It's not just COVID. Vt. hospitals face financial challenges heading into budget season.
The Green Mountain Care Board recently rejected a request from Rutland Regional Medical Center to raise the hospital's service rates, and the board is now considering a similar request from the UVM Health Network.
The rate increase proposals come as Vermont's hospitals are preparing for the upcoming 2023 budget cycle, which promises to be especially challenging for hospitals as they emerge from the COVID-19 pandemic.
VPR's Grace Benninghoff spoke with reporter Howard Weiss-Tisman about the challenges facing Vermont's hospitals. Their conversation below has been edited and condensed for clarity.
Grace Benninghoff: Howard, it’s rare to have a hospital ask for a midyear rate increase, but the Green Mountain Care Board heard from three hospitals yesterday. What’s going on?
Howard Weiss-Tisman: So the hospitals asking for the rate increases include Rutland Regional Medical Center, along with UVM Medical Center and Central Vermont Medical Center in Berlin, which is part of the UVM network. And what all these hospitals are saying is that they're getting hit really hard by inflation.
You know, we’ve been hearing a lot about nursing shortages. And we know how tough COVID has been on hospitals. But on top of all that the hospitals are saying that they're really getting slammed by these cost increases on everything from fuel, to food, and linens and medical supplies. And the hospitals are saying that they don't have the money in their annual budget to make it through the rest of the year.
This is what Al Gobeil from the UVM Health Network told the Green Mountain Care Board on Wednesday.
“You know, this is a critical moment. And now we're in dangerous waters. And we have no ability to raise our prices without you. Yet all of the businesses that we deal with can. And so it's putting us in a position where we are completely disadvantaged to staying modern. And I just see that as an existential threat for Vermont and the region," he said.
Rutland Regional Medical Center was seeking a 9% rate increase, but the board turned it down. Tell us how the Rutland hearing went?
Yeah, it was it was pretty tough. This was the third hearing that Rutland had before the board. At each hearing, the board asked for a little more information. I listened in on the hearing last week, and you could also see just what a tough position the board is in. So if they approved the rate increases, it would mean that every Vermonter who pays something on their insurance would see the rate go up. That's the way it works in Vermont. So small business owners would have to pay more and individuals would have to pay more. And the board knows that Vermonters are in a tough spot as they're coming out of COVID. And they're paying the same high prices on gas and food that the hospitals are facing.
So like you said, Rutland was asking for 9% rate increase. And the board talked about it a lot. They even considered at one point maybe giving them 1% or 2% to help them out. But after about an hour of some really tough back and forth, they totally denied Rutland's request. I was pretty surprised, and I think the hospital was kind of shell shocked, too.
And what about UVM?
This was the first hearing that they held. And so they're going to be back before the board next week. They're seeking a 10% increase, and the board will consider that next week.
So why are several hospitals in Vermont asking for rate increases? Is it because they're struggling financially? And why might that be happening here in Vermont?
It's important to remember that this was going on even before the pandemic. Most people will remember back in 2019, Springfield Hospital, declared bankruptcy. And this is something, Grace, that's happening all across the country. And it has to do with a lot of things. You know, a big reason why Vermont is having a tough time is our demographics. We know we're one of the oldest states in the country, so there are fewer younger people to pay into the insurance pool. And also, there's not a lot of money in the state, so there's more people on Medicaid and Medicare. The federal insurance programs don't pay as much as the insurance companies do. So the insurance companies are kind of trapped making up the difference. And again, that goes back to small business owners, folks that are paying premiums — and it's just not a sustainable system.
So now hospitals are just starting to get next year's budget together. And the Green Mountain Care Board yesterday voted on next year's budget benchmark. How do you think the 2023 budget hearings are going to go?
It's going to be really tough. It's important to remember that before COVID, Vermont's hospitals were in tough shape. About half the hospitals in the state were losing money, then you have COVID and all the strain that put on the hospitals. But at the same time, our health care system got tens of millions of dollars in federal aid during the pandemic.
And during COVID, the budget process over the past couple of years was kind of watered down, because the board knew that hospitals were going through a tough time. And so there were fewer reporting requirements. So now the hospitals are coming out of the pandemic, there's no more federal money, the hospitals are trying to kind of get their footing. And now we have these really intense inflationary pressures. This is what Kevin Mullin, chairman of the Green Mountain Care Board, said during the budget talks.
“The cost of nursing and other provider pay is not going to magically just stop. And we have to be prepared for some significant increases in the upcoming budget season to reflect that. If not, we're going to put hospitals on a death spiral as they chew through all existing reserves, or they start making the unconscionable decisions to start to shut down unit," he said.
So the board was really all over the map in their talks. They considered not setting any budget targets and kind of taking the hospital budgets on a case-by-case basis. But they also realize that it's not business as usual and a one-year rate increases that's tied to historical inflation wouldn't work. So in the end, they set a two-year target that's a little higher than what the board has set in the past. And they're hoping that the hospitals are going to be able to work within those budgets.