, even likely, that the only player that can right the ship will be the Legislature, which could be in the reform crosshairs when it reconvenes in January. The Green Mountain Care Board itself is embarking on what it describes as a broad-gauge effort to develop a “sustainable” system, in which each of the state’s 14 hospitals will offer an array of services that make sense medically and financially.

Vermonters should applaud that effort, but it will be hideously difficult because imposing a rational template on a massively over-bedded system would be a political tsunami. We now waste $300 to $500 million a year on our horse and buggy system, but clawing even some of that back would require dipping into local pockets across the state. And the Board’s performance so far has been simply atrocious. Moreover, the deep medical expertise necessary to move from the mess we have now to a viable 21st-century model exists only at the academic medical center level. And ours, the UVM Network, is itself a huge problem. The medical expertise is still there, but the whole contraption has proven, so far, to lack the ability to navigate its own environment politically.
So, what should my tiny corps of brilliant readers think about this? Herewith my suggestions about how to squeeze the whole nettle:

From the outset of reform, when Peter Shumlin ascended to the Governor’s office in 2011, there has been a lack of clarity about what healthcare reform actually means—what it would look like and how would it work. I will deal with that issue in a short post in the next day or two.
As I indicated above, there are many players and issues involved. I will deal with each one separately. First will be Governor Shumlin, and then his successor, Phil Scott.
Then the Green Mountain Care Board. There have been three iterations of that, each of which has been markedly different from its predecessor.
The senior management of the University of Vermont Health, especially the flagship Medical Center Hospital in Burlington. The lines trying to get treatment at the Burlington Medical Center are out the door, down the street, around the block, and headed now for another area code…without a credible word about a solution. And the senior management appears to have no ability to cope with the political whitewater it has to navigate.
The legislature is concerned about reform, but has no clear idea, at least so far, how to approach it. Paying for primary care has some support, but the money there would be a killer. Primary care amounts to just five percent of the nearly four-billion dollar annual health care bill, but do the math.
The hospital industry machinery, in the “person” of VAHHS—the Vermont Association of Hospitals and Health Systems—has been focused entirely on protecting all 14 hospitals as full-service providers in a state that needs, at most, three for four. The costs of that are hundreds of millions of dollars wasted each, year, not to mention fronting for significant volumes of low-quality medicine. The obvious answer—step down the majority of full-service facilities to clinics that meet local needs—scares everybody.
The press is clueless, so the public has no grasp of an issue that concerns everybody.
The minor players, like the State Auditor and the Health Care Advocate make some noise occasionally, but their contribution to debate has been minimal. And the performance of the non-player peanut gallery has ranged mostly from irrelevant to just strange.
In addition to the players, there are a number of gnarly issues that overarch the reform space. How do you measure the quality of care, for example? What effect is the Canadian experience having on reform? What influence does national policy have on the Vermont system?

There are a couple of potential paths forward, but they are problematic. There is a movement in the state to press for a breakthrough, but nowhere near a critical mass yet. Hope for the best, but the odds at this point favor stasis, and in the case of healthcare reform, stasis means decline.

So, fasten your seat belt.

A note to my tiny corps:

In a shift from past practice, these posts will be much shorter, and will include just the evidence necessary to make a given point.

Vermont Health Care Reform: a View from Outer Darkness

May 4, 2023 Laurie Davis

by Hamilton E. Davis

Reading the news and committing journalism myself in this space reminds me every day of how much my profession has changed over the last three decades. In the journalism trade of the 1960s and 1970s, reporters, or editors for that matter, bore no resemblance to the media stars of today. The lead story in the New York Times the other day reported that Fox News had fired Tucker Carlson; an adjacent article elaborated on how such a cataclysm came about and what it might portend.

No need here to explain who Tucker Carlson is and why the editors of the Times might advance news of his fate ahead of lesser items, like the risks to the Ukraine spring offensive against the Russians, or the doubts of Democrats nationally about the prospects of a President Biden reelection campaign in 2024. Carlson, for God’s sake, is (was) one of the tallest totems in American culture.

At the same time, however, some characteristics of the field endure. Public figures of all kinds--politicians, government bureaucrats, business leaders, command players in all sorts of institutions—hate to be criticized, embarrassed or even mildly rebuked. In an era I now recall through a golden haze, that was just tough. Serious newspapers called them out every day, and in many communities, twice a day.

Those newspapers are gone now, and today’s news sources, local, national, international operate under a different calculus. They can just hide, it’s easy with so few watchers on the beat. They can lie, up, down and sideways, because there’s nobody checking their math. And if they can’t hide or they are uncomfortable lying, they can refuse access—just be unavailable because there is no penalty or cost to be paid for that either.

So, I feel a responsibility today to my tiny corps of brilliant readers to describe some of the issues that I face as a journalist working on healthcare reform in Vermont. What I do now is what I did as a 20-something-year-old in the early 1960s—find out as much as I can about issues I think are important to the public, and make as much sense of them as possible.

The venue in those early days was The Providence Journal and The Evening Bulletin, a single newspaper with morning and afternoon editions. The Rhode Island population is about twice that of Vermont, but everyone read the ProJo so it had enough size to aspire to the same standards as the noise, like the New York Times, the Washington Post, and the Los Angeles Times.
Even in those early days, I had my own views about what people might want to know, but my editors were dubious. I can still hear a tough old city editor named Al Johnson saying: “Nobody gives a damn what you think, Davis. Just give the news.”

After a time, however, the paper eased up a bit and sent me to its Washington Bureau, where my work environment changed dramatically. Rhode Island is bigger than Vermont, but not a lot bigger. Everybody seemed to know everybody, and I could wander into the mayor’s office and talk about the day’s issues whenever I felt like it. Washington was different.

I arrived in the spring of 1968, just as President Lyndon Johnson was deciding not to run for reelection, and Sens. Hubert Humphrey and Eugene McCarthy were jousting over who would get to face the Republican Richard Nixon in the November election.

In those days, Washington was a cockpit of journalistic competition. The Times and the Wash Post were still the big feet, of course, but there were large bureaus, 10 to 30 or 40 reporters, from all over the map. Papers in Philadelphia, Miami, Baltimore, Atlanta, Dallas, Portland (Ore), Seattle, Cleveland, Milwaukee, Long Island (Newsday), Minneapolis, Des Moines, Little Rock had some of their strongest players on the field every day. Not to mention Chicago, which had two or three bureaus, or the Daily News and the Wall Street Journal in New York, neither of which gave an inch to their cross-town rival. Or the Associated Press and United Press International, news agencies that seemed to cover everything that moved.

Getting the steps right in the daily dance with news sources was absolutely critical. Both journalists and their sources clearly understood what information could be used publicly, and what couldn’t.

There was on-the-record, open to all. Great for press conferences and car wrecks. But then there was background, and in back of that, deep background, and still further back, deep, deep background. Get that wrong and you were dead, headed for a shopper in somewhere like Dubuque. These gradations gave news sources all over government the cover they thought they needed to get facts to the public.

The single source that fed Carl Bernstein and Bob Woodward of the Post the details of the Watergate scandal that sank President Richard Nixon in 1973, for example, wasn’t identified until years later.

Fast forward to Vermont circa 2023. The UVM Health Network has been at the center of the state’s health care delivery system reform for a decade. Last December, its long-time CEO, Dr. John Brumsted retired and was replaced by Dr. Sunil Eappen, known by all as Sunny. A month or so ago, I asked to see Sunny and was granted an audience.

I met Sunny at the third floor C-suite on the Network’s facility on Shelburne Road in Burlington. Before he arrived. I chatted briefly with Anya Rader Wallack, who is the Network’s Senior Vice President for Strategic Communication; she was scheduled to be in our meeting. I mentioned to her that I was surprised that she had not been allowed to be present at an earlier meeting between Sunny and Owen Foster, the new chairperson of the Green Mountain Care Board. I knew that because I had been told about it by another source, who said that the Foster meeting had been a really “rough ride” for Sunny.

In any event, Wallack brushed the whole thing off and added that she saw no need to be in my meeting with her boss. I then met Sunny and we talked for about 25 minutes or so. We agreed at the outset that we should just chat off the record. Which we did. A short time later, I posted a mildly interesting report on Sunny’s first couple of months on the job, noting only that he had a “rough ride” with Foster.

A few days later I got a call from Wallack, who said that an “important person” had called Sunny and reamed him out verbally for describing his meeting with the important person (Obviously Foster). On that basis, Wallack said, Sunny had told his staff to refuse to talk to me at all. I was to be banished to outer darkness. Well, it would be hard to get much more trivial than that.

So, now I have Sunny telling me I’ve broken the rules. I didn’t break the rules. I published only what another source told me. Sunny described his meeting with Foster in detail, which was fascinating, and BTW, I am sure he never would have brought it up if he thought it would be published. I never used that information in my post. The fact that Foster was angry about the “rough ride” phrasing was Foster and Sunny’s problem, not mine. Sunny, a child of the new era, might not have known the rules himself, but Wallack should have.

The reality, however, is that neither Sunny, nor Wallack, nor anyone else in the high command of the UVM Network has the faintest idea what the rules actually are, or rather, were. They don’t know how journalists function, or they pretend not to so they can blame a reporter for their missteps in the face of information that embarrasses them.

Sunny and Wallack aren’t the only ones who function like that: the whole policy and political world operates in very much the same manner.

A personal piece of evidence for that: Not only have I been banished by the UVM Health Network, I have also been banished by the Green Mountain Care Board, which is the other side of the same coin. I have at times over the past decade been critical of the Board’s performance, but that never had any effect on my ability to engage with the members. Kevin Mullin, the chair of the Board from 2017 until last fall, was noteworthy in that regard. Sometimes I thought he was right on the issue, some times I thought he was wrong. Irrespective of the issue, however, Mullin stood up to inquiries from me, or from anybody else.

Call him on his phone, he answered it—himself. Ask him your question, you got an answer. He never hid. If you wanted to argue some point or other, knock yourself out. He never bailed out because he had a “meeting.”

A couple of months into the regime of Owen Foster, the new chair, I had occasion to go to Montpelier, so I stopped at the GMCB offices on State Street. I was admitted by the administrative assistant, Kristen LaJeunesse. She invited me in and told me that she had been on the job for just three weeks. She seemed very nice. I said I would like to talk to Mr. Foster. She asked me to wait.

A few minutes later, she returned and said that Mr. Foster, as well as the other Board members, were too busy. “I should also tell you,” Kristen said, “that the Board members will be too busy to talk to you in the future, also.” I thanked her and took my leave.

As I drove away, I thought, Wow, back to the Washington of 50 years ago. During my tenure there, President Nixon hated the press and did everything he could to make their lives miserable, but reporters went to work every day, and the Republic survived.

So, what happens when a reporter gets banished, by the Green Mountain Care Board, the UVM Health Network, a specific legislator or office holder, President Nixon, or anyone else?

Well, in an important sense nothing, if you’re a professional—you just keep gathering all the information you can, and assessing it as best you can. In the case of the health care reform project in Vermont, the vineyard I’ve been tending for the last decade, there is a cornucopia of data and information, so much it is often overwhelming.

In just the last several months, I have written a couple of dozen what used to be considered obvious front page stories.

The 11 non-UVM hospitals in the state are costing the public from 30 to 50 percent more per capita than the UVM Network hospitals in Burlington, Berlin and Middlebury. The quality in the non-UVM hospital system is abysmal. The state has 154 more beds than it needs, a huge financial drain on the state. Hospitals in Newport, Springfield, and Randolph, and St. Albans are doing complex surgeries in far too few numbers to meet national safety standards…

These are just some of the highlights in the hundreds of pages of consultant reports sleeping in the Green Mountain Care Board archives, available to all. The members of the Green Mountain Care Board know all about that data because they are the ones who ordered it assembled. Yet they never mention it in their regulatory deliberations…

Still, even if you are persona non-grata, you can listen in on the Board Meetings, and you can still make a comment as a member of the public. You can do the same at Governor Scott’s press conferences. You can attend legislative committee hearings. And there is always the possibility that a player on the field will ignore the stigmata of ex-communication because he or she thinks the public needs to understand a policy issue.

Finally, there is an ironic consequence to shutting off a member of the press. Reporters have to work harder in a hostile environment than in an amicable one, and it is easier in those cases to dredge up negative information than positive. If a reporter is both competent and conscientious, he or she will give a news subject a chance to comment on the issue at hand. Sometimes, the news subject has a compelling reason for acting a certain way or knows something the reporter has missed, and that information can change the tone of the story.

Getting and assessing the story, in short, is harder, but still eminently doable. President Nixon found that out the hard way.

It was a couple of kids at the Wash Post, Woodward and Bernstein, who used the Watergate issue as a way out of covering the comings and goings in Prince George’s County, Md.

There are some enduring lessons, I think, from that era for our current debased policy and political life. One is that the press, or anyone else who is concerned about any policy issue, can expect to get all sorts of difficulties from institutions, politicians, bureaucrats, and just random yahoos who will defend their policy territory tenaciously. Not all of them, of course, and not even most—but still, a lot.

And don’t forget that people can change. Good things can happen as well as bad.

As I have written in this space, the early performance of Owen Foster as the new chair of the Green Mountain Care Board struck me as appallingly bad. He bullied OneCare Vermont, and he seemed determined to do what he could grind every nickel out of the UVM Network, the cost and quality leader of the whole system.

Yet, in a recent round table discussion on those issues, one of the witnesses argued, in effect, that the way to help UVMMC would be to cut its budget by more.”

The other Board members just sat there.

But Foster leaned right in. “How is that possible?” he demanded to know, sounding incredulous. It was just a moment in time. But I thought, okay, that sounded different. Maybe Foster will begin to get a grip on the whole reform conundrum.

That would be a good thing.

The UVM Network is Failing to Confront its Messaging Problems

May 3, 2023 Laurie Davis

by Hamilton E. Davis

Since 2015, a prominent theme in the healthcare environment has been the proposition that the UVM Network, and especially its flagship Medical Center Hospital in Burlington is too big, too powerful, too expensive, too dominant, pretty much too everything. The theme was born in an article in the newspaper Seven Days that marveled at how massive the building seemed, perched on its knoll overlooking the city, and remarking that it was “gobbling up” all of the smaller players in the medical field, especially primary care providers.

That banner was picked up notably by three leaders of the Progressive movement in Chittenden County—State Sens. Tim Ashe, Chris Pearson, and Michael Sirotkin, all now retired from state politics. These worthies had no particular knowledge about health care or health policy, but they focused on high salaries paid to top executives as evidence that big is bad and needs to be broken somehow.

The principal target was Dr. John Brumsted, who led the UVM Network for the first decade of the reform effort. His annual salary was $2 million, strikingly munificent in low-salary Vermont.

In fact, the anti-UVM narrative that has permeated the reform issue since the mid-teens was and is almost entirely without foundation. I have written about the evidence at length but for now consider just the salary issue. The UVM Medical Center Hospital operates in a national market. The company retains a consultant to determine the median salary for a given position, and that is what that person gets paid. As many above that level as below. Brumsted’s salary was mid-range. None of the on-the-ground evidence, however, has visibly moderated the anti-UVM narrative. There are several reform players who bear the responsibility for that, as I have pointed out before in this space.

But not all the responsibility. Part of the blame falls on the UVM Network itself. In my last post, I pointed out the deleterious early performance of Dr. Sunil Eappen, the new Network CEO, who took office in December. That isn’t much time to figure out a complex political scene on his own.

Of course, he isn’t on his own. Eappen’s senior management team has been in place for years. That team has a multi-million dollar public affairs apparatus, and it seems appropriate to ask how that corporate arm has dealt with the admittedly very challenging message environment.

Well, they have not been doing enough because the environment for the Network has been getting worse, not better. It is impossible to watch the Green Mountain Care Board’s regulation of hospital budgets without grasping that the UVM Medical Center Hospital is closer to the financial edge than it was even a year ago. That is not necessarily the fault of the senior management, but it is important to look at that:

Still the most damaging botch by senior management was the decision in the last budget cycle by Al Gobeille, the Chief Operating Officer and number two to Brumsted, to assure the public that whatever the depredation inflicted by the Green Mountain Care Board on the Medical Center budget, UVM would not cut any medical services to the public.
In fact, Brumsted had convinced Governor Phil Scott that the Network would have to cut services if it did not have enough money to pay for them. Which is exactly what the Network did when it withdrew from the project to build new mental health beds at Central Vermont Hospital. The Network had pledged to use revenues from a budget overrun to build the new beds.
The resulting Board-imposed budget cuts, however, made it impossible for the Network to afford the resulting operating costs. Moreover, the way it was handled was interpreted by some of the Press to demonstrate “gamesmanship” on the part of the Network management. The effect of the Gobeille caper was to damage, if not destroy, the Network’s credibility on the critical question of whether UVM is being starved of needed revenues.
The Gobeille issue is moot now: Al reported several days ago that he would leave the UVM facility to return to his restaurant business in Burlington. The damage remains, however, as does the question: Why was Al Gobeille, whose responsibilities involve operations-keeping the trains running on time—getting involved in political messaging, which was clearly outside his experience and skills?
That question would apparently go to Anya Rader Wallack, who was hired a couple of years ago as the Senior Vice President for Strategic Communications, specifically to address the crying need for the Network to competently tell its own story to the public. I could just ask her, of course, but that is impossible, for reasons I’ll get into in a post tomorrow. But what can the public see?
In January of this year, Wallack, wrote a commentary for VTDigger asserting that OneCare has saved large amounts of money for Vermonters, as well as improving quality of care across the state
OneCare is an important piece of the health care reform puzzle, she wrote. OneCare is working. OneCare is improving the quality of care and reducing costs in Vermont…Savings for Medicare of over $50 million have been realized since 2018…OneCare’s providers have consistently scored above average on quality of care. For example, in 2021, OneCare providers scored in the 90th percentile for diabetes management.
There were two serious flaws in this effort. The first was that it was mostly tell rather than show, a high school kind of failing. There are some facts in there—so much savings for Medicare, so high a rating on diabetes—but no sources are given, so they’re just claims by the UVM Network. Moreover, and much worse, they are so misleading that their credibility is minimal.
What the actual research shows is that Vermont’s performance on cost and quality is close to 100 percent the result of the performance of the UVM Network itself, which delivers 60 percent of all the care in the state. The other 11 smaller hospitals in the state remain in a fee-for-service reimbursement model that costs a third to a half more per capita than the UVM Network. I have published that data many times; my tiny corps will recall this graph and this graph showing the huge outperformance on the part of the Network on both costs and quality. None of the cornucopia of hard evidence for Network superiority in the Green Mountain Care Board archives is cited in the Wallack effort.
Wallack points out that OneCare’s support for primary care in the state has been crucial, which is true. But when it comes to cost efficiency and quality, you won’t find it in places like Rutland, Bennington, Randolph, Springfield, Newport and the like; you need to look at Burlington, Middlebury, and Berlin.
Wallack compounds this failing when she claims that “OneCare has made significant progress toward” the reform goal of shifting reimbursement from fee-for-service to capitation, or block financing. In fact, the business model of the 11 small and medium hospitals remains steadfastly fee-for-service, and OneCare is scared to even talk about it to those members.
The reason is that membership in OneCare is purely voluntary, and if OneCare management leaned on, say, Rutland, to drop the price of a routine baby delivery, Rutland could just walk. And so could any other community hospital because they think they need every big-ticket surgery they can get in order to keep their doors open. OneCare has no answer to that and neither, at this point, does anyone else.
The above assessment needs some cautions. OneCare Vermont is separate from the UVM Network, although that is pretty much a fig leaf. The Network owns OneCare and selects its management. A second issue is that Wallack bases some of her claims on the fact that most care delivered to Medicaid patients is paid for in fixed-price, capitated contracts. The significance of that is reduced in the reform space by the fact that Medicaid is the most parsimonious payer in the field. There is no capitated payment for Medicare or private insurance patients. Conclusion: no real help there.
The most recent UVM Network effort at messaging came from Allie Stickney, chair of the UVM Network Board. Stickney endeavored to explain one of the most significant structural shifts in Vermont medicine in the modern era—the creation of a single integrated company out of six hospitals in Vermont and northeastern New York. The Vermont units are the UVM Medical Center Hospital in Burlington, Central Vermont Medical Center in Berlin and Porter Medical Center in Middlebury; the New York facilities are in Plattsburgh, Malone, and Elizabethtown.
Beginning on Oct. 1 of 2022, the local boards in Berlin and Middlebury in Vermont and Plattsburg, Malone and Elizabethtown in New York ceded all their strategic and operational powers to the Network headquarters in Burlington. That step was the most important hospital structural shift in our region in the modern era. I wrote about it here.
In her Commentary on VTDigger, Stickney described the shift as a “clearer division of labor, with less overlap. The seven partner boards will focus on quality, access, diversity, equity and inclusion, determining community need, and fundraising to meet those needs through improved facilities and programs.
The Network Board will focus on finance and operations, working to further integrate network services, aiming toward improved outcomes for the communities we serve. Network and local boards will share the work of strategic planning.

I am struggling here to describe just how far out in La La Land the Stickney document is. The significance of the action taken last fall lies in the fact that, so far from “eliminating overlap” and other fantasies, the constituent Boards of the two Vermont affiliates and the three in New York voluntarily ceded all of their financial and operational authority to the Network executives in Burlington.

Hiring and firing affiliate hospital CEOs, determining their salaries, determining what medical services to offer, setting the local hospital budgets—all shifted to the UVM Network in Burlington. Raising money from local sources remains possible for the local board and they can watch over and report on quality efforts, but all the local power and authority is gone.

Which is a very good thing. The UVM Network now is a single, integrated company that delivers 60 percent of the acute medical care in Vermont. They do so at a third to a half lower cost than the other 11 hospitals in the state, and at quality levels that are twice to three times better than the smalls. Local boards have demonstrated no ability whatsoever to make competent judgments about 21st-century medicine. It is simply too complex and expensive for the local car dealer, and perhaps a retired high school principal. Moreover, it isn’t just the small hospital boards that can’t manage modern health care; the boards of the big players like the Network and UVMMC really can’t either. They all—big and small—rely on the professional judgment of the heavyweight doctors and administrators in their administrations.

The out-performance by the UVM Network didn’t emanate from its Board, it was driven by Dr. John Brumsted, who led the Network for a decade prior to his retirement last December. Brumsted was one of the most innovative healthcare leaders in the United States, which is why the UVM Network is the national pacesetter in reform. He was not, however, a national-class political leader, which is one of the reasons why the Network is in such a mess now.

The Vermont hospital system is now entering a five-month interregnum. All the hospitals are now completing their FY 2024 budgets, which must be submitted to the Green Mountain Care Board by July 1. It will take the Board staff five or six weeks to analyze those documents, and the Board will hold hearings on them in late August. The Board will announce its decisions around Sept. 15.

Anything could happen over that period. Sunny could right his own ship. The Green Mountain Care Board, whose performance has been appalling, could decide to address the needs of the Network—or not. The Legislature could become an effective player, which it is not now. The Press could get real about health care…the Biden Administration could get real about setting the Medicare system on a sustainable track.

The most potential possible shift would be the knowledgeable engagement of the Vermont voters; they could get engaged in the real issues of reform. It is the voters who will be the primary beneficiaries of getting to a sustainable system, and the victims of failing to do so. Moving voters is hard to do, especially given the lack of press coverage, but voters and legislators in Vermont are remarkably close, connecting regularly in supermarkets and schools. A legislator who gets three calls about an issue is on the alert, and if the calls go past five it’s a firestorm.

Another source of potential political pressure is the business community, which has been missing in the health reform space for years. Finally, a competent public relations apparatus should be able to mobilize public support at least in its own service area, which for the Network’s Medical Center in Burlington amounts to well over a quarter of the whole state population. So far, however, not happening.

So, impossible to say now where this all goes. We’ll know much more by fall.

Who is this Sunny, and Why is He Saying such Crazy Stuff?

April 10, 2023 Laurie Davis

by Hamilton E. Davis

A few weeks ago, Sunny Eappen, the newly minted CEO of the UVM Health Network, gave his first public interview to Stewart Ledbetter, the veteran anchor of WPTZ, Channel Five. Since he took office in December, Eappen has been introducing himself around the Network, getting used to his new organization and learning a new medical and political landscape. The Channel Five appearance was his first public performance while actually holding the wheel.

Ledbetter eased Eappen into the session, asking him where he is from (Chicago) and suggesting he must be getting used to riding the Lake Champlain ferries, which you have to do if you’re overseeing not just the three Network hospitals in Vermont, but the three in northeastern New York. Eappen allowed as how he was, getting to see the facilities and meeting the top people in his organization.

“So, three, four months into the job, is it about what you expected?" Ledbetter wanted to know.

It is, it is, Eappen replied. I think the financial situation has been difficult, but not unexpected. It’s the way it is across the country, around the challenges that all hospitals are having. What’s been a fantastic…even better than expected surprise has been how great the people have been, that is our staff, our caregivers are completely committed to our patients. Our leadership is committed to our communities. That’s been incredible and incredibly positive.

That sounded pretty routine, an acceptably platitudinous answer to a soft-ball question. In fact, it was totally contrary to the facts on the ground. It is true that hospitals around the country were hammered both medically and financially by the Covid virus.

But no delivery system in the United States has been driven as close to the rocks as the UVM Network has been by its regulator, the Green Mountain Care Board. Over the last seven years, the Board has wrung every nickel it could out of the Network’s budget requests, despite UVM’s demonstrably high quality and country-leading cost efficiency. A key result is that the Network’s Days Cash on Hand metric is no longer investment grade, although the rating companies haven’t downgraded them—yet.

The GMCB’s performance has been both irresponsible and incompetent, as I have written in this space ad-I-hope-not-quite-nauseum. Yet here was Eappen giving the Board the perfect cover: Hey, nothing unusual here, it’s happening to hospitals everywhere.

And it went downhill from there. In his understated style, Ledbetter stuck Eappen’s nose in every issue that has driven the crown jewel of the Vermont delivery system into a financial corner. Let’s watch it happen:

Ledbetter. In the pandemic, we heard about you having to pay the nurses more and you did. How many vacancies do you have? Have you turned the corner there?

I don’t feel we’ve quite turned the corner…we’ve made a lot of progress. We have hired more than we ever have before. The challenge remains that the number of people…nurses, doctors and other caregivers, has really changed here and across the country. So this is a challenge that is going to exist with us the next five, 10 years. And we’re going to have to come up with different ways to deliver that care. And it can’t be with a temporary workforce because it is just too expensive …

Well, the latter is certainly true; paying traveling nurses six figure annual salaries is not sustainable, and Sunny’s idea that the problem is going to take “five to ten years” to solve is simply ridiculous. The UVM Network has two years, possibly three years to right their financial ship. In five let alone 10 years on the current trajectory Vermont won’t have a national class academic medical center. Plus, Eappen went on to contradict his claim that a “lot of progress has been made.”

Ledbetter. Have you cut your travelers’ expenses significantly?

No, no. Compared to a year ago we’re probably 10 percent below where we were. So, we still have a lot of work to do on that front.

Throughout this conversation, Eappen seemed simply unaware that the underlying problem facing his organization is that it simply doesn’t have enough money to function properly, and that the reason is basically political, not whether the UVM Network is somehow flawed. What all the focus on the Network problems does is to deflect attention from what a mess the other 11 hospitals in the Non-Network are, and how petrified the Green Mountain Board is of getting political blowback by even talking about it…

Ledbetter keeps boring in. There’s news of a divorce between the UVM Network, and United Health Care, a national insurance company, that is refusing to contract with you because you’re too expensive. “They say that after receiving a nearly 20 percent in reimbursement rates over the last three years, UVM is now proposing a 15 percent price increase in one year and folks can’t afford that.

They’re correct. We were proposing 15 percent. As you know, we’re pretty regulated here in our state. So we can’t typically ask for anything more than the Green Mountain Care Board will approve…Eappen goes on to protest that UVM has one of the lowest cost networks in the country. We don’t think that we’re more expensive….

Those few sentences cast a shadow over the future of the academic Medical Center. I know that risks being overdramatic. But think about it. The Eappen position isn’t just weak, it is pathetic. The proposition that the UVM Network can’t even ask for what it needs, but rather what it guesses the Board might approve isn’t just ridiculous—it is legally, medically, financially, fiducially, and just plain-common- sense irresponsible. If the Network accepts even one more inadequate budget next summer and fall, it might never recover.

And it doesn’t have to. It should appeal an irresponsible Board-imposed budget to the Vermont Supreme Court, and at least let someone weigh in on the side of preserving the most medically and economically important asset that Vermont possesses and is in the process of losing.

Furthermore, there is abundant evidence to support its case. The evidence sits in the hundreds of pages of reports from a half dozen national consultants sleeping in the Green Mountain Care Board’s archives. Which everybody, including the Board, the Press, and the UVM Medical Center’s senior management ignores. Just like Sunny has demonstrated here. He asserts that the Network compares favorably nationally, and he drives that home by saying, “We don’t think we’re that expensive.”

What he conspicuously fails to do is to cite any specific evidence to support his case.

Of course, Sunny has only been in the job for four months, so it seems fair to ask, what about the rest of the senior management team and the Network Board who have been on the field for the last several years.

I’ll look at their performance in my next post.