[V]ermont’s largest hospital system is proposing to use extra revenue it made in fiscal year 2015 to improve mental health and dental care, expand access to housing, and tackle substance abuse issues and health care reform.
The University of Vermont Health Network — which includes UVM Medical Center in Burlington and Central Vermont Medical Center in Berlin — has proposed to spend $15 million on various programs that seek to benefit the public.
The hospital system would give $3 million of the money to the Champlain Housing Trust, an affordable housing organization in Burlington, to expand housing for vulnerable populations.
Another $3 million would be split among Washington County Mental Health Services ($1 million), Howard Center in Burlington ($1.5 million), and UVM Medical Center’s Community Health Investment Committee ($500,000).
The hospital system would spend $6 million on various substance abuse and dental health initiatives, including the UVM Medical Center’s Day One program, an expansion of a “hub and spoke” program, and a “complex pain management program” that it says would be unique to Vermont.
The final $3 million in the $15 million package would help fund transition costs to set up a single statewide organization that would serve as the linchpin in the Shumlin administration’s payment reform effort called the all-payer model.
Response to overage in 2015 budget
Dr. John Brumsted, the chief executive officer of the UVM Health Network, presented the proposal Thursday to the Green Mountain Care Board, which regulates hospital budgets. He acknowledged that both hospitals exceeded their revenue targets in fiscal year 2015, which ended Sept. 30.
“We propose to address this departure from the approved (patient care revenue) levels through rate reductions as well as investments tied to our network’s commitment to improving people’s lives through population health management,” Brumsted told the board.
Preliminary data from the Green Mountain Care Board say UVM Medical Center collected $27.6 million more for patient care than regulators approved, and Central Vermont Medical Center collected $7.8 million in excess revenue. Several hospitals took in excess revenue totaling $49.2 million across Vermont’s whole hospital system.
Brumsted estimated that, using internal accounting and deducting the slight overages that regulators allow hospitals to have, the UVM hospital system took in $29.1 million more than it should have. At the same time, he said, the profit margin was smaller than his team budgeted.
Brumsted said the hospitals took in the extra money because more Vermonters visited the network, including the new central Vermont ExpressCare locations, which saw substantial traffic even though emergency room use went down.
The hospitals were also not able to write off as much bad debt as they budgeted, Brumsted said. Patient care revenue (also called net patient revenue) is calculated minus bad debt and free care. Vermont’s 14 hospitals budgeted $86.6 million for bad debt that year, but the actual number was $63.4 million.
Bob Bick, the chief executive officer of Howard Center, supported the proposal. “We feel very confident that our ability to come together and talk about how we can best utilize these resources in a way that will have the most significant impact will be a productive situation,” he said.
Con Hogan, who sits on the Green Mountain Care Board, praised the UVM Health Network. Hogan said he reads about unethical hospitals in other states all the time, but UVM Health Network is different.
“Here we have a relatively low-cost medical center willing to invest in its community,” Hogan said.
Possible reduction in price of care
Using the UVM Health Network’s numbers, the $15 million proposal leaves at least $14 million remaining in excess revenue. Regulators may seek to take the money back from the two hospitals in the form of lower commercial insurance rates in the upcoming fiscal year 2017.
Brumsted supports lowering what the hospital charges. He said the hospital system plans to account for a reduction in patient care revenue in the two hospital budgets for fiscal year 2017. That budget process with the board has just started and will continue through the summer.
Brumsted said the system needed to wait to commit to a decrease in how much it charges insurers because the state is still considering cutting Medicaid payments to both hospitals. The department that oversees Medicaid recently decided to “hit pause” on a cut to how much Vermont’s largest hospitals get for treating Medicaid patients.
Al Gobeille, the chair of the Green Mountain Care Board, said the board would take public comment before voting on the UVM network’s proposal next week. He said the board would need to work with insurance companies and the hospital system in August to figure out how to lower what the hospital system charges insurance companies.
During the public comment portion of the meeting, someone asked Gobeille why the board wouldn’t seek to recover all the excess revenue from fiscal year 2015 — the full $29.1 million that the UVM Health Network estimates — in the form of lower commercial insurance rates in fiscal year 2017.
Gobeille told the audience there needs to be a balance in how the money is returned to ratepayers. He said there is no way to give money back to Medicare beneficiaries, for example, because their health insurance company is the federal government.
The next board meeting is March 31. The public comment form is here.
