Vermont health care authorities issued instructions to the state’s 14 hospitals Wednesday to keep the increases in their 2013 budgets to 3.75 percent, an even tighter lid than the last two fiscal years whose Legislature-imposed limits were 4.5 and then 4.0 percent.
The cap was set by the Green Mountain Care Board, which under state law has the authority to establish hospital budgets. The action is a significant cost constraint for the whole health care system since the state’s hospitals and the doctors whom they employ deliver more than 60 percent of the care in the state.
“Keeping a tight rein on the 2013 budgets is an important step in our efforts to build toward a single payer restructuring in the state,” said Anya Rader Walleck, the chair of the Green Mountain Board. “The state’s hospitals have done an excellent job on cost containment in the last two years, and we need to keep moving in that direction.”
The board built the budget target from a baseline of a 2.76 percent increase in a federal market basket of inflation indicators and then adjusted it to 3.75 percent to account for increases in hospital costs due to aging of the population, growth in income and other investments, such as improvements in information systems. If the hospitals stay within the caps, the system increase for the year would be $78 million on a base of roughly $2 billion.
As in the past two years, hospital budget writers will have the option to ask for exemptions to the cap for items that the board believes are essential to efficiency in the system as well as to health care reform itself. These include:
•Investments by a hospital to participate in the state’s plan to replace the Vermont State Hospital.
•Increases in the provider tax levied by the Legislature.
•Acquiring doctor practices that would not add to the overall cost to the system. That means practices already operating in the hospital service area and not new practices brought into the area.
•New revenues that would accrue from serving new patients from outside the state.