Hospital budget caps set by Green Mountain Care Board

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.

Anya Rader Wallack

Anya Rader Wallack. VTD/Josh Larkin

“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.

Comments

  1. Bethany Knight :

    Ham, this is totally Back to the Future! Didn’t this article first appear about 20 years ago??? Arghhh…well, at least you know what that ole ‘market basket’ is this, this time around. :-)

  2. Joyce Wilson :

    So a “tighter lid” on the hospital budgets to get ready for single payer! Now why would I choose a VT hospital over an out of state hospital, like Dartmouth? I’d much rather be seen in a hospital that has more rational flexibility in meeting health care needs that isn’t tied to an arbitrary fixed budget. That way there is less worry about cutting corners and rationing care to stay within the fixed budget. This is more like the old days on HMOs. Once the Green Mountain single payer health care system arrives, how will they force similar budgetary constraints on out of state hospitals? They can not, but I bet they will make it very difficult if not impossible for a Vermont state resident to choose an out of state provider or hospital for health care.

  3. Bob Zeliff :

    These rate caps have been developed with substantial discussions with the Hospitals. All are trying hard to control costs. I think we should be proud to our hospitals and health care providers.

    I really don’t understand you complaint! You would rather pay more? Do you really relate the more you pay with the quality of care? Do you drive a Mercedes? they cost more so should be better….at least a status symbol. Actually facts say that care costs do not correlate well with care quality.

    You can always do that, contribute money to any Hospital, they all have funds for people who want to do that.

    While I know that Dartmounth has participated in this rate setting I just do not know exactly how that has ended up.

    Maybe you could explain why you want to pay more. If you have some facts to support that position, that would help my understanding.

  4. Allan Wylie :

    Rate caps is another for name price controls and we have lots of experience with that strategy. It produces imbalances on the supply side, which, in other scenarios leads to a black market. In this application, we are already seeing a black market which is going to Poland or India for medical care.

    What’s not recognized by the Vermont legislators is that there is the law of supply and demand and it cannot be circumvented. You can put regulations on top of it, but it then responds to that environment in predictable and distorted way.

    While we don’t like to think of it that way, hospitals are a business. THey need to make a profit to stay in business. Doctors have their medical ethics which serve their patients well by putting the patients medical needs first. I do not deny that there are greedy and unethical doctors, but they are not the norm. We are in danger of putting in place a system which makes the hospital profitability the first priority and the patients health second. I’m sure we don’t want that, but placing caps on hospital budgets can lead nowhere else.

  5. Joyce Wilson :

    Bob,
    I have actually donated money to my local hospital’s cancer center and I don’t drive a luxury car, but your questions are off topic. The point to be made is that single payer health care systems control costs with blunt instruments = arbitrarily fixed budgets, global and (or) capitated payments. Vermont hospitals will be constrained by the limited budget and may be forced to cut corners and ration care, likely by waiting times, as done in Canada.

    If I am diagnosed with a suspicious lesion that may be cancer and I have to wait four weeks or longer for a biopsy in a VT hospital, to determine whether or not it is cancer, or I can go to a MA hospital next week to find out if it is cancer, do you seriously think Green Mountain Care will pay for my care in a MA hospital? Does Canada pay for its citizens to come to the US for care when the waiting times are excessive? The answer is no. I suggest you read these two links that discuss problems with the Canadian health care system.

    http://www.montrealgazette.com/news/Royal+Victoria+Hospital+turning+away+patients+colonoscopies/6237231/story.html#ixzz1oFboy790

    http://www.fraserinstitute.org/research-news/news/display.aspx?id=2147484002

    Plus the budgets that are being imposed on the hospitals in this VT Digger are for 2013. So what are you talking about spending more? I will spend the same amount of dollars at Dartmouth or a Mass. hospital as I would spend at a Vermont hospital in 2013. So good for you Bob that you choose to be seen in a hospital in Vermont with the budgets being capped while I choose to be seen out of state in 2013 at hospitals that do not have budget caps. I am not criticizing you or attacking you for your decision. So Bob it was not a complaint as I was just saying that I seek my health care at hospitals out of VT that do not have spending caps in 2013. Plus the VT Digger piece does say that this cap is a significant cost constraint for the entire Vt health care system.

    I agree that we need a better health care system that improves access for all, but I am strongly against limiting choice and relinquishing the control of my healthcare to a five member government panel of bureaucrats.

    • Bob Zeliff :

      I’m glad that you have donated to your local hospital, but do not respect them enough manage their resources efficiently so you feel you will have to travel out of state for health care? I

      You say you will spend the same out of state as Vermont but you want to travel to do it. Again your logic escapes me. Do you have any data that says out of state hospitals cost less, or offer faster service. From the data I’ve seen Fletcher Allen is amount the best in the country. From my personal experience with my parents Rutland regional also does and excellent job. I think you have been mis-informed.

      I had a colonoscopy myself last summer at fletcher allen, about 10 days after I called. Not a problem.

      Canada does pay for urgent health care in the US when people are traveling here. In the past when there was a back log on some special procedure which Fletcher Allen could provide, Quebec paid for that too. For all the “be afraid of Canada health care” miss information that is being distribute by self serving special interest, remember Canada has better national health than the US and they pay about 40% less. This makes their population heather and their businesses more competitive( i.e. less health care costs). I am not saying there are no problems with Canada’s system, any large complex system has problems but when you look at the total, they have better results at less cost than we do.

      We as a nation are falling behind in so many areas because we refuse to change, we have to use Russian’s vehicles to get to our Space Station, we do not have the technology to build the iPad in the US, and we have the most expensive (by any measure) health care (really hurts our competitiveness ) of any nation.
      Resisting change never used to be the American way, embracing it, make it work for us made us great. Now we seem stuck in the past.

  6. Joyce Wilson :

    Bob,

    I have actually donated money to my local hospital’s cancer center and I don’t drive a luxury car, but your questions are off topic. The point to be made is that single payer health care systems control costs with blunt instruments = arbitrarily fixed budgets, global and (or) capitated payments. Vermont hospitals will be constrained by the limited budget and may be forced to cut corners and ration care, likely by waiting times, as done in Canada.

    If I am diagnosed with a suspicious lesion that may be cancer and I have to wait four weeks or longer for a biopsy in a VT hospital, to determine whether or not it is cancer, or I can go to a MA hospital next week to find out if it is cancer, do you seriously think Green Mountain Care will pay for my care in a MA hospital? Does Canada pay for its citizens to come to the US for care when the waiting times are excessive? The answer is no. I suggest you read these two links that discuss problems with the Canadian health care system.

    http://www.montrealgazette.com/news/Royal+Victoria+Hospital+turning+away+patients+colonoscopies/6237231/story.html#ixzz1oFboy790

    http://www.fraserinstitute.org/research-news/news/display.aspx?id=2147484002

    Plus Bob the article above is talking about a budget cap for VT hospitals in 2013 and this budget cap does not apply to out of state hospitals. It will not cost me more to be seen out of the state in 2013. I do not have a complaint as you stated above. You decide to be seen in state with budget caps being put on the Vermont hospitals and I decide to be seen at hospitals out of state that do not have budget caps.

    I agree that we need a better health care system that improves access for all, but I am strongly against limiting choice and relinquishing the control of my healthcare to a five member government panel of bureaucrats.

  7. Joyce Wilson :

    Here is just a little background information on hospital ratings from US News Reports. Both Fletcher Allen and Rutland Regional in 2011 rating had a low nurse to patient ratio. The Green Mountain Care Board has put an ever tightening squeeze on the hospitals in VT with the arbitrary budget cap. 2013 will be an even tighter budget cap on the VT hospitals than 2012 and 2011!

    http://health.usnews.com/best-hospitals/fletcher-allen-health-care-6130001/cancer

  8. Jason Kelley :

    I just read with interest the article from The Montreal Gazette referenced by Joyce Wilson. It simply states that one particular hospital in Montreal cannot offer screening colonoscopies to Montrealers who do not normally receive their care within that hospital’s system. The author actually goes on to point a finger at the private clinics that have been set up in Montreal as a cause of the problem. It would be a real stretch to read this article as a condemnation of all health care in Canada or even care in the greater Ville de Montreal.

    Incidentally, the fact that we will always be able to read more articles about minor or major imbalances between supplies and demand in Canada is a tribute to the greater transparency and organization of their provincial heath care systems. Want to find out how many Vermonters currently have a problem with access to screening colonoscopies? Good luck finding out!

    Gaps in supply only exist in the public’s eyes if they get press coverage. For example, I remember a time in the past when the Burlington Free Press and numerous other American papers published many articles about a backlog for a different elective procedure in British Columbia. The American press couldn’t write enough about British Columbia’s wait list of about 150 patients. The right wing Fraser Institute couldn’t stop cackling. At the same time Vermont, with its tiny population (15% of British Columbia’s), had a waiting list for the same procedure that exceeded 150 patients. But that information was embargoed from the press by the hospital involved so never got reported. Caveat lector!

    Under a single payer system, whether in Taiwan or Canada or Vermont, doctors and hospitals may have more freedom and choice to advocate for their patients by addressing gaps in supply when they arise, freedom and choice that does not exist under the current dominance of the insurance conglomerates.

  9. walter carpenter :

    “At the same time Vermont, with its tiny population (15% of British Columbia’s), had a waiting list for the same procedure that exceeded 150 patients.”

    Thanks, Jason. When I was dying several years ago, and the doctors were giving up hope, I got this way because I had to spend a month simply finding a physician/specialist (insurance network problems was the cause for this), then at least another month before I could even get an appointment, then another month to try to get the procedure I needed. Fortunately, when the doctors saw the stage I was at, they overrode the bureaucracy and got me in as soon as they could. This happened not in Canada, but in Vermont, under our free-market system. It is not altogether that unusual.

  10. Joyce Wilson :

    This is an excerpt from the Montreal newspaper article:

    “And it’s not just low-risk patients who are affected. Those with a first-degree relative with colorectal cancer – which places them in the high-risk category – have told The Gazette that they have been waiting longer than a year for a colonoscopy. In one case, a 50-year-old patient, whose father underwent colorectal-cancer surgery and whose grandfather died from the same disease, has been booked for a colonoscopy in 2014.” Vt Digger readers should read this article and draw their own conclusions.

    Read more: http://www.montrealgazette.com/news/Royal+Victoria+Hospital+turning+away+patients+colonoscopies/6237231/story.html#ixzz1soyBOML6

    You say, “Under a single payer system, whether in Taiwan or Canada or Vermont, doctors and hospitals may have more freedom and choice to advocate for their patients…” Jason, You should be careful what you wish for. Look at how doctors are being treated in Canada for being patient advocates in speaking up and complaining about the problems with the Canadian health care system: http://www.google.com/search?q=bullying+doctors+in+Alberta+Canada&rls=com.microsoft:*:IE-SearchBox&ie=UTF-8&oe=UTF-8&sourceid=ie7&rlz=1I7DKUS
    From one of the articles: ”

    “Patients wait too long in emergency rooms and doctors dare not advocate for patients if they want to keep their jobs, according to a report on Alberta’s healthcare system. The Alberta Health Quality Council panel, which authored the report, said it has found widespread instances of physicians experiencing intimidation and muzzling when advocating for patients, evidence of a culture of fear and alienation across the province.” http://www.cbc.ca/news/canada/edmonton/story/2012/02/22/edmonton-health-quality-council-report.html
    And why are Canadians looking to introduce more privatization of services and doing away with the government health care system monopoly. I found this link at http://www.sunnewsnetwork.ca/video/909810955001

    Walter and Jason,this Vt Digger article is about putting an ever increasing squeeze on the hospitals budgets in 2013! The link that I supplied in an earlier post from US Today showed that both Fletcher Allen and Rutland Regional in 2011 had a low nurse to patient ratio.
    http://health.usnews.com/best-hospitals/fletcher-allen-health-care-6130001/cancer

    We have to reform our health care system but we should be looking at other systems in Europe, as discussed in the video I linked above. Vermont is going down the wrong path with reform by adopting the single payer government monopoly type system. We need to make sure we reform to get the best fix possible, not one that changes one set of problems for another.

  11. John Greenberg :

    Assuming the report Joyce Wilson refers to — http://www.montrealgazette.com/news/Royal+Victoria+Hospital+turning+away+patients+colonoscopies/6237231/story.html#ixzz1soyBOML6 — correctly portrays the situation, it implicates one department of one hospital. Should we really draw conclusions about the Canadian health care system on that basis? Is Joyce Wilson seriously suggesting that there are no similar (or worse) problems at American hospitals?

  12. Joyce Wilson :

    “Charles Adler and guest Dr. Brian Day on Canadians not being treated as customers, falling through the cracks of our medical monopoly.”

    http://www.sunnewsnetwork.ca/video/featured/prime-time/867432237001/healthcare-horrors/1456820505001

    Back to the emphasis of this Vermont Digger article to controlling health care costs with the Green Mountain Care Board putting an arbitrary budget cap on Vermont hospitals and an ever tightening squeeze. Plus see my earlier post to a link US News & World Report 2011 ranking of hospitals. In the 2011 ranking,both Fletcher Allen and Rutland Regional were falling behind. The nurse to patient ratio in 2011 was already low and the Green Mountain Care Board has put an ever increasing squeeze on the budget for 2012 and 2013.

    • Bob Zeliff :

      Joyce,
      Your US News article shows the results of the current system failing. Don’t confuse that with the future.

      Right now hospital have to absorb i.e. cost shift or cute cost because Medicade significantly under funds due to rate setting from Washington. Note Vermont has stepped up some what to augment this but we don’t have a lot of money for more. On top of this the hospital also have to aborb i.e. cost shift or cut costs when ever it is Forced to treat those with out insurance. These are just a few of the flaws in the current system.

      Green Mountain Care will cover everyone…and pay for everyone. Eliminating that cost shift, providing MORE funds to the hospital which they do not have. Also it is hope, yes only hoped at this point, that Vermont can get a waiver to more fully manage Medicade and Medicare, i.e. use those funds more prudently. By providing insurance for every one, the very expensive emergency room will no longer be used un paid care for the uninsured. They will be covered and be able to get much more cost effective care from a personal Doctor.
      An then there are the administrative saving of not having to deal with so many insurance forms.

      These methods are tried and proven in much of the rest of the world. They have both better health care and lower costs. We should join them in more efficient health care.
      Doing this will improve hospitals funding from these sources.

  13. Joyce Wilson :

    Good for you Bob that you are confident that arbitrary budget constraints put on the Vermont hospitals by the Green Mountain Care Board is part of the solution. Did you look at US News & World Reports rankings of hospitals? Vermont hospitals in the 2011 rankings were not holding up compared to rankings of other hospitals in the country. The nurses to patients ratio was low already in 2011 and is a very important indicator of adequate patient care when hospitalized.

    “..providing MORE funds to the hospital which they do not have.” The Green Mountain Care Board is putting a arbitrary budget cap with a tightening squeeze so more funds are currently not going to the hospital.

    Bob,we can agree to disagree and it is great that you feel comfortable being treated in Vermont hospitals that has an arbitrary spending cap put on them. Good for you! I choose an out of state hospital that does not have arbitrary spending caps on it! Freedom of choice for both you and me!

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