Can Vermont Find a Path Forward on Health Care Reform?

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

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

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

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

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

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

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

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

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

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

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?

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.

GMCB Runs Head-on into Reality: No New Money for Mental Health Beds

by Hamilton E. Davis

   The issue before the Green Mountain Care Board on March 8 was how to deal with about $18 million that was intended to pay for construction of new inpatient psychiatric beds at Central Vermont Medical Center, a unit of the UVM Network. The issue was pretty simple, and the amount was budget dust in the UVM Network $1.6 billion annual spending. Yet, the proceeding illustrated, once again, the extent to which the Board, under its new chairman, Owen Foster, has wandered so deep into the weeds that it is threatening the financial health of the entire Vermont hospital system, the evidence for which I’ve laid in my series earlier this year.

   Foster, a former federal prosecutor, supported mainly by Thom Walsh, is treating the UVM Network like it is some kind of rogue player, and that enforcement should be brought to bear on the company--Foster makes it clear he is just the guy to do it.

   For the first time, however, some Board members indicated that they might not follow Foster on a punitive course; and, also for the first time, the staff pressed for approval of its own course, which ran directly contrary to the Foster-Walsh posture. The staff position was set forth by Sarah Lindberg, the leader of GMCB finance team. Lindberg called for making the enforcement action “a bit more flexible” in dealing with the mental health needs in the state.

   The staff’s specific recommendation, she said, is that “UVM develop a proposal in consultation with our Department of Mental Health to figure out the best way to do that, which would be submitted to the Green Mountain Care Board by May 31.” Lindberg added that “the Vermont Department of Mental Health is supportive of changing the restrictions so that it is not limited to inpatient capacity…and that (the department) thought it was helpful to be able to collaborate in this exercise.”

   When the staff presentation was over, the Board members weighed in. Jessica Holmes and Robin Lunge supported the staff recommendation, and Owen Foster and Thom Walsh clearly opposed it. The fifth member, Dr. David Murman, didn’t take a clear position. Foster, however, appeared to dislike the staff recommendation. So, he took charge and put a vote off to the March 22 Board meeting.

The Backstory

   The debate arose in the 2017 budget year, when the UVM’s Medical Center Hospital in Burlington took in far more patients that it or anyone else expected. No one knows why the spike occurred, and it wasn’t repeated in subsequent years. The result, however, was clear enough--the hospital took in about $41 million more than budgeted, and of that amount about $20 million fell to the Medical Center’s bottom line. Those numbers exceeded the budget approved by the Green Mountain Care Board, so the question was how to turn the $21 million back to the payers. (The hospital could keep the $20 million spent delivering the care.)

   As soon as the numbers appeared, Kevin Mullin, chair of the Board, and Jessica Holmes drove to Burlington to discuss the matter with the UVM Network management. Rather than simply reducing the payment by payers in the following year, Mullin and Holmes worked out a plan with the Network to commit the overage to construction of a 40-bed inpatient mental health facility at the Network’s Berlin campus. The first phase called for 25 new beds, the second for 15. The need for such a unit was particularly pressing then since Hurricane Irene had destroyed the state’s inpatient mental hospital in Waterbury in 2011.

   The Network spent the next three years designing the center, at a cost of about $3 million. The remaining $18 million was reserved for construction, and was invested during the interim in the financial markets. An additional $3 million in interest is also available for the project.

   Fast forward to 2021. The Board now has been under new leadership since Governor Scott replaced Peter Shumlin in 2017. The new Board had a Scott-appointed majority that began in 2018 to solve its cost problem by grinding down UVM spending, while routinely approving much higher per capita spending in the 11 non-Network hospitals in the state. UVMMC’s margins were crashing, and its Days Cash on Hand had fallen below investment range.

   For that reason, the Network informed the Scott administration and the Board that it could no longer afford to carry out the project. It wasn’t mostly the construction cost. Given its financial position, it couldn’t afford to pay the annual losses that would accompany the operation of it. Mental health is an inveterate money loser, everywhere, and the Board agreed: even the most recalcitrant Scotties could see that they had run out the string on hammering their most medically and cost-efficient system in order to hide from the political blowback that would attend any effort to confront the need to recast our 14-hospital structure.

The New Reality for Reform

So, here’s where we stand now. The need for new mental health capacity is greater now that it’s ever been. The actual money available, about $18 million, or $21 million if you include the interest, is actually less than a drop in the bucket. No one, especially the Green Mountain Care Board and the Scott Administration, has the faintest idea what to do about it. That indictment covers Governor Scott himself, his Chief of Staff, Jason Gibbs, and his apparatus at his Agency of Human Services. The only competent medical expertise to lead the way to a solution resides in the UVM Network; the Department of Mental Health has some resources, but not enough to match up with UVM.

And irrespective of expertise, commitment, or anything else, the driver in the health care space is this:

There simply is not enough money to solve the problem of new inpatient mental health beds.

   For its part, the UVM Network proposed to spend the reserved $18 million on eight initiatives already underway or planned to improve care for the mentally ill. They include enhancing the ability of primary care providers to deal with mental health problems; a “step down” program to help patients reenter the community after discharge, and to help patients avoid hospitalization; and, in conjunction with other local providers, establish an urgent care center in South Burlington. None of these efforts, however, involve new inpatient beds.

   The resolution will come at the GMCB meeting this Wednesday, the 22nd. If you’re a betting person, put your money on Foster and Walsh falling short. Which isn’t very encouraging because having two of the five board members out in the weeds and seemingly determined to go further out is a dark augury for our reform initiative.  

What are Foster and Walsh Getting Wrong?

   Well, they’ve got a lot of stuff wrong, but the most important in the instant case is to assume that the $18 million is the fruit of some nefarious scheme by UVM’s Medical Center Hospital. There isn’t a scintilla of evidence of that, and no serious person thinks there is. What happened to the Medical Center Hospital in 2017 was a sharp spike in patient traffic, driven by national forces such as the increasing technical complexity and high cost of modern care. All over the country patients are voting with their feet, bypassing small facilities in favor of much bigger centers, and it’s happening in Vermont.

   The second major mistake is toying with the idea that the Board should just order the UVM Network to go ahead and build and operate the additional inpatient beds, whatever the financial consequences. Walsh provided a rationale for that.

   “Most health care provider organizations consider inpatient mental health care not profitable, and we have seen over the decades in this state that if it’s considered not profitable it does not get built,” he said. “So, to remove any enforcement where we don’t require inpatient beds being built continues the intolerable care…so I think this is a call to action.”

   Those comments moved Foster. “Thom’s point hit home with me real quick, just the fact that if it’s not profitable it won’t be built,” he said, “so it (the UVM project at Central Vermont) won’t be an equal consideration (with other UVM projects).” Foster by then was reading the room, however, and he retreated to some comments about the need to have the Department of Mental Health as well as mental health care providers involved. And deferred the vote.

   What’s wrong with the whole profit argument is that while it may be true in most places it isn’t true here. Under the state’s reform law, the Green Mountain Care Board has the power to determine what hospitals spend, as well as deciding how much it can keep as a margin in a non-profit system.

     That is precisely why the $18 million became an issue in the first place.

The Vermont Health Care Reform Project is Approaching a Climax

by Hamilton E. Davis 

When I began this series, I said that Vermont’s health care reform project was farther advanced than any similar effort in the U.S., but that it had stalled, that it now has no trajectory at all. Earlier articles sketched the barriers that have led to stasis; this concluding article will look forward to the next six months and suggest what it will take to break through to a doctor-hospital system that has high quality and sustainable costs.

   We won’t have to wait long. Vermont’s 14 hospitals are putting together their budgets for Fiscal Year 2024 now, and the Green Mountain Care Board will decide by the end of March what it will accept in those proposals. The budgets are due at the Green Mountain Care Board by July 1. The Board will hold hearings on the budgets in late August and early September, and will rule on them by the middle of that month. FY2024 starts Oct. 1.

   Two of the most fraught issues will take center stage within the next six weeks or so. The first step will take place in the engine rooms of the hospitals, where the Chief Financial Officers live. How much money should they ask for? What inflation rate do they expect? What services do they plan to employ? And, critically: How much money do they need to keep the doors open, and bring in a margin—an excess of revenues over expenses?

   Those questions pose dramatically different challenges to separate elements in the delivery system. For the UVM Health Network, which delivers 60 percent of all the care in the state, the issue is whether they build into this budget a full or partial recovery of the money they have been shorted over the last five years, and the extent to which they begin to invest in the resources they need to flourish over the next decade in a sustainable 21st century structure.

   The second fraught issue is the way the 11 non-UVM hospitals approach their budgets for FY2024. The Board has treated the “smalls” with kid gloves but despite that and despite also the federal subsidies available to eight of the smalls, their business models remain very shaky. They have trouble making any margin, and they have to worry about whether the Board will begin to raise the obvious questions about the service lines they are offering. There are no indications yet of what their response to those forces will be.

The UVM Network Conundrum

    The UVM Network has not laid out its priorities publicly, but a reasonable estimate for the next decade would be a billion and a half dollars. Can a figure like that be justified? Absolutely. In fact, the array of consultants that have assessed the whole system in detail for the Green Mountain Care Board laid out the evidence for it in 2021. I’ve sketched those findings in earlier articles. A quick summary:

   The Network hospitals in Middlebury, Berlin and Burlington had much lower costs in the pre-Covid era than the other hospitals in Vermont, and much, much lower costs than the rest of the country (see graph). Moreover, quality in the UVMMC is substantially better than in the other Vermont facilities (see graph). On the basis of these metrics, the consultants recommended that Vermont eliminate some 150 beds from the small community hospitals and add 60 beds to the UVM’s flagship Medical Center Hospital in Burlington.

   As the UVM Network CFO Rick Vincent and his finance team close in on their final figures, they have to take the above realities into account, but they also can’t help taking into account the Green Mountain Care Board’s relentless hammering of their budget submissions over the last five years, and the Board’s refusal to mention so much as a syllable about their own consultant’s recommendations. For the UVM Network, therefore, the budget has to be shaped at least as much by political realities as the needs of their Network. A challenge for Solomon. We’ll know that decision soon.

   It is important thing to note that the political factors facing the UVM Network are internal as well as external. The hostile political parameters of the Green Mountain Care Board’s attitude are clear enough, but there are huge questions about the Network’s response to those realities. To date, the response of Network senior management has been purely reactive, as we have seen. Will that change?

   The ultimate decision will be up to Dr. Sunny Eappen, who took over from the retiring Dr. John Brumsted in December. One of the potentially most effective steps he could take would be to challenge Board decisions his management team believes contravene state law requirements. These laws regulate that entities receive “due process,” and be permitted to get a “fair return” on their investment.

   In the wake of the Board’s decision on the Network’s current budget, the Network sent a letter to the Board making the case that it hadn’t been treated fairly because other hospitals with much more expensive budgets got rubber stamped (no due process) and that it hadn’t been allowed to recover revenues spent on historically high inflation, which it had no ability to avoid (no fair return on investment). But the Board ignored the letter, and the Network just hunkered down, as usual. The attitude seemed to be: Well, the Supreme Court would just remand the case to the Green Mountain Care Board, so what would be the point?

   Actually, there would be a very important point. According to an experienced utility lawyer of my acquaintance, a remand on a health care regulation case would be an important contribution to the regulatory apparatus, and potentially of enormous benefit to a system like the UVM Network. The Vermont Supremes would not just send back the case—that would be a plain waste of time. Rather they would study the case carefully and make a judgement on the Board’s processes, including their views on how well the rights of the appellant had been protected. If the Supremes thought the GMCB performance had been faulty, the remand would lay that out. There is an extensive body of law on public utility regulation, but so far none at all on the health reform project. A UVM Network appeal would be valuable on several fronts. We have no idea, however, what Sunny might do, and in any event a direct challenge to the Green Mountain Care Board will have to wait until late summer.

   Were it so inclined, the Network could mount a campaign similar to the response of the medical profession to the managed care debacle in the mid-1990s, which I described in an earlier article. The message would be that the Green Mountain Care Board is threatening the medical care the UVM Network delivers to its patients not just in the five counties of northwest Vermont, but to the whole state. Neither the Green Mountain Care Board, nor the area legislators, nor the Scott administration itself could stand up to a force like that.

   Such an operation, however, would require serious political skills, and there is no evidence that the current senior management team at the UVM Network has anything resembling that. And as far as Sunny is concerned, no one knows what he would bring to such a parade. We’ll know by mid spring, but I don’t expect to see such an effort. Possible, but not likely.

   Finally, the underlying disjunction between the Network and the Board suggests that the Board’s cuts to the hospital budgets could be construed as a “taking” of private property, without fair compensation, a violation of the appellant’s rights under federal law, and even the U.S. Constitution. I have no idea whether these kinds of considerations have occurred to the Network management…

   The other side of the Network coin will be the budgets from the 11 smaller community hospitals. They have been protected from serious examination by the Green Mountain Care Board, as I described in an earlier article. There is no guarantee though that the Teflon treatment will continue. The small hospitals have been tiptoeing along the edge of a financial cliff for the last several years. Their problem has not been regulation, but rather the fact that their business model no longer makes any financial or medical sense.

   Hence the conclusion of the Board’s consultants, which I sketched in an earlier article. A quick reminder: Dodgy medical quality, with way-too-high PQI numbers, and questionable admissions as much as high 20 to low 30 percent unjustified; overbedding (sic) by more than 150 units; recommendations to cut the size of a majority of the small community hospitals. The smalls have been protected thus far by a Green Mountain Care Board that is too weak-kneed even to talk about the issue. But the Board’s Sustainability project continues to loom over the 11 non-UVM facilities. If the Legislature were to weigh in, it could strip away the political protection and the budgets now under construction in the smalls could be blown away…

   Right-sizing the 11 small hospitals could save Vermonters from $300 million to $500 million a year, which would render the doctor-hospital system “affordable” for the first time since the end of the Second World War. It is possible, but unlikely the Green Mountain Care Board will drive that process.

   The Legislature could do it, however. There’s no assurance, of course, that the Legislature will force such an effort. There are some hopeful auguries: the new chair of the House Health Care Committee, Lori Houghton, an Essex Junction Democrat, clearly “gets it.” She knows perfectly well that the small network needs to be recast. Ginny Lyons is a Chittenden County Democrat who chairs the Senate Health and Welfare Committee. She has been involved in the reform project since its birth, and she may get in the game between now and mid-March. Other key players could be Sen. Jane Kitchell, the chair of Senate Appropriations; Jill Kerwinski, the House Speaker, and Philip Baruth, President Pro Tem of the Senate.

   The Legislature hasn’t played a central role in the health care reform project, but it could. What’s new is that since Oct. 1 of last year the UVM Network is actually no longer a “network,” but a single integrated company with divisions (hospitals) in four counties of the state. Those counties send 62 representatives to Montpelier, 41 percent of the 150-member House. The four-county Senate delegation counts 12 members, 40 percent of the 30-member Upper Chamber.

Seventy plus legislators in a 180-member Legislature constitute a huge potential political force, one that could reverse the anti-UVM Network narrative in the state in a matter of weeks. The Network’s own political apparatus is pathetically weak, as we have seen over the last few years, but the Legislators could solve it themselves. If they were to try that, it would be evident in the next several weeks.

   There are a number of lesser problems that have to be worked out, but none that reach the level of the dance between the UVM system, the Green Mountain Care Board and the Legislature. Even the various machinations involving the Scott administration and its Agency of Human Services, which may produce some additional Medicare money for UVM’s Medical Center, aren’t central to reform.

The same is true of the Vermont Blue Cross mess, and the blather that comes out of the Vermont Health Advocate, the Vermont Auditor, and VAHHS, the hospital trade group. They are all complex, and all can have some effect going this way or that, but all would resolve if the total disjunction between the UVM system, the Green Mountain Care Board, and the Legislature can be worked out. The deal will go down, or not go down, beginning in March and winding down in late summer.

The only things in play, and at risk, in that period are the health and safety of the Vermont population, the potential for saving Vermonters billions of dollars over the next decade, and the Vermont economy itself.

Seems worth watching.

UVM Network Has to Firm up its Political Message Fast

by Hamilton E. Davis 

    The trajectory of cost increases in the American healthcare system began to assume its modern shape in the early 1970s, shortly after the advent of government payments for care for the poor and the elderly—Medicaid and Medicare. The trajectory increased dramatically in response to the new demand. The percentage of Gross Domestic Product spent on health care rose from 6.6 percent in the mid-1960s to nearly 20 percent today.

   There was one significant break in the 58-year spending track. It began in 1994 when the upward slope of the curve went nearly flat for three years. In 1997, however, it resumed its pre-1994 inflation rate.

   The three years of cost relief coincided with what I’ll call the Managed Care era. Managed Care companies, called Heath Maintain Organizations (HMOs) were specialized insurance firms that proposed to save the public money by putting doctors under pressure to reduce costs. The way they went about it involved a clever bit of arbitrage: The managed care companies drove doctors’ revenue demands down, but took payers’ costs down by less—and kept the difference. Which was good for payers, the public, and the insurance companies.

The medical community, however, lost its collective mind. Medical providers were in a rage. Doctors began to tell their patients that they weren’t being allowed to give them the care they needed. “Sorry, the HMO says no.” Think about the effect that would have on a mom with a sick child. All over the country, a meme arose that HMOs were evil, and a wave of opposition began to form and sweep across American society. It even reached the movie industry. If a film character mentioned the word HMO, hissing and booing sounded across the theater.

  Healthcare cost inflation was in a sustainable range, about the ambient inflation rate, but in three years the HMO movement in its initial form collapsed like a wet dishrag. HMOs evolved into ordinary insurance companies, passing along the costs generated by medical providers. By 1997, cost increases were running at eight to 11 percent per year. In Vermont, hospital costs between 2000 and 2009 doubled.

I’ve resurrected this history because in an ironic way it is newly relevant today. The essential point is the potential power of alienated medical providers. Which is what we have in Vermont today. The entire hospital industry is disgusted with, and angry at the regulator, the Green Mountain Care Board.

The 60 percent represented by the UVM Health Network has had its revenues constrained to the point that its mission is at risk, despite the fact that its cost performance and quality ratings are among the best in the United States. The other 40 percent, the small community hospitals have business models that are at best marginally sustainable, and are petrified that the Board might push them over the edge. Those issues have been the subject of earlier articles in this series.

The issue for today is why the UVM Health Network has failed over the last eight years to mount a coherent defense of its performance. The attack on that performance by a whole range of players has been savage and unjustified, as I have attempted to show. But the UVM Network has far more resources in every sector—quality control, financial management, policy expertise, range of services from primary care to specialty treatment—than any other provider in Vermont. It has, importantly, a multi-million dollar political and public relations apparatus. Plus, it is the single most important asset in the state’s economy.

   Yet, over the last eight years, it has failed to tell its own story effectively. A toxic narrative has taken a firm hold on the political environment. In my previous articles, I’ve laid out the evidence for that. The question for the Network’s senior management now is whether that narrative can be reversed. Failure to do that will cost Vermont one of its most important assets, national-class medicine in the center of its population, Chittenden County. Consider:

• Who is in charge and who’s doing what? The UVM Network has a new CEO; he is Dr. Sunil Eappen, an impressively credentialed executive from MassGen Brigham, a huge hospital in Boston. Sunny, as he is called, took the helm in December, and he is just now getting acquainted with his own system, and with the broader healthcare community in Vermont. Sunny inherited the in-place senior management team and we need to assess its performance, both because of its relevance going forward and because Sunny will have to cope with the toxic anti-UVM Network narrative that has been in place for years, and has actually gotten worse lately.

For example, Eappen met personally recently with Owen Foster, the new chair of the Green Mountain Care Board, and the few reports that have seeped out about the discussion indicated it was a rough ride. You could gain some insight into what rough means by watching the recent Board hearing on OneCare Vermont, which is essentially an arm of the UVM Network.

Foster trashed OneCare, a performance I detailed in an earlier article in this series. Most of that assault was entirely unwarranted, but it was pretty obvious that at least a portion of its roots lay in the last days of the retiring CEO Dr. John Brumsted’s tenure. Over the last couple of years, Brumsted had pressed the case to Governor Scott that UVM’s Medical Center Hospital was being starved of revenue by the Board, and if that process wasn’t reversed, the Network might have to cut some essential services to Vermonters.

Scott obviously believed that because he tore into the Board for its bad performance last June, a process I looked at in yesterday’s article. What happened next was a classic managerial mess. When the issue of cutting services came up last fall, Al Gobeille, Brumsted’s Chief Operating Officer, said publicly that the Network would never cut services, contradicting Brumsted’s two-year

What was even worse, some observers believed the back-and-forth showed that the Network high command was lying about the issue. Colin Flanders, a reporter for Seven Days newspaper, said that explicitly on Stewart Ledbetter’s Channel Five news show. “Gamesmanship,” he called it.

A second factor in the Brumsted-Gobeille-Scott kerfuffle is the role that was played, or not played by Anya Rader Wallack, who was named a Senior Vice President for Strategic Communications in the spring of 2021. The anti-UVM narrative was firmly in place when Wallack took office, but it’s fair to ask how she let the Gobeille caper cause such damage…

In any case, Eappen needs to get that whole function under control, yesterday.

• It is extraordinary that the UVM Network hasn’t even really tried to use its huge contribution to health care to get treated at least decently. Let’s count the ways. OneCare has contributed more than $100 million to support primary care in the state. Sixty percent of that comes from the Network. Take it way, and the already shaky primary care doctor network in Vermont will crumble. And the Network would be fully justified doing that; in fact it was close to doing before Eappen arrived.

The same sixty percent keeps the Vermont hospital association afloat. Yet the Network played no role in the recent decision to hire Mike Del Trecco to replace Jeff Tieman as President of the trade group. Del Trecco has been following Tieman’s policy of throwing the industry’s weight behind keeping all 14 full-service hospitals afloat in a state that only needs four. A couple of years ago, Deven Green, a lawyer for the association, said publicly that the local Vermont hospital network was “lean and mean.” Really. The consultants who studied the system told the Green Mountain Care Board in 2021 that Vermont has at least 150 beds more than it needs. That might be mean, but it is a long way from lean.

• Vermont has an enormous investment—hundreds of millions of dollars—in what reformers call an All-Payer Model. Think of that as a critical step on the way to full capitation, which is the federal government’s preferred path to real cost containment. The centerpiece of the effort in Vermont is the UVM Health Network. No Network, no health care reform. The Network could refuse to participate unless it gets treated fairly by the Green Mountain Care Board.

The Network has got nothing but grief for its leading role in reform. A politically competent management should be able to utilize its numerous strengths to negotiate far better treatment than it has received since 2018. That’s the real challenge facing Sunny Eappen and his senior management and they need to figure it out, well, now.

Phil Scott Has an Opinion on the Green Mountain Care Board

by Hamilton E. Davis

   One of the knottier problems in assessing health care reform in Vermont is figuring out the role played by Governor Phil Scott. Since coming to office in 2017, Scott has come in and out of focus, staying hands off, then engaging in a sort of positive way, then shifting from warm to cold and back again.

That all sounds kind of mysterious, of course, but given that the reform project now is more political than policy-driven, Scott’s posture over the next six months could be decisive, either to leave reform in limbo or to break through to a sustainable delivery system that would be a model for the country. It is pretty easy to follow the meandering track Scott has left so far, but impossible to predict where he goes next. The Scott posture is worth examining, however, because it could affect the other key players, like the Legislature, the Public, the Green Mountain Care Board, and the healthcare industry itself. Let’s give it a try.

The reason why Scott is Governor in the first place is the health care reform project. The father of the effort was former Governor Peter Shumlin. Shumlin ran for office in 2010 and won a very close race against several credible opponents on the strength of his advocacy of a Single Payer system for Vermont’s doctors and hospitals. He steered his plan through the legislature in 2011 and got off to a good start. In 2012, he won a second term decisively and picked up momentum to the point that there was speculation that he might be a Democratic candidate for President. Health care reform is a long-term effort, of course, but Shumlin appeared set for an extended tenure, like Howard Dean who served for 12 years, and Jim Douglas, his immediate successor, who spent eight.

   It all went south for Shumlin in 2014. He botched the opening of a federal subsidy for health insurance and then failed to figure out how to finance a full-on Single Payer plan, in which state government would pick up the private sector’s share of the cost of the acute care system. His political credibility gone, Shumlin barely won reelection to a third term against a marginal candidate and retired from politics before the 2016 election.

  Shumlin’s Lieutenant Governor was Phil Scott, a Republican from Barre, a tall, regular guy, a formidable race car driver at Thunder Road, and the operator of a small construction company. He wasn’t a public policy maven, but he was respected and everybody liked him, including Shumlin. So, when Shumlin blew up, the one left standing was Scott, who ran in 2016, and won solidly.

When Scott took office in January of 2017, the world thought that reform had died in Vermont, which it hadn’t. Shumlin was gone, and so was the Single Payer idea, but the reform launched in 2011 was still alive. Both Scott and his new chief of staff, Jason Gibbs, however, wanted nothing to do with it. They understood perfectly that healthcare reform had wrecked Shumlin’s career; whatever the implications of that, a project like Vermont’s reform was anathema to Gibbs, a combative conservative. So, Gibbs and Scott did what they had to do: they named a new Green Mountain Care Board chair, and a couple of new members, and otherwise ignored the whole process.

The AHS Conundrum

   It is important at this point to look at a sort of kink in Vermont state government that has become an important factor in the reform project. Governor Scott and his staff run state government from Montpelier, but his Agency of Human Services operates out of a sprawling complex of buildings in nearby Waterbury. Moreover, the reform structure gives an outsized role to the Secretary of AHS; that person, for example, is a signatory to the reform arrangements with the federal government…We can fast forward here by saying that the Scotties have had three AHS secretaries under Scott, all of them with dramatically different approaches.

The present incumbent is Jenny Samuelson, who took the AHS helm early in 2022. Samuelson is intense, aggressive, and committed to health care reform, but with some important differences with her predecessors, particularly in their relations with the Governor’s office. Samuelson understands clearly that she works directly for Gibbs, who has been almost completely detached from the reform project, but who has retained some important powers, such as naming new members to the Green Mountain Care Board. Asked about her role in that issue, Samuelson said she had no involvement at all.

She does manage all the details in the day-to-day processes, and they are extremely complex, but our focus today is on where Scott stands on reform.

As I’ve said, his involvement has varied over time, with much of the progress reflecting the postures of the AHS secretaries. That all changed dramatically, however, on June 1 of last year. On that day, Scott wrote a letter to the Green Mountain Care Board ripping its performance to date, promising to “hold the Board accountable” for getting better results for Vermonters, and to drive all that home, announced that he would create a committee of senior healthcare experts to provide advice on how to accomplish that. The leader of that effort, Scott said, would be Samuelson; the process would be fully transparent, and the results would be announced to the public. Well, that was quite a shift in direction from the first four years of Scott’s tenure. The questions for today are: what led to the pivot, what has the advisory group accomplished, and where do we stand today?

   What led to the change in direction? I cannot be sure exactly, since getting information out of government has become difficult. My sense, however, is a major factor was the drumbeat of criticism of the Board’s performance from the hospital industry, especially in the period when Covid dominated our community life. Jeff Tieman, then chairman of the hospital association, hammered the Board for putting his members under unnecessary pressures when they were struggling to cope with the virus. I think another factor was that Dr. John Brumsted, the CEO of the UVM Health Network, had convinced Scott that his organization was being so starved for revenue that its mission was in danger, that without a change in the Board’s attitude toward 60 percent of the state’s delivery system, the UVM Network could be forced to close some vital services, which would have to be obtained out of state, at enormous additional cost.

Whatever the reasoning process, the operations of the advisory group got underway last July, and significant chunks of Scott’s plan didn’t survive the political reality on the ground. The original scheme called for there to be eight to ten members, with important leadership from Doctor Brumsted, by far the most credentialed medical and corporate leader in the state. Well, Brumsted agreed to serve, but every healthcare interest group and lobby clamored to be allowed onboard. Result, 26 members, not eight or ten.

The second Scott assurance didn’t last either. The idea of just any old person attending the meetings of the august group spooked the Scotties, so no actual transparency. The meetings would be closed to the public, but Samuelson’s staff would provide regular notes on the content of the meetings.

That also turned out to be a chimera. The “notes” were just a few snippets, with no information about the author of the snippet nor any context anyone could use to discern the development of policy. And Samuelson, who was willing to discuss the reform issues at length shortly after she took office, will no longer return my calls. What I can discover indirectly is that Samuelson is heavily focused on the operations of the Designated Agencies, the ones that combine some medical issues in conjunction with other concerns like poverty and homelessness.

A second area of focus for the AHS Secretary has been on how to maximize the revenue available from federal Medicare officials to support the delivery of acute care; that would be of great benefit to the UVM Network, especially because of its status as an academic medical center. But the size of those revenue flows, and whether they are an adequate replacement for ordinary revenues in hospital businesses is unclear at this point.

So, whither Phil Scott today? The only thing I have any confidence in is what Scott told me in a one-on-one interview in November of 2021. I have not published this before, but I checked recently with Jason Maulucci, Scott’s press secretary, who told me the Governor’s views haven’t changed. I’m paraphrasing here, but this is what he said:

   I don’t see any reason why we need a Green Mountain Care Board at all. We designed the Board to regulate a Single Payer system, and Single Payer is gone. So, why do we need it?

  Given that position, will the Scotties try to get rid of the Board? Well, Scott didn’t say, and it doesn’t really matter because as things stand now, there is no chance the Legislature would buy into such a proposition. Democrats have veto-proof majorities in both chambers, and the Board has been popular there.

The only break from the current stasis can arise from sentiment in the Legislature itself. Is that likely? Not now. Is it possible? Yes, but that is an issue we’ll look at in a forthcoming article.

Alas, Poor Foster, Who Blunders into the Weeds on OneCare Vermont

by Hamilton E. Davis 

     In the 50 or so years that Vermont has been in the vanguard of a half dozen other states in seeking a solution to the national cancer of out-of-control costs and dodgy quality that afflict health care doctor and hospital care in the United States, no issue has been so badly misunderstood, unfairly vilified, and flat-out lied about as the state’s Accountable Care Organization, OneCare Vermont.

   OCV has performed better than any other such organization in country, yet it has been totally trashed by the Green Mountain Care Board. The Board has performed even worse on its oversight of OneCare than it has in regulating Vermont hospitals, which is a high bar indeed.

   There is a large body of evidence for every aspect of the summary above, but it will be impossible to understand without a basic description of what OneCare is and how it works. The best way to do that is to describe a specific situation to which any ACO could apply.

   The purpose of an ACO is to permit buyers of health care like federal and state governments on one hand and employers and insurance companies on the other to buy health care for sizeable blocks of patients at a fixed, per capita price. That reimbursement system is called “capitation” and it proposes to replace fee-for-service, in which doctors and hospitals get paid if they do something, and get paid nothing if they do nothing. Fee-for-service is the engine that has driven costs in the acute care system in Vermont and across the country into the stratosphere, a full third more than anywhere else.

   It looks like this: Take a reasonably coherent region like northwest Vermont, say Chittenden, Grand Isle, Addison, and Franklin counties, and count the number of Medicaid recipients there. Let’s agree that number is about 30,000. Okay, in that area are three hospitals—UVM’s Medical Center Hospital in Burlington, Northwest in St. Albans, and Porter in Middlebury.

   The Medical Center and Middlebury are connected, but Northwest is a separate company, as are the primary care groups. Under federal law, individual companies are debarred from collaborating on prices. In 2010, however, Congress enacted the law known as Obamacare, which established a workaround of anti-trust laws. Under Obamacare, separate medical companies could collaborate to permit separate health care firms to group their various services and get a single price for all the care a patient might need.

   The key element in this picture is that with fixed price contracts, when health care providers provide more than was agreed upon, there’s no more money. So, there’s no financial incentive to do unnecessary testing, or any other services. That is why capitation has been adopted by the federal government as the ultimate step toward a financially sustainable system. And also why it has been adopted as a goal by state government in Vermont in its agreements with the feds.

   The piece necessary to make the machinery work is called an Accountable Care Organization.  That’s what OneCare is. An ACO’s job is to take the money from the various payers, and then distribute it to the medical providers according to the agreement reached by the payers and the various providers. That’s basically it.

   The ACO doesn’t negotiate the contracts between the payers and doctors and hospitals. It can’t tell Medicare or Medicaid bureaucrats what to pay, or tell its member hospitals what to charge. It has a role to play, but it is minor. A couple of metaphors:

   A car is a complex piece of machinery. It has to have an engine, that now requires a computer to keep it running. It has to have a transmission, a wonder of modern engineering. It also has to be painted, have windshield wipers, tires, and a heating system. Those functions are important—you couldn’t sell the car without them—but they are minor. It will be a rare customer that selects a car on the basis of its windshield wipers.

   Stage plays have major and minor roles. In a performance of Shakespeare’s Hamlet, a brilliant Yorick will not rescue bumbling performances by Ophelia, Hamlet, Claudius, or the First Gravedigger….

   Newspapers have, or used to have, people called copy editors. They would read stories and fix misspellings, butchered grammar, and obvious errors of facts, then write the headlines. They are essential players in the game, but the real heavy lifting is done by reporters who gather the facts and write the stories, and editors who deploy the reporters and evaluate their performances. No copy editor ever won a Pulitzer Prize.

   OneCare, the ACO, can carry out other functions if the players in the system want them. It can collect money from the hospitals and funnel it to primary care providers, many of whom can barely stay in business. It can collect quality data from the various hospitals. It can coordinate efforts to smooth the delivery of services among separate units…but its essence is to be the money link in a capitated delivery system. 

   Vermont law confers authority to regulate ACOs on the Green Mountain Care Board, and that has become a huge problem, which does not exist in the rest of the country.   

        It took 12 years of pushing, 1983-1995, to get legislative authority to “establish” or cap, hospital budgets in Vermont. And another 18 before a regulatory body, the Green Mountain Care Board, summoned up the stomach to actually start using it. Thirty years. And now the Green Mountain Care Board is not using it, but abusing it. So, call it 40 years…

   To assess that process, we have to go back to the OneCare budget hearings before the GMCB last fall. Those sessions were the maiden voyage of the new Board chair Owen Foster, as well as a second new member, Dr. David Murman. Here’s what happened in the budget review process:

   The driver of the interrogation of Vicki Loner, the CEO of OneCare was Foster himself, and in less than a minute on the Orca Media’s video he was headed into the weeds. His first point was that OneCare was responsible for the money that it took in from the payers and distributed to the participating hospitals and doctors. “Since 2018, OneCare has had a full accountability budget of over $5 billion and with this year’s budget nearly $6.5 billion.”

   That statement alone was jaw-droppingly ridiculous because the $6.5 billion covers all sorts of stuff that is real, but tangential to the cost of acute medical care, like nursing homes and visiting nurses’ associations, and state government spending on so-called Designated Agencies, which deliver mostly-social services. They don’t lie within the purview of either OneCare or the Green Mountain Care Board. The actual cost of acute care—doctors and hospitals—runs to about $3 billion, less than half.

   It became clear to everyone listening, very much including Vicki Loner, that not just OneCare, but health care management in Vermont, had entered new territory. The OneCare he was addressing is a group of 60 or 70 technocrats and includes just one doctor, and that one is a primary care physician.

  The idea that this group could somehow guide or manage or even have a measurable impact on the medical care delivered in 14 full-service facilities isn’t even conceivable. Nevertheless, Foster was just getting started.

   His next sortie was a line of questioning aimed at showing that OneCare is a “mission-driven organization”, that the cost of health care in Vermont is too high, that OneCare’s mission is to get it down and it is not succeeding…

   “In your point of view, does OneCare have a role or responsibility to assist or curb health care costs in Vermont and improve quality in outcomes, and if so what do you see that role is?

Loner tried to explain that OneCare has a role to play in health care delivery, but its actual powers are very limited; that yes, it is a factor in cost containment, but not a major factor, and that the actual power to force movement in that direction lay elsewhere, but the responses of Loner and occasionally of her staff were complicated and completely inadequate to cope with a prosecutorial assault. Loner was clearly crumbling and it kept getting worse.

 Foster: “In your view, is OneCare accountable for curbing health care costs in Vermont…And, in your view are healthcare costs in Vermont too high…So would you or would you not characterize health care costs in Vermont…Your website says health care costs are too high, Do you disagree with that?...How do you think OneCare Vermont is doing at achieving a goal of curbing health care costs in Vermont?”  And he caps his performance by attacking Loner personally.

   “...do you think you are adequately compensated? Do you think that if you were compensated more generously you would be greater incentivized to achieve outcomes for Vermonters, or would it not make any difference?” Loner didn’t answer that, so he asked it again. It continued on like that.

   Here is the amazing part. Vermont costs may be too high, but they are the lowest in the United States, as we saw in yesterday’s article. Whatever they are, the responsibility for getting them down belongs not to OneCare, but to the Green Mountain Care Board. Which the Board members over the last six months wouldn’t even talk about, let alone act on.

   OneCare Vermont functions perfectly well doing the job it has to do—providing a platform to get fixed-price contracts between payers and providers. But if a payer or a provider is not interested there is nothing OneCare can do about it. Federal law permits any provider to leave an ACO if it so chooses. If OneCare leans on a hospital to change some aspect of its business model the hospital is free to leave.

   The ultimate affirmation of these realities lay in the outcome of the Board hearings on OneCare’s 2023 budget. Forget all that talk about OneCare being responsible for $6.5 billion in health care spending for a year. The Board cut OneCare’s actual operating budget by just over $300,000, from $15.2 million to $14.9 million.

   That’s not the most serious threat to reform, however. OneCare is owned by the UVM Health Network, and it could simply shut down OneCare, which would cripple primary care in the state, and beyond that crater the reform movement itself. OneCare Vermont is the only tool available to the Green Mountain Care Board to rationalize the small hospital network in Vermont.

   We’ll look at those issues in a later article. Coming up tomorrow: How are the Scotties doing on reform?

No Good Deed Goes Unpunished: GMCB Loves to Squeeze UVM Network

by Hamilton E. Davis 

   The single most important issue in the Vermont health care reform initiative is to protect and build on the University of Vermont Health Network, and particularly its flagship Medical Center Hospital in Burlington. The Medical Center delivers half of all the acute care in the state—that percentage rises to 60 for the Network when you include the smaller hospitals in Berlin and Middlebury. The quality of their care, measured by outsiders, is far superior to the rest of the Vermont hospitals., while its costs are a full third lower than the rest of the country.

   And it isn’t just the volumes of care that sets the Medical Center apart from the rest of the facilities in the state. The Medical Center is the only hospital in Vermont that can deliver tertiary care, like open heart procedures, therapies for the most complex cancers, and Level One trauma care for accident victims. Moreover, in concert with the UVM College of Medicine, its doctors perform important medical research, and train medical students, many of whom remain in state. Finally, aside from the flow of medical benefits, the UVM Health Network, which treats more than a million patients a year, is the single most important component of the Vermont economy.

   Yet, the Green Mountain Care Board is doing its best to starve the UVM Network of the revenues it needs to sustain its operations. Those depredations also damage the Network’s reputation and its morale. Plus, the Board’s parallel campaign against OneCare Vermont exacerbates the pressures on the UVM Medical Center, which was the intent of UVM opponents over the last seven years. (I’ll assess the OneCare issue in my next article).

What Evidence Supports that Indictment, and Why is it Happening?

   Taking the Why first. The Board’s actions for the most part do not derive from mindless animus toward the Burlington hospital. They arise rather from the huge political pressures that attend the reform process itself, which are generated by the way money flows through the system.

    About half of all acute care is paid for by federal and state taxpayers in the form of Medicare and Medicaid, the other half by the private sector in the form of insurance premiums and self-insured employers. Medicare and Medicaid, however, don’t pay the full cost of the care they purchase. So, the shortfall gets added to the bills paid by the private sector—the dreaded cost shift. 

      A big chunk of the cost shift lands on Vermont Blue Cross because its coverage is so widespread, and an equally big chunk of that goes to the UVM Network because it so dominant: The UVM Medical Center is five times as big as the only sizeable community hospital, Rutland, and more than 20 times the size of the other smaller facilities. The 11 smaller community hospitals waste a lot of money, which I showed in my last series (First, second, third, and fourth), but the Board members are petrified of political blowback if they even mention it. (The whole Blue Cross thing is an issue unto itself, which I’ll asses in a later article.) 

    The same dynamic terrifies the management of the small community hospitals. They know they can’t begin to perform at the level of the UVM Medical Center on either cost or quality, and if they are forced to try, the odds are they will have to go out of business or step down their operations to clinics that focus mainly on emergency medicine and primary care. No more $400,000 to $600,000 salaries for CEOs of 25-bed hospitals or $500,000 to $1,000,000 incomes for surgeons who want to do too-small numbers of complex surgeries in a cornfield. Those pressures are real, but the Board’s job, for which the members are paid handsomely (six figures for part time work for all but the chair, who gets paid as much as the governor) is to both control costs and make sure that essential services remain available. Spending all their regulatory muscle on hacking away at its most important, least expensive and highest quality hospital is reprehensible.

       That’s the Why.

   Okay, how about the evidence of dismal performance by the Green Mountain Care Board? Start with the general proposition that an academic medical center like the UVM hospital in Burlington needs a margin of 4.0 percent per year. It also has to recover its expenses from delivering care. If the hospital had been allowed to recover its expenses, plus the four percent margin, the hospital would have retained $308 million over the five-year period from 2018 to 2022. What they got was $87 million, a shortfall of $221 million.

   A full $108 million of the shortfall stems from the refusal of the Board to allow UVMMC to recover the costs of the inflation that has ravaged the economy over the past couple of years. Neither the medical system, nor any other sector of the national economy, can escape the consequences of inflation rates reaching 7.0 percent in the Covid era, the highest in 40 years. The remaining $113 million of the shortfall arose because the Covid relief funds did not fully cover the losses from the effects of the virus.

   The effect on the UVM Medical Center can be seen in one of the most important financial metrics, the Days-Cash-on-Hand available to company management. That figure is critical to the hospital’s ability to raise money in the financial markets, which make lending rates based on recommendations from the three major bond rating agencies. They look like this:

   As you can see, the UVM figures are in no-man’s land for both Moodys and Fitch, and they edge into the barely acceptable range only for S&P in 2018 (205) and 2021 (185). No financially competent person can look at that picture and see anything but the edge of a financial cliff. There is no real way to estimate the monetary cost of a reduction in UVMMC’s bond rating, but it will obviously be considerable, especially given the current lineup of new equipment and structural needs, and the need on a somewhat longer reach for a new bed tower.

   The consultant, Berkeley Research Group, stated in 2021 that UVMMC needs at least another 60 beds by 2026; and that didn’t take into account any movement of complex care out of small regional hospitals and into the academic medical center, which has to be done. Call it 100 new beds, at a minimum.

   I’ve been highly critical of the Board’s management of this issue, and it’s fair to ask whether the Board shouldn’t be rigorous in examining the performance of 60 percent of regulated system. The obvious answer to that is, Yes, but it is also fair to test the Board’s performance in that regard. Have the members looked fairly at the UVMMC performance? Let’s look at that.

    A good place to start is the performance of UVMMC and its smaller partners compared to the national spending rates. Everybody brags about that, including the UVM Network. They publish figures from the Dartmouth Health Atlas showing that Vermont has the lowest Medicare costs in the country. Those figures are accurate, but misleading.

   Vermont’s favorable cost profile is generated mostly by the UVM health network. If you compare the UVM Network to the national rates, the cost profile looks considerably better; and if you stack the 11 non-UVM hospitals against the country the Vermont community group looks far more ordinary. Those spending profiles are show in the graph below.

     A question worth asking is the amount of money Vermonters would save if the community hospitals operated at the level of cost and quality as the UVM Network. You can visualize the potential in the graph below.     

   The Green bar shows the 2018 Medicare cost performance by the UVM Network compared to performance of the 11 non-UVM facilities in the state. Note the extreme outliers, all over $9,000 per Medicare recipient—Rutland Regional Medical Center, Southwestern Vermont Medical Center in Bennington, Gifford in Randolph. And Grace Cottage in Townshend, which shouldn’t be a full-service hospital at all (in some years, its average daily census is one) and Mt. Ascutney in Windsor, which functions essentially as a rehab hospital for Dartmouth-Hitchcock.

   We got at the actual dollar amount of saving by multiplying the population in each hospital service area by the per capita rate achieved at the Medical Center in Burlington. We then determined the cost in each service area by multiplying the actual per capita rate by population of each hospital. We then subtracted the efficient level cost form the actual cost.

    The weighted averages capture the savings:

$134 million per year, as measured from the most reliable data set in the country—The Dartmouth Health Atlas.

 Another look at the same issue is contained in a state-by-state look at per capita in the Dartmouth Health Atlas. For the year 2018 it shows that Vermont has the lowest costs ($8,010) for its Medicare population in the country: Only a few states out of the 50 are even close: Hawaii ($8,090), Alaska ($8,251), Oregon ($8,614), and New Mexico ($8,905). The weighted average for the entire United States is $10,779. Most of the states range from $9,000 to $10,000, or higher. You can see the whole U.S. layout here

Of course, the academic medical center is expected to operate at a high level, but what has so far gone unremarked is that the UVM Network has demonstrated that it can wring high performance out of its small hospital units as well as the flagship. Take a look at the data. The first graph shows the Network’s Central Vermont Medical Center stacked up against the other four med sized facilities. Note the size of the overspending gap at Rutland, the second biggest hospital in the state, and Southwestern Medical Center in Bennington.

    The same kind of spending gap can be seen in the graph below that shows the performance of the UVM Network’s Critical Access Hospital against Vermont other 25-bed hospitals.   

   There is no evidence that the members of the Green Mountain Care Board have the faintest notion of how their decisions have run counter to the needs of the Vermont hospital system and the need of Vermont for national class health care in the state’s center of population, Chittenden County.

   The Board’s management of OneCare Vermont, the statewide Accountable Care Organization has been even worse. We’ll look at that in tomorrow’s article.

Vermont Health Care Reform: Riding High, but Dead in the Water

by Hamilton E. Davis

   The Vermont health care reform project is now entering its second decade of operation in a deeply paradoxical position. On the one hand, it leads the country in the effort to build an acute care system that can deliver high quality medical care at a sustainable cost. On the other, the Vermont effort is dead in the water, with no visible trajectory at all.

   The main blockers to progress are the Green Mountain Care Board and the Scott Administration, both of which are completely at sea on reform, however good their intentions. There are several other players that contribute to the stasis—the Vermont Association of Hospitals and Health Systems (VAHHS), the Vermont Health Care Advocate, the state Auditor, the Press, Vermont Blue Cross, some elements in the primary care physician community, and a free-floating congeries of anti-reform advocates and anti-UVM Health Network opponents.

   Adding to the complexity in the reform space is an unprecedented turnover in the player rosters across the system: a new chair and a new member on the Green Mountain Care Board; a new president of the hospital trade group, a new chair at the House Health Care Committee, a new president pro tem in the Vermont Senate; and a new CEO for the UVM Health Network, which delivers 60 percent of the acute care in the state.

  The question going forward is what it would take to get past the current barriers to reform. Late last year, I wrote a four-part series on one key element in the failure of the Green Mountain Care Board to look at, much less to grapple with, the quality and cost issues that bedevil the non-UVM Network hospitals—11 small and medium sized hospitals.

   The focus of this new series will be an analysis of the remaining elements in the reform project, and what it will take to surmount them.

What are the Primary Challenges?

• UVMMC budget and GMCB failures. (Article No. 2)
  In my series in November, I laid out the extent to which the Green Mountain Care Board failed to meet its obvious responsibilities for managing the spending patterns and the quality performance of the 11 non-UVM hospitals. You can read the November series here: First, second, third, and fourth. Those facilities account for about a billion dollars in the state’s total per year; the UVM Network share is about $2 billion.
  An even more important failure by the Board has been its management of the budgets for the UVM Health Network, and especially the Network’s flagship Medical Center Hospital in Burlington. Over the period 2018 to 2022, the UVMMC has been unable to cover $108 million of its inflation expenses; its operating margin has fallen from a plus $46 million in 2018 to a loss of $23 million in 2022; and its Days Cash on Hand has dropped in half over the five year period, from 205 to 113.
  Fortunately, the federal and state governments have pumped nearly $200 million into the Medical Center to make up for the depredations of Covid. That money kept UVMMC whole for 2022, but the Covid money is drying up now and it’s not clear yet whether any or how much of it can be made permanent. And in any event, no matter what happens in Vermont, there is no way to predict what the U.S. House will do in the next six months, including trying to slash Medicare. Government money is a valuable but fragile reed.  
  What is clear is that the Board’s focus on grinding every possible nickel out of the Burlington facility while rubber stamping the non-UVM network hospital budgets represents a mortal threat to the delivery of high quality, cost effective care in Vermont.  
  The Board’s actions were taken in the face of a mountain of data showing that the UVM Network units are the most financially efficient in the United States, as well as in Vermont; and their quality performance is off-the-charts superior to the other 11 hospitals in the state.
  I’ll lay out the case for that conclusion in the second article in this series. 

• OCV experience and its implications. (Article No. 3)
  One of the most important dynamics in the decade-long tenure of the current reform project is the enormous success of the anti-reform players to use OneCare Vermont, the state’s Accountable Care Organization, as a club to beat on the UVM Network, which owns the ACO. In November and December of last year, the Board collaborated in that scheme by trashing OneCare’s budget for the Calendar Year 2023.
  On paper, the budget action didn’t amount to that much. The Board cut the risk it was imposing on the OCV administration from ninish to twoish percent. The total risk burden runs to about $340,000. The significance of the OCV experience is the length to which the Board, under the new leadership of Owen Foster, is willing to go to damage the standing and reputation of the UVM Network. The public and the Legislature need to understand that because the Board has forced the UVM Network to consider whether to just dump OneCare altogether, which would badly damage primary care across the state and place a huge drag on the reform project itself.
  The OneCare experience demonstrated the extent to which the “new” Board, especially its worst performing members—Foster, the new chair, the veteran Jessica Holmes, fresh from botching the hospital budgets earlier last fall; and Thom Walsh—are willing to go to avoid confronting the real issues facing the system.
  I’ll lay out those particulars in the third article.    

• The Scott Administration. (Article No. 4)
  On June 1 of last year, Governor Phil Scott, who had basically ignored the reform project since he took office in 2017, pivoted sharply in the form of a letter to the Legislature excoriating the performance of the Green Mountain Care Board and promising that his administration would “hold the GMCB accountable for providing thoughtful and effective regulation in the upcoming hospital budget and health insurance rate reviews.”
  To carry out that pledge, Scott wrote that he would establish an “executive-level committee of health care providers and payers” to advise the players on health care reform and share that information with the Board. The Governor concluded by saying that his administration and the Legislature should share “the responsibility to hold the GMCB for taking action that benefits Vermonters this summer and in the new year.”
  Wow, that was certainly a bold step. I will assess how that worked out in the fourth article.   

• UVM Network Lack of Response to the Board challenge. (Article No. 5)
  We have laid out in this space the data demonstrating the clear superiority of the UVM Health Network, and especially the Medical Center Hospital in Burlington, in both cost effectiveness and quality of care compared to the rest of the Vermont system.
  Since 2015, however, the UVM Network senior management has failed to successfully tell its own story to the people of Vermont, to explain clearly what it’s doing, and why it works. Over that five-year span, the Network has been purely reactive, a grumpy letter here, a few platitudes there.
  The result: a toxic narrative that paints the UVM Network as domineering, greedy, overly expensive, an utterly malign presence in the state. Reversing this narrative is critical to health care in Vermont, and indeed to the whole Vermont economy. Reversing the narrative is possible, but it isn’t happening yet. I’ll assess the problem and suggest ways to cope with it in the fifth article.

• The Vermont hospital association is a major blocker of reform (Article No. 6).
  There was a clear pivot point for the Green Mountain Care Board in 2019 when Jessica Holmes, a Board member, broached the idea of guiding Vermont hospitals in the direction of “sustainable” budgets. Sustainable budgets were understood to mean determining whether the service lines in each hospital make sense both medically and financially; and if they don’t, determining how the Board might press hospitals to improve those business models.
  The other Board members adopted the Holmes initiative, but the reaction of the Vermont community hospitals was immediate, and volcanic. It came in the form of a letter from Jeff Tieman, then the CEO of the Vermont hospital trade group, who ripped the Board for even thinking of such a thing as the sustainability idea.
  For Vermont’s small hospitals, the problem with the Board initiative was that they couldn’t possibly pass the straight-face test on their service lines, which featured orthopedic surgery like hip and knee replacements that are too complicated and expensive for tiny hospitals, but whose revenues are essential to keep the small hospital doors open. And, more than that, the presence of high-six-figure-income surgeons and the small hospitals themselves are often the communities’ largest employers and serve as a bulwark to communities when those economies struggle.
  The central problem, however, remains: Small hospitals all over the country are going out of business or joining larger health networks because even dodgy surgeries, along with enhanced federal funding, are not enough to make the Vermont small hospitals financially viable.
  The Vermont reform project cannot mature without a solution to that dilemma. I’ll assess that issue in Article No. 6. 

• Is there an Answer? (Article No. 7)
  There are some hopeful auguries. For one, the UVM Network is under new leadership. The new CEO is Dr. Sunil Eappen, an impressively credentialed executive from Mass Gen Brigham, the Boston behemoth that matches up with the best such facilities in the world. “Sunny” as they call him, took office in December and there hasn’t been time to see him in action…
  The ultimate power to right the reform ship, however, is the Vermont Legislature. The main players there will be Rep. Lori Houghton, a Democrat from Essex Junction, who is the new chairperson of the House Health Care Committee; Sen. Jane Kitchell, a Democrat from Danville who leads Senate Appropriations and, not incidentally, the strongest single player in the Senate; Sen. Ginny Lyons, a Chittenden Democrat who chairs the Senate Health and Welfare Committee; and Sen. Philip Baruth, Chittenden Democrat, newly elected President Pro Tem of the Senate.
  There is no way to tell yet how well this team will play, but Houghton, Kitchell, and Lyons seem fully ready to go now. The challenge is the morass of misinformation through which they must clear a path. And, based on the record of the last seven years or so, they are unlikely to get much help from the Vermont press, the Vermont hospital association, the Health Care Advocate, the state Auditor, or the business community.
  I’ll assess those prospects in the final article, No. 7.

Foster Founders on his Maiden Voyage

by Hamilton E. Davis

   On November 16, the new Green Mountain Care Board put on the most shameful, bone-deep stupidest performance I have seen in government in the 40 years I’ve been watching it as a professional. For five hours and seven minutes, the Board harried, bullied and tormented Vicki Loner, the CEO of OneCare Vermont for her supposed failures to solve the problem of high costs in the state’s hospital system. The most amazing part of it was that the failures the Board kept harping on weren’t OneCare Vermont’s at all, they were the fault of the Board itself.  

   The lynch mob was led by Owen Foster, the new chairman who took office officially on Oct. 1. Before hearing a word of testimony about the OneCare budget for the coming year, Foster delivered a set-piece speech about the issues involved in which he demonstrated that he had no understanding whatsoever of health care reform.

    He simply got his facts wrong: for example, he assumed that OneCare actually controls the purchase of billions of dollars of medical services whereas they are simply a middleman between payers and providers. And he was just plain abusive. He asked Loner whether she would work for a lower salary — he sounded like a prosecutor determined to show how tough he’ll be in defense of Vermonter’s money.

   Foster at least has the excuse that he is new to his job. But that wasn’t true of Board members Thom Walsh and Jessica Holmes, who piled right on. Walsh has been a Board member for about a year and routinely claims to know more about health policy than the rest of the Board; and Holmes, an economics professor at Middlebury Colleges, has been a Board member since the mid-teens, who understands the issues as well or better than anyone else.

   I understand this all may sound overwrought, but stay with me here. I’ll lay out the basics today, but over the next several weeks, assuming some technical problems can be solved, I’ll post the particulars, accompanied by actual clips of the Orca Media videos of the Board meeting. As I’ve pointed out earlier in this series, the economic and safety consequences of reform failures are immense; and only public awareness will move the Scott administration, the Board, the Legislature, the hospital industry, the press, the Health Care Advocate, the State Auditor, Vermont Blue Cross and Blue Shield, and others to abandon the Yahoo Playbook and get reform done.

The Basics

   Scarcely anyone, including some of the most perceptive of my tiny corps of brilliant readers, and even many of the professionals that get paid to know, fully grasps what OneCare is and what it is supposed to do. Herewith another try:

   We have 14 full service hospitals. The UVM Health Network units in Burlington, Middlebury and Berlin are fully integrated into a single company and operating in a sustainable way for the next decade and beyond, although they have plenty of problems. The other 11 are very small—25 beds or fewer for eight of them—or just plain small; but call them mid-size. All live in a fee-for-service world, where doctors and hospitals get paid only when they do something, which is a huge incentive to overuse; that system makes the American hospital industry at least a third more costly than it needs to be. In Vermont, that means at least $300 million of waste.

   In 2010, Congress enacted the Obamacare legislation that included a device to convert fee-for-service reimbursement to pre-paid, block financing that eliminates the incentive to overuse. They called it an Accountable Care Organization (ACO). It works like this, schematically because the edges are always messy:

   Take a payer, say Vermont Medicaid, which pays health care costs for low and many middle- income people. The state has roughly 30,000 Medicaid recipients in northwest Vermont, and it wants to control those costs.

The state knows who the patients are because they are enrolled in the program, and it knows the approximate fee-for-service costs because they are being paid now. So, state Medicaid takes that number, say $90,000,000 adds a reasonable inflation rate, say 2-3 percent and tells OneCare that’s what it wants to pay. So, $90 million for 30,000 people.

  The total amount of money then has to be distributed to independent doctors, small hospitals like the facility in St. Albans, and the big tertiary care center in Burlington. All of those providers also know who the specific recipients are because they treat them now and how much Medicaid will pay for that care because they get rate now.

   There may be some negotiation involved, but it’s minor. At the beginning of each month, state Medicaid sends a check to OneCare, and OneCare splits it up into checks to individual doctors and hospitals. Here’s the payoff, and the justification for OneCare’s existence:

   Once the monthly checks have been sent to the individual provider, there’s no more money, so state Medicaid is protected from overuse in the system. For their part, the doctors and hospitals get their money up front, which makes their lives much easier.                                              

Unforced Errors

   All of this sailed right by Owen Foster, the new chair of the Green Mountain Care Board. Foster was steering his first meeting after his appointment on Oct.1, but he has known since summer that he was likely to get the job. And he obviously had plenty of time to be briefed by the Board staff. Still, his opening remarks made it clear that he was clueless about how the system works.

   Since 2018 OneCare Vermont has had a full accountability budget of over five billion dollars. And with this year’s budget nearly $ 6.5 billion dollars.

   Okay, he’s in less than a minute and he’s deep under water. The only money OneCare is actually responsible for spending is its own operation budget, and the Board should apply a fine-tooth comb to that. The real money, however, the items that start with a B for billions, just passes right through OneCare to the hospitals that actually spend it on medical care.

   Having misstated the financial realities, Foster continued on, telling Vicki Loner he didn’t think much of last year’s OneCare budget presentation, that she should provide nothing but specifics about performance and that she get the whole thing done in an hour, or preferably 45 minutes. He then concluded:

   As I’m sure you can all understand, you are entrusted with enormous sums of Vermonters’ money and there are huge responsibilities that come with that. You’re under oath, your responses should directly answer the questions. And you should strive for candor. Obfuscations or misleading responses are detrimental to this Board’s review…

   Finally, after his nine-minute speech, Foster turned the floor over to OneCare. Following the budget, Foster returned to the attack. For example, he pressed OneCare hard about how they decided to use the UVM Network to manage some data for them. His point there was that the relationship between OneCare and the UVM Network was close and not arms-length, and more than that, that it might be a mistake to trust UVM Network with all that patient information. It was this series of exchanges that justifies the “bone-deep stupidity” phrase in my opening.

   Of course, the relationship is not arms-length, and there is nothing wrong or questionable about that. The whole ACO structure assumes it—the ACO, in this case OneCare, is designed to include hospitals, and it is hospitals that generate all the medical data worth bothering about.  As for the UVM Network being suspect, the Network treats more than a million patients a year, including 60 percent of all care to Vermont residents. The Network needs that information to treat those patients; patients can die if it isn’t there.

   There’s more to the whole OneCare, ACO issue, which I’ll get to. But I also want to justify my “shameful” assertion in the top. Foster segued from the standard Yahoo playbook into personal abuse. Here is how it sounded:

   The CEO compensation (Vicki Loner’s) is projected to be $491,000 in FY 23, and I understand from responses to the staff that that includes bonuses. Does it also include retirement benefits? Any sort of severance package? Or any other financial benefits…

   Do you think you are adequately compensated? Do you think that if you were compensated more generously you would be more incentivized to achieve outcomes for Vermonters or would it not make a difference…would you serve as OneCare’s CEO if you received less compensation?

   These are just snippets, of course. There was more in the same vein, which my readers will see when I can get the Orca Media video up. I said in my opening that the Foster hatchet job was shameful and stupid. I would now add cowardly and disgusting. And GMCB member Thom Walsh picked up the Foster banner.

The Walsh Conundrum

       Since the original five--member Green Mountain Care Board was appointed in 2012, there have been by my count 16 total members over the decade of the reform project. There have been some quite good ones, a few losers, most ordinary. There have been just three medical doctors over that span—Allan Ramsay and Karen Hein in the first group, and now, as of Oct. 1, David Murman. Ramsay and Hein were two of the very best, in my view—they had decades of in-the-trenches experience taking care of sick patients. I never saw them wrong-footed, and neither ever fell for some of the goofier trends that regularly infect the reform space. As for the newly appointed Murman, he was the only member of the Board in the recent OneCare brouhaha who wasn’t pushing his way into a clown car.

   One of the most enigmatic, and problematic, of this roster is Thom Walsh. Appointed about a year ago, Walsh is a physical therapist, not a medical doctor, but qualifies as a “provider” on a body that badly needs them. Moreover, he has a Ph.D., which tends to impress, and he has a bulky resume, which includes ties to the Dartmouth Health Institute and a similar unit at Boise State. In the recent GMCB hospital budget sessions, Walsh completely out maneuvered the interim chair Jessica Holmes and Robin Lunge to get control over the decision on the UVM Network budget. The Board ended up cutting the UVMMC budget entirely on Walsh’s terms.

   In his year-long tenure, Walsh has been a relentless critic of the UVM Network system. His core contention has been that whatever the merits of a particular case, if the system makes health care too expensive then less well-off patients will simply avoid care and suffer serious harm therefrom. He avoids any mention if the billion or so dollars spent every year by the smaller community hospitals which are riddled with overly expensive and questionably quality care. He makes it clear regularly that he doesn’t think much of the other Green Mountain Care Board members. He instructs them about how they should evaluate the Dartmouth Health Atlas data, and tells them what is going on “in the consultant space.”

   In the case of the OCV budget, Walsh spent his time pressing Loner and team to provide this, that and another piece of “data.” I am not going to burden my readers with direct quotes demonstrating this, partly because I didn’t understand the questions myself but mainly because I don’t think it really matters what OneCare does about data. The data that matters is generated by payers who provide the money and the doctors and hospitals who spend it. OneCare Vermont has no power whatsoever to move either one.

   What Walsh did succeed at brilliantly was making the OneCare team look inept. Which fit right in with the tone and tenor that Foster set.

The Holmes Style

   Jessica Holmes piled on too, not with hack-handed bullying like Foster and Walsh, but in her academic-seminar style, sounding technical and sympathetic, but slipping the knife in when it would be most effective. Let’s watch it happen in a transcript of the hearing:

   Her first question involved a OneCare survey of the extent to which primary care doctors are engaged in the reform effort. She noted that 78 responses seemed pretty low, given that there are probably more than 500 such doctors in the state. Then:

   Did this survey instrument include questions that gather specific examples of how OneCare’s investments, data analytics and payment incentives have fundamentally shifted how those providers actually deliver care? Is there evidence in that survey being collected about meaningful and measurable delivery system transformation that’s directly to OneCare specific efforts?

   Those were a remarkable two sentences. The first thing they do is to sign on to and drive home the Foster and Walsh contention that OneCare bears the responsibility for transforming the health care delivery system in the state. As we’ve seen above, that isn’t the case, except as a cog in the broader machinery. So, the real answer is that there aren’t any specific system changes accomplished by OneCare, as Holmes knows far better than most. Moreover, as the prime mover of the GMCB’s Sustainability project, Holmes knows about the mass of consultant data that sits in the GMCB vaults.

   Something that has weighed down on me in the past year is that we have been celebrating our relatively low total cost of care, and perhaps we should but I want to ask you about our wait times. So, our wait times are excessive in Vermont, particularly for specialty care, which is disproportionately used by seniors, so has…OneCare Vermont assessed the role that wait times and access might play in OneCare’s Medicare cost performance?

   Wow, the sheer pious hypocrisy of that is breathtaking. In the first place, OneCare bears no responsibility for the “wait times and access challenges.” Holmes is talking here about wait times at UVM’s Medical Center in Burlington, which are very serious, but a direct responsibility of the hospital itself.

OneCare’s only direct role in the state’s Medicare cost performance is very limited but entirely positive: OneCare is the transmission link between Vermont’s Medicaid and all OneCare’s member hospitals that enables fixed price contracts between payer and provider. Which is all to the good. But if there are deficits at any individual hospital, OneCare Vermont has no power at all to order changes there. Under federal law, no hospital has to belong to an ACO, so any aggrieved Vermont hospital can just walk away.

Let’s conclude for now with the pious hypocrisy thing. The wait times at the UVM Medical Center are hugely damaging to Vermont patients, and to the hospital itself. One of the places to look for a cause is the Green Mountain Care Board, which has hammered the Medical Center’s budgets for six out of the last seven years. The Board did it again in the budget session that concluded in September. Jessica Holmes voted for every one of those cuts.                                                  

Where was top management?

   It was dispiriting to watch Vicki Loner get hammered like that. She just didn’t have a chance. On the one hand, she gets her marching orders from her Board of Managers, which includes a bloc of UVM Network people, but also has an important admixture of members representing the small hospitals in the state, which are petrified by any “transformation” that forced them to match the quality and cost efficiency of the UVM Network. On the other, she gets huge pressure from reform elements in the state as well as the federal government to gin up stuff like scale of participation, care coordination, quality monitoring and a bunch of other bureaucratic stuff that the UVM Network already has and nobody else wants.

   Finally, it’s time to admit that the UVM Network, which has a multi-million-dollar apparatus to manage the political environment it lives in just isn’t getting it done. The toxic anti-UVM narrative born in 2015 is still alive, and apparently getting worse. Anyone who doubts that ought to watch the Orca Media’s video of the GMCB meeting a week ago on the OneCare budget, which I’ll post as soon as possible.

N.B. Today’s post concludes the current series. After the holiday, we’ll look at the few remaining elements in the full of picture of Vermont health care reform as we continue into the new millennium.