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As Losses Mount, Some Hospitals Request Steep Rate Increases

A hospital.
Stina Booth Photography, Courtesy
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Northwestern Medical Center in St. Albans expects to lose $4.7 million this year. The hospital wants to raise its rates by almost 6 percent next year.

Six of Vermont’s 14 hospitals will end this year with a deficit, according to reports submitted recently to the Green Mountain Care Board.  And as the losses mount, some hospitals are seeking steep rate increases this year.Hospitals are required to submit their budgets at the beginning of July, before the board's annual budget review and rate increase hearings in August.

Northwestern Medical Center expects to lose more than $4.7 million this year, while Grace Cottage Hospital projects about $1.2 million in losses, according to the reports.

At Copley Hospital in Morrisville, officials expect a deficit of more than $1.2 million, marking the fourth year in a row of losses.

The Green Mountain Care Board reviews hospital budgets each year with an eye toward controlling costs by limiting rate increases.

Vermont Association of Hospitals and Health Systems president Jeff Tieman says hospitals can plead their cases before the Green Mountain Care Board during budget hearings.  

 “The hearings will be intense because we have the Springfield situation swirling. We have concerns about margins and financial distress elsewhere in hospitals," said Tieman, who said the hearings are an opportunity for regulators to "understand the full scope of challenges and opportunities and pressures that are on hospitals.”

Not all of the state’s hospitals reported losing money. Most of the larger hospitals stated they could keep rate increases below 3.5 percent.

Smaller hospitals that have merged with a bigger institution, like Porter, which is  part of UVM Medical Center, and Mount Ascutney, which merged with Dartmouth Hitchcock, also reported budgets that could withstand rate increases below 3.5 percent.

But standalone hospitals serving mostly poor and aging populations said it would not be sustainable to keep such a tight rein on what they charge patients.

"The hearings will be intense and they should be. That's the point of them; is to make sure that we're getting at all of the issues, and that regulators understand the full scope of challenges and opportunities and pressures that are on hospitals." - Jeff Tieman, Vermont Association of Hospitals and Health Systems

Officials at Copley Hospital asked for a nearly ten percent average rate increase. They reported cutbacks on hiring, education and capital projects this year, explaining that high drug prices, and losing a surgeon added to the losses in 2019.

In St. Albans, Northwestern Medical Center reported a request for a nearly six percent increase.

Northwestern Medical Center CEO, Jill Berry Bowen, said the hospital’s rate request is tied to the tough realities small hospitals face.

 “Our inpatient volume is down a bit. The birthrate is down. So we’re seeing those shifts in the inpatient,” Berry Bowen said. “Our emergency department volumes are down. So it’s these types of shifts that are making it challenging.”

Northwestern lost money over each of the past three years.

Berry Bowen said the hospital is at a critical point, as it moves to an electronic record system, tries to address worker shortage issues, and adopts Vermont ‘s alternative payment system.

The hospital is focusing some of its attention on cutting costs, but Berry Bowen said she hopes the Board recognizes the need to support Northwestern’s rate increase request.

“When you have a cap of 3.5 percent, and you already are working at a very high productivity level using lean strategies, then it becomes extremely challenging when you have this really tight gap of what you can have for a net patient revenue, and what the cost of doing business is,” she said. “The lines are crossing.”

Vermont is the only state in the nation that has a single regulatory body overseeing hospitals.

The Green Mountain Care Board this year will have to figure out a way to control spending, while making sure Vermont’s rural hospitals keep their doors open.

The first hospital budget hearing is scheduled for August 19, with final decisions due by the end of September.

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