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.