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.