by Hamilton E. Davis
My last post was a Manifesto declaring a view about how health care reform in Vermont should proceed. I said there that I would begin to publish comments on these and future posts from my tiny corps of brilliant readers. Those comments and my responses will sit on top of the piece in question. I’ll call it:
POINT – COUNTERPOINT
Toni Kaeding: Oops, Brattleboro?
Right, mistake here. I should have included Brattleboro in the small hospital group.
Bob Zeliff: This is a great and much needed discussion. We need to substantially reduce the unnecessary overhead and improve the efficiency of our hospital and health care delivery system. We have the "bones" of this in place with the GMCB and some limited consolidation done by One Care. What we need is a real vision for Vermont. Neither One Care or GMCB has done this. Both would claim it is not their job. The State leadership must step up with some prompting. Great start with your manifesto.
Zach Sullivan: After reading your most recent piece, I went back to the piece that you'd written almost exactly a year ago (August 5th, to be precise) and the North Country. I actually think that you missed the real heroes of that story - the Board members at Moses Luddington who decided to shut the hospital down (or to put it on a path where they knew it would be shut down - I don't know the particulars of it). That might be worth a little more exploration to see what needs to happen in Vermont if no one has the political will to impose consolidation from the top (which I don't think they will).
I have written about the way the UVM health network has recast the hospital system in far northeastern New York. That initiative involved closing Moses Luddington Hospital in Ticondaroga and replacing it with a primary care, emergency room clinic. The network then integrated the Ti clinic with the community hospital in Elizabethtown and the medium size hospital in Plattsburg. It’s a strikingly effective model that could be adapted to Vermont, if anyone here was interested. I haven’t seen any such interest.
John Perry: This is a fine (not to put too fine a point on it) manifesto, but like others I have read (Marx, e.g., or Dalton Trumbo) it neglects a few details and makes other assumptions about human nature and the power of technology) It might work if, for example, we had statewide broadband and rapid public transit. It might work, also, if we relocated to the five major metropolitan areas. You know, Metropolitan Montpelier, with its massive high-rise moderate income housing developments; metropolitan Bennington with its excellent employment opportunities and industrial center; and a terrific road system (perhaps with teleportation capability) for the outlying areas (outlying, as in more than 1 hour from any of the "metropolitan areas" e.g. most of the Northeast Kingdom.) Perhaps, with enough helicopter pads at the clinics, the transportation to the megahospitals could work.
Your column, as usual, is provocative. The manifesto, as you rightfully acknowledge, needs a little work. For me, I like "socially distant" small hospitals, close enough to me and my family.
John McClaughry: Ham observes that “the problem is that the regional community hospital system was built for the Vermont of 100 years ago, and it is both medically and financially unsustainable: we just don’t have the money to pay for it. Most of the community hospitals are simply too small to provide 21st century medicine at a full hospital level. Their finances are shaky at best and they are trying to finance the things they should do by doing things that are too complex for them…”
This point was powerfully made in 2009 in The Innovator’s Prescription, by Clayton Christensen MD, Jerome Grossman MD and Jason Hwang MD, all of Harvard Business School (2009). In it the authors analyze today’s hospitals from a business management standpoint. They conclude (Chapter 3):
“The organizational paradigm of the general hospital coalesced in an age of intuitive medicine. The entire hospital was essentially a solution shop. But today’s hospitals are substantially different. As technological and scientific progress enabled standardized processes and treatments for precisely diagnosed disorders, hospitals commingled value-adding process and solution shop activities within the same institution – resulting in some of the most managerially intractable institutions in the annals of capitalism…
Hospitals need to deconstruct their activities operationally into the two different business models: solution shops and value-adding process activities...Our biggest and best medical centers will be able to bifurcate themselves. Smaller hospitals, however, will need to focus on becoming solution shops or value-adding process hospitals, or simply expect to be liquidated through disruption.”
Elsewhere the authors address some additional issues: location-sensitive emergency services, hospice services, and the network function of managing patients with chronic conditions (who account for seventy percent of health care spending, and require regular urging and monitoring.)
No wonder Ham’s Manifesto has aroused the wrath of the likely disruptees.
As I observed in my commentary of August 5, what we call “health care reform” comes down to “legislation to have the government compel somebody else to pay more of your health care costs. That ‘somebody else’ includes, variously, the taxpayers, your employer, others in your insurance pool, and the providers themselves.”
Adopting the ACO model in effect deputized the ACO, mainly owned by UVMMC, to wield the state’s coercive hammer to control costs (every politician’s health care mantra) by forbidding or starving high-cost providers out of business. This has the great advantage of insulating “the government” from making unpopular decisions about which providers flourish and which expire, a major debility of traditional single payer schemes.
John McClaughry is a very conservative policy analyst, with broad experience both nationally and in Vermont. He is my toughest critic; he particularly hates government intervention in what he believes should remain in the private sector. Because of that it is hard for me to engage with him on reform; I once wrote that his views were frozen in the second Jefferson administration (1804-1808) and he responded only partly tongue-in-cheek that I was entirely wrong—that his views centered on the first Jefferson administration (1800-1804). If he gets free of his ideology on American politics and government, he is a surgically precise thinker.
Connie Godin: Love Copley but the skiers could def go to Burl or CVH (I'm old too many name changes) to get their broken bones fixed which has been their cash cow. Maternity should stay there with the "clinic/ER". I like your Manifesto.
Allan Ramsay: This is quite a manifesto. Henry Tufo made a similar argument thirty years ago. "All we need is five or six hospitals and some fast ambulances."
Here are my thoughts on what the eight hospitals could become:
1) Regional Primary Care Hubs: focused on prevention but including urgent care, retail care, mental health, telecare, home visits, laboratory testing, and imaging. (Birthing center would be optional but the malpractice costs would probably be prohibitive.)
2) Centralized care management and community based services. Including the "hospital-at-home" concept, home based rehabilitation and long term care, and comprehensive end of life care.
3) A hub for management of the social determinants of health including nutrition, housing, transportation, aging, and broad band access.
I spent time in Cuba several years ago to understand how they delivered health care and achieved such good outcomes at low cost. I wanted to set up an elective rotation for our family medicine residents. This is exactly how their regional delivery system works. The rotation did not work out because of a diplomatic shift (Bush called out Cuba as part of the "axis of evil"), but I learned a lot.
Allan Ramsay is a veteran primary care doc with some four decades of practice, mostly in the UVM system. Former member of the Green Mountain Care Board. Most knowledgeable member about the workings of the delivery system, then or now. Powerful advocate for the primary care physician community. We disagree about some aspects of reform, but I think he is a hugely valuable player on the reform field. I listen to and parse every word he says. BTW, the late Henry Tufo was one of the most influential docs to work at UVM in the modern era. I consider him my mentor, and Allan worked with Henry for many years.
R. “Mort” Wasserman: Enjoyed reading this manifesto, especially the references to hospital affiliation. The state faces some difficult choices. Are you familiar with the recently published Rand study on rural hospital affiliation and its consequences?
Yes, I am familiar with Rand and the issues surrounding hospital consolidation in the U.S. I will write about that issue soon. An interesting aspect of that is how far in the weeds some key members of the Legislature are on that question.
Paul B. Stanilonis: I am an Octogenarian and think that centralized Montpelier and gov has spent millions and has very little to show for it when looking at healthcare reform. To think they will get it correct--- dream on.
Your current journalistic effort is well done and ultimately the healthcare system will implode in Vermont. It will be driven by market forces and hospitals will close in bankrupt condition. This mess will see systems fail:
1. More and more Vermonters will be unable to purchase health insurance
2. Vermont businesses will not be able to afford Health Insurance
3. The cost of healthcare will continue upward driven by covid-19 demographics and ever exploding tech inventions, to say nothing about the capitalist pharmacology business model
This whole mess is driven by the fact there are too few people paying into the money pot. The all payor model will fail without more people paying in. We need to completely redesign the business model. Vermont does not have the population to do it alone. When you were younger, Vermont and NH Blue Cross Blue Shield shared the burden. UVM Medical Center has the vehicle for reform. Capital Health Care-Kaiser Permanente all failed. Cost too high and not enough people paying in.
Green Mountain Health Care Board will keep pussyfooting around, spending over 2 million a year while the system fails. As you well know, a shortage of providers in primary care is looming.
Northern NY – VT – NH based on service areas should have a united business plan. How we deliver healthcare needs to be a baseball game!! Not built on golf, tennis and cronyism. Montpelier – politicians should not be the design build folks.
Anyhow, stay well, wear your mask, stay home, wash your hands and keep writing. There are a few of us reading!!
The Right Path for Reform: A Manifesto
August 2, 2020
by Hamilton E. Davis
In March of this year, the Covid-19 pandemic dropped a viral curtain over modern life as we have known it. The arrival of the beast coincided with the cresting of President Donald Trump’s campaign to trash American politics, cripple our national government and subvert our notions of honesty, decency and intellectual integrity. There have been myriad effects from these evil winds, but one of the most important has been the loss of focus on the reform of our health care system. That loss affects the whole country, but it has fallen with particular force on Vermont because Vermont has been in the forefront of the reform effort.
That is unfortunate because the state is on the cusp of what I believe is the single most important policy decision it has ever made—what to do about its hospital system, and more precisely, the system’s small community hospitals. We are a state of just over 600,000 people and we have 14 ½ hospitals delivering care to them at annual cost of more than $2.7 billion. That is billion in case you skipped over it. The half a hospital is Dartmouth-Hitchcock Medical Center (DH) in nearby New Hampshire, which delivers tertiary care to the whole eastern part of the state. Forty percent of its patients are Vermonters.
The problem is that the regional community hospital system was built for the Vermont of 100 years ago, and it is both medically and financially unsustainable: we just don’t have the money to pay for it. Most of the community hospitals are simply too small to provide 21st century medicine at a full hospital level. Their finances are shaky at best and they are trying to finance the things they should do by doing things that are too complex for them…
The obvious question is what to do about it, a question that the whole state policy apparatus has been wrestling with one way or another since 1983, and directly since 2012. I believe the reformers need to come up with their answer by mid-September. And in my view there is only one sustainable path forward. Here it is, call it a…
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, Brattleboro 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.
If the solution is that obvious, why don’t we just do it? Glad you asked. Because it’s complicated? Nope, it’s actually hideously complicated. But it’s also essential to the physical and financial health of the entire state, so Vermonters need to step up. I suspect that some of my tiny corps of brilliant readers will help lead the way, whether they agree with me or not.
The Vermont reform effort was launched in 2012, and has achieved a significant level of success over its eight-year tenure. By using its regulatory power, the Green Mountain Care Board has cut the annual inflation rate in the state’s hospital system in half, saving Vermonters half a billion dollars in the process; and, working together, the state’s hospitals and doctors and the Scott administration have built the infrastructure needed to shift the flow of money through the system from fee-for-service to fixed price contracts. Fixed price contracts are the only reliable route to a high quality, cost efficient and hence sustainable health care delivery system for the 21st century.
However, every step along that path has been difficult, often tortuous. The initial machinery to control costs in Vermont hospitals was put in place in 1983, and that machinery, strengthened along the way, accomplished nothing much over 30 years; we didn’t get serious until 2013. And shifting to fixed price contracts is incomparably more difficult. Our first execution of that final step took place in 2017, and there has been too-slow, but nonetheless steady progress since.
The process, however, requires tearing up not just the financing in the health care delivery system, but the culture of medicine itself. Every single doctor and every single hospital has grown up in a medical environment where the more stuff you do, the more money you make. Moreover, the implications of the reform effort reach beyond medicine to the social and political structure of the state. The Vermont project makes perfect financial and medical sense, but it would have very severe social and political consequences. The local hospital is often the biggest employer in town, and the medical and management bigfeet take home huge paychecks by Vermont standards. CEOs get paid $400 to $600,000 a year; an $800,000-a- year surgeon could support a whole town’s Little League program out of petty cash. Vermonters should know, however, that if they continue propping up their failing rural hospitals with the current financing scheme they will be opting for care that is wildly overpriced and of questionable quality.
That issue has been seething under the surface since the onset of reform, but it is rising to the top this summer. The vehicle carrying it there will be the Green Mountain Care Board’s annual hearings on the hospital budgets for Fiscal Year 2021, which begins Oct. 1. Within that framework, the central question will be whether to require the hospitals to prepare and defend “sustainability” plans. What that means on the ground is that they will have to show that their high revenue service lines garner enough patients per year to ensure that those medical teams do enough cases to meet at least the threshold quality requirements; and that their unit costs make sense. The Green Mountain Care Board wrote that requirement into the budget orders for six of the hospitals last September, and they are considering whether to extend it this year to all hospitals.
Despite the glaring need to right-size the system, the Vermont hospital association has gone into full-throated opposition mode. In a letter to the Board on March 11 of this year and in testimony on July 15, Jeff Tieman, the president of the association, said that the sustainability effort was a terrible idea. It isn’t needed, he said, it can’t be done, and, in any event represented “regulatory overreach” by the Board. The letter was signed by all the hospital CEOs in the state, including Dr. John Brumsted, the CEO of the UVM health network, and Dr. Steve Leffler, the President of the UVM Medical Center, Vermont’s academic medical center, which delivers half the care in the state. The UVM network also includes Porter Medical Center in Middlebury and Central Vermont Medical Center in Berlin—adding those to the Burlington center runs the UVM dominated portion of Vermont care close to 60 percent.
Tieman said that the sustainability initiative was doubly unfortunate in the light of the damage that the Covid virus had inflicted on hospital budgets. The reality though is that the sustainability initiative was discussed at length last summer, months before the virus appeared, and the small hospitals were just as hostile to the idea then as they are now. They saw it then, as they see it now, as financial suicide: if they are forced to deliver only care that is very low risk medically and makes financial sense, they won’t be able to stay in business. Of course, many of them are having trouble staying in business, offering every lucrative service line that can draw even a trickle of patients.
Still, the Tieman broadside appeared to have a strong effect. At its July 15 meeting, the GMCB could have voted to affirm the detailed format for the sustainability push, but Board Chair Kevin Mullin pulled if off the agenda quickly. The Board can’t afford to delay the issue any more though, and they will have to face it at their meeting on Wednesday.
Even if they vote to go ahead, which I suspect they will, the real test will come in the way the Board steers the individual hospital budgets. And in a very real sense, it isn’t up to just the Board. The whole policy apparatus, including the public at large, will have a voice in the ultimate outcome; and they should make their voices heard. That is how the best public policy gets made.
It will not escape the notice of my tiny corps that I have made a big bunch of assertions here, but I haven’t actually proved a damn thing. I know, I know. But, hey, it’s a manifesto after all. In any event, there is plenty of evidence available, and I will lay it out to the best of my ability over the next month and a half. A Vermont Journal will follow the process as closely as possible; and while the above has been a panoramic view, I’ll shift now to a very tight focus. The issues will get a vetting in every hospital budget decision. The same analysis needs to be made of the performance of all the major players—the Scott administration, the Legislature, the UVM network, OneCare Vermont, the hospital association, Vermont Blue Cross, the state auditor, the Health Care Advocate, the business community, the federal government’s Medicare apparatus, and the press.
Finally, in a departure for A Vermont Journal, I’ll publish any comments from my tiny corps of brilliant readers that I think make a contribution to the debate. My own views on these matters will be evident, but I am confident that my tiny corps will weigh the evidence carefully and come to their own conclusions.
So, as always, Caveat Lector.