Running Away and Hiding From the Data

This is the third article in a series…

by Hamilton E. Davis 

   The wave of change that has engulfed the Green Mountain Care Board began to gather last spring when Kevin Mullin, who had chaired the Board since early in 2017, said he would retire in mid-summer. It was about the time that hospitals were preparing their FY2023 budgets, and the Green Mountain Care Board was preparing to issue its guidance for that process.

   There was a palpable sense of movement in the air, but it was in the background; not very specific. With Mullin retiring, of course, there would have to be a new chairperson to take the Board through the late summer budget decisions, but there was no way to tell who that might be. A second factor was the consultants’ reports resting in the Board’s data vaults, the highlights of which we looked at yesterday. The material was explosive: it painted an unsettling picture of the high costs and poor quality in the state’s 11 non-UVM hospitals. But no one was assessing it or even paying attention. The press ignored it completely.

   Yet another factor involved the budget of the UVM Health Network Medical Center’s hospital in Burlington. Starting in 2017, the Mullin-led Board routinely cut the UVMMC budget to damaging levels, despite the fact that data showed UVMMC to be, by a factor of as much as three, the highest quality facility in the state; and by as much as 50 percent, the least expensive. The UVMMC margins dropped steadily over the tenure of the Mullin Board, as did its Days Cash on Hand. The only thing that kept the bond rating agencies from cutting the Medical Centers debt quality was their forbearance in the face of Covid. Which won’t last.

   The financial consequences for the state from the dynamics of reform were and still are simply enormous. The UVMMC budget alone is about $1.5 billion; its Network units in central Vermont and Middlebury run that number close to $2 billion. The 11 community hospitals in the state spend around $1 billion, for a total acute care tab of about $3 billion. Throw in the non-acute spending for things like nursing homes, home health care and various social programs and you get around $6 billion, which is 20 percent of the whole state domestic product of $30 billion. Screw that up and you could sink the Vermont economy. And that’s just the money. The damage to Vermonters from dodgy quality and lack of access is incalculable.

The System Begins to Move

  The first stirring came in late winter when Robin Lunge mounted an effort to be named the new chairperson. A lawyer, Lunge was named to the Board in the mid-teens by then-Governor Peter Shumlin. Prior to that she served as Director of Health Care Reform, working out of a pod in the Governor’s Fifth Floor office in the Pavilion. She was placed there by Steve Kimbell, the Commissioner of the Department of Fiscal Regulation, who along with Anya Rader Wallack, was directing Shumlin reform effort. Whatever her title, her job was to liaise with the Governor himself and to give Wallack any legal help she might need.

   As a member of the Board, Lunge was a secondary player. The intellectual leaders were Jessica Holmes, the Middlebury College economics professor, and Maureen Usifer, a private sector financial expert. The political direction and leadership came from Kevin Mullin, the chairman. The fifth member, Tom Pelham, had no discernable effect on the Board’s deliberations. In late 2021, Usifer retired and was replaced by Thom Walsh, a Dartmouth professor.

   As the budget decisions loomed, however, Lunge stepped to the forefront. A major question was how to frame the overall spending level for each hospital. The details can be left to a later post. For now, it is sufficient to say that Holmes and Mullin favored beginning to move from a simple cap to a metric based on the per capita spending in a hospital service area, a metric that looked forward to a fully capitated system. Lunge disagreed and proposed a complicated, old style, two-year cap of around eight percent. Lunge won her point on a 3-2 vote. The policy impact of that was zero. The important point was that Mullin had lost control of his Board, and Holmes’ intellectual leadership had failed.

   Fast forward now to early August of this year. Mullin is gone, and Jessica Holmes has been named interim chair of the Green Mountain Care Board. And that new Board was on a brand new track, although it wasn’t obvious to everyone. When Mullin was chair and a petitioner was finished with their presentation, Mullin would throw the issue to the other Board members for comment and discussion, starting now with one member, another meeting a different member. He would also regularly state his own views.

   Holmes changed that from her first day. When discussion time came, she would call every time on Lunge first. Lunge would then launch into a fully prepared proposal as the right course for the Board. If Holmes had some views that would complement Lunge’s comments, she would articulate them. But the lead role was always Lunge. Holmes would then turn to Tom Pelham, and always last to Thom Walsh.

   As the hearings proceeded, it became obvious the Holmes-Lunge posture had been worked out in advance, and that the Board had broken into two distinct blocs--Holmes and Lunge on the one hand and Walsh and Pelham on the other. For most of the hospitals, that divergence didn’t matter. Both Walsh and Pelham were inclined to support the small hospitals, and to be skeptical and tough about the UVM Network. The elephant in the room for all the Board members was the information from the consultants bearing on the problems of the small hospitals.

Running and Hiding from the Data

   All four members avoided any mention of the data, even as they were spending hours talking to every hospital management team about their operations, their problems and their successes and challenges. Budgets for North Country, Springfield and Gifford hospitals, with not a word about the dangerously low Leapfrog volumes. Budgets for Springfield, Northeastern in St. Johnsbury, Northwest in St. Albans, Copley in Morrisville, Gifford in Randolph, North Country in Newport—all above 30 percent of their inpatient admissions and admissions from the ER that were not needed. Unneeded care is a huge quality red flag. Not so much as a whisper of discussion.

How do you rubber stamp budgets for Rutland, Gifford and Southwestern in Bennington when their PQI readings are far worse than national PQI standards…And how do you avoid a word about the findings by Mathematica that you have 140 too many beds in Brattleboro, Bennington, St. Albans, Middlebury, Newport, Morrisville, Randolph and St. Johnsbury?

   I asked Jessica Holmes about those issues, and she emailed the following response:

   She wrote first that Vermont is still in a Covid emergency, and that all the state’s hospitals are stressed by work force shortages, financial losses and problems with access and quality.

   “So this year’s budget process was about short term stabilization as outlined in Act 167,” she wrote. (her emphasis) “As we emerge from the pandemic,” she continued, “the Board will be accelerating its work on long term sustainability…we will be doing a deeper dive into capacity, efficiencies, volumes, costs and quality…so the very important work started by the consultants in 2021will be accelerated in early 2023.” She added that the Board will hire a consultant to help with design work.

   I responded to this by email, saying that there is nothing in Act 167 or any other Vermont statute that prohibits or discourages in any way the Green Mountain Care Board from taking action to protect Vermonters from dangerously incompetent medical care. I got no response to my second question.

   The analysis by the various consultants is voluminous, and there be may well be a contrary case to be made about any element of it. I have asked for comment on that question from the Vermont Association of Hospitals and Health Systems, whose membership includes all the state’s hospitals, and received no response. In the future, I’ll seek comment from the individual hospitals, and I anticipate I will get some, or a lot.

   The thing we can tell now is that the Green Mountain Care Board as constituted between early August and the end of September was a total failure. We don’t need a “deep dive” in early 2023. We’ve been living through a deep dive for at least the last five years. What we need is a Green Mountain Care Board with at least enough political courage to look at the facts we already know. Which is at least possible.

   Because as of Oct. 1 we have a new Green Mountain Care Board, the third in our 10-year reform journey. In tomorrow’s post, we’ll look at the new Board’s maiden voyage.

A Critical National Look at the Vermont Hospital System

This is the second article in a series

by Hamilton E. Davis 

   The single most difficult barrier facing the Vermont health care reform project is right-sizing the state’s 14-hospital system. It is not the most difficult because it’s technically complex, but because it’s so wrenching politically. We now operate 14 full-service hospitals, when we actually need four, with the remainder stepped down to clinics of various sizes. Our current system was built for the Vermont of 100 years ago: a tiny, cold rural state with more cows than people, and a fretwork of goat tracks for roads, many of which weren’t even passable in mud season.

   The key reform task now is to recast the hospital system so that it can deliver high-quality, cost-effective care in the 21st century. You can’t even broach that concept, however, without understanding first that it isn’t what we have now. The Green Mountain Care Board figured that out in the late teens, and in response initiated what it described as a “Sustainability” program. In each hospital service area, it is critical to determine what medical services can be delivered safely and at a reasonable cost.

   To set the stage, the Board engaged an array of national-class consultants to study the Vermont hospital system and recommend changes. They included Mathematica, which studies the forces driving rural hospitals in the U.S.; the Berkeley Research Group (BRG) that advises government and corporate clients across a broad front; Burns and Associates, which advises states on health policy, financial modeling and program design; the Dartmouth Health Institute, publisher of the Dartmouth Health Atlas, the single most credible national authority on health care cost patterns; and Oliver Wyman, an adviser to payers and providers on system analysis and strategy planning.

   On Oct. 27 of last year, these worthies spent a full day laying out their findings before the Board. Which were absolutely stunning. The full burden was that the Vermont hospital delivery system, outside of the UVM Network, is a total mess, cost wise, quality wise, pretty much however wise you want to look at it. Too extreme? Take a look and decide for yourself: In the current hospital budget season, this is a sample of the data the Green Mountain Care Board ran away and hid from.

• An instructive view of the quality of surgical quality in was a metric developed by a corporate body called the Leapfrog Group. Formed in 2000 by a group of major national corporations that were unhappy about outrageous health care costs and based on the medical literature, the Leapfrog Group asserted that surgeons should do a minimum number of cases to maintain their competence. For hip and knee replacements that number was 50 per year. Below is what Berkeley Research Group reported for the Vermont hospitals.

For Copley Hospital, the 42 annual number of hips is below but close to the Leapfrog minimum, as is Porter’s 48 knees per year. But look at the figures for Gifford in Randolph—eight hips and 14 knees…and North Country in Newport—22 hips and fewer than 6 knees. And Springfield Hospital, 10 hips, 19 knees. These are huge red flags for patient safety. The Green Mountain Care Board, the most powerful health care regulatory body in the United States, should have shut those down the day the data appeared. What did the Board do with that information in the budget process? Zip, nada. Never was mentioned.

• The graph above shows the finding by Mathematica that 21 to 37 percent of the care delivered across the community hospital network is potentially avoidable, which means that care probably should not have been provided. The metric is Potentially Avoidable Utilization (PAU). The consultant did not provide a figure for either UVMMC or Dartmouth Hitchcock, the first because UVMMC is urban, not rural; and DH because it is in New Hampshire. But the quantity of apparent overuse raises a red flag because it throws both the cost and the quality into question. Look particularly at the high hospitals with 30 percent or more questionable care—Northeastern (St. Johnsbury), Springfield, Northwestern (St. Albans), Copley (Morrisville), Gifford (Randolph), and North Country (Newport). Attention paid by the Board. Zero.

• A second perspective from Berkeley on quality in the whole Vermont system is illustrated above. Berkeley used a metric called Preventative Quality Indicators (PQI), which was developed for the federal Department of Health and Health Services; it estimates the volume of care that could have been avoided and care that could be avoided is by definition low quality. Note that the shorter the bar, the higher the quality.

These data show a stunning disparity between the high quality (PQI 5.96) at the UVM Medical Center in Burlington, and hospitals like Southwestern in Bennington (PQI 16.41), Gifford Medical Center in Randolph (PQI 15.01), and Rutland Regional Medical Center (PQI 13.24). Those gaps are huge, and the people of Vermont should know about them. They didn’t hear a word from the Board.

• Of course, one of the major questions presented to the consultants was what might be done to address the kinds of problems illuminated above. One of the most provocative was the recommendation by Mathematica to reduce the capacity in the state by as many as 140 beds. The analysis left Rutland Hospital, Central Vermont Medical Center, Springfield Hospital and Mt. Ascutney in Windsor pretty much alone. But look carefully at the rest, which Mathematica would render unrecognizable—Brattleboro, now a middleweight at 66 staffed beds, down nearly two thirds to 25; Southwest in Bennington, a middle weight at 78 beds, down 45 percent to 43; Northwest in St. Albans, another middleweight, down from 53 to 31. Even more striking, ironically, is that recommended cuts for the flyweights, the Critical Access Hospitals (25 beds) - in Middlebury, Newport, Morrisville, Randolph, and St. Johnsbury—would leave them too small to be full-service hospitals at all. Systemwide, that would be offset by the recommended addition of 60 beds at UVMMC, two at Central Vermont and four at Windsor. Moving decisively on even a portion of this would be a huge step toward sustainability. It would also amount to political Armageddon, which is why nothing is likely to happen in the near term.  

   The material above is just a selection of the mass that has accrued in the Green Mountain Care Board’s data vaults over the past year or so. It is simply the ante in the biggest public policy poker game the state has ever seen. Health care involves a yearly expenditure of more than three billion dollars for acute care, and in the short run, messing it up will not only be catastrophically expensive for residents and businesses in Vermont, it could crash the Vermont economy itself. On a longer reach, however, rendering the whole thing sustainable could save Vermonters $300 to $500 million a year. The benefits of sustainability would dwarf any growth or economic development ever imagined for our state.

   We’re closer to those sunlit uplands than any other state, but we are dead in the water because our players simply aren’t good enough. That is particularly true of the Green Mountain Care Board, the linchpin of the whole system.

   We’ll look at that problem in tomorrow’s post.

Green Mountain Care Board Turns Into a Dog that Wouldn’t Bark

A note to my readers: Below is the first of a series of articles that will describe and assess Vermont’s health care reform project as it enters its second decade.

 by Hamilton E. Davis 

   The Vermont health care reform project, which was born in 2012 and which has been grinding along a relatively consistent track for a decade, basically fell apart during the recent Green Mountain Care Board hospital budget deliberations, and now faces an entirely new policy and political landscape.

   The key element in the general metamorphosis was the incompetent and irresponsible performance of the Green Mountain Care Board in establishing the hospital budgets for Fiscal Year 2023, which began on Oct. 1. The Vermont system is really two systems—the UVM Health Network, which includes three Vermont hospitals and which delivers about 60 percent of all the care; and the remaining 11 independent facilities, which deliver the rest.

   In establishing those budgets, the Board lavished all its disciplinary muscle on the UVM Network hospitals in Burlington (UVMMC), Berlin (Central Vermont Medical Center) and Porter Medical Center in Middlebury. Those hospitals have the highest quality ratings in the state, and on a per capita basis are the least expensive in Vermont. I’ll lay out that whole process in a future post.

     At the same time, the Board, led by the veteran members Jessica Holmes and Robin Lunge, literally ran away and hid from their own consultants’ data that showed that the non-UVM hospitals are a total mess, with huge over-capacity, major quality challenges and off-the-wall costs. (I’ll lay that data out in a post tomorrow.)     

   It is ironic that it was Holmes who drove the initial decision in 2019 to embark on what she called a “Sustainability” project, one that would look at structural issues like the quality and cost of complex service lines at the individual hospitals. Ignoring all that information casts a shadow over the integrity and long-term viability of the Green Mountain Care Board itself; and raises the question whether Vermont will continue to lead the nation in the search for a new high quality, low cost paradigm for American health care. That question now confronts a “new” Board, as reconfigured as of Oct. 1 of this year.

   Moreover, that uncertainty will be amplified by structural changes in the whole public policy apparatus in the state. Think of them as dominos in a complex system that affects the finances and physical well-being of every Vermonter.

The Falling Dominos

• No single player is more important than the Green Mountain Care Board, which has been tasked by the Legislature to manage the entire system. The Board membership that has been in place since 2017 has now has been restructured. As of a few weeks ago, the Board has a new chairperson, Owen Foster, and a new member, Dr. David Murman. Foster is a former Assistant U.S. Attorney for the District of Vermont, who specialized in health care fraud. Murman is an Emergency Department physician at Central Vermont Medical Center in Berlin. The dynamics inside the revamped Board are as complex and nuanced as a novel. I’ll lay that out in a later post. Neither had anything to do with the budget mess in September.

• The Board was just the first domino. The second is the retirement this fall of Dr. John Brumsted, the CEO of the UVM Network. Brumsted is the architect of the Network, which also includes three hospitals in northeastern New York State. Since talking the helm in 2011, Brumsted has labored to recast the medical and financial framework of his system, which now has sufficient weight to play at the level of the real heavyweights of the U.S. hospital world. What Brumsted has not accomplished, however, is development of a political structure that can reverse the public narrative that casts UVMMC as too big, too greedy and domineering for Vermont.

That task will now fall to Dr. Sunil Eapen, a top executive at Brigham and Women’s Hospital in Boston, who will replace Brumsted as CEO after Thanksgiving. Eapen was a real catch for the UVM Network: He did not get the top job at the merger of Brigham and Women’s and Massachusetts General Hospital, but his credentials are superb, far beyond anyone a Vermont facility could have hoped for. Still, the regulatory and political environments are toxic for UVMMC, and reversing that will be very challenging. Meanwhile, the dominos keep falling.

• Governor Phil Scott has appointed a majority of the current Board, and was recently reelected in November. Yet Scott’s leadership of the Vermont reform project has oscillated wildly between fear and disinterest to dramatically intrusive, and back again. The day-to-day management of reform falls to the Secretary of the Agency of Human Services and Scott has had three of those since 2017, all different from one another. How all that is playing out will require another post.

• Which gets us to the Vermont Legislature. That body is undergoing historic levels of turnover heading into the 2023 session. There will be nine new committee chairs, including House Health Care; there will be a new President Pro Tem of the Senate, as well as a new Lieutenant Governor, who plays a role in choosing the chairs in the Senate. How the Legislature will react to health care reform is one of the most complex questions in the project.

• A domino that doesn’t get enough attention is the Vermont Association of Hospitals and Health Systems (VAHHS), the trade group that includes all 14 full service hospitals in Vermont. The long-time VAHHS president, Jeff Tieman, left last spring, and his top deputy, Mike Del Trecco, is seeking to replace him; Del Trecco is now the interim CEO. Since 2019, Tieman focused his efforts in heading off the whole Sustainability project, which poses a huge threat to the finances and the complex medical procedures, especially orthopedics, in the states smaller hospitals.

  Where Del Trecco will take VAHHS on the crucial issues of reform is not yet clear, but it will be important. Small and medium sized hospitals have enormous political support in their communities and if the people in those communities see Sustainability as a threat to those facilities they could lead an anti-reform revolt in the Legislature.

   It will also be important to see whether and how the UVM Network, which pays 60 percent of the VAHHS salaries, utilizes that muscle to push the reform initiative into the community hospital group. Yet another critical point is who will quantify and then figure out how to supply the money it will take to transition the small hospitals to a 21st century structure.

   That array of uncertainties is far from the end of the reform story for the autumn of 2022. No single one is as important as the unraveling and re-raveling (sic) of the Green Mountain Care Board. But the financial situation inside the UVM Network, especially inside the Medical Center Hospital in Burlington, is the key to the future of serious medicine in Vermont, and that issue will require its own cluster of stories.

   Moreover, there are marginal players who bear on the future of reform—like the press performance in illuminating the complexities of the issues, the state Health Care Advocate, the Vermont Auditor, and Vermont Blue Cross and Blue Shield. We’ll catch up with them along the way.

   And it won’t all take long. We’ll see some issues resolve by Thanksgiving, and many others by the end of the year. Plus, the action or lack of action by the Legislature in the 2023 session that begins in January will be more decisive than any since the 2011 session gave us Act 48, the policy tiger we’re still riding.

Tomorrow: What our system looks like now.

UVM Health Network Fully Integrates Across Two States

By Hamilton E. Davis 

   In a momentous structural initiative, the five affiliates of the University of Vermont Health Network in Vermont and northeastern New York have voted to transfer their entire operational and strategic powers to the Network headquarters in Burlington. For the smaller hospitals in Berlin and Middlebury, Vermont, and Plattsburgh, Malone and Elizabethtown in N.Y., decisions such as hiring and firing of hospital presidents and other major employees, hiring and setting pay for doctors, establishing budgets, selecting service lines, and setting quality targets will be made at Network headquarters.

      This shift will create a fully integrated academic medical care delivery system with more than double the throw-weight of the University of Vermont’s current Medical Center Hospital; and open a path for the UVM Network to take a seat at the table with the most important health care players in the United States—Mass General and Brigham in Boston, for example, or Yale New Haven, or Intermountain in Utah. The geomedical (sic) position of the Mayo Clinic in rural Minnesota, for example, is strikingly similar to that of the UVM Network.

    Of course, such a trajectory will be very challenging, and it will not happen soon, but the UVM organization will have the infrastructure to get there. Moreover, to the extent that effort succeeds, significant benefits will flow to the UVM College of Medicine, and to the Vermont economy generally. For medical students, doubling the patient base will enhance their training opportunities. And for the economy generally, the same doubling should increase the potential for spinning off private sector biomedical initiatives. Finally, the availability of national class health care should appeal strongly to private companies looking to relocate.

   The effective date of the new local hospital bylaws will be Oct. 1 of this year, although considerable progress has already been made in some areas. And the “unified” medical staff will be created over time, rather than at the effective date of the agreement.

   The local boards will retain ownership of the assets, such as buildings, land and equipment and will continue to have responsibility for fund raising and for monitoring the local application of Network quality standards. The affiliates also gain by the shift of fiduciary responsibility from their community hospital to the Network. And representatives of the local hospitals will have seats on the various standing committees within the Network management structure.

   The full integration of the Network community could trigger criticism by the array of UVM and health reform opponents in Vermont, who charge that the Network is too dominant and too greedy and is therefore a threat to the smaller hospitals in the state. The reality, however, is that the move is a done deal. The common bylaws that govern the integrated company have been legally adopted by all six companies, which include UVMMC itself, and by the Network Board.

   Beyond that, there is simply no credible underpinning for the anti-UVM narrative. The Dartmouth-Health Atlas, as reliable a source as we have in the reform space, shows that the UVM Medical Center delivers not only the least expensive care in Vermont, but some of the most cost effective care in the U.S. And the consultants utilized by the Green Mountain Care Board have reported that UVMMC’s quality and, in fact, the quality of its Network colleagues in Vermont, is far higher than the non-network providers in the state.

Health Care Reform in Action

   So, how after 10 years of intense reform activity, how did we reach this point? And how will it change things on the ground?

   The recast system is the fulfillment of the vision of Dr. John Brumsted, the President and CEO of the Network, who conceived of it early in his career as a gynecological surgeon and who has pursued it for decades, in each post he held as he ascended the medical management ladder. After acting as a second to former UVM Medical Center chief Dr. Melinda Estes during much of the aughts, Brumsted was named interim CEO of the Medical Center in 2011 and assumed the permanent post in 2012.

   Brumsted sums up his goal as “the right patient, at the right time, and at the right place.” All sorts of people salute the same flag, but Brumsted is one of a tiny number who are trying to bring it to fruition. And as far as I know, literally the only one who is doing so without owning an insurance company, and while coping with the most draconian state regulation in the U.S.

   Not only is the agreement a done deal, it is steady forward. The Network, now effectively one company, deploys 927 full time doctors east to west from Central Vermont Medical Center in Berlin, Vermont, to Alice Hyde Hospital in Malone, N.Y. The support staff numbers 2300. For comparison’s sake, the listed roster at MassGen Brigham, the Boston behemoth, shows 1022 docs. The integrated Network will serve a million patients a year.

   The map above shows the Network units, and the road—ferry transportation system that ties them together. On the east (Vermont) side, patients in the Barre-Montpelier area use Central Vermont Medical Center in Berlin as their local hospital; if they need more specialized care, they travel on I-89 to the Medical Center hospital in Burlington. Porter Medical Center in Middlebury serves patients in Addison County. If they need more extensive care they travel to Burlington on Route 7.

   On the west (New York) side, the anchor facility is Champlain Valley Physicians Hospital in Plattsburgh. CVPH is not a tertiary care facility, but it’s pretty close. Its 300 beds aren’t far off the Burlington capacity, and it delivers some pretty complex care, like cardiac catherization, for example. Virtually all the surgery carried out in the New York units takes place here. Alice Hyde Medical Center in Malone serves Franklin County, and refers its complex patients to Plattsburgh. Elizabethtown Community Hospital in the southern tier of the Network area does no surgery at all. It sends its complex care patients to Plattsburgh.  So does the Medical Village (primary care and ER) in Ticonderoga. Some obstetrics patients in southern Essex County go to Porter Medical Center in Vermont for delivery. And if Elizabethtown needs to it can send patients directly to Burlington over the Essex-Charlotte ferry. Beyond the Network itself, the New York State Police helicopters out of Saranac Lake regularly to deliver critical patients to the Medical Center in Burlington.

   The trickiest leg in the transport system is moving patients needing tertiary care at an academic center from Plattsburgh to Burlington. Ambulances and cars travel on local roads to the Cumberland Head ferry for the 14-minute ride to South Hero on the Vermont side. That ferry runs all day, year round; but it can occasionally be blocked by wind-driven ice.

    The approximate travel times on the transport web are shown in the accompanying table.

Early Progress

    I said earlier that there has been considerable progress toward integration. Which is true, but it’s been patchy. In Vermont, for example, top management in Burlington has been deeply involved for years in the operations of Central Vermont Medical Center, which serves the Barre-Montpelier area. The current hospital chief, Anna Noonan, came out of the Medical Center’s executive offices; and the former Network Chief Financial Officer Todd Keating spent at least half his time in the late teens trying wrestle Central Vermont’s annual budgets into submission. The current Network Chief Finance Officer, Rick Vincent, will manage those budgets out of Burlington.

   Perhaps the clearest example of how the shift in corporate structure will work is the experience of Porter Medical Center in Middlebury. A 25-bed Critical Access Hospital, Porter ran aground in 2017, and the Porter Board decided to affiliate with the UVM Network. The Board recruited a new Chief Executive Officer with instructions to attack the Porter financial problems.

   The new CEO did so, but the local doctors revolted and the new CEO was gone. The Porter Board recruited a replacement, against the advice of the UVM management. That recruit also failed to work out, and the Porter Board selected yet another CEO, and this one, Tom Thompson, had the support of Burlington and he is still in place. All that back-and-forthing ate up time and money, but under the newly integrated structure, it won’t happen again.

   Thompson will be evaluated by the senior Network management and if he leaves or begins to fall short, the Network will select that replacement. The Network CEO will consult with the local board, but the Network chief will select the new replacement, and set his or her salary. And the new Middlebury chief will not be a CEO; that person will be a Chief Operating Officer, who will report to the CEO of the Network…as of today, the CEO of all six Network  hospitals is John Brumsted.

   The New York wing of the Network, meanwhile, presents yet another variation on the theme. John Brumsted has already completely rewired the three county, four hospital system that jumped into his lap between 2013 and 2015 He closed a small hospital in Ticonderoga and replaced it with a “medical village” consisting of an Emergency Room and primary care; recast the management and service lines at Champlain Valley Physicians Hospital In Plattsburgh; and stitched the whole into an integrated operation that also included Alice Hyde Hospital in Malone and the small community hospital in Elizabethtown. In effect, Brumsted made those decisions because the New York units asked him to.

   Now the shift of power from local boards to the Network management has been formalized, and the operating and strategic decisions in New York will be made in Burlington. The doctors across the Network will work for a “unified” staff, which, over time, will be comprised entirely of academic medical center-level physicians paid according to an integrated template; the latter is an IRS requirement for non-profit institutions.

So, What do we Get Out of This?

   There are enormous potential benefits from this newly integrated system:

• Operating one organizational structure rather than six will save money and facilitate decision-making. There will be one CEO—of the whole Network. The smaller units will become, in effect, divisions of one company. They will be lead by a Chief Operating Officer, a COO. There will be one Chief Financial Officer, rather than six; one Human Resources chief, not six; one IT, computer manager, not six.

• There will be a single Electronic Medical Record system, EPIC, which came fully online last spring. EPIC’s expense and firepower dwarfs that of the smaller IT systems available to individual community hospitals.

• It will be much easier to recruit high quality personnel across the board. A high performing chief medical resident in training somewhere will be far more likely to move to Malone, or Berlin, or Elizabethtown, if he or she will be part of a national class academic medical center rather than a small, remote, stand-alone hospital.

   Of course, these benefits are potential. Rendering them actual will be very difficult. John Brumsted’s new ship has been built for speed. Sailing her, however will be equally challenging. And it won’t be Brumsted at the helm. Brumsted will retire this fall, and it will be up to his successor to confront the very rough seas and heavy weather that lie just ahead.

Health Reform Project in Vermont Encounters Violent Turbulence

by Hamilton E. Davis

   A sort of collective madness has settled over the health care reform environment in Vermont.

    Within the compass of a couple of months, we are seeing a new north-of-$3 billion tab for our hospital system; the first change in leadership at the UVM Health Network in 14 years; a seismic upheaval in a Green Mountain Care Board membership that has been in place for five years, accompanied by a critical shift in its staff; new leadership in the Vermont hospital trade group; and a new management regime at OneCare Vermont, the state’s lone Accountable Care Organization.

    Not to mention that the Vermont Legislature, which writes the laws for our tiny, cold, northern village, will open its January session with nine new chair people and a new boss for the Senate—a shift of historic magnitude. None of these developments, however, quite match up to what is now happening in the administration of Gov. Phil Scott, who took office in 2017 and is seeking a third two-year term, which he will surely get.

   A Vermont Journal has to start somewhere in trying to illuminate the above landscape and the events in the Rip van Winkle department of the Scott administration is as good a place as any. I will post analyses of all these aspects of reform as possible.

   After basically ignoring the reform project for the first five years of his tenure, Gov. Phil Scott woke up on June 1 and launched a frontal assault on the Green Mountain Care Board, a majority of whose members he appointed. The Scott sortie was clearly an overreach, given that all the real power over the Vermont hospital system remains with the Green Mountain Care Board.

   That does not mean, however, that there is no bill of particulars against the performance of the Green Mountain Care Board. The Board has been a sort of slow-moving train wreck, doing nothing about the huge problem of wasted and questionable quality care in the Vermont community hospital system while keeping statewide costs under control by steadily draining money out of the UVM Health Network, particularly the UVM Medical Center in Burlington, to the point that the whole academic medical center is at serious financial risk. The members did so in the face of compelling evidence that the Network hospitals deliver the highest quality care in the state, at the lowest per capita cost—by huge margins.

That 800-pound chicken, in turn, has come home to roost in the form of the Medical Center’s Fiscal Year 2023 budget, filed last Friday, which calls for total expenditures of $1.659 billion, a full 10 percent or $150 million over the current year’s $1.509 billion total. The UVMMC request is more than double the GMCB cap, although that cap is pretty squirrelly.

   Moreover, taking in that much revenue can’t be accomplished without increasing UVMMC’s charges to payers like Vermont Blue Cross and MVP by 19.9 percent, or $36 million, a hit that will be reflected in Blue Cross premiums and will draw howls of protest from the carriers, advocates for the poor, and such marginal players as the Health Care Advocate and the Vermont Auditor. The Board has never granted an increase of that magnitude.

  The backdrop for this back and forth is an unsettled structural situation, marked by the need for the Scott administration to find a new chair-person for the Green Mountain Care Board to replace the retiring Kevin Mullin; the UVM Health Network Board is now interviewing potential replacements for Dr. John Brumsted, who directs or strongly influences 60 percent of the care in the state, and is retiring after 14 years; and VAHHS, the hospital association, is seeking to replace Jeff Tieman, the president of the trade group, who has been a significant player in the reform space. Mike Del Trecco is the interim CEO of VAHHS.

It will be difficult for even my tiny corps of brilliant readers to get their arms around this tangle, so I will break it into chunks over the next several weeks. A good place to start will be the UVMMC budget and the GMCB’s management of it over the last five years. Because getting that wrong could deprive Vermont of its most significant health care asset, and the Vermont economy’s single most important prop.

The UVM Network’s Role in Vermont, and GMCB’s Management Performance

   Since 2015, UVM’s critics have charged it is too big, too dominant over smaller players, and too grasping of money and control. The evidence flatly contradicts those claims.

  First, the single most important national data source for health care reformers is the Dartmouth Atlas for Health Care, the DH Atlas, for short. This publication shows the Medicare spending per capita in hospital service areas in the United States.  The data are adjusted for age, race, and gender to enable apples-to-apples comparisons. Within Vermont, the results look like the graph below:

   The findings shown above demonstrate that the financial performance on a cost per capita basis for the UVM Health Network are not just the best in the state, but best by a huge amount. Moreover, a striking anomaly in the data is the finding that other two Network hospitals in Vermont, Central Vermont Medical Center in Berlin with just over 100 beds, and Porter Medical Center in Middlebury with just 25 beds are as economically efficient as the academic medical center. (I’ll discuss the phenomenon in another post)

   Second, in draining so much money from UVMMC, the Board has put the hospital and the people of Vermont at significant risk for having to pay higher interest rates to borrow money. The cost of borrowing is set by three national rating agencies—Standard & Poor, Fitch and Moody. Nearly all major hospitals maintain an A rating on their bonds. The Medical Center lost its “A” several years ago, and the Brumsted administration had to struggle for 10 years to get it back.

The graph below illustrates how perilous UVMMC’s position is now. A critical metric to assess financial health for a business is Days Cash on Hand, the amount of money needed to keep the doors open with no revenue coming in.

The rating agencies have held off punishing hospitals during the Covid pandemic from 2020 until now, but by next winter that piper will have to be paid. And the price is likely to require the Board to endorse a really big increase, one that will have to not only account for the current raging inflation, but for the depredations of the last five years. The evidence for the drain is shown graphically by the UVMMC ratings over the last seven years.

Third, a persistent question in the health care reform space is whether cutting the waste out of the community hospital network will lead those hospitals to deprive patients of necessary care to save money. The following graph demonstrates the fallacy inside that speculation. A national consultancy addressed that question for the GMCB in a report delivered last fall. The metric the consultant used is called Prevention Quality Indicator, PQI. If an episode of care is judged not necessary, then that block of care is by definition of low quality. The results show the clear superiority of UVMMC and network quality over the rest of the system. The take-home message: high quality and low cost go together, a message GMCB has ignored over that period.

  Governor Scott responded strongly to this situation shortly after the legislative session ended when S285 came to his desk for signature. The bill appropriated $4 million to the Green Mountain Care Board to study the advisability of shifting the focus of reform from specific action by the GMCB to the establishment of Global Budgets for hospitals—a different kind of regulatory mechanism. The measure also gave the Director of Health Care reform in AHS $900,000 to work on reform.

In a letter to legislators dated June 1, Scott said he would sign the bill, but that he was hesitant to do so. “Stabilizing our health care system has become increasingly urgent,” Scott wrote. The system, he continued, is increasingly fragile coming out of Covid and it now “confronts the impacts of deferred care, an aging population, a workforce crisis and the historically high inflation that increases the costs supplies, energy, and staff. With all these factors, the system is at risk of significant disruption and instability.

“While I do not believe the Green Mountain Care Board should be in a policy development role, given the fiscal crisis our health care system faces—and the affordability crisis it will present to Vermonters—time is not on our side,” the Governor wrote.

In order to ensure that the total $5 million is “deployed quickly and in very close coordination with my administration, the Legislature and stakeholders,” Scott said he had “directed the Agency of Human Services and the Department of Financial Regulation to provide active oversight” (emphasis added) of the GMCB’s use of the resources in S285. In agenda would be to deal first with stabilization, then regulation, then the form of the All-Payer Model, and finally long-term consideration of how a fully sustainable system would work. These are highly abstract terms, each of which could be elaborated over thousands of words; but there was no mistaking the tone of his comments.

In his letter, Scott said his two agencies “would hold the GMCB accountable” for “thoughtful” decisions on hospital budgets and insurance rates. And the mission of his executive-level committee would be to “move forward with the All-Payer Model and value-based payment reform.”

 So: “Active oversight, hold the GMCB accountable, move forward with reform.” There is no question that Scott’s posture here is very aggressive, especially when compared to his performance since he took office in 2017. It certainly qualifies as “leadership,” which reform advocates have pressed Scott on for several years.

If there was any doubt that Scott was denigrating the ability of the Green Mountain Care Board to do its job, they certainly faded last week when a report spread though the reform space that the administration would hire the Wakely group, a national health care consultancy, to evaluate the FY 2023 Vermont hospital budgets, which is the GMCB’s central responsibility.

An obvious problem, however, is that the executive branch of government has no authority whatsoever to interfere with GMCB decisions on hospital spending, the amount hospitals can increase their charges to insurance companies, the amount insurance carriers can increase their charges to payers, or Certificate of Need (CON) permission for hospitals to build new facilities, or install new service lines.

 The only relief for an aggrieved payer or provider would have to come from the Vermont Supreme Court, and the plaintiff in such a proceeding would have to persuade the court that the GMCB decision was arbitrary and capricious.

Given these realities, it is impossible at this point to even speculate about the ultimate impact of the Scott initiative. The hospital budgets for the Fiscal Year 2023 arrived at the Green Mountain Care Board on July 1. The Board staff will analyze the budgets in July, and the Board itself will hold hearings on them in August. Their decisions on the budgets will be made by mid-September and the decisions announced formally by Oct. 1, the start of the new fiscal year. State law requires that hospitals comply with those Board decisions. Neither AHS, nor DFR, nor the Legislature will have any authority to change those numbers. Which does not mean that the activities of the Scott committee might not have an effect, only that the effect will be mostly political, although the Scotties might be able to capture some more federal money.

The Green Mountain Care Board, meanwhile, has said nothing publicly about the assault by the Scotties. Kevin Mullin, the chair of the Board, said that the members had been warned by their lawyers not to comment on budget issues while they are before the Board, but the private reaction has been frosty: you cannot have a conversation with a Board member without being reminded that the Scott administration has no authority to direct the Board, a message delivered with quiet satisfaction.

The above post is just the ante in the summer’s poker game. A Vermont Journal will look next at the Green Mountain Care Board’s positions and activities as far as they can be determined from material available before the formal budget process. A major piece of that will be a description of the large volume of independent analyses on reform that came into the Board in the last half of 2021.

That post in turn will call for a much deeper dive into the whole Scott oversight committee, and especially what’s going on with Jenny Samuelson, the new Secretary of Human Services and the field commander of the Scot forces in that unique project. Stay tuned.

Vermont Board Finally Gets it on UVM Network Budgets

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.

Leading the Pack, but Playing Badly

by Hamilton E. Davis 

   The Vermont health care reform project that was born in 1983 crested over the last six months and is now becalmed, ahead of any other state, but well short of the goal of a 21st century system that delivers high quality care at an affordable price. Nothing structural stands in the way of reaching the goal.

    Unfortunately, however, all the major players and most of the minor ones are playing really badly, which means that Vermont could just drift for two, three or more years, wasting at least $300 million a year and putting up with dodgy quality across much of the system. We won’t see any real movement before the Green Mountain Care Board considers the Fiscal Year 2023 hospital budgets in September of this year and nothing in the record so far augers well for anything definitive then.

   This seems like a good time, therefore, to sum over the reform issues as they evolved recently, especially because some of the most important have never surfaced in what now passes for a Vermont press corps. I lay each one of those out in detail over the next several weeks:

                                                                  Reform Issues

• A major complexity of the reform project is that the Green Mountain Care board has two responsibilities—one is as a conventional regulator of hospital spending; the other is as the point of the reform spear. The single most important action by the Green Mountain Care Board has been to drain the financial strength out of the UVM Medical Center in Burlington. The performance on the UVMMC budgets since 2017 indicts the Board for reckless incompetence. Two particulars before a full analysis of that question: UVMMC has the highest quality and the lowest per capita costs in the Vermont system; yet the Board regularly cuts UVM’s ability to recoup its costs. The Board has cut UVMMC’s requested increase in insurance payments in 5 of the last 6 years. There is no evidence that the Board set out to damage UVMMC’s ability to deliver necessary care, but that has been the result. By underfunding the state’s most important, and cost-effective hospital, it has rendered the reform effort more difficult, and may have doomed it altogether.

• One of the most egregious failures in the whole reform experience has been the refusal of Governor Phil Scott to confront the whole reform head on. I asked the Governor about that in a private interview late last year and his response was that he didn’t think Vermont needed the Green Mountain Care Board at all. The current system, he said, was designed in 2012 to meet the requirements of former Gov. Peter Sumlin’s Single Payer reform model; and since that effort died in 2014, the whole exercise looks redundant.
  Of course, the Scott administration couldn’t simply walk away, so Scott’s Agency of Human Services (AHS) has had to deal with a range of practical questions that arose from the reality that reform continued in the wake of the failure of Shumlin’s Single Payer project. That responsibility devolved to the various AHS secretaries—first, Al Gobeille, then Mike Smith, and in 2022, Jenny Samuelson. I’ll lay out that performance in a future post, along with a full account, including a transcript, of my interview with Governor Scott.

• A major failure of the Green Mountain Care Board, along with the Scott administration, has been its refusal to act on its responsibility to reshape the rest of the delivery system financially and medically. That can probably be ascribed to sheer political terror. Vermont has 15 full-service hospitals (including Dartmouth-Hitchcock Medical Center in New Hampshire, which serves eastern and central Vermont) and it only needs four. The remainder should be clinics of varying sizes.
  On Oct. 27 of last year, the Green Mountain Care Board received the reports of a squadron of health policy consultants who provided a wealth of data to support the above conclusion. A couple of examples: In the state’s 13 technically rural hospitals (UVMMC is urban) an average of 30 percent of its care was judged to be unnecessary. And several of those hospitals were doing some surgeries in numbers far below what’s necessary to ensure competence. It’s critical that the public weigh in on the question of whether they want to pay outrageous unit costs for questionable quality surgeries.

   Of course, there are more players involved than the Green Mountain Care Board and the Scott administration. The Legislature is a huge player, though so far more potentially than actually. The state’s hospitals outside of the UVM health network are critical players; in fact, the interests of the UVM Network hospitals can and often do diverge from the rest of the hospitals. And, to date, the non-Network hospitals have functioned with far more political coherence than the UVMers. A third personification of the hospitals is OneCare Vermont, which nobody appears to understand. The Vermont Auditor and the Health Care Advocate have a voice, which to me seldom make sense. Of course, Vermont Blue Cross and Blue Shield has huge influence owing to their direct or indirect coverage of a third of the state’s residents.

   Anomalies abound. The “press” writes extensively about some developments and events, and nothing about others. UVM’s Medical Center and its Network hospitals (which include Central Vermont Medical Center in Berlin and Porter Medical Center) routinely and unfairly get excoriated by other players, but have never been able to tell their own story adequately…

   Hence the need for this overview, which I will complete by the end of April. Promise.

Green Mountain Care Board Bails out on Reform

by Hamilton E. Davis

   On Feb. 1, the Green Mountain Care Board submitted its report on hospital sustainability to the Legislature and accompanied it with a letter requesting an immediate infusion of another $2-$5 million to begin the process of shifting Vermont’s health care reform to an entirely new track. The buzzword for the new track is Global Budgets, a system that exists in only two states and whose complexities baffle even many health policy wonks.

   The central idea is clear enough: Instead of paying doctors and hospitals a fee for each unit of care they deliver, the various payers would deliver to the providers a single block of money for the all the care in advance; if the hospital delivered more care than the amount agreed on they wouldn’t get paid more for it. That should contain costs because doctors couldn’t make more money by doing unnecessary care. A heavy fog settles in as soon as you’ve absorbed that.

   At present, just two states, Maryland and Pennsylvania, operate under global budgets. Those systems, however, are completely different from one another. At least, that is what I am told by the tiny number of health policy adepts in Vermont. How do they actually function and what is the difference between the two, no one seems to know in detail. What does seem likely is that the preferred model is Maryland, given that the GMCB built its proposal on a study performed for the Legislature by Donna Kinzer, who worked with the Maryland system. At the same time there have been reports that Pennsylvania is preferred.

      We’ll learn more about this in the next several weeks, but in a certain sense the more significant implications of the letter to the legislature are what it says about where the Board’s collective head is as we enter the 11th year of the Vermont project.

What are we to Make of This Move?

   There are two very important inferences we can draw, one in the long term, another in the short. The long-term significance is contained in the headline for this post:

   It seems clear to me that the Green Mountain Care Board is bailing out on the single most important piece of the responsibility conferred on it in Act 48, the basic health care reform bill passed in 2011: reorganizing or right-sizing of the Vermont system. Pick your own metaphor, a captain abandoning his sinking ship, a collapsing military unit looking for a bug-out route.

   Vermont has been pointing at the reorganization question for a decade; and over the last six months a platoon of consultants and policy experts has provided a solid evidentiary basis for moving forward on it. To swerve to an entirely new, very complex strategy now simply pushes the hard issues out years into the future. There is a lot more to this issue, and I will explore that territory in future posts. For now, I want to look at the immediate challenge facing the Legislature—how much more are the members going to have to come up with this year to accommodate the Global Budget fantasy.

Show Me the Money

   The letter from the Board to Legislature asked for an immediate appropriation of $2 million to $5 million to pay for the Global Budget. The initial response from a joint House-Senate hearing last week on the issue on the issue was a clear preference for the two million level, rather than the five.

    What never surfaced at all was the real financial issue, which is that the two to five million is just the ante to a game that is going to call for the Legislature to come up with hundreds of millions of dollars that it can’t possibly produce. The conservative prospective tab is $200 million to north of a billion dollars to build out a fully elaborated Global Budget system.

   To grasp the import of this whole exercise, one has to read, line by line, the two concluding paragraphs of the Green Mountain Care Board letter to the Legislature. They are short, but cataclysmic. The first reads, in brief:

1. Design and implement a Global Budget reimbursement program for Vermont’s hospitals.

2. Support a redesign of the system “by experts” to eliminate inefficiencies in the actual delivery of care so as to lower costs and improve quality.

3. Provide the resources required to put all the necessary new machinery in place.

   The second sums it all up:

   The success of these efforts will also require appropriate investments in primary care, mental health and Medicaid payments that are sufficient to cover the cost of delivering essential services. In this vein, the Board also recommends supporting DVHA’s (Vermont Medicaid) efforts to align Medicaid reimbursement rates with established rate methodologies that include adjustments for medical inflation. It is also essential that the Board receive timely estimates of Medicaid payments so that it may consider its impact on hospital finances in its review of hospital budgets.

   Wow, that whole screed is a fantasy. Let’s count the ways.

   The biggest single problem is the money. The only actual figures in the Board’s letter is the request for $2 to $5 million to hire a consultant. The recommendations listed above, even if adopted only partially, would blow the doors off the state budget. Start with the idea that the state should roughly double its Medicaid budget. The Board’s presentation doesn’t quite put it that way, but the implication is clear. Medicaid pays in the neighborhood of half the actual cost of acute care, and paying the full cost seems reasonable. Except that it simply isn’t possible. Here’s why:

   Medicaid and Medicare went into effect in 1996; and the intent was to pay for health care for the poor and the elderly. Those programs generated a very rapid growth in demand, and the overuse incentives in fee-for-service medicine put a blowtorch under the tea kettle.

By the early 1970s, the rise in health care costs was soaring out of control, and both the federal and state governments began to fall back. The government shortfalls spawned the cost shift to the private sector. By the mid-1970s, the federal government of the United States, the governments all 50 states, not to mention the Canadian national government, the governments of all 10 provinces, and the British national system were generating a cost shift of some kind. Advocates often describe that process as “unsustainable” but it has existed now for almost 50 years, and the chances that the Vermont Legislature will just pick up that tab are close to or at nil. A rough estimate of the price to buy out the Medicaid cost shift will run somewhere around $100 million, and probably more.

Shift now to the Board’s recommendation for state money to pay for “redesign of our health care system to reduce inefficiencies, lower costs and improve health outcomes…” Great idea, that redesign is the keystone to a shift in hospital financing from fee-for-service to block fixed price contracts between payers and providers.  What would it cost? In the Board’s appearance before a joint Senate-House health care committee, there wasn’t a whisper of that question. 

You can get a hint, however, by looking at the UVM networks across Lake Champlain in far-northeastern New York State. A few years ago, the hospital in Ticonderoga, a small one with around 40 beds, asked the University of Vermont’s health network to take it over and redesign it. Which UVM did. Network officials closed the hospital and replaced it with a “medical village” that included very strong primary and a fully equipped emergency department. The cost of $15 million was picked up by the New York State Health Department.

    So, use that as rough guide. At least eight and as many as 10 Vermont hospitals will have to be downsized to make financial and medical sense.  Applied to Vermont, the tab to right-size our system would run to at least $100 million and probably twice that or more. Think the Legislature would have any problem with that?

    And if you want to see some people actually losing their grip on reality, read the concluding sentence in the italics above again. The Board wants the Legislature to manage its budget process so as to get the relevant information in a “timely manner” to the Board for its hospital reviews.

   Anyone who has been as much as a half mile from the state house knows that the formulation of a state budget makes a sausage machine look like something run by Plato and Aristotle. The central reality is that there is never enough money; even on those rare occasions when tax revenues are pouring in over the gunwales, there still isn’t enough money. And the final tough decisions in May come down to the late night, early morning scrambles just preceding adjournment, in a swirling ballet of advocates, legislators, lobbyists…

   In the light of this reality, telling the Legislature how to handle their business is a fool’s game. In fact, Kevin Mullin, chairman of the Board, found that out a couple of years ago when he wrote a similar letter about Medicaid reimbursement and got blistered from one end of State Street to the other. He may have forgotten…

   The letter, clearly building on the troubling information that has flowed into the Board from half a dozen consultants over the last six months, concludes with this warning:

   “Without intervention, Vermont hospital financial health will likely resume deteriorating, exacerbating the health care affordability crisis and increasing the probability that hospitals will shed essential services and/or potentially close. While COVID relief funds have been instrumental in keeping hospitals afloat during the pandemic, once these one-time subsidies cease, underlying inefficiencies in the system will continue to challenge hospitals’ abilities to deliver the right care, in the right setting, for an affordable price.”

What Should Vermonters Make of All This?

    Well, the recommendations sound reasonable on the surface, but as soon as you look under the hood they incline toward a conclusion that the Board, at least as it is currently configured, simply can’t do the job it was set up to do. Too extreme?

   With regard to the first recommendation—global budgets. In essence, a Global Budget calls for the payer or buyer of health care services to pay the hospital prospectively, in advance, upfront for all the care it expects to deliver in a year. It eliminates fee-for-service reimbursement entirely. If the hospital delivers more care than anticipated, it has to eat the shortfall. In other words, it is still obligated to deliver the care, but there isn’t any more money.

   Global budgets are an old idea, but there aren’t many in operation. Maryland and Pennsylvania have tried it; and Maryland at least believes it has saved some money.

   The problem with Global Budgets in Vermont is that they would lock in a very large block of questionable care, especially in the smaller hospitals. In fact, we don’t really know whether the Maryland system did that. There is no question that the Board members understand that. The consultants they have been hearing from have told it to them from several perspectives. For example, as much as a third of the care in the community network could have been avoidable. Another key metric:  the state has some 134 beds more than it needs; several hospitals have relatively poor quality rankings. Vermont has 14 full service hospitals when it only needs four.

   The Board members appear to be petrified at the idea that they might have to deal with this problem themselves, which they could do. After all, they administer the most comprehensive, not to say draconian regulatory statute in the country. At a recent Board meeting, Mike Barber, the Board’s lawyer, read to the members a list of the things that state law authorizes them to do. The reading, in a steady drone, took 32 minutes and 16 seconds.

   The real problem is that right-sizing the small and even some medium-sized hospitals would mean pulling big chunks of money out of small communities that are already suffering; many, are losing population and watching their local schools shrink and sometimes close. In those circumstances, the local hospital serves as a vital community focal point, and the presence in town of a $400 to $600,000 hospital president and a few $700,000 to $1,000,000 a year orthopedic surgeons is very comforting.

   Nevertheless, that is the problem to be solved, and it is uncertain what lies ahead for reform if the Green Mountain Care Board is afraid to confront it head on.

N.B. In recent months, I have been posting at quite long intervals. To keep up, I’ll take that pace up considerably. Coming next: an assessment of the report on wait times in Vermont hospitals, and then a closer look at how the Green Mountain Care Board has put the whole Vermont system at risk by

draining too much money from UVM’s Medical Center, and from the rest of the system as well.

There is a Path to Full Health Care Reform, but Will the GMCB Take It?

by Hamilton E. Davis 

   By mid-February if not before, Vermont’s 14 hospitals will start building their Fiscal-Year 2023 budgets, some $3 billion to be spent on acute care for just over 625,000 people. Those budgets will take effect on Oct. 1 of this year, and they will add up to a really big number. Hospitals eat up some 10 percent of the Vermont economy: the state’s Gross State Product is around $30 billion. If you add in other health care spending like retirement homes and visiting nurse services, the health care tab rises to more than $6 billion, 20 percent of Vermont’s entire economic output.

   When the hospitals’ Chief Financial Officers start drafting the new spending plans, they will do so in an environment unlike any other in the United States—one established by the Green Mountain Care Board in the form of its “budget guidance” for the new fiscal year. That process has been going on in one form or another since 1983, and the process got even more draconian in 2011, when the Shumlin administration launched its Single Payer reform initiative and the regulatory apparatus ramped up to another level. The coming budget process, however, will be markedly different from the one that has been in place for decades. The reason is that the Board’s cost containment efforts are basically tapped out: Over its tenure beginning in 2012 and 2019, the Board cut the long-prevailing annual hospital inflation rate of eight to nine percent per year to roughly half that, to around three and a half to four percent. Vermonters avoided spending nearly $2 billion over that stretch. Over the last few years, however, costs have begun to creep up again, and as of today the Board simply has no answer for that. Yet. The question this winter is whether they will find one. A Vermont Journal believes there is a clear path forward, but there is no indication at this point whether the Board will take it. The path looks like this:

   Step One.

    The Board should abandon its strategy of capping the total spending by each hospital, and shift to judging individual hospitals on the dollars-per-capita they are spending in their service areas. Every regulatory regime over the last 40 years has started with a total spending cap on Net Patient Revenue, but in the light of state and nationwide migration of patients from tiny local hospitals to bigger centers, that no longer makes any sense. In the serious health policy community, including federal Medicare officials, there is broad agreement on that.

   Step Two:

   Vermont has 14 full-service hospitals, 15 if you include Dartmouth-Hitchcock Medical Center (DH) across the Connecticut River in New Hampshire. Eight of those are so-called Critical Access Hospitals with 25 beds or fewer. Another six are bigger, but still pretty small. Rutland Regional Medical Center has 200 plus beds, but the other five are under 100 beds. We actually need four full service with the rest down(right)-sized to clinics that focus on primary care and emergency rooms. I posted a Manifesto on this point in August of 2020. Late last year, five national consultants made the same argument, backed up by comprehensive data.

   Step Three:

   The current Green Mountain Care Board took over regulation of the hospitals in 2017; a majority of its five members was appointed by Gov. Phil Scott, who was elected in 2016. Beginning with the 2018 budget, the Board has steadily drained financial resources out of UVM Medical Center. The Medical Center delivers a full half of all the acute care in the state; and, moreover, it is perhaps the single most important player in the state’s economy. Failing to rectify that dynamic going forward will be irresponsible—and just plain dumb. And the UVM question will be more fraught than usual this year because the Medical Center will need a big increase in its charges to Blue Cross and other insurers. If they don’t get it, they will be at great financial risk, which could mean that the whole issue could end up in the lap of the Vermont Supreme Court.

So, What Next?

   If the above analysis is compelling, what are the chances that the Board will shift the necessary gears?

   Well, they’re mixed. Replacing the cap on a hospital’s total spending with the cost per capita in each service area is perfectly doable, if the Board decides it wants to do it. I am guessing it will, but there are no guarantees.

   Right-sizing the state’s hospital network, will be hideously difficult, even though doing so would save Vermonters hundreds of millions of dollars each year. The problem is that while it’s very easy to make the right-sizing case, the money would come out of the pockets of highly-paid administrators and doctors in the affected communities.

   The Board could begin the process by dealing with just the most egregious cases first, but the early indicators have been negative. At a recent Board meeting, Kevin Mullin, the chairman, said flatly that the Green Mountain Care Board is not going to tell anybody what they can or cannot do.

   Step Three, permitting the UVM Medical Center to get the financing it needs is technically easy, but the political environment for anything involving the UVM network is problematical. Still, the data is unequivocal, and if the Board refuses to confront it in the coming budget season then the Board’s future could become existential. The entire hospital industry, from the smallest to the biggest, along with the Governor and his senior staff, are thoroughly sick of the Board at this point, and while that sentiment has not showed up in the Legislature, it would likely rapidly go viral because so many members have a hospital in their districts.

   Moreover, in the new fiscal year UVMMC will need a very large increase in the amount that it can charge Vermont Blue Cross and other insurers for the care the big hospital provides, and if they don’t get it the whole issue could end up in the lap of the Vermont Supreme Court.

                                    The Case for Recharging the UVM Medical Center Finances

   In a post late last fall, I made the case for the proposition that the Green Mountain Care Board had drained too much money from the state’s biggest, and by far its most important medical facility.

   To recap, the Board has been cutting the UVMMC margin since it assumed office in 2017. Over the period 20161 to 2022, UVMMC has been shorted by $61 million just from recovering its expenses in delivering care. In the period 2018-2022, UVMMC has not been allowed to collect any of the cost shift that it has experienced over that period…keep in mind that UVMMC maintains the highest quality in the state, and gets that done at a per capita cost that is at least 20 percent and as much as 50 percent cheaper than the rest of the state.                                                                                                                                  

   The Board’s main tool was to regularly cut the “commercial ask,” the amount the Medical Center can increase its charges to Vermont Blue Cross to make up for the “cost shift,” the shortfall in hospital revenue that occurs when neither Medicare nor Medicaid pay the actual cost of the care they buy.

   The fallout from the Board posture has been falling margins needed by any business, an inability beyond that to collect payment for actual care delivered, and deterioration in the financial data, like Days Cash on Hand, that tell investors how well the Medical Center management is running their business.

   The critical metrics for any business are the money left over at the end of each year, minus interest on loans, depreciation, taxes and amortization (EBITDA); days-cash-on hand, debt load and age of plant. Any major business has to borrow money in the financial markets, and the interest rates the business must pay depend on the quality rating they receive from three agencies, Fitch, Moody and Standard and Poor.

In the budget submitted last year to the Green Mountain Care Board, UVMMC said it was okay on age of plant and debt load, but that the key metrics of working margin and days cash on hand were uncomfortably low. EBITDA was still marginally acceptable, but days cash-on-hand had slipped under water. Consider:

   The above graph shows that UVMMC’s performance on a key financial metric. In general, the rating agencies have kept the Medical Center at an acceptable level. But all have indicated they are closely watching both the EBITDA margin and cash.                         

   How serious has this been? The answer is, very. Beginning in the late teens, pre-Covid, UVM’s Medical Center has undergone a series of challenges that no one could have foreseen. The first was the loss of five operating rooms at UVM’s Fanny Allen site in Colchester because of a failing air handling system. The second was the attack on the hospital’s computer system by Russian hackers; the third was the slowing of productivity owing to the installation of the system-wide installation of the new EPIC computer system; and the fourth was the Covid attack itself. The cumulative effect of these tribulations was a huge hit on the hospital’s revenues. If the Board does not allow UVMMC to recover those revenues then it will put the hospital’s mission at risk. And more important, it will put the health of Vermonters at risk.

   Aside from the sheer numbers, my impression is that some of the members have bought into the anti-UVMMC narrative that has been pressed since 2015 by opponents of health care reform. Evidence?

• In the current year’s budget hearings last fall, the Board went over the UVM Medical Center nickel-by-nickel and forced cuts. Meanwhile, it passed the budgets for Rutland Hospital, the state’s second biggest hospital, and Gifford, a 25-bed facility in Randolph without even a hearing. Each of those two budgets was more than 50 percent more costly—with no good reason—than the Medical Center in Burlington. Go figure.

• In 2012, the Burlington system rescued Central Vermont Medical Center in Berlin, a medium-sized full service hospital from the financial mess it had wandered into. In 2016 the UVM system saved Porter Hospital in Middlebury form bankruptcy. As of the current fiscal year, Porter is now one of the financially strongest Critical Access Hospitals in the state. And on a per capita spending basis, it is at least 30 percent and in some cases 50 percent cheaper than the other small hospitals. In other words, the UVM system has far outpaced all the other providers for big, medium and small hospitals in its Vermont lineup.

• According to the Dartmouth Health Atlas, in 2018, Vermont had the lowest per capita Medicare spending rates in the U.S.--$8,010 against the national average of $10,716. (The DH Atlas is risk adjusted for price, age, sex and race). Within Vermont, the lowest cost counties were Addison, Chittenden and Washington. Those are the three counties served by the three members of the UVM health network in the state—Porter Medical Center, UVMMC, and Central Vermont Medical Center. Addison is one of the five lowest cost counties in the U.S.

• In a recent Green Mountain Care Board meeting, the GMBC staff showed that Vermont has come in comfortably below spending level required by the federal government as a condition of its participation in federally-based reform. The only reason that is true is that the UVM network hospitals—the Medical Center in Burlington, Central Vermont Medical Center in Berlin and Porter Medical Center is Middlebury are so financially efficient compared to the rest of Vermont’s hospitals.

Thinking about Where We Are

   There has been something strikingly anomalous in Vermont’s health care reform journey. We have bolted ahead of the rest of the country, but the process has never been pretty. There have been dead ends, notably in the mid-1990s when then-Gov. Howard Dean’s reform project blew to smithereens, along with the national initiative of Hillary Clinton; and in 2014 when then Gov. Peter Shumlin’s Single Payer scheme crashed and burned.

   Along the way, there has been and continues to be forehead-slapping buffoonery on the part of the executive and legislative branches, the regulators, and the press, along with ignorant marginal players like the state auditor, and the health care advocate. Not to mention a lot of silly gasbaggery from various “opinion makers.”

   Yet, here we are. Still ahead of the pack, and still in a position to actually achieve a medically and financially sustainable system on a statewide basis. All we need are a few players to step up and play at a competent, national level. It doesn’t seem like too much to ask, but it’s not happening today.

Board Drains Too Much Money from UVM Medical Center

by Hamilton E. Davis 

   The campaign, or perhaps more accurately the siege, of Vermont’s effort to lead the country to a fully sustainable health care delivery system is coming to something of a head this fall. The two barriers still blocking the way are the crying need to recast the state’s 14-hospital network into something that makes medical and financial sense; and the crying-just-as-hard need to reach some consensus on how to keep the University of Vermont’s Medical Center Hospital financially capable of leading the state system into the third decade of the 21st century.

    The most politically sensitive and fraught question is how to deal with the small hospitals, which are financially challenged and are prone to trying desperately to deliver as much high-intensity, high-revenue care as possible, in order to afford to deliver the kind of low-intensity, low-revenue care that meets the actual needs of their communities.

   There is no gainsaying the importance of that aspect of reform.  Low volumes are a threat to medical quality, and those same low volumes tend to generate high, often enormously high, unit costs for stuff like hip replacements and other complex surgeries. Moreover, there is enormous potential for cost savings in system reorganization: my calculations show that getting the small hospitals cost structures to the level of the UVM health network facilities could save Vermonters $500 million per year. Accomplishing that is basically a matter of political will, which is no trivial matter. Still, the UVM question is ultimately more important, so I will deal that first, and get to the recasting the small hospital network in my next post.

The Board Needs to Regulate UVMMC Differently

      The Green Mountain Care Board caps the Medical Center’s spending in two ways: by limiting the annual increases in its overall budget; and by controlling the amount of money the hospital can collect from commercial insurers. The starting point is Net Patient Revenue (NPR), For the Medical Center in Burlington, the total patient spending ranges from $1.2 billion in 2016 to $1.5 billion in 2022, for the Fiscal Year that began on Oct. 1 of this year.

   The cap imposed by the Board on Net Patient Revenue has been set for some time at 3.5 percent per year. That number came out of a calculation of the historic growth of 3.0 percent per year in the Vermont state product, plus 0.5 percent as a premium to finance the potential cost of implementing reform. The NPR cap has clearly outlived its usefulness: the reason is the wide variability in the volumes of patients coming into the different hospitals.

   The first problem showed up several years ago. Patients were starting to move away from small community hospitals, both because rural areas across the country were losing population, and because the ones who were left began to bypass small local facilities in favor of larger centers. Beginning at least five years ago, Vermont’s Community Access Hospitals (with 25 beds for fewer) would estimate their volumes based on historic levels, and they would estimate their total expenses on the assumed volumes; when the expected volumes didn’t show up, and the expenses didn’t come down in tandem, the little hospitals began to lose money—regularly.

   Critical Access Hospitals get a federal subsidy, but even then, the community business model began fail. In the 1970s and 1980s, hospitals in St. Albans, Winooski, and Bellows Falls went out of business or were absorbed by other hospitals; in the last decade, a medium sized hospital in Berlin and a CAH in Middlebury got rescued by the UVM Health Network; and a couple of years ago, Springfield, a CAH went into bankruptcy, from which it just emerged. Over the last two years, four different consultants have warned the Board that the dynamic is still at work and is a threat to the entire system.

   Meanwhile, the Green Mountain Care Board’s NPR cap regulatory model has begun to undermine UVM’s Medical Center, the anchor not only to the state’s health care system, but the single most important prop to the state’s economy in general. As a business, UVMMC contributes $1.5 billion to the state’s total economic output; at the same time, the UVM College of Medicine feeds a steady stream of doctors and other medical professionals into the system; and its faculty carries on a full research agenda.

   The two most important metrics for assessing the Medical Center Hospital’s position in Vermont’s health care are the facts that it is by far the larger and most complex provider; and that on a per capita basis it is by far the cheapest. Another equally important metric is it that delivers the highest quality. Since the toxic political narrative that permeates the Vermont policy space argues the opposite of the above, it is important to look at the actual figures, from multiple sources.  Here we go:

   Federal Medicare officials report the spending on Medicare recipients by hospital service area in the various states. Medicare is not the only payer, of course, but it is arguably the most important, since older Americans consume the highest volume of care. A hospital’s Medicare spending pattern is a reliable proxy for its overall performance. The latest year of available data is 2018. Consider the chart below:

   The low bar on the left shows the lowest per capita cost spenders in the state—UVMMC in Burlington, Central Vermont Medical Center in Berlin, and Porter Medical Center in Middlebury. Those three are the Vermont facilities of the UVM Health Network. Their average spending in 2018 was $6,334.09.

   The high bar on the right shows the big spenders—the hospitals in Rutland, Bennington, Randolph, Windsor and Townshend. Their average spending in 2018 was $9,730.95, a full one third higher. The average of the remaining six hospitals was $8,361, roughly 23 percent above the low figure. (Click here to see the figures for each Hospital Service Area for the six-year period 2013 to 2018, the last year for which the feds have figures.)

   The obvious message in the above graph is that the current GMCB regulation template no longer makes any sense at all. The big spenders, like Rutland, Bennington, and Gifford in Randolph, just have to keep chugging along at their very high cost rates and they get just a pro forma look from the regulators. In this year’s budget settings, Rutland and Bennington got barely more than a glance, and Gifford didn’t even have to make an appearance. UVMMC, by contrast, got its inflation rate request cut by 14 percent.

   The central problem with using NPR as a cap for UVMMC is first that Chittenden County is one of the few in Vermont that is growing; and second, that patients here, like in the rest of the country, are bypassing small rural facilities in favor of bigger centers like the Medical Center in Burlington and Dartmouth-Hitchcock in nearby New Hampshire. In 2017, for example, UVMMC saw a huge spike in volume with a $40 million overage on its NPR. The Medical Center’s dilemma as it enters FY 2022 is that it can’t process all the patients that are piling up on its doors fast enough.

   The Vermont reform players need to ask themselves whether it makes sense to cap the traffic into their highest quality, lowest cost facility in favor of keeping up volumes at lower quality, higher cost in the rest of the system. That regulatory template needs to be scrapped now. The number that counts is not Net Patient Revenue, but the cost per capita in the hospital service area, adjusted for demographic differences like age.

   There is an important second metric that Green Mountain Care Board needs to examine closely now. That is the way that it regulates what’s known in the biz as “the commercial ask.” A hospital’s revenue is divided into two streams, one for treating Medicare and Medicaid patients, with the money coming from the state and federal governments; the other is coming from private insurance companies and self-insured employers. The government payers pay what they want to, always less than cost, (patently unfair) and the private payers pay the full cost, plus the government shortfall. In Vermont, unlike other states, the regulator has to approve the size of that payment—the commercial ask.

   Over the six years between Fiscal Years 2016 and 2022, the Green Mountain Care Board has steadily constrained UVMMC’s private sector revenue stream. The following graph shows the effect of that process:

   In each of the six years, the left-hand bar represents the amount that the Medical Center needed to cover its increased expenses for that year. The years 2016-2020 are actual figures; 2021 is a close estimate based on partial results; I have not shown FY’s 2022 budget because it is anomalous; I’ll deal with that in another post. The center bar is what the Board allowed. The right-hand bar is the shortfall experienced by UVM. The single bar at far right shows the total shortfall.

   It’s that right-hand bar that represents a threat to the UVM Medical Center itself and to the whole Vermont health care delivery system. The Board will have to build a new regulatory template for the commercial ask or else risk pushing half the state’s medical capacity back to the financial brink a few years into the future.

   Why has the Board used UVMMC as a piggy bank? A pretty obvious reason is that the Board is under very heavy political pressure to make the health care insurance offered by, say, Vermont Blue Cross, more affordable. The more Blue Cross pays the Medical Center, the more its premiums rise. Of course, the amount the UVM rates are increased are dwarfed by the higher per capita costs in the community hospital system. But the UVM’s Medical Center has been subjected to a five-year vilification campaign by reform opponents, along with Chittenden County progressives, like the former Senate President pro tem Tim Ashe, and Sens. Chris Pearson and Michael Sirotkin.  

    The analysis above shows quite clearly in my view that the GMCB has drained so much money out of the UVMMC revenue stream that the engine of the Vermont hospital system is now at serious financial risk. It is essential that the Board remedy that failure before it issues its next budget guidance in the spring.

   It is also true, however, that the senior management of UVMMC and its network have contributed to the problem by failing to place its financial needs squarely on the table and demand that the Board confront them. The senior management and the network boards need to shift their financial and political posture on this fundamental issue; and they need to do sooner rather than later. The evidence for that conclusion is just as clear as the evidence that the Board has mismanaged the problem overall.

   Herewith: The direct shortfall in the commercial ask was something just over $60 million dollars over six years. The Board’s reduction in the commercial ask came to a bit over $20 million. In other words, UVM’s senior management never asked for the missing $40 Million.

      When asked about this, the UVMers reply that they felt boxed in by the cap on total revenue on the one hand, and rising costs on the other. Which is true, but that doesn’t mean that senior management doesn’t have to manage its environment. UVM operates under a heavy regulatory apparatus and their own boards and senior management are going to develop a new strategy for coping with the external world.

   One could argue, and I would, that the Board should have been able to see that and calculate its impact: In dealing with the other hospitals in Vermont, the Board routinely falls all over itself trying to repair egregious poor performance and outright failures. An example would be Springfield Hospital. And it gives a free ride to hospitals like Rutland, Southwest in Bennington, and Gifford in Randolph, whose costs run at 30 percent higher than the UVM Network. Regulators have a responsibility not just to press down on costs, but to ensure that vital services are maintained. For the last five years, the Green Mountain Care Board hasn’t done that with UVM’s Medical Center Hospital.

So, the UVM senior management team clearly has to fashion a different strategy for dealing with regulators. The Green Mountain Care Board hasn’t left them any choice.

UVM Network Takes Full Ownership of OneCare. Uproar Ensues. Nothing Actually Changes.

by Hamilton E. Davis

   A week or so ago, the University of Vermont Health Network announced that it would become the sole owner of OneCare Vermont, the state’s only Accountable Care Organization. From its inception in 2012, OCV has been owned jointly by the University of Vermont Health Network and the Dartmouth-Hitchcock health system in nearby New Hampshire. VTDigger, Vermont’s only state-wide news organ, summed it up this way:

   The move is the latest in the UVM Health Network’s consolidation of power in Vermont’s health care sector and is sure to draw criticism from those who believe the sprawling non-profit has too much control over health care spending and delivery in the state.

   That single paragraph captures both the toxic political environment and the bone deep ignorance that lies like a miasma over the Vermont health care reform project. And if you want to see just how far into the irresponsibility weeds it’s possible to go, you can read the commentary by Bill Schubart on VTDigger, about which more below. In fact the whole reactionary blather about the ownership shift is entirely wrong, in its supposed facts and its implications.

   The UVM Health Network has no “control” whatsoever over a dime of medical spending, or the movement of a single pill or scalpel, in the 11 of 14 hospitals that lie outside UVM’s three network hospitals. And it has much less control than one would suppose even over the activities of the network hospitals in Middlebury and Berlin.

   Moreover, the UVM network has no ability to exert such control through OneCare Vermont, which is controlled not by its “owner”, but by the OneCare Board of Managers in a process governed by state law. There are 21 such Managers and going forward UVM will have four representatives in a system that requires a supermajority of 14 votes on any important decision. UVM, in short, hasn’t enough power or control to determine the location of a paper clip in any of the 11 hospitals outside its own borders.

   This is a devilishly difficult subject to write about because it is so complex and because so much of the public discussion about it has been marked by misinformation, sheer ignorance and outright lying. All that is compounded by the reality that at the end of the day, nothing has actually changed. So why bother? My personal reason is that public discourse in the U.S. has become badly debased, and it seems a shame to let that happen here. I hope my tiny corps will appreciate my giving it a try. In any event, herewith:

   The difficulty starts with the fact that there are actually three underlying questions. The first is why did the shift in ownership take place? The second is, what difference does the shift make, and will the hospital system operate differently? The third is whether the shift represents reprehensible behavior on the part of the University of Vermont Health Network—is it a power grab, a conflict of interest, and will it damage the state’s health care delivery system?

UVM Network v. Dartmouth-Hitchcock

   This is the easiest place to start. In 2012, UVM and DH agreed to jointly create an Accountable Care Organization (ACO), a contraption designed as part of the federal Obamacare legislation to permit individual hospital and doctor groups to join in offering to provide payers (Medicaid, Medicare, insurance companies) with a full range of acute medical care to large blocks of patients for a single price per capita. Hence the term, “capitation.” They called it OneCare Vermont. The point was to eliminate the huge incentive in the ubiquitous “fee-for-service” reimbursement structure to overuse of medical care, at devasting costs both financially and in quality terms.

   UVM and DH invited the other 13 Vermont hospitals to become part of OneCare;12 of them did. And OneCare began the 10-year trek toward a reconfigured system. This fall the UVM Network and DH announced the change in ownership, and touched off an intense discussion in the policy space—did Dartmouth jump, or was it pushed? And how would the new configuration behave differently?

   The answer is that Dartmouth jumped, but its reasons were essentially prosaic and practical.  And the effect of the change going forward would be nothing all, except to give the anti-UVM and anti-reform claque a golden opportunity flog their nemesis.

   When Dr. John Brumsted, the CEO of the UVM Network, and Steve LeBlanc, DH’s top strategy official, discussed the ownership change with the press they talked a lot about how it increased efficiency, etc. etc. LeBlanc was positively voluble about how committed Dartmouth is to its Vermont patients, and how supportive it is of everything that OneCare is doing. And of course, DH would maintain a single seat on the OneCare Board.

   A Vermont Journal has no doubts about the sincerity of all that, but I would add a few caveats. For at least two years, DH has been skeptical about its tie to OneCare and the level of effort it takes to maintain it. Dartmouth’s primary focus has been on its customer base in southeastern New Hampshire, not to mention the prospect that Massachusetts General Hospital might poke its way north, in the same way it has begun to colonize Rhode Island. Mass General is a giant, and in 2019 it linked up with another giant, Brigham and Women’s Hospital, also in Boston, and the combined unit is a behemoth that could begin to erode Dartmouth’s appeal in southeastern New Hampshire.

   None of which is to say that Dartmouth doesn’t need every single Vermont patient it can attract, especially for big-ticket tertiary care. It does, because, 40 percent of DH traffic comes from Vermont, so without Vermont traffic Dartmouth is out of business. Hence Steve LeBlanc’s enthusiasm. But DH gets no real benefit from OneCare, and it definitely has no appetite for getting tangled in the Green Mountain Care Board’s regulatory net.

   And, more important than anything else, Dartmouth has nowhere near the commitment to reform that Brumsted and UVM have demonstrated. Evidence? Over the past five years, 13 of Vermont’s 14 hospitals have taken full risk, fixed price contracts with Vermont Medicaid. If those hospitals delivered more care than they estimated, they had to eat the extra cost. Dartmouth’s participation in that period? Zero, not a cent.

   So, that is the Dartmouth-Hitchcock situation. It is still a member of OneCare Vermont, but not an owner. And the actual effect of the shift in ownership is—nothing at all.

Ownership versus Control

   The issue lying at the center of the ownership brouhaha is the distinction between ownership and control, or management. It certainly befuddled the VTDigger reporter. For much of the general public ownership means control. If you own a lawnmower, you can tell the lawnmower to just sit there in the garage, or you can make it mow the lawn. If you’re the Mom or the Dad, it’s entirely up to you whether the kids get to drive the family car. You own it, after all.

   The situation is entirely different with a business, not all businesses, but a great many of them. If are the sole owner of a widget company, you can shift to manufacturing socks entirely at your own initiative. Good luck, knock yourself out.

     But if you are the owner of a company with stockholders, the situation is entirely different. Consider Ford Motor Company. Ford has a gazillion stockholders—they are the owners of the company. But the stockholders, qua stockholders, have no voice at all in the control of or management of the company.

Let’s say you own $5 million dollars worth of Ford stock, and you believe that the company should shift to manufacturing cars that run on ice cream. That means nothing at all; management in Detroit wouldn’t even let you in the door. For shareholder companies are controlled by their boards of directors. If you want to move to ice cream as a motor fuel, you have to get control of the Board. Can that be done? Yes, but rarely, and certainly not easily. Of course, if support for ice cream gained sufficient momentum to move the Board, then the guys in their F-150 pickups would be driving up to the pumps to choose between strawberry, chocolate and pistachio.

At a miniature scale, OneCare duplicates that structure. OneCare is a for-profit limited liability company organized in 2012 under Vermont law. It carries the for-profit designation not because it makes a profit—it doesn’t; but because the founders confronted a kink in the interface between state and federal law. Vermont law says that non-profit companies must limit the participants in the endeavor to 50 of the total Board members. Under federal law, however, an ACO must enlist 75 percent of the participants on its Board. Hence the kink: OneCare is for profit in Vermont and is considered by the IRS to be non-profit. A conflict, obviously, but since OCV doesn’t make profits, no harm—no foul. (more about this below)

In any case, OneCare works like this:

   A purchaser of medical services like Vermont Medicaid wishes to buy comprehensive care for a block of patients for a single per capita price. Comprehensive means care delivered up the intensity ladder, from primary care in a doctor’s office to moderately complex care in community hospitals to very intensive care available only in tertiary centers like the UVM Medical Center or Dartmouth-Hitchcock.

   A Medicaid recipient in, say, Swanton might need to see his or her primary care doctor locally, and the patient might need more complex care at the local hospital, Northwestern Medical Center in St. Albans; if that level care doesn’t solve the problem, the patient could go to a tertiary center, like UVMMC or DH. The central idea in reform is that the route to cost containment lies in getting a single price for the care delivered in the movement of patients through the system.

    The clearest example of its operation is the 2017 contract between the Vermont Medicaid agency and four hospitals in northwest Vermont—in St. Albans, Berlin, Middlebury and Burlington—to deliver all necessary acute care to 31,000 Medicaid recipients in those hospital service areas for $93 million.

   OneCare Vermont, the ACO, functioned as a device to get the money into one bucket, and then distributed to the providers depending on how much care each would have to provide. That number for each hospital is determined by taking the number of lives expected to come in the door, and, given the fact that the intensity of care differs from hospital to hospital, combining the lives with the claims data for that hospital in the past.

   The underlying basis for the angst over UVM and OneCare is the implicit or even explicit claim that by virtue of its ownership of OneCare that the UVM Health Network will be able steer more of the total money in a given contract to itself than is fair. And if that is the case, then the other players would get less than their fair share, since the size of the contract is fixed.  

   The reason for belaboring this history is to dispose of the proposition that ownership of OneCare indicts the UVM network for “conflict of interest” and putting their finger on the scale when the money from a OneCare contract is distributed among the state’s hospitals. Let’s consider that proposition:  

The Operation of the OneCare Board.

       Okay, okay. UVM can’t run the state’s hospitals just because they own OneCare. But they are really big, so why can’t they just capture the OCV Board? I mean, they are way more powerful than the other players in the system, and everyone says they’re really greedy and bullying, and, of course, the fact that they own the system means that UVM has a “conflict of interest” which allows them to get more than their fair share of the money flowing into the system. If you are condemned to live in the health care reform space, you will hear stuff like that every day.

   The reason why the UVM Network can’t do any of that is the existence of the Operating Agreement between the Board of Managers of OneCare itself. And it is that Board that actually determines everything that OCV does. Not only does UVM not control the Board, they have far less influence on it than is justified by their size. The UVM Medical Center in Burlington delivers about half of all the acute care in the state; its budget get runs to about $1.4 billion per year. Add in the care delivered in the network hospitals in Berlin and Middlebury and the percentage of the total runs close to 60 percent.

       The Board consists of 21 members, only four of whom have anything to do with UVM. The remaining 18 members represent seven other hospitals, along with primary care practices, and other players like the Vermont Food Bank, the Vermont Federal Credit Unions and the Hospice Director at Bayada Home Health, which runs facilities in Chittenden County. Moreover, all of the important board decisions get made by a ‘supermajority” of 14 votes. UVM’s ability to control or manipulate this structure to its own advantage simply doesn’t exist, and never did.

   The UVMers are outnumbered on the Board by the CEOs of Gifford Hospital in Randolph, Southwest Medical Center in Bennington, Brattleboro Memorial Hospital, Rutland Regional Medical Center, Mt. Ascutney in Windsor and a representative of Dartmouth-Hitchcock in nearby New Hampshire—six to four.

   These 21 players function under the terms of the operating agreement. (Key elements of that document are listed below).

    In sum, to believe the Yahoo case on that matter, you would have to believe that veteran CEOs like Steve Gordon at Brattleboro, Claudio Fort at Rutland, Tom Dee at Bennington, Dan Bennett at Gifford, Joe Perras at Mt. Ascutney in Windsor, and Michael Costa at Northern Counties Health Care are too dumb to realize their pockets were being picked. People who believe that are the truly gullible ones.

The Truly Bad Performers

   Which doesn’t mean there is any shortage of players determined to make it. By far the most egregiously false and irresponsible claims on the anti-UVM case came from Bill Schubart, a former business-man who publishes commentary on VTDigger. After a series of bleak ruminations on the problems of health care in the U.S.—lack of available staffing, obesity, lack of vision and leadership “and the overwhelming inertia baked into a system that has evolved to protect the interests and privilege of all who profit from it, rather than delivering on its mission of population health and care,”-- Schubart pivots to Vermont.

   The public is focused on long wait times at UVM Medical Center, Schubart wrote, “but the problems affecting Vermont’s only tertiary-care hospital run much deeper. They include lack of a clear vision, poor governance, embedded conflicts of interest, and an acquisition strategy that consolidates power, creating an unchecked monopoly with no countervailing regulatory force.”

   Schubart follows that claim with a miscellany of criticisms of OneCare Vermont, the Green Mountain Care Board, and the Scott Administration…It all adds up to a lengthy indictment of the whole health care delivery system. Given the amount of misinformation that pervades the reform atmosphere, it is tempting to write Schubart’s screed as just more noise. I think, however, that at least some of my tiny corps might be interested in a full assessment of his broadside. The reason is that the public at large has no reliable source of information on this critical policy arena, as we have seen from the continuing blundering coverage by VTDigger. So, herewith:

• On UVM’s posture and performance. The description of that is entirely false in general and in most of its specifics. The Vermont health care reform project leads the whole United States in the effort to shift from fee-for-service reimbursement to block financing or capitation. The original reform vision was articulated by former Governor Peter Shumlin, and in its first iteration it was designed and put into execution under the direction of the industrial-strength policy experts Anya Rader Wallack and Steve Kimbell.

But the Shumlin administration couldn’t have even started without the full support and cooperation of John Brumsted, the CEO of the UVM Medical Center in Burlington and the rest of the UVM network players in Middlebury and Berlin. There are roughly 850 ACOs in the United States, and the only one fully committed to what the federal government defines as Phase Four, full capitation, is OneCare Vermont and the only reason that is true is the commitment by Brumsted. That is why from the earliest days of reform, federal Medicare officials have put OCV in the forefront of national reform; it is why the University of Chicago’s research groups report to CMS that the Vermont program is ‘very promising’, and the testimony of national small hospital expert Eric Shell, that UVM leads the country on reform.

Shubart makes the point that the total amount of Vermont medical spending is just two percent of the total, which is true; but that is not the fault of either UVM or OneCare. The barrier to much greater participation is the refusal of either federal Medicare officials or private insurance firms like Vermont Blue Cross to permit capitated payments for their purchases of care. Even given that environment, Vermont’s Medicaid Agency now has $147 million in full capitation, while the rest of the country has---nothing.

• The claim that the Vermont system is a UVM monopoly and that the whole thing is riven by conflicts of interest. That claim is demonstrably false. A Vermonter who lives within walking distance of the Medical Center at East and Colchester Avenues is perfectly free to seek medical care anywhere he or she wants. And many do.

 They can go to Dartmouth for advanced care, or minor care for that matter. They can get a knee, hip or shoulder replacement at Copley, or Dartmouth, or Rutland, or Boston. And many do. A few years ago, the CEO of Copley, a 25-bed hospital in Morrisville, told the Green Mountain Care Board that without its high-end orthopedics, Copley couldn’t exist.

Moreover, anyone who thinks that the doctors in non-network hospitals in Vermont like Rutland, and Brattleboro or St. Albans operate in thrall to whatever the Medical Center thinks about medicine is just plan ignorant. Doctors at the UVM Medical Center may think that the St. Albans hospital is too small to do very complex operations like spinal fusion, but that fact has precisely zero to do with what the St. Albans doctors actually do.   

• Shubart claims that “UVM Health Network now has virtual control over how the money from Medicare, Medicaid and commercial insurance is spent.” That is false. See the analysis above. The 11 hospitals outside the UVM network spend their money with no reference whatever to what either UVM network, or for that matter, OneCare Vermont, thinks about it.

• A major contention in the Schubart case is that Brumsted and the Medical Center are on an acquisition binge, getting control of hospitals like Porter in Middlebury and Central Vermont Medical Center in Berlin, not to mention the three hospitals in northeastern New York—all in the service of amassing more power. There is no historical evidence to support that. The affiliations with Porter and Central Vermont were rescue missions. Both the smaller Vermont hospitals asked to be taken under the UVM wing because they were going broke. If you think taking on a crashing small hospital is a power move aimed at building more revenue, you might consider why Dartmouth-Hitchcock, begged to do the same thing for Springfield Hospital, fled screaming and left Springfield to bankruptcy court. The same thing was true in New York. The New York State Health Department, which hemorrhaged money into the North Country is still grateful to Brumsted for getting their poorest region on a sustainable health care track.

• In an effort to establish a clear conflict of interest, Schubart makes a connection between the fact that Al Gobeille, who spent a term as chair of the Green Mountain Care Board in the ‘aughts and then a couple of years as Secretary of AHS, is now part of the UVM Network’s senior management team. “As second-in command to Brumsted, Gobeille is assumed by many to be his successor.” That makes Schubart sound like an insider, but he obviously doesn’t get it. The actual selection of a new CEO for the network is most likely to come from outside Vermont. There are a handful of potential in-house candidates including Al Gobeille and Dr. Steve Leffler. If there is an internal successor to Brumsted, it is much more likely to be Leffler, who is President of UVMMC, or whoever fills the vacant post of head of the Medical Group, the physicians who practice mostly in Burlington.

• After this meandering mess, Schubart goes off the rails by suggesting that the travails of the UVM Network are leading to something much darker.

   And when does self-interest metastasize into corruption?  

In watching and participating in health care reform in Vermont over the last 38 years, that is the single most irresponsible thing I have ever heard said.

   To sum up, the threats to a reform future, one that saves Vermonters billions of dollars going forward and drives badly-needed improvements in quality across the entire state, are players like Doug Hoffer, the state auditor; several Chittenden County Progressives, like former Sen. Tim Ashe, and current Sens. Chris Pearson and Michael Sirotkin; a big chunk of the small hospitals who are desperate to keep delivering care that is too complex and expensive for them to manage; VTDigger, the only state-wide news organ, whose performance on health care is a journalistic disgrace; a random collection of cranks, yahoos and know-nothings; and, now Bill Schubart.

I will leave my tiny corps of brilliant readers with this conclusion:

       You can believe what you hear from this malignant tribe. You can also believe in the Easter Bunny.

N.B. In the current debased public policy space it isn’t enough to just lay out a skein of facts—you basically have to prove everything. And even then, you can expect that more than 40 percent of the public will continue to reject it out of hand. The following elements would be footnotes in a longer treatment:

On the legal status of OneCare Vermont:

OneCare Vermont is a limited liability for profit corporation organized under Vermont state law, Title VSA 11 Section 4002. It is a for-profit company in Vermont. It doesn’t get profits, but it can’t get non-profit status under Vermont law without constraining the percentage of active players on its governing body to 50 percent of the members.   Under pressure from Mike Smith, the Secretary the Agency of Human Services, OneCare petitioned the federal government to shift its tax status to non-profit. In response, the Internal Revenue Service agreed to “recognize” its non-profit under Title 26 United States Code, Section 501(c)(3), but its Vermont status remains for profit. It was a huge issue when Smith pushed for it, and it lingers in the drumbeat of criticism about OCV generally; but in fact, the whole exchange made no change in the way the system actually works.

When it started out, OneCare crafted an Operating Agreement to govern the way the members dealt with each other; the specifics of that agreement are not set forth in state law, but the contract among the members is enforceable by a Vermont Superior Court. Following are the relevant portions of the OneCare Operating Agreement:      

Paragraph 4.2: Actions Requiring Supermajority Approval of the Board. Notwithstanding any other provision of this Agreement to the contrary, without the approval of a supermajority of the Board, which for purposes of this Agreement means the vote of two-thirds (2/3) or 66.67% or more of the Managers eligible to vote, including the vote of at least one of the Appointed Managers appointed by UVM Health Network (such approval, a “Supermajority Approval”), the Company shall not take any of the following actions:

   (c) Execute any instrument, ACO Program Agreement, or take any action to bind the Company to any fixed or contingent obligation in excess of $100,000;

   (e) Guarantee the payment of money or the performance of any contract by another person or entity where the obligation to pay exceeds $100,000;

and,

Paragraph 6.1: (m) Adopt the annual operating or capital budget of the Company (notwithstanding any other provisions, expenditures in approved budgets do not require additional approval);

   (n) Adapt or materially modify the Clinical Model, or any plan for the allocation of programmatic shared savings or shared risk in the ACO;

   (o) Adopt any strategic plan for the Company;

   (p) Execute any contract with a monetary value in excess of $100,000;

   (r) Any Other Material Action. For purposes of this Agreement, the term Material Action shall mean any action that is determined by a Member in its discretion to involve a material change to the operations of the company or has a financial impact on a Member greater than $100,000.

   If you read and think about that boilerplate, you can see that jimmying the money by UVM is about as impossible as one can get. Look particularly at (r), which says in effect that whatever else happens, any member can call for a supermajority vote, irrespective of the merits of the case. And if it happens that a single hospital was to lose such a vote, it can simply opt out of that contract, and revert to full fee-for-service reimbursement.

Seven Days Discloses Huge Access Problem at UVM Medical Center

by Hamilton E. Davis 

   The Vermont health care reform landscape suffered a moderate earthquake last week. It is not clear what the final damage toll will come to, but the quake and the aftershocks laid bare the widespread failures of all the major players, which, summed over, constitute the formidable barrier standing in the way of full maturation of the reform project. And not just reform, the day-in-and-day-out operation of one of the most complex, expensive, and critical social institutions we have.

    The precipitating event was a story in Seven Days, the weekly newspaper/magazine in Burlington, about the lengthy delays that Vermonters face getting medical care at the University of Vermont’s Medical Center Hospital, the flagship of the state’s delivery system. Those delays were not just surprising, they were not just shocking, they were horrific. As of this summer, the UVM Medical Center was scheduling important care out as far as the fall of 2022.

   The response to these disclosures was at best dispiriting. The worst performance by far came from Mike Smith, the Agency of Human Services Secretary who steers the Scott Administration’s health care policy. Smith treated the crisis as a borderline criminal failure, which he, Smith, promised to get fixed. In fact, Smith has no clue how to fix anything in health care. The response of the hospital itself, in the person of its CEO Dr. Steve Leffler, was pathetic. In the face of a story he had known for weeks was coming, he offered Seven Days a 30-minute interview, which he cut off right at his deadline. A key job for a CEO is to manage his organization’s environment, and Leffler fell flat. On the other hand, the senior management team, including Leffler, is now closing in on a real plan; we should see the outlines of that within 10 days.

   The most encouraging response came from Kevin Mullin, the chairman of the Green Mountain Care Board, who tried his best to turn policy and political chaos into a respectable process, like adding coaches and referees to a soccer game for seven-year-olds. Yet, the Green Mountain Care Board has been a major contributor to the buildup of financial pressures inside the UVM system for the last five years, and there is an excellent chance that the Board will do so again this year.

   And despite the fact that Seven Days performed a signal journalistic service in cracking open the Medical Center’s internal mess, Seven Days has been missing-in-action for the last 10 years on the whole issue of health care reform, the single most important policy conundrum of our time. The magazine/newspaper would still be missing-in-action if Paula Routly, its editor, hadn’t failed to get a medical appointment she needed…

   It may be a masochistic exercise to delve into these developments, but for policy mavens among my tiny corps of brilliant readers, I offer my best autopsy:

Mike Smith Redux

   From the day they took office in 2017, the administration of Gov. Phil Scott has been clueless about health care reform, and indeed the nature of Vermont’s doctor and hospital system. They still are. And they are getting worse. Their latest depredation is Mike Smith’s “investigation” of the UVM Medical Center’s access problems. The hospital’s problems are very severe, and the performance of its leadership is a legitimate, even obligatory issue for public policy managers. But for Smith to treat it like a case of a town clerk running off with the tax money is simply irresponsible. Moreover, the idea that Smith himself might actually be able to facilitate a solution is a bad joke. This is not Mike Smith’s first rodeo, and he has botched things right from the beginning.

   Smith took over AHS in late fall of 2019, when his predecessor Al Gobeille left to join the senior management team at the UVM network. At the time, reform opponents had been running a five-year campaign to denigrate the network, and they had concluded, accurately, that the best way to do that was to attack OneCare Vermont, the state’s lone Accountable Care Organization. That attack was based on a lie. OneCare was a for-profit corporation owing to a quirk in state law that involved the way that OneCare structured its Board of Trustees—OCV had to be for-profit to get the widest possible representation from the state’s providers.

   In fact, OneCare had nothing to do with profit. In their 11-year existence, they never had a penny of profit or a penny of loss.

   But Smith charged right in. He said that the profit designation was the source of the problems in the system and he demanded that OCV seek federal non-profit status. Which it did, and it sort of got it. The details of that don’t matter because the shift in status made no change whatsoever in the way that OneCare operated…what the Smith foray did was reinforce the public narrative hostile to UVM.

   Smith was new at the time, of course, and he might be forgiven for being low on the learning curve; but fast forward a year and Smith was right back at it. Someone had attacked OneCare for some damn thing or other, and Smith jumped right in and said he would “reboot” the whole OCV operation. He then produced a 19-point plan that had no substance whatever. The fact is that OneCare does one vital, but essentially simple job: they function as a device to transmit money from payers to groups of providers, multiple doctors, and hospitals to care for big blocks of Vermont residents for a fixed price. That’s it. Full stop. OneCare has done that without a flaw for Medicaid financing since 2017…but Smith got what he wanted when OneCare applied to the federal government for a sort of work-around non-profit status. The net effects—big political win for Smith; OCV looked bad, as did its owner, UVM; the change on the ground was zero. No change at all.

   Fast forward again to last week. The situation with UVM is obviously very serious; and its senior management is desperate to solve the problem. It is important to understand the roots of the problem, however. The Medical Center suffered three powerful blows in a short time. The first was a computer attack that disabled the UVM system and cut heavily into their revenue stream; the second was the loss of six operating rooms at the Fanny Allan site, which further drove financial losses; the third was the increased costs that flowed from the installation phase of a system-wide computer system. Of course, the Covid crisis didn’t help either.

   One should sympathize with UVM’s misfortune, but everyone in Vermont has a stake in a flourishing UVM Medical Center and the state administration has an obligation to pay attention to that. What to do?

In the early 1970s, for example, there were significant management failures at Green Mountain Power, and the prospect of Chittenden County toasters going dark became a serious threat. The public utility commission at the time quietly informed the company’s board of their concern, and within a month or so the Board replaced the management. State government, in other words, has a potent level of suasion over the private sector, but it takes a high level of skill to bring it to bear. Some sort of intervention would be theoretically possible in the UVM case if it became clear that current management can’t solve its problem. No such skill level exists in the Scott administration.

    When Smith put himself to the test, he fell flat. Earlier this summer, it became obvious that a major factor in the access problem was the wave of people with mental health and substance abuse problems pouring into the Medical Center’s emergency department. Smith at that point pledged that he would open nine more beds at Vermont’s Psychiatric Hospital in Berlin and 16 beds at the Brattleboro Retreat, all beds that lacked staff to service. His self-imposed deadline was Sept. 1.  My sources have said that Smith got none of these promised additions. Of course, that has to be checked and I tried for three days. A week ago, the Department of Health could answer no questions about that badly needed staffing. That kind of failure by one of Smith’s AHS units seems very suspicious; some kind of investigation or probe is clearly warranted…

   My conclusion is that Smith is a second-rate political hack, and anyone who thinks he is capable of making any judgment at all about UVM is kidding themselves. Smith’s record to date supports that judgment, in my view.

Inside the Hospital Itself

What’s going on inside the Medical Center isn’t fully clear at this point. Reread the Seven Days article and you will see all sorts of unanswered questions. The essence of the problem is that the Medical Center hasn’t disclosed enough information to render even rough assessments possible. For example, the public relations apparatus published some early statements to the effect that UVM is trying to recruit as many as 94 doctors; a second datum was that they have developed a system to rapidly get appointments for people who particularly need them. Neither of those initiatives are described clearly.

   What’s missing? What we need to see are first, the standards of care—how long should a patient have to wait for an appointment, depending on the service line. Primary care would be one metric, shoulder rebuild another. Example: In mid-August, I checked when a patient can get a routine dermatology appointment. Answer: early February. Clearly not good enough. Example Two: Recently a new Vermont resident of my acquaintance called the UVM network’s phone and asked to be referred to a primary care physician. The answer: Mid November—of 2022. Ridiculous. It might be possible to somehow improve the throughput rate, but shifting six months to a week or, let alone 15 months to so will take adding new doctors. That presents multiple problems in the current environment. One is that nationally doctors are scarce, and getting scarcer. Keep in mind also that each new doc will require 3.5 support staff. And all that new capability will be expensive, at a time when regulatory pressure on spending is heavier in Vermont than anywhere in the country.

   Bleak as that outlook seems, there were indications in the last few days that the senior management team was beginning to right its ship. One positive note was in the Seven Days piece itself: While the access was terrible, most patients thought the care they finally got was terrific. A straw in the wind comprised the first hard numbers for the recruitment program—75 doctors and 250 nurses. Those are difficult numbers to achieve, but at least they are real. The most hopeful augury is that fact that network CEO John Brumsted recently added Anya Rader Wallack, a national class health policy expert, to his senior management team to manage strategic communications. External communications has been a black hole at the UVM Network for a decade—that’s changing rapidly.

The Green Mountain Care Board

   With the hospital at bay, and the Scotties making their usual political mess, Kevin Mullin, the chair of the Green Care Board, made a gallant effort last week to turn chaos into something resembling a rational policy process. He announced that the Board would join Scott’s “investigation”, but he in effect took command when he said that Mike Pieciak, the Commisioner of Financial Regulation would also. That was an important step: Smith is ineffectual, but while Pieciak has been a quiet presence, he is one of the most competent players across the whole of state government. So, future government pronouncements on the access issue should be far less strident and considerably more centered on evidence-based decision making.

   Mullin’s second move was equally shrewd. He said that he would appoint a two-woman ad hoc group to help seek out solutions to the access problems. The two would be Jessica Holmes, one of the five members of the Green Mountain Care Board, and Ena Backus, the Director of Health Care Reform for the state.

   A professor of Economics at Middlebury College, Holmes is the most capable member of the Board. And Backus is one of the few fully credentialed health policy experts in state government. She works for Smith, however, and with Smith strutting around offering pronouncements, there is no oxygen left for anyone else. So, linking Backus to Holmes solves a very real problem. I have no idea whether Holmes/Backus will get anywhere, but if you had to pick two players to try, they were the right two.

   In addition to these steps, Mullin made it clear that the basis for government action going forward would not be the prosecutorial edge so beloved by Smith, but a cooperative effort to find a way to higher ground on a problem that affects everybody.

The Deeper Issues

   While the Mullin initiative was a positive step, there are very hard issues that lie beneath surface. It isn’t clear, for example, whether the best efforts of all the current players can find a solution to the access problem. If the Medical Center simply can’t get the through-put it needs without a huge infusion of new players, then it may not be possible to get those players. And even if Mullin can get all the current players pulling in harness, not one of those players has any experience, or credibility in the field of recruitment. Not one player on the Green Mountain Care or its staff, or in the top tier of the Scott administration has ever recruited a doctor, let alone a dozen, or two dozen, or 90, or 100. The likelihood that Jessica Holmes and Ena Backus can find a “solution” to the access problem at UVM hovers just above zero. Neither has ever been even close to the complexity of operating a billion dollars a year academic medical center, let alone one facing the enormous challenges UVM does. What we can do is credit Mullin with a good try to rationalize something has been looking like a barroom brawl.

   The only one who has any chance of carrying something like that off is John Brumsted. And it is likely that Brumsted himself is the key to any solution. Brumsted’s role and his performance as the—by far—strongest health player now in Vermont deserves a full post on its own.  For the time being I’ll revisit a post I put up in 2019, laying out the way that Brumsted rebuilt the medical delivery system in the upper reaches of the North Country of New York into one of the most effective ones in that state. Brumsted is more or less hated in Vermont. But in New York state, whose health care apparatus dwarfs that of Vermont, Brumsted is considered one of the best health care executives in the country.

   There is no way to tell whether Brumsted can resolve the current mess; he could fail—anybody can fail. But on the record of the last 10 years, no player now on the field has demonstrated anything close to the kind of competence that Brumsted and some of his senior colleagues have. Not One. Single. One.

The Press

   In her editor’s note on the access issue, Paula Routly lamented the difficulty of a weekly magaziny (sic) type publication trying to wrangle a journalistic nightmare like health care into a manageable framework. Her two reporters, Colin Flanders and Chelsea Edgar, did a terrific job. But the fact that Seven Days and its reporters ignored health for the last five years left them vulnerable to an important blotch right in the middle of the second most important story it ever published.

   It was the part where the writers tried to show that the underlying fault in the access problem might have been greed on the part of John Brumsted, the CEO of the UVM Health Network. The writers quoted Jim Daily, the retired president of Porter Medical Center in Middlebury, as saying that Brumsted had “screamed” at him when he told him that he, Daily, wanted to fully employ the urologist then being shared between Porter and UVM.

   “We employed specialists because we thought it served our patient population,” Daily is quoted as saying. “UVM thought we should concentrate on primary care.”

   Okay, wow. That theme needs some unpacking. In the first place, Brumsted was absolutely right. The only sensible role for not just Porter, but also the other tiny hospitals in Vermont, is primary care, with an admixture of minor specialists when they make economic and medical sense. And at most of the small hospitals in Vermont, the numbers of people seeking complex specialty care are far too small to keep surgical teams sharp and even less likely to be accomplished at unit costs that are anywhere near reasonable. The small hospitals are squeezing in every possible bit of specialty care not mainly because they want to serve their patients—it’s because they are desperate to get the money, and sky-high unit cost and dodgy quality are the price we all pay.

   That all became obvious when Daily, who bought up primary care and specialty practices with abandon, drove Porter Hospital onto the rocks and it had to be rescued from bankruptcy by UVM. It has taken four subsequent CEOs to get Porter back on track. And Porter still shares the urologist with UVM.

   My tiny corps may be wondering why I describe the Seven Days article as the second most important the paper ever wrote on health care. In contrast to the current effort on the UVM access problem, the most important article was a blundering screed the newspaper published in January of 2015 excoriating the Medical Center as having “mushroomed” into a behemoth that was “gobbling up” all the other health care providers in the region. The writer of that piece never asked the most important question, which is how big the hospital needs to be. When you drive by the main facility on Colchester Avenue it looks huge. But it is important to understand that its main service area includes more than a quarter of the whole state population, and that it provides the only tertiary care in Vermont. The fact is that the Medical Center was too small in 2015, and it’s too small now, a major factor in the access crisis. When the Green Mountain Care Board approved the construction of the Renaissance Tower in the early teens, they refused to allow UVM to add a single additional bed. They could change double rooms to singles but were allowed zero new capacity. They were also not supposed to add new staff, which fortunately they ignored.

   The consequences of that one 2015 piece were severe. Seven Days itself abandoned health care entirely until last week. But the “huge, greedy, gobbling up” theme that the article hung around the Medical Center’s neck spawned a five-year vendetta against UVM first by a clown car carrying key Chittenden County Progressives like former Senator Tim Ashe and current Sens. Chris Pearson and Michael Sirotkin; and then provided the foundation for an even more vicious, incompetent, and irresponsible anti-UVM campaign by Anne Galloway and her minions at VTDigger.

   A few days ago, I called Routly to ask her whether her experience with the health care uproar would lead her to change her outlook on covering continuing issues like health care. She said she it had, without gainsaying the journalistic challenge of trying to bridge the gap between hard news coverage and the immensely more difficult task of producing magazine level stories that go far beyond piling up of facts for 600 words. The facts themselves can be difficult enough; setting scenes, constructing compelling narratives, finding and analyzing patterns in a mass of events, quickly and effectively sketching disparate characters—that is incomparably more difficult. Twenty-eight-year-old Chekovs are rarer than hen’s teeth (Routly would murder a cliché like that in a New York minute. Along with the New York minute)…anyway, one of the few shafts of light in the pervasive gloom is the possibility that Seven Days will step up somehow to fill the journalistic vacuum on health care.

   The Vermont delivery system and the people it serves need all the help they can get.   

N.B. The above post is obviously a beast that covers a huge amount of ground. The reason is that I think my tiny corps deserves a chance to see the way that various pieces of the health management machinery interact. Every element of the panorama deserves elaboration, and I will get to that as soon as possible.

Yacovone Preaches on UVM Spending From Deep Left Field

by Hamilton E. Davis 

   Arguably the single largest barrier to the full maturation of Vermont’s health care reform project is that it is so widely misunderstood. The press, such as it is, is basically clueless. The Scott administration supports the principle, but has provided no political leadership. The legislature is pretty much a health policy desert. There is simply no way, therefore, that the public can follow the twists and turns as reform moves ahead, or just sits there.

   A few weeks ago, Eric Shell, a national class expert on hospital policy who runs a consultancy out of Portland, Maine, told the Green Mountain Care Board that the Vermont project is the most advanced such effort in the United States. Shell, who advises health policy experts in three dozen states along with the federal government, said no other state reform effort is even close to Vermont. Shell did not seem to grasp the extent to which reform is an orphan here. Shell doesn’t know David Yacovone.

   Yacovone is a state representative from Morrisville and a member of the House Appropriations Committee, an influential post. He has had long experience in health-related fields. On Aug. 12, Yacovone published a commentary on VTDigger under the heading, “Who will protect the rest of Vermont’s health care system.” The piece cast the University of Vermont Medical Center’s plans to expand some of its services as a threat to the rest of the health care system.

   The commentary was occasioned by the UVM Medical Center’s plans to build a new outpatient surgery center, at least part of which would replace the ORs that were lost at the Fanny Allen site. The UVM announcement did not include details; the specific action will be to seek state permission to plan the facility.

   The UVM statement conflated changes contemplated at both its Medical Center in Burlington and at other sites in the UVM Health Network, which includes the Central Vermont Medical Center in Berlin and Porter Medical Center in Middlebury.

   The network said that “over the next several years,” it will upgrade the Emergency Department at the Medical Center, expand its neonatal intensive care unit, and move its ophthalmology (eye care) and dermatology services to Tilley Drive in South Burlington. A critical piece of the long-range plan will be to build an inpatient psychiatric unit at the Central Vermont Medical Center in Berlin.

   Yacavone attributed these projects not to necessary patient care, but to UVM’s desire to    bolster its strength as a business. “The Green Mountain Care Board must put a moratorium on health care spending proposals intended to rebuild the hospital infrastructure, not because they may not be needed, but because we need to be sure what we do approve is most important.”

    It is difficult to adequately describe just how preposterous that whole screed is. It is the sheerest demagoguery. The idea that you can just swap out treatment for heart disease, trauma, stroke, cancer and myriad other dangerous-to-life afflictions in order to treat diabetes and obesity is absurd on its face. Only in Vermont’s Alice-in-Wonderland health reform environment would something like that would appear in print, let alone be taken seriously. Given that Yacovone will get a hearing, however, let’s look closer at the string of absurdities that constitute his case. In no particular order:

• Even if the Green Mountain Care Board decided to rein in UVM’s spending on acute care, that does not mean the care isn’t going to be delivered. Premature babies, heart attack and stroke patients, and car wreck victims are going to get care somewhere, and if it’s not available at UVM, they will go somewhere else at a minimum 10 percent cost increase, not to mention the huge inconvenience.

• One of the fundamentals of contemporary medicine in Vermont as well the rest of the United States is that you can’t make any money on primary care. Primary care is the foundation for the whole medical edifice, but primary care docs get paid at the low end of the scale. A sustainable system essentially depends, therefore, on financial support from the hospital subspecialty community. One $800,000 a year orthopedic surgeon can keep several $200,000 primaries afloat.

• An important example of this dynamic is the UVM commitment to build an inpatient psychiatric unit at the network’s Central Vermont Medical Center in Berlin. In September of 2011, floods generated by Tropical Storm Irene washed away the state mental hospital in Waterbury, and state government never got itself together to replace it. So, in 2017, when a spike in volume at the UVM Medical Center sent an extra $20 million to the hospital’s bottom line, the Green Mountain Care Board and the hospital agreed to use that overage to build the Central Vermont unit. The unit is still in the planning stage, but the UVM system remains committed to it. No UVM, no solution to the state’s mental health facility problems.

• Yacovone claims that allowing UVM Medical Center to do a full schedule of subspecialty care means that there won’t be enough money to do the chronic stuff, like diabetes and asthma care. That is simply not true. The UVM system operates primary care clinics in Burlington, Colchester, Essex and Hinesburg. Moreover, UVM researchers contribute to medical knowledge on diabetes and obesity. And, not incidentally, the UVM College of Medicine trains new doctors in family medicine, internal medicine primary care, primary care pediatrics, and some primary care gynecology. Every dime that gets chiseled somehow out of the UVM spending will damage medicine not only in Chittenden County, but all over the state.

• Even people who might concede the above points could be susceptible to the caveat that, whatever its merits, the UVM medical system is just too expensive, wicked costly in the vernacular. That claim is as bogus as the rest. The real cost of medicine consists in what the public pays in taxes for Medicare and Medicaid, and what employers and individuals pay in insurance premiums. The direct measurement of that is the per capita cost of care in the various hospital service areas.

  As it happens, the federal government collects that information for the Medicare population across the country, and the numbers get published in the Dartmouth Atlas Project, an industry guidebook. The data for 2018 provides this quick look:

        Hospital Service Area                     Cost of an individual Medicare Recipient

Chittenden County (UVMMC)                                      $6,523.66

Bennington (Southwest Medical Center)                  $9,822.16

Randolph (Gifford Medical Center)                             $9,684.66

Rutland Regional Medical Center                                $9,631.90

The above is just a snapshot (I’ll do a full post soon on the DH Atlas findings for Vermont) but it is enough to disabuse the ordinary Vermonter of the bogus proposition that the UVM Medical Center is the big spender. In fact, in the latest data, it is the lowest, a full third below the high spenders and significantly below all the rest.

None of the above will have any impact on Yacovone and it will likewise have no effect on the dead-end opposition to reform that exists in the reform space. Yacovone is particularly interesting because his style is unusual. During the legislative sessions he speaks often, with a special kind of flair. Normally, when the representatives speak, they use a hand-held microphone. Yacovone pioneered a striking departure: instead of a hand-held mic, he arranged to use a tiny mic that attaches to a shirt collar, the way television celebrities do. That way, his arms are free to sweep wide as he offers his profundities to the multitudes in the high-ceilinged House chamber, the cathedral of Vermont’s political life. You could get a sense of that in the peroration of his commentary:                                          

   “Will the some (sic) 55,000 Vermonters with diabetes be better off with proposals like the one offered by UVM?”, he asked. “The short answer is no.

   “Will obesity be combatted with more hospital construction projects? The short answer is no.

   “Will Vermont’s rate of fatalities due to overdoses…change with more beds and operating rooms? The short answer is no.”

   Then, ominous, pregnant pause:

   “Vermont is watching.”

 Okay, well, it’s a good thing Vermont is watching. But if what they’re seeing is a health care delivery system shaped under the twisted principles espoused, then they will experience a system badly debased, both medically and financially.

Hoffer, Vermont Auditor, Goes Way off the Rails on Reform

by Hamilton E. Davis 

   Last week, the Green Mountain Care Board invited Eric Shell, a nationally known expert on rural health care systems, to give the members his views on Vermont’s health care reform project. Shell runs a consultancy called Stroudwater, based in Portland Maine. He has worked with some three-dozen states as well as the federal government on issues involving small hospitals and he has looked closely at the Vermont system.

   “I’ll say this straight out,” he said at the outset, “and I’m going to say it again at the end. Vermont is the leading state in the United States around the transformation to value-based care and a true health care system. There’s nobody close to you.”

   Shell was particularly complimentary about OneCare Vermont, the state’s sole Accountable Care Organization, which he said had markedly increased the number of attributed lives starting in 2017, thereby connecting the revenue streams of the future to primary care physicians.

    “You all in Vermont have really written the book on this through OneCare Vermont.” he said. “I am humbled by what you have done, and what you are going to do in the future.”

   Those comments stand in striking contrast to those of Vermont’s state Auditor,
Doug Hoffer, who for the last year or so has mounted a broad-based attack on the state’s health care reform project, arguing that it has cost money rather than saving it for Vermonters and building the case for abandoning the project in 2022, rather than signing up with the federal government for another five years.

   Almost every significant point Hoffer makes is simply wrong, politically motivated, or just a plain cheap shot. He knows virtually nothing about health care, and there are serious questions about whether he is overstepping his portfolio as Auditor. Yet Hoffer is getting taken seriously by a credulous press corps (read VTDigger and Seven Days) to the point where he is becoming a significant player in one of the most important policy decisions Vermont will ever have to make. Some dismiss him as just noisy, but he is more than that: He is dangerous because he could undermine a Vermont reform that could deliver the highest quality, most cost-efficient delivery system in the country.

   The Hoffer indictment, contained in two major reports and several press interviews, argues as follows:

• From 2000 to 2018, the increase in health care costs in Vermont means that Vermont is worse off than it would have been without the All-Payer-Model. To reach this conclusion, Hoffer looks at Vermont spending in that period and compares it to the same trajectory across the country.

If health care spending had increased at the same rate as the U.S. average, we would have spent roughly $1 billion less in 2018. Those savings would have more than covered Vermonters’ personal state income taxes in 2018, and the savings would have equaled $1,576 per person.

Wow, that would be a lot. And in just one year…the obvious problem here is that Hoffer has taken the inflation rate over an 18-year span when the question at hand is whether the inflation rate in the reform period, 2013 to 2018, was equal to, worse than, or better than the inflation rate that prevailed pre-reform, 2000-2009. The graph below presents the real question. And the real answer is that Vermonters under the reform structure avoided a total of $1.9 billion in hospital spending compared to their rate of inflation from 2000 to 2009.

Read my blog post about these numbers here.

There are some caveats on all the numbers bandied about here. Health care spending includes more than just hospital spending, but hospital spending is the engine that drives the broader number. Moreover, there can be some confusion about the time spans involved. We have used two time spans for the relevant analysis, 2000 to 2009 and 2013 to 2019. The missing three years, 2010, 2011 and 2012 were an anomaly because those numbers had nothing to do with any regulatory regime, pre or post reform spending in FY2010 fell dramatically because the Great Recession of 2008 hammered demand. In 2011 and 2012, the spending cap was set by the Legislature at 4.5 and 4.0, well below the historic track. None of these details, however, vitiate the policy issues cited above.

• Manipulating the Numbers: 

One of the questions thrown up by the figures above is whether the 50 percent cut in the hospital inflation resulted mostly or wholly from national trends, rather than being a result of the Vermont project. Hoffer makes that argument in his report. In fact, the national data shows a dramatic switch in the Vermont versus the national per capita health spending rates, in the opposite direction from that of the Hoffer indictment. See the graph below:

In the pre-reform period 2,000 to 2009, Vermont’s per capita health care spending ran well ahead of the per capita rates for the U.S. as a whole, 85.9 percent to 63.5. In the All Payer Model period, 2013 to 2018, that posture flipped, with Vermont increasing at a rate of 18.0 percent and the U.S faster, 22.1 percent.

• A second major thrust of the Hoffer attack is his assertion that OneCare Vermont administrative costs are higher than whatever it has saved the state, a canard that made it right into the headline of the Seven Days story. OneCare is Vermont’s lone Accountable Care Organization, and its function is widely misunderstood. In the broad sense, it is one of four major players in reform, and as such deserves a share of the credit for the $1.9 billion racked up by the All-Payer model, as shown above.

OneCare’s specific job is to assemble the spending estimates from multiple hospitals into a single fixed price to a payer to cover a cohort of patients. Example: In 2017, OneCare midwifed a contract between Vermont’s Medicaid agency and four northwestern Vermont hospitals to provide all necessary care to 31,000 recipients for $93 million. The latest figure for Medicaid fixed price contracts is about $185 million across the state, and while that number should be higher, it has already stabilized Medicaid spending. The Vermont Medicaid Agency is the only such body in the U.S. to have a grip on Medicaid spending.

Finally, the value of OneCare lies not just in the benefits it has already delivered: The big payoff will come when Vermont Blue Cross and federal Medicare bureaucrats seek fixed price contracts for their patients, all of whom are much more expensive.

In the light of these realities, OneCare’s annual $19.3 million cost is mouse meat.

• Okay, but you’re unhappy about the scale issue—we’re not getting Vermonters into fixed price contracts, fast enough. Well, that’s true, but it isn’t the fault of OneCare, which can’t construct such a contract unless a payer wants to do it. And the major payers—the federal Medicare officials, and private insurers like Vermont Blue Cross—don’t want to. Moreover, even if they did, the small hospitals in Vermont don’t want to either because rationalizing the smalls network would mean they would have to step down from full service hospitals to clinics: The small hospital business model is dead in Vermont, just like it is in the rest of the country. OneCare has a bureaucracy which serves as a convenient punching bag for reform opponents; but at root, OneCare is actually just the 14 Vermont hospitals, and if the process of reform threatens them they can simply drop out of the ACO or restrict their participation to Medicaid.

One of the most troubling aspects of the Hoffer campaign is that he indulges himself in some nasty, personal comments. For example, he routinely denigrates Kevin Mullin, the chairman of the Green Mountain Care Board, contending that he isn’t doing his job. Another case in point is his suit against OneCare Vermont to force the CEO Vicki Loner to turn over to him the salaries of all her lower level bureaucrats. Publishing salaries can have some benefits, but for the most part they are just ploys to damage an opponent in the eyes of the public. In this case, however, Loner had already provided both the Green Mountain Care Board and her contract partner, the state Agency of Human Services, with the 12 top salaries of OneCare employees. Loner’s paychecks total $408,000 per year. And the people with whom OneCare actually had a contract, the Medicaid Agency, were perfectly happy with that level of disclosure. As was the Green Mountain Care Board, the government agency actually assigned to deal with the issue.

   It’s perfectly reasonable for public officials to argue about this stuff, but it seemed a long reach when Hoffer suggested Loner is acting like she is “above the law.” There’s a disturbing Trumpian air about that. Hoffer’s language is getting close to “Lock Her Up.”

   The irony is that there is a serious question whether Hoffer himself is outreaching his legal portfolio. In a column published last February, Seven Days columnist Dave Gram raised that very issue. Gram cited two particular critics, Republican Sen. Randy Brock of Franklin County who served as Auditor from 2005 to 2007; and Oliver Olsen, an Independent from Londonderry.

   “With some portion of the population, you lose your credibility, and that relates to the perception of how independent you are, and the value one assigns (to) your opinion and the work that you do,” Brock said of Hoffer. Brock added that an auditor’s work should be something another auditor could replicate to reach the same conclusions, which he said does not always appear to be the case with Hoffer’s…

   Olsen, who served three terms in the Vermont House, asserted that Hoffer “got his math wrong” and that the “data and analysis” Hoffer used in his audits was “not readily available for public review…which makes it impossible to verify the accuracy of your analysis against source data.” 

Hoffer mounted a point by point defense against these charges, which readers can review in the Gram column. However, politics and government ain’t bean bag as Mr. Dooley has informed us and you can make too much of the above kind of give and take.

The very serious issue underlying it, however, is the whole matter of health care reform, and in particular the extent to which Hoffer is trying to seize control of the very complex process involved.

   In the service of that proposition, I offer my tiny corps of brilliant readers the following two observations:

1.  In a remarkable twist, Washington County Superior Court will get to rule on Hoffer’s effort. Attorney General T.J. Donovan has filed suit in that court to force OneCare Vermont to comply with the Auditor’s demand that OneCare deliver up the salaries of its lower level employees. The decision will support or eviscerate the Hoffer effort to control the reform process. Interesting.

2.  In a thoroughly non-legal sense, I offer A Vermont Journal’s take on the whole kerfuffle. My first observation is that the major reform players in Vermont have assembled a very extensive and expensive array of health policy technicians to support the effort.

The Green Mountain Board, which has the central responsibility for reform, conferred Act 48, has at least a dozen. So does the Scott Administration and its Agency of Human Services, which deploys the Director of Health Care reform and staff; the Blueprint for Health staff, and the staff of the Commissioner of the Department of Vermont Health Access, which directs the Vermont Medicaid program and which operates the only fixed price contracts in the United States.

The Auditor’s office has, as far as I can tell, no credentialed health policy expertise at all. As far as Hoffer himself is concerned, I offer this: Beginning in 1980, I have talked to health policy experts from one side of the country to the other, in Maine, Massachusetts, Iowa, Wisconsin, California, Oregon and California…a few months ago, I talked to Hoffer on the phone at some length, and I was astonished to discover that he knows virtually nothing about health policy, in Vermont or anywhere else.

   Hoffer is quite simply a health policy ignoramus, and if players like Kevin Mullin, the chair of the Green Mountain Care Board, and Mike Smith, the Secretary of the Agency of Human Services, want to maintain their own credibility, not to mention their sanity, they should just ignore him. The auditor can always find the ear of a gullible press corps, but Mullin and Smith should just stand up and get on with it.         

####

N.B. In my last post, I misspelled the last name of Paul Heintz, the Managing Editor of VTDigger. The spelling here is correct. The blame is mine. Apologies.

Vermont Reform Now a Dumpster Fire: Can it be Contained; Can it be Put Out?

by Hamilton E. Davis 

   The Vermont health care reform project is the gnarliest, most important issue ever confronted by the state policy apparatus—the Governor and his executive branch, the legislature, the Green Mountain Care Board, the state’s doctors and hospitals, the state’s Accountable Care Organization OneCare Vermont, the state Auditor, the state Health Care Advocate, the Press, and advocates of all persuasions. The people most affected are the 625,000 or so residents of Vermont, who pay almost a fifth of their incomes for health care, and suffer from its quality shortcomings.  They are in serious trouble because the health care reform process now most resembles a dumpster fire.
   There is no end of nuances, complications, bureaucratic details, but it is possible to paint a picture of the process; and one of the best places to start is with the Press because that voice is heard more widely than any other. The Press in Vermont now means VTDigger because it can reach as many as 200,000 readers a day, and because no other news outlet takes health care reform seriously. So, let’s start with Digger’s latest offering:
  In an article published recently, the reporter Katie Jickling wrote that Vermont is moving toward a decision whether to extend the current All Payer Model for another five years. That decision, she wrote, rides essentially on the performance of OneCare Vermont, the state’s lone Accountable Care Organization (ACO). And that performance, she says, has been subpar.

   “OneCare Vermont took charge of the state’s health care reforms in 2016,” Jickling wrote, “soon after Gov. Peter Shumlin abandoned his plan for single-payer health care.” It aimed to work with hospitals and providers to change the way health care is paid for, to incentivize high-quality health care and lower cost…but
   “The trajectory has been rocky,” Jickling wrote. “The organization (OneCare) has consistently fallen short of its targets for growth, with fewer doctors and patients participating than expected…in 2021, the organization lost membership. It also faced pushback from health care providers. Last fall, several independent doctors said that participating in OneCare was more trouble than it was worth, and they left the organization. Hospital officials told the Green Mountain Care Board that the dues and financial risk made participation too expensive. In November, Human Services Secretary Mike Smith launched an improvement plan to get OneCare back on track.”

   Well, that didn’t sound promising.  In the light of OneCare’s performance, should Vermont sign up for another five years of the same?  Can OneCare somehow get its act together? The re-up decision needs to be made in December, now six months out. The deciders will be Governor Phil Scott, his Secretary of the Agency of Human Services Mike Smith, and the Green Mountain Care Board, whose chairman is Kevin Mullin; if there is another federal All Payer Model plan, those three will have to sign it. But others will have to weigh in. Federal Medicare officials require that Vermont reformers seek input from the public and the legislature. In other words, the decision to move forward on reform is hugely problematic.

   No one can predict the outcome of that process. But my tiny corps of brilliant readers need to know that the entire content of the Jickling’s Digger piece is simply rubbish—wrong in fact, biased, incompetent. Too strong? Let’s go to the tape. To set the stage, my readers need to understand that Sunday’s piece wasn’t Jickling’s first rodeo. She been doing the same thing since she came on board Digger, as I wrote about in October of 2019 and January of 2020.

   Jickling starts out by saying that OneCare took charge of health care reform in 2016…It didn’t. OneCare is a cog in the reform machinery, and one of the lesser ones. The real managers of reform are Gov Phil Scott and his Agency of Human Services, who speak for the state as whole, and the Green Mountain Care Board, which has been invested by the legislature with the most formidable array of regulatory power in the country. To the extent that there have been failures of reform, it is those two players who deserve a big piece of the blame. The lack of political leadership has been particularly damaging.

   On the other side of the table are the doctors and hospitals on the one hand, and the payers, including the state Medicaid agency, the federal Medicare bureaucrats, and private insurance like Vermont Blue Cross and MVP and self-insured companies. Neither Jickling, nor the whole VTDigger apparatus and much of the whole reform playing field understand what OneCare is, or what it does.

Here goes:

   OneCare Vermont is basically a shell or a middleman that permits a grouping of individual hospitals and doctors to join together to negotiate with a payer to deliver all essential medical services to a big group of potential patients for a fixed price. Authorization of such a structure is a major element in the federal Obamacare law. That represents the essence of Vermont reform, which is to shift payment to providers from fee-for-service to capitation—a per capita amount. Capitation shifts the incentive in the system from overuse to only-necessary services.

   The clearest example is the actual 2017 contract between Vermont Medicaid and four hospitals in northwest Vermont to deliver care to 31,000 Medicaid recipients from that area for $93 million. Of that amount, roughly half has to be withheld to pay for care to the region’s Medicaid population that is delivered outside the region; that has to be paid fee-for-service. The other half, however, gets paid to the hospitals in Burlington, St. Albans, Berlin and Middlebury in advance monthly payments. And for the hospitals caring for local patients, there is no more money. Hence the elimination of an incentive for delivering unnecessary care.

   OneCare’s role in that process was simple. It took the hospital budgets submitted by the four hospitals for the work envisioned, shaped them into a single price for the state’s Medicaid Agency and submitted that for approval to Medicaid officials. Once that was granted, Vermont Medicaid sent a check for the agreed upon amount each month to OneCare and OneCare divvied up the money among the four hospitals.  Chop, chop. OneCare’s performance of their key role has been just fine.  

   Okay, what about Digger’s list of failures as listed above—the primary care docs are mad, the hospitals think the fees are too high, Kevin Mullin thinks its all too slow, etc.? 

   There is no question that the problems cited by Digger exist. They do. But the problems aren’t the responsibility of OneCare. The blame belongs elsewhere. Let’s look at the evidence:

• The most important barrier to a sustainable system—defined by high quality care at a year over year affordable cost—is established and maintained first by federal Medicare officials, and locally by Vermont Blue Cross and other private insurers.
  Neither federal Medicare nor Vermont Blue Cross will permit real capitation, or the fixed price contracts that will actually drive changes in medical spending. Both Blue Cross and Medicare will make prospective payments to hospitals, but they require those hospitals to maintain a shadow fee-for-service record, and at the end of the year they reconcile the payments to the shadow system. So, if a hospital spends more than the agreed-upon amount, their payers send them a check for the difference. That drains all the cost containment out of the system.

• Is that the only problem? No. The only player with direct power to drive reform is the Green Mountain Care Board. In that regard it has been singularly ineffective. if Vermont hospitals think the OneCare dues are excessive, then the Board can tell them to put the money into their budgets and the Board would approve it.  The first Green Mountain Care Board did exactly that. In 2013, the Board determined that Vermonters could afford to increase medical costs by 3.0 percent per year. But they set the target at 3.5 percent, if the half percent was committed to health care reform. (The Board membership turned over in 2017 with the election of Phil Scott)
  Is Vermont Blue Cross with its control of health care financing a full third of the state’s population dragging its feet and hamstringing reform? Absolutely. One Care Vermont has no power at all to change that fact. The Green Mountain Care Board on the other hand has enormous leverage over the Blues because it dictates the rates the Blues can charge some of its customers. That leverage remains in the Board’s toolbox.
  The Board has taken one tentative step toward real reform. In 2019, it resolved to require hospitals to draw up “sustainability” plans, the essence of which was to force hospitals to defend the costs of their services, as well as showing that on complex surgeries they were doing enough cases to keep their surgical teams sharp. I have written here that for most of the small hospitals, there is no way to meet those goals.
  The “sustainability” project was proposed in 2019, and has gone exactly nowhere. The Board has two consulting firms in the field for the last six months; there will be a preliminary report on their findings before the end of the month. But no one has even spoken about the implications of those studies, which are that most smaller hospitals make no sense financially or medically; but they make huge sense politically and socially. Downsizing smaller hospitals to clinics that make financial and medical sense will be huge shock that no one in Vermont is really prepared for. In the 10-year history of reform, I have never heard public word spoken about that challenge.

• One of the truly surreal characteristics of the reform environment is that so many people misunderstand what OneCare Vermont actually is. In physical terms, OneCare consists of a group of a little over 60 bureaucrats who work in a third-floor suite of offices on Water Tower Hill in Colchester. In essence, however, OneCare Vermont is just a name for the individual hospitals as a group.
  Over the last six years, all the other players on the field have treated and talked about OneCare like it was just a free floating alien that was “managing reform”, that it was costing too much, or was losing money, or that its quality was problematic, it wasn’t being transparent, it was “for profit” unlike the rest of medicine. The reality is that the bureaucrats have no control over any of that.  In its bureaucratic role, OneCare delivers no health care at all; it can’t put on a bandage or prescribe an aspirin.
  Every episode of care in the Vermont system and every dollar of cost is the responsibility of the doctors and hospitals in Vermont. OneCare can collect quality and cost data across the system, but they have no ability to determine the data itself.  
  Once you grasp that, then all the commentary by Digger and Mullin and the legislature and all sorts of people that OneCare has to do better at appealing to hospitals, and selling their ideas to doctors and on and on and on becomes just absurd. One Care Vermont is nothing less and nothing more than the hospitals themselves.

• A competent press corps could eliminate the problem outlined above, but no such corps exists now in Vermont, at least when it comes to a complex issue like health care reform. There is a deeper level to the OneCare phenomenon, however, that is very complex and that constitutes a threat not only to reform, but to the day-to-day operation of the delivery system.
  The original theory behind modern reform structure was that the project should be “provider-led.” Since doctors and hospitals would be gathered into federally authorized Accountable Care Organizations, they could begin to function more as a block than as individual, competing entities. That shift would enable not just fixed price contracts necessary to control costs, but the kind of vertical integration that would enhance the quality of care. In modern medicine, patients move mostly up and down in the system: They go from the primary care doc to the smaller hospital, and then to the most highly sophisticated tertiary centers; and then back down again as their problems get brought under control. To be of high quality and efficient in this view, the system needed to be integrated.
  When he was chair of the Green Mountain Care Board, Al Gobeille regularly described it as a “Coalition of the Willing” and he and the Board shaped their management strategies to comport with it. Sadly, what we have learned in the last five years in Vermont is that we have no such coalition. To the extent that there is a coalition it is one of the unwilling. For the interests of the small hospitals—which include at least eight and as many as 10 of the 14—diverge radically from those of the four bigger ones.
  From one end of the country to the other, small hospitals are afflicted by a failing business model. Modern medicine is too complex and too expensive for small hospitals, so they are going out of business or affiliating with big systems. What Vermont’s small hospitals are trying to do is to do as many complex surgeries as they can so as to wring out enough revenue to keep their doors open. It’s a wickedly unstable system, and anyone who thinks the answer is to just vilify OneCare Vermont is talking nonsense. Of which there is no shortage.

Where Does that Leave Us?

To sum up: OneCare Vermont is fully capable of doing what it has to do. It has managed the fixed price contracts between Vermont Medicaid and the state’s doctors and hospitals with no problems. If another payer—Vermont Blue Cross, MVP, Medicare—want to negotiate such a contract with providers, OneCare can function just fine as the middleman.

   What OneCare cannot do is to persuade, muscle, cajole any the various payers to move to capitation, fixed price contracts, if they don’t want to. They are effectively debarred from that role by the clash of interests between the large hospitals and the small. The muscle, persuade, cajole job belongs to Governor Scott and his minions, who have been catastrophically bad at it; and the Green Mountain Care Board, which has the formal legal responsibility for recasting the system, but which has used a minute fraction of their power to get to the job done.

   A second conclusion is that VTDigger remains a fourth-rate journalism provider, whose damaging effect on health care reform has been amplified by the fact that it is the only daily, state-wide news organization. The primary responsibility for that lies with Anne Galloway, the founder and still top authority at Digger. No single player has thrown more garbage on the fire than VTDigger.

   Many observers hoped that Paul Heintz, who moved from his post as the top reporter at Seven Days and by a wide margin the best reporter in the state, to the job as Managing Editor at Digger would solve the quality problems there. On the showing so far, a vain hope. Digger has announced that Katie Jickling is moving on; but we’ve seen that movie before.

   In the first three years of the Digger vendetta against OneCare and UVM, the writing was done by Erin Mansfield, directed by Anne Galloway. Mansfield’s writing was so obviously problematic that it began to threaten the credibility of Digger itself; officials across state government were going bonkers and the noise became damaging to the news-gathering function. So, Galloway fired Mansfield replacing her with a local journalist named Mike Faher. For a couple of years, Faher wrote straight forward coverage of the Green Mountain Care Board, but Galloway continued to demand that he find more dirt about UVM and OneCare and Faher resigned in protest, to be replaced by a far more compliant Katie Jickling.

   Heintz took command of the newsroom several months ago, and although he was fully aware of how sub-par her reporting was, Heintz left her in place, a running sore at the state’s only real “newspaper.” Jickling is now leaving to accept a prestigious assignment out of state, and the reading public will have to wait and see what Digger does about a replacement. The choice: a competent reporter who is directed and edited out of a Heintz newsroom; or a Galloway hatchet person directed and edited by the founder herself.

   Digger’s long vendetta against OneCare is a sad chapter for the news site, and a first-class journalistic organization would renounce it. Going forward, however, doing it right would not be trivial. We’ll have to wait and see.

Anya Rader Wallack Returns

    The University of Vermont Health Network moved today to shore up one of its most glaring weaknesses when it appointed Anya Rader Wallack Senior Vice President for Strategic Communications.

   Wallack, who was the architect of Vermont’s health care project, will become the fifth member of CEO Dr. John Brumsted’s top management team; the others are Al Gobeille, who is Senior Vice President for operations; Rick Vincent, the chief finance officer; Dr. Claude Deschamps, who leads the network physicians; and Eric Miller, the general counsel. Wallack will replace Theresa Alberghini DiPalma, who has resigned.

   “I believe the American health care system is in crisis and can only be fixed by people who have a clear vision for reform and are in a position to improve it,” Wallack said in network press release. “I have dedicated my professional life to

improving our health care system and keeping it affordable,” she said. “The UVM Health Network has an extraordinary leadership team. I share their vision and values and am excited to join them.”

   Wallack will receive a base salary of $400,000 per year, and will take over a major responsibility in the network, which is the one of the most important health care providers in the region, along with Dartmouth-Hitchcock in New Hampshire and Maine Medical in Portland. The UVM group is made up of six hospitals in northwest   Vermont and northeastern New York. The network deploys more than 1,500 doctors and other providers across the region, and serves more than a million patients a year.

   The UVM network along with the university’s College of Medicine is arguably the most valuable asset that the state has, not only medically but economically, but it has been routinely denigrated by a witches brew of opponents—Chittenden County progressives, who hate anything big; major portions of the primary care physician community; many of the small hospitals, who see the 500-bed UVM Medical Center as  threat to them; the state auditor who attacks the state’s Accountable Care Organization; skeptical treatment by the Green Mountain Care Board, biased  press coverage….

   Reversing the negative narrative around the UVM network will be Job One for Wallack. Can she do it?

Job One

   No one can be sure about that, but I offer the following assessment to my tiny corps of brilliant readers:

     Wallack is a very unusual player, and Brumsted’s ability to bring her on board the network ship is a brilliant stroke. So, what does unusual mean? And a “brilliant stroke” why? Stay with me here:

   The health care reform movement arose in Vermont about 1983 and followed a wandering track from then until around 2010-2011, when it accelerated dramatically in the wake of federal Obamacare and former Governor Peter Shumlin’s Single Payer initiative. Over that period, a total, a very generous total, of maybe 25 or 30 people actually understood how the health care system works and what it might take to reform it.

   Of that cohort, a tiny handful, meaning mid to low single digits, could be considered national class players in the reform space. Anya Rader Wallack is one of those; John Brumsted is another.   

   Wallack grew up in Bennington, and went to UVM, graduating in 1988. Her first important job was with Kimbell and Sherman, a new lobbying firm and Wallack’s flawless management of the back office functions there helped the firm grow to its dominant position.

   Her first big break occurred almost at once. In August of 1991, then Gov. Richard Snelling died unexpectedly, and was succeeded by Lt. Gov. Howard Dean. Dean was very close to Kimbell and Sherman politically, and when the new Governor had to scramble to assemble a staff, Kimbell and Sherman agreed to let Wallack go. She started out as deputy chief of staff, at 25 years old. And she didn’t just step into the routine minutiae of the governor’s office: Dean had inherited a major health care reform initiative, and he turned it over to Wallack. He also hired a tough, experienced health policy expert named Rachel Block and the two of them steered the first big health care reform project into the Legislature. At the same time, First Lady Hillary Clinton was putting together national reform effort, and Wallack served as one of Clinton’s state level advisors.

   The reform movement that crested in the mid-1990s failed in Vermont, as well as nationally and in the half dozen states that were in the reform vanguard. In the wake of the crash, Wallack left Vermont for a hospital job in Oregon. Reform would be dead for a political generation, but for Wallack, at 29 years old, the experience would turn out to be invaluable. In the early ‘aughts, she earned a Ph.D. in social policy from the Heller School at Brandeis University, one of the premier academics centers on health policy.

   She brought that extensive background to bear in 2011 when she led the Shumlin Single Payer initiative to passage and then served as the first chairperson of the newly-formed Green Mountain Care Board. Her first move there was to write a one-page memo to a federal Medicare official outlining the Vermont reform approach, a foray that put the state at the top of the reform effort nationally. The second thing she did was to get in touch with John Brumsted, the CEO of the Vermont Health Network to begin working on reform. No reform was possible then, or is possible now, without leadership from the UVM system, which delivers half of all the care in Vermont.

       She left Vermont in 2014 for personal reasons, before the single payer aspect of Vermont reform imploded, working at high levels first in the Rhode Island state government, and then at Brown University before deciding to come back to Vermont for a final effort to reform to full maturity. To repeat: Can she do it? Well, neither broad experience nor matchless credentials can ensure success. Still, getting one of Vermont’s best ever players back on the field has to be a plus.

   I said at the outset that the Brumsted’s addition of Wallack would shore up the UVM Network’s most glaring weakness. That weakness has been a stunningly inept performance in managing its own environment. UVM Medical Center hospital has the best quality and financial performance in the state. None of the 13 other hospitals in the state can match the 500-bed tertiary academic facility in Burlington. Eight of the 13 have 25 beds or less, the rest are relatively small; only Rutland, Bennington and Central Vermont should be considered full service hospitals going into the 21st century, when American medicine gets more expensive and more complex every day.

   The anti-UVM narrative has flourished over the last five years with no effective response. It is true, of course, that much of the criticism of the academic medical center is unfair, misguided, dishonest…but UVM during that period has had on its payroll a multi-million dollar public affairs apparatus that just never worked.

   If you’re looking for evidence for that, you might consider the contrast between the political environment in northeastern New York and Vermont. In New York, the hospitals just across the lake simply asked UVM to take them over and solve their financial problems. UVM did so, and Brumsted became a hero in New York. When he realized that the failing 40-bed hospital in Ticonderoga couldn’t be saved, he gutted the facility and turned it into a clinic with strong primary care and a state-of-the art emergency room. Given the assurance that UVM would watch over the place, the New York state health department ponied up the $15 million needed to do the work.

   In Vermont, in the face of a withering campaign of vilification, Brumsted has become Satan.

   Turning that around is critical both for UVM and the cause of reform in Vermont.

   For Anya Rader Wallack, that is Job One.

A Farce with Real Import

by Hamilton E. Davis 

   Vermont’s health care reform project, now in its 11th year, has been dead in the water for months, still well short of maturity. The barriers to progress have been simmering opposition in portions of the primary care community, small hospitals, and the Democratic-Progressive left in Chittenden County, not to mention the Health Care Advocate and the press. The focus of that hostility has been the University of Vermont’s Medical Center Hospital’s dominant role in the delivery system and OneCare Vermont, which is owned by the UVM Network and serves as the proxy-scapegoat for all the shortcomings of the reform effort.

   Reform of course has moved off stage under the lash of the COVID-19 virus, but its machinery has been grinding along nonetheless, without much notice. All that changed last week when Attorney General T.J. Donovan announced that he would sue OneCare on behalf of the State Auditor, Douglas Hoffer. Hoffer is demanding that OneCare Vermont disclose the salaries of all its 60 or so employees. OneCare responded that it had disclosed most of the relevant salaries, that it had complied with terms of their contracts with payers, and that it would fight the suit.

   In substance, the suit is of little to no importance—it’s a characteristic political ploy by the auditor, who specializes in them, and it will not drive any significant change in the operation of the health care delivery system or the process of reform, no matter which way a court decides. It’s also intriguing why T.J. Donovan has chosen to participate in this farce, about which more below. Why farce? Because we already know the salaries of the top dozen executives at the top of OneCare and those are the ones matter. And even if OneCare laid out every dime of salary it disperses to its entire staff, that information wouldn’t tell Hoffer or anyone else anything about the way OneCare operates, or what it does well or poorly. The suit, in short, is just harassment by opponents of reform.

   The evidence for that is just a computer click away. The salaries of the top dozen executives at OneCare have been available since last spring to anyone who cares to access the Green Mountain Care Board website. A selection: Vicki Loner, the CEO, got paid $408,774 in 2019, around the average compensation for the president of one of Vermont’s small hospitals. Sara Barry, her top lieutenant got $253,056. Tom Borys, the finance guy, got $162, 614. Norm Ward, the sole doctor on the staff, drew $382,367 See for yourself:

   At Governor Phil Scott’s last press conference, I asked Mike Smith, his secretary of the agency of human services, how he viewed the suit and what he considered its relevance to the reform project. Smith dismissed the whole thing as a “squabble” between a couple of other players, and said that he didn’t consider it relevant to the progress of reform. To the extent that the suit throws into question OneCare’s  openness to inquiry, Smith said he was entirely satisfied with OneCare’s “transparency.” He added:

    About a year ago I pushed for release of the salaries of those in the higher levels of OneCare. I asked them a 990-like disclosure; as you know, they aren’t a nonprofit now, but I want them to act like a non-profit so that you list the salaries of the agency. I didn’t ask for the salary of the receptionist, or maybe an executive assistant and others—I asked for the top salaries of individuals. OneCare did submit that information.

   I also asked OneCare to file with the IRS as a non-profit; the IRS hasn’t done that yet…but, from my point of view, the execution of the contract we have with the ACO we have enough look-see into their financials to feel comfortable. We have a lot going on with Covid and other things so we are going to leave this between the Auditor and OneCare.

    Smith’s view is particularly apt here because his Medicaid agency is the only payer that negotiates prospective payment, fixed price contracts with OneCare. Those arrangements are the closest in the United States to full replacement of fee-for-service reimbursement by block financing, or capitation. That shift is the essence of the Vermont reform project, and the grail for reform in the country.  

If the Suit is a Farce, Why Does it Matter?

   The fact of the suit, however, serves to illuminate the hugely troubled political and social landscape that the reform effort has to traverse. Some key elements:   

• The most basic problem is that almost no one who is not a specialist knows what OneCare does, or why it does it, or how it does it. OneCare is basically just a middleman or conduit for the flow of money into the delivery system. OneCare doesn’t spend a penny on health care: the north-of-a-billion dollars a year that flow through go directly to hospitals and doctors and it is those doctors and hospitals who spend the money to deliver care.

• The reason OneCare exists at all is that federal law has decreed that the Accountable Care Organizations are the proper vehicle to enable stand-alone hospitals and docs to offer a single price for delivering care to large cohorts of patients. The size of those payments, however, is negotiated by the payers and OneCare, but how the money is spent is entirely up to the individual hospitals and doctor groups. The ACOs are also tasked with gathering quality data and encouraging things like better coordination between providers to improve both quality and cost containment.  However, OneCare has zero effect on the quality of care delivered by either hospitals or doctors.

• Beginning in the mid-teens, some Chittenden Country Progressives and left- Democrats have carried out a vendetta against the UVM Medical Center, and the UVM Health Network. The lead player in that band was then Senate Pro Tem Tim Ashe. Ashe, now gone from office, contended repeatedly that UVM was a monopoly that was gobbling up all the smaller medical players and was forcing independent doctors to leave the state. UVM had to be stopped, he argued, if Vermont is to control its costs. His lieutenants in that campaign included Chittenden County Senators Michael Sirotkin and Chris Pearson; and the thesis was picked up at various times by a range of other players, including the state Auditor.

  An intriguing element in the suit is that the Attorney General, T.J. Donovan, is throwing his hat into the anti-UVM campaign. T.J. has never weighed in on reform itself in any substantial way. A couple of years ago, he assembled all the state’s reform players in a meeting in Contois Auditorium in Burlington, and they spent more than two hours laying it all out for him. Then silence.

  Any member of my tiny corps of brilliant readers is hereby permitted to speculate whether T.J’s foray into the weeds of health care reform might be driven by a desire to position himself for campaign for a seat in the Washington delegation, if a seat opens there, or for Governor, if Scott opts not to run in 2022.

• By far the most significant arena for speculation inspired by the suit is whether the Scott Administration, in the person of Mike Smith, the AHS chief, decides to take full ownership of the overall reform project; and give it the political leadership it will need to succeed. When the Scotties assumed office in 2016, they treated the reform project like a live hand grenade. By the end of their first term, they had moved into a position of support, but without any perceptible effort to actually make things happen.

  That began to change last fall when federal Medicare officials criticized the slow pace at which the Vermont project was ramping up. Smith, who was just concluding his first year as Secretary, stepped in immediately to say that he would “reboot” the OneCare operation, and get its shortcomings remedied. That initiative made practical political sense at the time, but the reality is that Smith will not be able to “reboot” anything, short of taking charge of whole project. The reason is that OneCare itself is severely limited in what it can do. It gets its day-to-day marching orders from the UVM Network headquarters—the Network CEO is chairman of the OneCare board. And OneCare isn’t really a separate player: the ACO is simply a consortium of the state’s hospitals, and, based on the written record, the state’s hospitals want no part of reform. They fear, with good reason, that if the small hospital network is forced to justify their very expensive but low volume service lines, they will be diminished to the point that several won’t continue to function as hospitals—they’ll be forced to downgrade to clinics, and some might not survive at all.

• Two other confounding issues. One of the most important is how the Scott administration, once it gets right into the engine room, meshes with the Green Mountain Care Board. Act 48, the foundation statute for reform, confers a huge array of powers and responsibilities on the board and it isn’t clear yet whether it can function both as regulator and designer of the final form of a delivery system recast to flourish in the 21st century. The second confounder is the fact that the Legislature is under new leadership in both the House and Senate and there is no telling how they will react to anything that will affect community hospitals.

   This whole mess has to be sugared off in the next six weeks or so because the financial course for the FY 2022, which begins Oct. 1, will begin to form in the next several weeks—the hospitals are putting their budgets together now for submission by July 1; and the GMCB will have to deliver their budget guidance for that process soon.

   Moreover, the Vermont reformers will have to determine the form in which they will petition federal Medicare officials for another five-year reform waiver. The reform project encompasses all the payers, but the critical payer is fully federally financed Medicare, since no hospital can survive without it.

    The first wave of reform is running from 2017 (a trial year) to 2022, and the new one will run form 2023 to 2028. Will we need any mid-course corrections? And will the structure of reform—including the GMCB, the Scott administration, OneCare Vermont, Blue Cross and other insurers, the UVM network, and the smaller community hospitals—have to change somehow? Who knows?

   And if you are inclined toward metaphysics: how will the Legislature react to the whole thing?

   Pretty hard questions. And consider that the reform players will be massively tied up for several more months with COVID.

OneCare Vermont Shouldn’t be a Scapegoat

by Hamilton E. Davis

  No single issue in reform has been so subject to ignorance, misinformation, bias and political manipulation as OneCare Vermont, the state’s Accountable Care Organization (ACO). And none is so critical to success. The essence of reform is the shift from fee-for-service reimbursement to block financing to doctors and hospitals, and there is no way to do that without an ACO. In essence, an ACO is simply a shell or a box that allows doctors and hospitals to combine to deliver care to large groups of people for a single fixed price. This innovative device was established in the federal law known as Obamacare.

   While the basic role of OneCare seems straightforward enough on the surface, the problem now is that OneCare is being made a scapegoat for all the pressures and cross currents belaboring the reform project. OneCare is a for-profit company, so obviously it can’t be trusted. OneCare is losing money. OneCare is wasting too much money. OneCare is cutting support for primary care doctors. OneCare is getting scolded by the federal government for not enrolling enough Vermonters.  Opposition is coming from some elements in the Legislature, the state’s Health Care Advocate, the State Auditor…The Secretary of the Agency of Human Services says he is going to “reboot the system.”

   This whole cacophony is amplified by wide spread ignorance of what OneCare Vermont actually is. It is characterized as some alien growth that has attached itself to the Vermont delivery system. In fact, OneCare Vermont is nothing more and nothing less than the Vermont hospitals, along with a big chunk of independent doctors. That doesn’t mean that OneCare doesn’t have any problems—it does. But its problems are the same problems that bedevil the entire reform effort. And solving them will require the concerted effort of all the major players: the Scott administration, which has provided no real politic leadership at all; the Vermont Legislature, which has been almost entirely an intellectual desert when it comes to reform; the Green Mountain Care Board, which is struggling to manage the restructuring of the hospital system; the business community, the single biggest beneficiary of reform, which has been missing in action on that vital issue and more.

   The misapprehension around OneCare Vermont arises from three sources. The first is that its nature and function have never been adequately explained by the reformers themselves. The second is that anti-reformers have chosen to use OneCare as a club to beat the UVM Network, and they have succeeded to a large extent. That effort has been centered in the Progressive community in Chittenden County, which appears to dislike the UVM system because of its size and dominance. The third is that while the ACO is a shell that holds nearly all the hospitals and most of the doctors, the interests of the large hospitals diverge from those of the small hospitals, so that trying to find a single “provider” message is difficult. Trying to accurately unravel all of these deep forces is impossible in a single post. But it is critical to at least not fog the environment with stuff that simply isn’t true.

Expunging the Myths

   The idea behind OneCare is pretty simple. For the 50 years leading up to the launch of reform in 2013, people moved in wandering paths through the delivery system, starting with primary care doctors and rising up the complexity scale to secondary and tertiary care, the former delivered in small and medium sized hospitals and stand-alone specialists and the latter in much bigger tertiary centers, many of which are also medical colleges. At each step along the way, the patient or his insurer paid for each episode of care. The system was both insanely expensive and marked by very patchy quality. The remedy long agreed upon by the policy community is to shift to block financing, which shifts the risks of medical care from the public to the doctors and hospitals. If a person needs to get her left leg amputated, and the doctors cut off the right leg by mistake, we (the public) pays once for cutting off the wrong leg, and once again for cutting off the correct leg. Bad medical care makes more money for providers than good.

   That doesn’t mean doctors try to make mistakes—they don’t. But they still make many mistakes, and until it costs them money, rather than cost us money, those mistakes will continue to drive overall health care costs into the stratosphere.

   None of this is to suggest that there are no problems inside OneCare. There are. The interests of the small hospitals differ from the interests of the big players, the UVM system and Dartmouth -Hitchcock. But the most tenacious stresses inside OneCare arise among the hospitals themselves, not with the OneCare bureaucracy. The workers there don’t make a trip to the water cooler that isn’t approved by the OneCare board, which is led by UVM and includes representatives from all the provider sectors—big hospitals, little hospitals and primary care providers. Moreover, the gargantuan job of recasting the culture and financing of the delivery system can’t possibly be carried out by one player or another: it will depend on the concerted efforts of the players. (OneCare Vermont), the regulators (Green Mountain Care Board), the state’s political leadership (the Scott administration and the legislature), the private insurance industry (mostly Vermont Blue Cross) and, the single biggest beneficiary (large employers).

   The performance of every one of those players has been problematic to a greater or lesser extent. That B minus effort hasn’t killed the reform, but it has very significantly retarded its progress, and it could kill it yet. No one can tell yet whether reform will fully mature, or drift away into irrelevance. We could easily return to the 1995-2010 era, with a sizable bureaucracy invested with serious regulatory powers accomplishing, basically, nothing at all. At the very least, however, we should at least get the fact situation roughly correct. We don’t have that now, especially in regards to OneCare, which is currently a scapegoat for various failures and blundering around that essentially affects the entire system. For example:

• When the subject of OneCare arises, commenters seldom get far into the first sentence before they note that OneCare is a “for-profit” company, the obvious implication being that it can’t be trusted. The for-profit trope is a red herring, which doesn’t mean that it isn’t effective. When Mike Smith, the newly-minted Secretary of the Agency of Human Services made his first appearance before a legislative committee last year he said it was necessary to convert OneCare to a not-for-profit company. Actually, it isn’t necessary.

  For-profit status is a requirement under federal law. OneCare was incorporated in 2012 by the University of Vermont medical system and Dartmouth-Hitchcock Medical Center, and during its eight-year life it hasn’t had a penny of profit, or a penny of loss. The underlying reason for the for-profit status is a kink in the federal law that limits participation in the management of non-profits; and OneCare is committed to giving all elements in the medical community a voice in its operations. So, its Board includes representatives of big hospitals, medium hospitals and little hospitals, along with independent groups of physicians such as Federally Qualified Health Centers, a key element in the primary care physician community. Putting all those potential beneficiaries on the OCV board forecloses the option of making the company nonprofit. Imagine the howl that would go up if UVM and Dartmouth kept the smaller guys off the Board.

• A major chord in the anti-OneCare chorus is the claim that its performance on costs and quality is terrible. OneCare is losing money for the system, money that would be better spent on the delivery of care.

The essential problem with all of this is that scarcely any of it is caused by OneCare itself. OneCare itself doesn’t deliver a scintilla of health care. OneCare can’t provide an aspirin or put a bandage on your knee. Every single piece of medical service in the State of Vermont is delivered by doctors, hospitals and their technical support. If there is a problem with medical quality, that problem lies with doctors or hospitals. OneCare can collect quality data from providers, but the content of that data depends 100 percent on providers. If the cost performance under the fixed price contracts is subpar, the problem lies with the providers, 100 percent.

• A major challenge for OneCare is the so-called scale problem. Vermont has agreed in its contract with the federal government to enroll 70 percent of its 550,000 eligible residents in fixed price contracts by 2022.

We are running behind schedule on that, which many of the players are pleased to blame on OneCare. The reality, however, is that the number of Vermonters attributed to OneCare is entirely up to the payers—Medicaid, Medicare and private insurers like Blue Cross and MVP. Plus, large self-insured employers. In that cohort, Medicaid is basically all in, but the rest are coming in much more slowly. Still, the progress has been steady. In 2017, the first full reform year, OneCare had 31,000 attributed lives for 31,000 people. The number of attributed lives went to 112,000 in 2018, to 172,000 in 2019, and to 250,000 in 2020. The number of lives actually covered by fixed price contracts, and the ones required by Medicare, is lower than that (the actual figures are a little squishy) but they have grown each year. And none of that should obscure the key facts. The first is that Vermont is leading the country in the direction it needs to go on health care reform. There are some 850 ACOs in the United States, and just two—Vermont and one in northern California—are actually moving steadily toward block financing that places the financial and quality risk where it belongs, with the doctors and hospitals who deliver the care. The second is that OneCare has no power to force payers to enter into the payer side of a fixed price contract and likewise no power to force hospitals to enter the execution side of such an agreement.

• One of the most difficult questions in the OneCare issue is its relation to and effect on primary care. The single essential function of OneCare is to enable the shift from fee-for-service reimbursement to block financing. The second most critical function, however, is the support for primary care in Vermont. OCV doesn’t have to do it; primary care has to a significant degree stood on its own for 100 years or more. And it can continue to do so. Still, once you get past the overall costs in the system, halting the steady, decades long erosion of primary care should be your next priority. And for OneCare Vermont, it is the next priority. Which has not insulated it from the environment described in the first sentence of this post—ignorance, misinformation, bias and political manipulation. Consider the current situation:

  In 2017, OneCare developed a program to shift about $20 million a year to support primary care providers who would attribute their patients to OneCare. There are about 700 primary care docs in the state, and if the $20 million were split up evenly it would send just under $30,000 to each one. Since nowhere near all 700 are willing to fully participate in reform the amount going to each eligible doc would run somewhere between $50 and $75,000. The basic formula, obtained from 2018-2020, called for OneCare, using hospital money, to pay primaries $3.25 per member per month (PMPM). The subsidy program was very popular, especially during the Covid crisis because the doctors got the money even when the patients didn’t show up.

  A few months ago, however, OneCare announced that it would inject a quality requirement into the subsidy program for 2021. Instead of the straight $3.25 PMPM, the doctors would get paid on a sliding scale from $1.75 to $4.25 PMPM, based on their performance meeting a 13-unit quality performance test. Pandemonium ensued. OneCare was cutting primary care reimbursement when those docs needed it most, the Legislature huffed. A group of 14 independent practices announced that they would leave the program. Five advocacy groups said that OneCare Vermont should be shut down, and the state should dump the reform effort. In response, the Green Mountain Care Board urged OneCare and the independent docs to find a compromise, which they did, essentially pushing the whole issue off for a year. Ultimately, however, the primary care docs will have to decide whether they want to participate in reform as it has been constructed in Vermont. They don’t have to. But in considering that, they might recall the comment by Kevin Mullin, chair of the Green Mountain Care Board to the effect that there is another PMPM number possible. That number could be zero—no subsidy at all.

However, there is no gainsaying the seething virulence toward OneCare in the reform environment. Like many of the incremental steps taken over the last couple of years, the compromise didn’t really solve anything. The self-defeating objections of the primary physicians to the proposed subsidy revisions are emblematic of the widespread misunderstanding of OneCare Vermont, and what the organization actually is. OneCare has plenty of problems, but most of them are the same problems that bedevil the entire reform effort. And solving them will require the concerted efforts of all the players. To demonize and ultimately abandon OneCare means destroying the reform effort itself. Which will return Vermont’s medical care system to the bad old days of increasingly unaffordable prices, poor quality medicine and unequal care for Vermonters. And it would remove Vermont from the rolls of the handful of pioneers capable of reshaping medical care for the nation as a whole.

A Reprise of Health Reform Savings

by Hamilton E. Davis

One of the most fraught issues in the Vermont health care reform project is whether the project has saved any money over its tenure from 2013 to 2019, the last year of full spending data for the state’s 14-hospital system. A specific sore point has been the performance of OneCare Vermont, the state’s Accountable Care Organization. Some have claimed that OCV has had no positive effect at all.

  At Governor Phil Scott’s last press conference, I asked the Governor’s team whether they believe that the effort has had any financial effect. I said at the time that my analysis showed the reform efforts, by the Green Mountain Care Board, OneCare Vermont, and the UVM medical system, have saved Vermonters at least $1.9 billion dollars over the reform effort since 2013. And I asked the Scotties what their figures showed. They had no answer at the time, but they may have a response at today’s press conference. I cannot attend that session, so I thought I would simply repost the analysis I carried out in February of 2019. The whole text is reprinted below.

Thinking big numbers: guess how long one million seconds is, in days, weeks, months, years?
A billion seconds? No calculating—just take a shot.

Health care reform has had a long gestation period in Vermont, nearly 50 years, and for most of that time the galvanizing issue has been the need to get costs in the delivery system under control. Costs began their meteoric rise in 1966 with the birth of Medicaid and Medicare, national programs to pay for health care for the poor and the elderly. At that time, health care costs in Vermont amounted to 6.6 percent of the Gross State Product. The federal programs put a blowtorch under the tea kettle of demand, and costs began a meteoric rise that took health care’s share of the total state output to today’s level of just under 20 percent.

I am dredging up this history now for two reasons. The first is that the cost issue has faded from the reform environment over the last few years, which could skew the process; and, secondly, because we are now able to assess the financial impact of the reform project over its first seven years. That impact has been huge: Vermonters have saved nearly $2 billion in that time, and that is before the full force of reform has really begun to bite. The current Legislature has no real sense of that; and in fact, it’s general posture recently has been at best skeptical and at worst hostile toward the project in its current form. The negativity appears focused on the role of the UVM health network and the state’s Accountable Care Organization, OneCare Vermont. The huge savings over the last seven years could not have been achieved without the combined efforts of UVM, OneCare, and the Green Mountain Care Board.

In a previous post, I used the metaphor of climbers challenging Mt. Everest to illuminate the reform saga. We are now at Camp Three in the Everest metaphor, and one of the biggest potential obstacles between here and the summit would be some kind of harassment by the Legislature.  I'll write more about this in a future post, but for now consider that possibility as a cloud in the sky on Leg 4 of the Everest climb.

Following is my analysis of the effect to date on the financial dimensions of reform.

The first step to rein in costs came in 1983 when the Legislature established the Hospital Data Council with a mandate to figure out how costs worked in the system. The hospitals did not account for all of health care costs; other costs included sectors such as long-term care and independent physicians; and it did not even include all the hospitals—the VA hospital in White River, and the Brattleboro Retreat were left outside the regulatory tent. Still, the state’s community hospitals that were, and are, the engine of cost inflation.

In 1987, the Council issued a report showing the spending track for the period 1981-1988. It looked like this:

  In 1981, Vermont hospitals spent $149,500,000. By 1988, it was $271.1 million, resulting in a compound annual growth rate (CAGR) of 8.9 percent during that seven-year period (CAGR is like an average only better). That was clearly unsustainable. And it was playing hob with private insurance rates. Medicare and Medicaid together account for roughly half of acute care spending, and since the federal and state governments don’t pay their full share of the costs, the difference has to be made up by private payers—the dreaded cost shift.

The Data Council had no actual power to force lower inflation rates, but that changed in the mid-nineties with passage of a reform bill that gave the state the power to “establish” hospital budgets. The new regime was called BISHCA, and it regulated the hospital system until 2011, when the Legislature adopted the current reform plan. The new sheriff was the Green Mountain Care Board, and for the first time in modern era a regulatory body began to act like, well, a regulatory body.

I say that because costs roared along out of control throughout the period of the 1990s and the ‘oughts. The sole break in that trend came between 1994 and 1997, when the inflation curve flattened markedly. The change came not from Vermont regulation, but rather from nationwide voluntary restraint by the industry during the managed care era. Once managed care went away, the cost resumed their climb on the same slope as the ‘70s and ‘80s.

Our contemporary view begins in 2001, which is where the GMCB data gathering really begins. (The earlier data exists but is in the archives where it is hard to get at.) The easiest way to follow the analysis is to look at the following graph.

From 2001 to 2009 costs inflated by 8.01 percent. That figure is labelled CAGR, which means Compound Annual Growth Rate, a number that is close to a simple average, but is considered slightly more accurate by the money priesthood. In my analysis I have ignored the actual spending figures for the Fiscal Years 2010, 2011 and 2012. The reason for ignoring 2010 is that the marked drop in the inflation rate was not the result of any regulatory effort by BISHCA, but rather occurred by a big reduction in demand from the 2008 recession.

In 2010, we entered the modern health care reform era, when Pete Shumlin, a state-senator from Putney, won a very close race for Governor, first against four very credible opponents in the Democratic primary, and then an equally credible Republican in the general election. Shumlin won his long slog through difficult political terrain in large measure because he promised to solve the problems of the health care delivery system. He called his project Single Payer.

Shumlin launched his reform project in 2011, with a strong focus on cost containment by the newly established Green Mountain Care Board. At about the same time, the UVM health care system, in partnership with Dartmouth-Hitchcock Medical Center, formed an Accountable Care Organization (ACO) to attack the cost problem at its roots by shifting reimbursement to doctors and hospitals from fee-for-service to fixed price contracts that put providers at risk for the financial performance of the system they run.

The first hospital budgets considered by the Green Mountain Care Board were submitted in FY 2013. The first system inflation rate in the new system was derived from the actual spending in FY 2012 compared with the 2013 figures. The figures for the succeeding year are shown in the bottom leg of the graph, culminating in the 2019 system budget of $2.6 billion. The average (or CAGR) was 3.91%.

Beginning with the same base—the 2012 system budget of $1.99 billion, I have shown an inflation track of a 7.0% for 2012 to 2019, on the assumption that those numbers would be expected from the regulatory regime preceding the GMCB. The actual figure for 2001 to 2008 was 8.01%, but I cut it back to 7 because some of the money mavens I talked to thought that 8.0 was a little high, based on some national data. I also wanted to be as conservative as possible. Anyway, for each of the seven years I compared the actual spending with the “what-if” or “but-for” figures on the top line to get a savings for each year. The total savings came to $1.9 billion for the seven-year period.

I was frankly astonished by that number. I believe it demonstrates two realities when you are dealing with health care costs. The first is that the financial demands of health care delivery system are absolutely voracious. The second is the sheer mathematical power of compounding. An example: I used the 7.0 figure in order to be conservative and not boggle the priesthood. The 7.0 figure yielded a total savings of $1.9 billion. The priesthood, however, has no Vermont figures whatsoever to support their 7.0 view. On the other hand, the numbers from 2001 to 2009 that generate the 8.0 figure are as solid as the Green Mountains.

The savings at the 8.0 level come to $2.6 billion, a difference of a cool $700 million. To get some sense of the potential financial rewards of pursuing reform aggressively, recall that last spring the Legislature and the Scott administration collaborated in a titanic battle, involving a blizzard of vetoes, a special session, and a threat to shut down Vermont state government, over a Scott effort to save, possibly, $26 million.

Given these huge savings, it passes understanding why there is not more appreciation in state government of the results of just the early phase of reform. Nothing that either the Scott administration nor the Legislature has even thought of doing approaches the benefits that have flowed from the reform process since the passage of Act 48 in 2011. And there are a lot more savings where the last ones came from.  A brief suggestion: put the state employees and the state’s teachers into OneCare Vermont so that their health care can be delivered under fixed price contracts that keep inflation under control…

The health care numbers are so big they are literally bewildering to think about. If we used the 8.0 and found a savings of more than $2.6 billion, that figure would amount to half of the whole General Fund budget for the state. Just shifting from millions to billions is hard for ordinary people to get their heads around.

Speaking of which: did you try the test at the beginning of this piece? A million seconds versus a billion seconds.

A million seconds is around 12 days, enough for a short vacation.

A billion seconds is some 32 years, a third of a very long life.

Health care reform lives in a B for billion world.

Mark Levine: Vermont’s very own Dr. Fauci

by Hamilton E. Davis

   Among the remarkable epiphanies wrought in American life by the Covid virus is a new appreciation for reliable information on important issues. The modern world has been starved of that by the rise of the Web and the concomitant collapse of the American newspaper. Information in this new dystopia has been politicized, degraded, weaponized.

   Arising from this rubble, however, has been a new kind of player on the public stage. He or she might be a bureaucrat, a scientist, a politician, or somebody who just wandered into the frame. What they have in common is that they clearly know what they are talking about, they speak plainly, they don’t lie, they don’t talk down to people. Those characteristics shouldn’t be rare in public life, but in this deracinated environment they certainly are, so that our new players feed not only the mind but the soul: people trust them, and public trust is very hard won these days.

   An outstanding national example is Dr. Anthony Fauci, the chief federal government spokesman on the Covid-19 virus. No person in the United States has as much credibility on the pandemic as Fauci. And he has achieved that working for Donald Trump, the highest of bars. Another is Michael Osterholm, a brilliant professor at the University Minnesota, who was well known in the scientific community, but who is now teaching the whole world how to navigate a pandemic like Covid. In New York, Governor Andrew Cuomo metamorphosed a thuggish political persona into statesmanship simply by talking sense to his constituents as the wave engulfed his state.

   Vermont is a tiny player in the pandemic world, but we have our own version of this new player. He is Dr. Mark Levine, Vermont’s Commissioner of Health. Levine was appointed Vermont’s Commissioner of Health by Governor Phil Scott in 2017 after a long career in the UVM system. Health Commissioner has never been a particularly high profile role in Vermont state government, but that changed earlier this spring when the Covid virus appeared. The Vermont response team was led by Scott along with Levine; Mike Smith, the Secretary of the Agency of Human Services; and Mike Pieciak, Commissioner of the Department of Financial Regulation.  Beginning in March, the Vermont team held three open press conferences a week, and Levine played an outsize role there because he was the medical guy and the core of the crisis was the medical dimensions of the virus. Over the tenure of the pandemic, Levine was involved in something like 50 press conferences; I believe that was more public exposure for a health commissioner than all of Levine’s predecessors combined.

   The whole Vermont team performed well in the face of the virus, but it wasn’t perfect, which I’ll get into later. But through the dark days, in the view of A Vermont Journal, Levine was rock solid. Like many of my colleagues in the ink-stained space, I have become a Covid web rat, surfing constantly for insight, facts that rang true, wisdom even—anything to keep the boat on an even keel in the roughest seas I have ever seen.

   During that time, I found Levine as valuable as the Faucis and Osterholms and occasional eminences from the University of Washington at Seattle or John’s Hopkins or University College London. Levine was never uninformed, flustered, anything but measured, steady. If I could have asked for anything more, it would have been that he come down harder on the blundering of some of the players.

    And, in my own fantasy, I have wondered whether Levine might be willing to expand his portfolio to pronounce on the insanely contentious issues surrounding the much broader issue of health care reform in Vermont. If he would do that, it would be a service to the state that would resonate for decades. We need truth-telling on reform as desperately as we need a vaccine for the Covid beast.

Talking to Fauci (Levine)

    The other day I got the chance to talk on the phone at some length with Doctor Levine. Since the virus debuted in early March, the Scott administration has communicated with the public by holding first thrice-weekly, now bi-weekly press conferences, with Scott and his top lieutenants making a variety of presentations, and then taking questions from 25 or 30 members of the media. For a functioning journalist that availability is better than no availability, but it is nothing like the pre-virus days when you could talk to pretty much anybody at whatever length you needed; you could ask follow up questions, resolve ambiguities, explore interesting lines of inquiry. So, it was a breakthrough for me to have Levine take my call. Our conversation reinforced the impressions of Levine I had formed since March.

   My first questions involved two performances by the medical system that seemed problematic to me, and which I think embody the gnarly issues that form the current environment. The first was the decision by Copley Hospital in Morrisville to use antibody testing on their own employees; the second was the generation of a fake news outbreak of Covid in Manchester that turned out not to exist. The Copley situation was problematic, but not clear-cut, while the Manchester mess was just bad medicine and bad public policy. My question to Levine: if he had come down harder on the Copley situation, could that have headed off the obvious blunders in Manchester?

    As is his wont, Levine laid the whole case out carefully, while characterizing the Copley initiative in as favorable terms as he could. “To their credit,” he said, “they tried to study it as opposed to just doing it.” And they did pick up a marginal piece of useful information; namely, that using a finger stick to get a blood reading is not good enough; you have to get a regular blood drawing. Beyond that, the whole Copley caper falls apart. First, as he does regularly, Levine went to the science.

   The gold standard for testing, he said, is the PCR version--the one where they stick the swab way up your nose. It’s not totally foolproof, it can give you a false negative if there is just a trace of virus in your system. It also takes time to process. But PCR detects the presence of the actual Covid genome, and hence is the most reliable test to see whether a person has the virus. There are two other types of tests; one is a serology or blood version shows whether you have antibodies to the virus in your bloodstream. In other words, whether you have had the virus in the past. The second is an antigen test, a shortcut version of the PCR test that detects fragments of the virus in the system at the time of testing.

   The Copley initiative involved testing their employees for antibodies, and Levine explained first how limited that process is. There are two kinds of antibodies, those that the body produces on contact with the virus, which tend to fade fairly quickly; the body produces a second type of antibody which can last for a very long time—real immunity.

  “What they learned at Copley,” he said, “is that it isn’t very useful to screen for (the short-lived) antibodies because they couldn’t correlate it with any PCR (the gold standard) data and the sample size was so small they couldn’t really conclude anything—it wasn’t very useful, it’s a small place and it’s a small number, and we didn’t have a very high level of disease in the state.”

   The test could be valuable, he added, if it was done with a large enough sample to inform state policy makers about managing the virus in the future.

 “What I have been saying in my press conferences is that this is not a test we should really do to inform an individual about anything—whether they should donate their plasma, whether they should go back to work, should they get a vaccine,” Levine said. “It’s not going to be helpful for individual decision making.”

   Okay, got it. I’ll explore later whether the Copley experience was just the kind of blind alley that is common in medicine, an error of execution, a publicity stunt, or something else. We also need to know if it was a waste of money, and if so, how much. What is clear right now, however, is that nobody in Vermont should follow the Copley example. How do we know? Because Mark Levine, MD., says so. He’s our gold standard. Can he be wrong? Of course, but someone in Vermont who wants to plow new ground on pandemic medical issues should be ready to get over a very high bar. The Copley caper didn’t come close.

The Manchester Debacle

   The Copley testing was ill-advised, but it didn’t appear to cause any serious damage. The same cannot be said of the testing mess in Manchester. A pair of local doctors there ran antigen tests in the late spring and early summer; recall that the antigen test is a quick and dirty look at whether the person has the Covid virus at the time of testing. The Manchester Massacre was a perfect storm of errors and egregiously bad behavior that rippled out in all directions and illuminated just how difficult it is to manage the pandemic. That narrative is still unfolding, and I will address it in a future post. This is a profile of Doctor Levine, so I’ll just sketch Manchester here to enough to make the necessary points.

 On July 16, a Thursday, Vermont Digger published an article saying that, “A Manchester health clinic reports 59 Covid cases in a growing outbreak.” That was possibly the most striking headline Vermonters had seen, beyond the reporting of the presence of the virus. Fifty-nine cases outside of a nursing home or prison dwarfed anything Vermont had seen since the virus appeared in early March. The headline and the top of the story was enough to cause panic in the Manchester area, and deep concern in the rest of the state.

   But then the first red flag appeared. “But seemingly contradictory reports between town and state officials about the surge of cases have sparked confusion among residents and a backlash against the state on social media.” Finally, the Digger piece gets to the real news:

   “At a press conference on Thursday afternoon, Health Commissioner Mark Levine said his department had confirmed just two of those (59) positive cases and didn’t have enough information to label the incident an “outbreak.” The story added that Levine said he took the information seriously, but that “We need to let the data and information come out.” Levine is bending over backward here not to trash the locals because in fact the data is out, and the story the data tells is that the whole thing is giant botch. I mean, two out of 59 cases confirmed. Really?

   The final count was 65 positives from the antigen testing, and just four could be confirmed. That is actually a national story because the consensus of the Web tribe was that the antigen tests had very few, if any, false positives.

   By the next day, the facts were pretty much clear. A small primary care group called the Manchester Medical Clinic with just two doctors mounted a testing program to find people with the Covid-19 virus. The test was only cleared for use in mid spring, so it was unproven in operation, and it and its basic design limited its use to people who had Covid symptoms; no responsible person ever thought it would displace the PCR test that was standard all over the world. In July the clinic reported that it had found 59 cases of Covid in the area of Manchester, a town of just over 4,000 in Bennington, County, and Londonderry, a town of 1700, about 17 miles to the east. That’s a huge outbreak for such a small area, and it caused an uproar.

   In substantive terms, however, the “story” was over in not much more than 24 hours. Mark Levine said on July 17 that standard PCR testing of the 59 cases showed that just two actually had the disease. That’s a 97 percent false positive rate, which is simply preposterous. It was obvious to anyone thinking clearly that there was something wrong either with the test itself or the way it was used.

    An obvious inference, however, couldn’t keep the story from spinning out of control. The Manchester Town Manager, John O’Keefe put up the erroneous data on Facebook page, and he said later that it would have been unethical not to have done so. The direct result was several downtown businesses closed down and a retail market program was aborted.

   The lead doctor at the Manchester Clinic, Janel Kittredge-Sterling, denounced Levine for bringing up the testing issue. She was quoted by Digger as saying Levine was creating a “false sense of security that may lead ultimately to increased spread of the virus.

   “Please don’t make the blanket statement that these are false positives and that people can go about their business, because that is dangerous,” Kittredge-Sterling said. “I’m concerned that these folks don’t go out and with this false sense of ‘Ok, my second test was negative. I can go out.’”

   Meanwhile, the Digger stories noted that there was talk on social media about the “deep state”, and criticism of the state for “undermining the (clinic’s) positive results.” There was talk of conspiracy theories. Ryan Ferris, who operates an ambulance company in Chittenden Country, said his firm had carried out antigen tests on some 800 workers, only one of whom had tested positive. Yet, he blistered the state officials for “jumping to conclusions,” and suggested to Digger that the standard PCR might be inaccurate.

   “For the Department of Health to jump from ‘Oh, they tested negative to PCR’ to ‘Oh, that test must be bad,’ that doesn’t bear out nationally, and it doesn’t bear out over the results of the several hundred we’ve tested…” He added he had offered to help the state solve its testing problem, but that they hadn’t taken up his offer.

   Mark Levine barely held his own against this tsunami of medical ignorance, financial self-interest, political irresponsibility, bad press performance—all in all, a goat rodeo. After a six day run, the whole issue went away, when hundreds of real tests showed only a handful of actual infections. Its long term effect, however, remains: Vermont has a desperate need for reliable information about issues like the Covid virus. Levine isn’t the only one who understands the issue, but he is the only one people will trust to lay it out for them. Here is what the public needs to know about antigen tests.

   Levine: If you use an antigen test within the first five days of infection in an area that has a “reasonable prevalence of the virus” and the person being tested has some symptoms, then it can give you a jump on getting the person tested, isolated and treated. That’s not what happened in Manchester, Levine said.

   “Many of the people they were seeing we didn’t think satisfied the definition for Covid in terms of the victims they presented,” he said. “And on top of that they had a bunch of people we regarded as having no symptoms, and that’s not where the test should be used. And so, there were a lot of problems in execution…

   “The problem,” he continued, is that this test is now being used at work sites. People are marketing it and using it at a work site to reassure the employer that the employees are free of disease and to reassure the public facing those businesses that the employees are free of disease. And the reality is (the test) is not meant to be given to people who feel well and don’t have Covid. “

Being Mark Levine

   It may have seemed tedious, even to my tiny corps of brilliant readers, to follow the meanderings of the Copley and Manchester adventures, but I believe it is necessary to understand the environment in which Levine works, and the difficulties he faces.  A hospital goes off into an ill-advised medical adventure, a couple of emergency room docs blunder into the weeds on Covid testing—and blame Levine for introducing sanity into a public health crisis; and a business guy markets a marginal Covid test on employers in Chittenden, and trashes “state health officials” when his product is described as basically useless. And every piece of half-baked junk gets amplified by the dodgy health care reporting of VTDigger. (Example: Digger had the last word on the Manchester mess: “Testing company says Manchester tests were accurate”)

   There is nothing easier in Vermont today for people who have no serious credentials to say, in effect, ”Hey, it’s just Levine. What does he know?”

   So, my question to the Health Commissioner was, do you need to get tougher? Do you need to come down harder on the actual performance of the various players? Do you have a plan to bypass the garbage flying around so that the Vermont public gets a clear view of the issues involved? Levine said he intends to do just that.

   “That will probably happen,” he said. “I am being somewhat respectful of the process, and I want the full report by the FDA (on testing) to come out, no matter what it shows, to help guide us and explain what went wrong in Manchester, not in a shaming way, but as an example, and then be able to reiterate what I said before about who the appropriate audience for this test is, where it should be used, where it shouldn’t be used.

   “I have maintained all along that we will use these tests in Vermont…but it will be done under the right terms and the right conditions.”

   Okay, Mark, but do you have a plan to articulate those terms and conditions at the front end and thereby foreclose poor performance by the various players?

   “I absolutely do have a plan; that’s why I want to have the support of the investigation by the FDA, because I will not say anything different than I am going to say anyway. But having that investigation will reinforce the point I want to make. That’s key.”

   Levine sounded determined to me, and his getting more forceful would be an important advantage as Vermont navigates the white water that lies between where we are now and either a vaccine or herd immunity. Enhanced oversight by Levine and the rest of the Covid team will be both difficult and important. Difficult because so many of the players are driven by ignorance, self-interest and political forces. Important because the state is already badly stressed by demographic and financial forces. The underlying issue is that Levine’s basic decency and understated style can work against him, as we saw in the Manchester case. My own view is that we can count on Levine—he is one of the vanishingly small number of national class players on the field.

   That conclusion gave rise to my personal fantasy: that Levine might move beyond his immediate concerns with the virus to the broader issues that stand in the way of driving health care reform to full maturity, and a delivery system that is sustainable into the 21st century. That question is nowhere near as immediate and visible as the Covid battle, but it is much more difficult financially, socially, politically and culturally. So, if Levine could extend, or be asked or directed to extend, his portfolio to commentary on reform issues it would an important asset going forward. Those issues abound—what services should the small Vermont hospitals deliver; should Northwest Vermont Medical Center in St. Albans build a new Intensive Care Unit with Burlington’s Medical Center nearby; should 25-bed hospitals do hip replacements, or vascular surgeries? And dozens more. Vermont seems to me to be an information desert and a reliable medical authority would be a huge help.

   Would Levine be interested in that?

   He said he would, and that he believes that the Covid emergency could drive a new emphasis on public health by governments. In the U.S., he said, governments normally spend two to three percent of their budgets on public health, while the figure in Europe is in the teens. “The pandemic should make people so much more aware of the shortsightedness of that approach,” Levine said.

  And those nasty questions attendant on reform: Should Vermont have someone who can provide medically credible advice there?

   “Absolutely,” he said. “We know we can’t spend money on everything under the sun,” he continued. “The pandemic will help drive reform based on value over volume…”

   Failure by Vermont to wring the best out of Levine’s skill and knowledge and the public trust he has engendered would be to waste one of the state’s most valuable assets. Vermont can’t afford to do that. Not even close.