Health Care

Copley Hospital under pressure from state regulators

Art Mathisen
Art Mathisen, the president and CEO of Copley Hospital in Morrisville, at a Green Mountain Care Board meeting Sept. 1. Photo by Erin Mansfield/VTDigger

Copley Hospital in Morrisville is under scrutiny for the budget it requested from state regulators for the upcoming fiscal year.

The scrutiny led the hospital’s new chief executive officer to give an impromptu speech to the Green Mountain Care Board on Thursday about how he plans to decrease expenses and improve the hospital’s finances.

Located about an hour’s drive from Burlington, Copley is one of just three hospitals in the state — including Rutland Regional Medical Center and Springfield Hospital — that did not propose to increase prices in the upcoming year.

The hospital is proposing to keep its prices exactly level. But because of an increase in people coming to the hospital, Copley expects to see a 7.4 percent increase in how much revenue it takes in, before expenses. It also projects a lower amount of profits from 2015.

Al Gobeille, the chair of the board, opened a discussion at a meeting Thursday about concerns over the hospital. Con Hogan and Jessica Holmes then raised concerns about Copley’s operating expenses, which are about $1 million more than the amount of money from patient care it expects to get in 2017.

“I don’t know if they realize the size of their problem,” Hogan said. “Their expenses are bigger than their (revenue from patient care). That’s not possible over a reasonable period of time. You just can’t do that. … I think they’re actually to the point where they need a plan B. I don’t think this is a workable budget, and I’m not prepared to approve it.”

Since fiscal year 2014, the hospital system as a whole has taken in less revenue from patient care than it spent on operations, according to data from the Green Mountain Care Board, but some hospitals have still run substantial profit margins, even before accounting for donations they received.

Copley Hospital in Morrisville. Courtesy photo
Copley Hospital in Morrisville. Courtesy photo

“What struck me about their budget was the outliers in terms of expense growth,” Holmes said, referring to Copley. “So, 8 percent growth in operating expenses, 15 percent in growth in cost per admission. There’s just something there that’s outside the range of normal for the rest of the hospitals. If they’re chasing the utilization to cover costs, what’s happening there?”

Dr. Allan Ramsay, another board member, said Copley appears to be doing more surgeries at a higher cost, which may mean they are more complex cases. “That’s not a trend that we want to see in a smaller community hospital,” he said. “It does generate revenue, but there are other surgical facilities that are better suited to do complex surgical cases.”

In February, Copley received a permit from the Green Mountain Care Board, called a certificate of need, to add additional operating rooms to its current surgical wing that was built in the 1970s. The hospital started construction in April and plans to open in December 2017.

copley hospital surgery
Staff members and equipment are jammed into  Copley Hospital’s old operating room in this 2015 photo. Photo courtesy Copley Hospital

Copley performs 2,000 surgical procedures every year, according to its website, which advertises a team that “mixes advanced technology with personalized care.” The hospital also owns Mansfield Orthopaedics, which is a popular surgical practice with locations in Morrisville and Waterbury.

“When we approved their surgical (permit) I don’t think anyone on the board felt this was a message that you could do more complex surgical cases,” Ramsay said. “We expected a flattening of utilization. We didn’t expect that a budget would be returned to us with utilization that suggests that they are able to do more complex surgical cases.”

Gobeille said a member of the board and the board’s budget expert should meet with Copley’s leadership to discuss the hospital’s 2017 budget and have something ready by Thursday. He offered to be the board member who meets with Copley next week.

Art Mathisen, who became Copley’s president and CEO in April, attended Thursday’s meeting and stood up to address the board’s concerns. He said in an interview that he is working hard to come up with ways to decrease expenses as quickly as possible without alienating his staff with sudden changes.

At Porter Medical Center in Middlebury, a new chief executive officer instituted a series of sudden personnel cuts that created angst within the community and pushback from doctors and nurses. That chief executive officer has since resigned, and the hospital is considering joining the University of Vermont Health Network.

“As a new CEO you come in with your philosophy as an organization, and I’m different from my predecessor — good, bad, or indifferent. I’m just different,” Mathisen said. “I’m 45 years old and I’m used to goin’. And I come to Copley, a great small community hospital, and they’re getting used to me and I’m getting used to them.”

“What I was trying to say (to the board) is, give me an opportunity to turn the organization in a direction that I feel it needs to go,” he said. “In other words, allow our margin to be healthy so we can do the things that we need to do to take care of our Vermonters who are coming to us.”

He said the hospital would have to cut its prices by 6 percent in order to meet the board’s patient care revenue cap of 3.4 percent.

“We’re trying to be good fiscal stewards of the dollars of all of us, and I’m starting to put those things in place because it takes a lot of time,” he said. “You’ve gotta win the trust of your folks before you change everything.”

The next Green Mountain Care Board meeting is Thursday at 1 p.m. in Montpelier.

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Erin Mansfield

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