by Hamilton E. Davis
For the first time in the tenure of Gov. Phil Scott’s Green Mountain Care Board, the senior management of the UVM Health Network stood up in mid-November, and said, in effect, Enough is Enough. The Network said it would appeal the full range of the Board’s recent decisions on its FY 25 budget. The first challenge is to the Board’s enforcement action on an earlier UVM revenue overrun; that will be heard in a Superior Court. The second will ask the Vermont Supreme Court to void the Board’s severe cuts to this year’s spending at UVM Medical Center Hospital in Burlington.
According to the Network’s press release, the appeals will seek to restore $122 million to the Medical Center Hospital’s revenue stream in the fiscal year that began Oct. 1. The first UVM action is to ask the Board to stay its $80 million dollar penalty for exceeding its spending cap in 2023. The second will be to appeal the Board’s $42 million cut to its FY25 budget. Failure to reverse that drain, the release said, would force the Network to begin cutting vital medical services to Vermonters. The first step in that process took place a few weeks ago when the Network “paused” the construction of half a dozen new surgical beds in its South Burlington facility. The Board permitted the requested beds, but attached financial conditions that rendered the project unaffordable.
The Network did not indicate any other specific cuts, but over the summer I laid out the money-losing services the Network now delivers: the state’s only Level One Trauma Center; the Vermont Children’s Hospital, the state’s only source of specialty pediatrics; all kidney transplant and dialysis services in Vermont; the state’s only high-risk pregnancy management services; and pediatric outpatient services. Moreover, the UVM Network operates and pays the largest share of the cost of OneCare Vermont, which contributes roughly $20 million a year to support primary care across the state; without that support, primary care in the state would collapse.
In response to the UVM action, the Green Mountain Care Board issued a statement saying that “UVMMC’s statement is inaccurate and a disservice to the community and the many hard-working employees of the hospital.” In other words, Game On: The Vermont courts will determine the course of the Vermont doctor/hospital system for the new fiscal year, now a month old; the lead-in to the 2025 session of the Legislature; and the shape of the Vermont medical system; and, indeed, the state’s entire economy, into the coming decades of the new millennium.
So, what should we think about this irruption of new developments in the 50-year track of Vermont’s healthcare reform movement?
The first and most obvious thing to say is that no one can predict the outcome. The second is that it will be cataclysmic; and third, not quite as certain, it’s fairly fast-moving. The UVM senior management that has been in doormat mode since Gov. Phil Scott took office in 2017, turned into a tiger in a matter of days and in the process wrecked all the places for the players to hide.
Scott himself has been hiding from reform since taking office, and his top aide, Jason Gibbs, is even further out to lunch on reform. Scott/Gibbs are now looking straight into the mouth of a cannon that could blow their administration to pieces. The business community is just beginning to realize that the foundation they’ve been standing on is beginning to crumble.
Actually, it’s already crumbling. Beta, the electric plane maker, is in the process of hiring 500 new employees—and the UVM medical system can’t take care of them. The same thing is true of the other tech companies that represent the economic iron in the Chittenden County area. Since summer, UVMMC has been sending some of its senior docs to work at the Network hospital in Plattsburg, N.Y., simply to get away from the GMCB wrecking ball. There is a stubborn backlog of 4,000 colonoscopies that can’t be performed in a timely way…there is simply no way these developments make any sense.
There is a commonplace rule in much of the legal community that a private entity should never challenge its governmental regulator. “Even when they win, they lose,” the saying goes.
The legal community could be in for a shock, however, in the current situation. One piece of evidence for that came in page 15 of the UVM Network’s formal notice to the Board. It was signed not by by the Network’s Chief Counsel Eric Miller, but by Shapleigh (Shap) Smith, a former Speaker of the Vermont House, and two of his colleagues at the Dinse law firm, Anne Rosenblum and Alexander Hunter.
Shap Smith is one of Vermont’s top litigators; if anyone in the Scott administration or the Green Mountain Care Board thinks that the UVM challenge can be brushed aside as a pro forma effort they are kidding themselves. None of the Green Mountain Care Board lawyers, nor those in the Attorney General’s office, can stack up against Smith. A very interesting question, therefore, will be whether Owen Foster, the chair of the GMCB, can persuade the governor to authorize using tax money to hire a credible law firm to represent his Board…don’t bet on it.
Yet another shift in the healthcare reform space is the advent of a new chairperson at the UVM Network itself. He is Tom Golonka, a private sector finance and governance expert, who will ascend to the chairmanship formally on Jan. 1. I am speculating here, but I believe Golonka is already turning out to be a new sheriff in town. He first came to notice as the chairperson of the local board of the Central Vermont Medical Center. In 2023, the local chairs of the Network wrote a mildly challenging letter to the Legislature about the way the Green Mountain Care Board was regulating hospital budgets. Nothing came of it, but the buzz inside the Network was that it was Golonka who urged the move and helped draft the letter.
I am not speculating when I say that Golonka was the one that jolted Sunny Eappen, the CEO of the Network, out of his doormat mode and into the leadership of what amounts to an insurrection, a shift that occurred in the last month or so. The UVM Network leadership had been struggling for a decade to reverse the toxic narrative that the Medical Center Hospital in Burlington was a bullying force with high costs and poor quality.
Beginning in October of 2021 and continuing into February of 2022, half a dozen national consultants filed reports and analyses showing that in fact UVMMC was the highest quality, most cost-efficient provider in Vermont, and one of the best such players in the U.S. For three years, the Green Mountain Care Board has been hiding that data from the public. They won’t be able to hide it much longer—there simply is no other data bearing on the adjudication of UVMMC’s performance.
Still, the whole exercise promises to torment the justices at both the Superior and Supreme Court levels. The first step will be easiest. The UVM claim that they had been denied the due process of a hearing and the opportunity to defend themselves against an $80 million penalty for taking in that amount of extra revenue in 2023 seems obviously true, if for no other reason than I had never seen or heard of such a hearing. Chapter and verse on the issue were laid out both in Eric Miller’s letter to the GMCB, and in Shap Smith’s formal petition to the Board. Owen Foster, the chair of the GMCB, has already announced that the Board will contest the issue aggressively, but if you are inclined to bet, bet on Shap—ultimately. UVMMC is not likely to prevail at the first level so the appeal from that would be to the Superior Court, which would have to establish the facts and make a judgment on the law. If UVMMC did not prevail in Superior Court, it could appeal to the Vermont Supreme Court, where those justices would rule on the decision laid down below.
The issues on the penalty are not very complicated: they involve questions like whether a hearing was held, was the hearing made known to the public, were the witnesses sworn in…minutiae like that.
The UVM appeal on the $42 million it hopes to rescue from the Board’s cuts to its current annual budget will be much harder. That appeal will have to begin at the Superior Court level, and will be based not on Mickey Mouse questions like whether somebody bought a newspaper ad, but rather on huge existential issues like how to design a whole Hospital/Doctor system: Do we need 14 full-service hospitals, or just four-or three? How can we ensure the availability of primary care for rural areas, or urban, for that matter? How should we distribute obstetrical care? That doesn’t even get mentioned now.
Lurking behind the legal back and forth are the difficult structural issues that plague the actual Vermont medical system. Like, when will the people who run our systems shift from episodic counting to per capita rates, which is how we actually pay for care? And when will we extend capitation reimbursement from Medicaid, which is small and low cost, to Medicare and private insurance, which could save north of $500 million a year?
And who is going to manage all of this? There isn’t single person on the Green Mountain Care Board, or its staff who is remotely capable to doing that. One of the reasons for that is that neither Gov. Phil Scott and his wingman, Jason Gibbs has any idea either, and they picked the Green Mountain Board members.
The Board bet all its marbles on Bruce Hamory, a consultant, to sort all of this out, and Hamory produced a 144-page map that is so bad that it’s already a political corpse. Jenny Samuelson, the Secretary of Human Services, wrote it off the other day when she “reassured” Vermonters that the administration wouldn’t allow anyone to wreck their health care system…
The abrupt UVM Network shift in posture opens up the whole system, from top to bottom: how many hospitals do we need, and what should each one of them do? How do you ensure medical quality while cutting costs by a third? And how do we assess the performance of the people charged with making those decisions—the governor and the executive branch, the individual regulators and their staff, the Legislature, the Health Care Advocate, the Vermont Auditor, the business community?
In other words, huge opportunity at the cost of huge risk.
And a plea to the players:
Could you resolve these dilemmas very quickly, please?