by Hamilton E. Davis
The Green Mountain Care Board as it is currently organized took control of hospital cost regulation and reorganization of the Vermont hospital system in early 2017 when a new Governor, Phil Scott, was sworn into office. In their five-year tenure, the Board held to a consistent course, which consisted mainly of grinding every nickel they could out of the UVM Health Network’s budgets and rubber-stamping spending in the rest of the hospital system.
Last week, the Board underwent an epiphany of sorts when the UVM Network told the members flatly that it was out of money, and that it could not possibly build the (25) new psychological patient beds at Central Vermont Medical Center in Berlin. Dr. John Brumsted, the Network CEO, acknowledged that it was committed to the project and will turn the $18 million it is responsible for over to the Board or whomever it designates. But the capital cost psych bed project will run to $158 million or so, and will generate an annual operating loss of $25 million, which makes the whole idea a fantasy.
The central theme of the Board draining the financial muscle out of the University of Vermont’s Medical Center Hospital in Burlington has been in the reform atmosphere for some years, but the reaction of the Board to the Brumsted presentation constituted a striking reversal of form. They got it.
Kevin Mullin, the Board chair, who had been pressing UVM hard for reassurances on the bed project, said he understood that UVM couldn’t just keep losing money, although he and other Board members kept probing for some way to get the beds built. Tom Pelham, who has complained regularly that UVMMC gets more of the margin money in the system than it deserves, said he thought that the beds in question should be paid for, both in capital and operating terms, by the state. Leaving UVM’s Medical Center to carry that burden simply isn’t fair, Pelham said. Member Jessica Holmes commented that the UVM Network presentation “threw her mind into problem-solving mode”, but that her mind hadn’t come up with a solution to the fact that the UVM Network simply has nowhere enough money to do the job. (Member Robin Lunge had no substantive questions, and Member Thom Walsh didn’t show up).
I’ve called that reaction an epiphany, because in the more than 400 board meetings in the last five years, the palpable posture of the Board has been hostility to UVM’s case. A major reason for that is the campaign by the anti-reform and anti-UVM claque to denigrate the academic medical center as a means to deflect pressure from the small hospitals in the state. The atmosphere at Wednesday’s session was a sharp break from this Board’s past.
No one should underestimate the importance of that. At the same time, however, just waking up does not mean that the Board is prepared to shift the ship of health system management to a new course. And to an unprecedented extent, the whole reform project has been thrown into question.
For example, the Board has resolved to shift from managing the reorganization of the overall system itself to setting up a “Global Budget” process, which apparently means hiring a consultant to deal with the myriad complexities of a system that has been tried in only two states, and their versions of that model differ. The Global Budget idea, meanwhile, is tangled in the Vermont Legislature because the Board needs $5 million just to start down the new road, and there is a good chance the Board will come up either very short of the total it needs, or completely empty. Which would leave the Board even deeper in the weeds than it already is.
Moreover, the Board has been hiding from the obvious problems laid at their feet by the half dozen or so consultants who, last fall, delivered their findings on the massive inefficiencies in the community hospital network. Brief examples, which I will elaborate on in future posts, includes the fact that a third of the small hospital traffic in the state is unnecessary and that we are supporting at least 130 more beds than we need.
If that list of lamentations isn’t long enough, a close examination of Brumsted’s testimony last Wednesday would catch a hint of cuts in the UVM Network that could go far beyond the psych bed issue. For just walking away from a capital and operating bill of $150 million doesn’t actually save any money at all. The UVM Academic Medical Center and its smaller satellites don’t have a revenue stream adequate to maintain the full array of services they deliver now. That means that patients who need services that UVMMC has to drop will have to get them elsewhere. Dartmouth-Hitchcock Medical Center in nearby New Hampshire is one possibility, but if acute Medicaid patients have to go to Boston and pay market rates it would be huge hit to the Vermont Medicaid budget.
The UVMMC finance team is now determining the specifics of that exercise, which must be available within the next month or so in order to complete the Fiscal Year 2023 budget, which has to be submitted to the GMCB by July 1. The key consequence of those figures will show up in the so-called “Commercial Ask”—the amount that the UMV Network hospitals can increase the rates they charge Vermont Blue Cross for care they deliver. Over the last six years, the UVMMC ask has varied from one to eight percent. The Board has cut UVM’s ask in five of the last six years.
The effect of that campaign will stare the GMCB in the face in August, because the Commercial Ask will almost certainly have to exceed 20 percent, which will blow every single mind in the health reform sandbox. That will be the cost of driving UVMMC to its financial knees.
As of today, no one in the upper murks of the Scott administration, or the Green Mountain Care Board, or the Vermont Legislature, or the Vermont Hospital Association (VAHHS), or the Vermont business community, or the Vermont press, or any of the marginal players has the faintest idea what to do about it. The million patients who pass through the doors of the UVM system every year will be the ones who pay the price for those failures.