Commentary

Robert Holland: David vs. Goliath at the Green Mountain Care Board

Editor’s note: This commentary is by Ron Holland, an emergency physician and policy analyst who works at North Country Hospital in Newport.

On April 13 in Montpelier, the Green Mountain Care Board held a contest between the proponents for a cost-saving ambulatory surgical center (Green Mountain Surgery Center) and the current health care system.

It was a bit of a lopsided contest. In one corner was David, representatives of the group of 16 physicians who are proposing to build a new ambulatory surgical center. In the other corner was Goliath, the entire Vermont health care establishment (UVM Medical Center, Vermont Association of Hospitals and Health Systems, Northwestern Medical Center) who are the current providers.

The prize was a certificate of need, the go-ahead from the Green Mountain Care Board to build the surgical center. David, understandably, thought it was a good idea. Goliath, not at all.

The contest occurred in an overcrowded, poorly ventilated conference room in a small state, but it directly addresses one of the most difficult questions of our times: How to balance the costs and benefits of health care in the U.S. economy. Other developed countries have better health outcomes at about half the U.S. cost. National resources spent on health care are not available for other goods such as education that have a long-term positive dividend. Each state spends more on low back pain that it does on law enforcement.

This event occurs within the context of repeated failure to moderate U.S. health care costs since the 1980s. In 2001 the Institute of Medicine (IOM, the branch of the National Science Foundation that’s devoted to medicine) wrote that “the difference between 2001 health care and the health care that we could have is not a gap but a chasm.” Since that time the Affordable Care Act of 2010 reduced the percentage of uninsured from 16 percent to 9 percent while increasing the rate of growth of health care costs, as it poured more resources into an inefficient, ineffective health care system. Health care costs have risen from 13.8 percent (2001) to 18.2 percent (2016) of the GDP and are projected to reach 19.9 percent in 2025. As costs continue to increase, access will deteriorate. We are now in the fourth decade of failure in our attempt to control health care spending. Clearly, we need a new strategy.

The IOM identified six aims for building a 21st century health care system. Health policy should aim for patient-centered, safe, timely, efficient, effective and equitable health care. These features identify the criteria for evaluating a health policy. Arguments that do not directly and clearly address these features are either illegitimate, irrelevant or poorly defined. A policy option that wins on each of these features is dominant. When competing options each have some wins, a more detailed and difficult analysis is required. A close look at this contest provides insight into the nature of the forces that make controlling health care costs so difficult.

It was apparent that Green Mountain Surgery Center’s cost savings is the current providers’ revenue stream to be used by them in an opaque manner to pursue their missions.

 

The hearing began with Green Mountain Surgery Center proposing to build a 12,800-square-foot facility to house two operating rooms and four procedure rooms to perform 6,000 procedures annually. The proposal calls for a $1.8 million investment that will save an estimated $5.5 million annually in health care costs. Anticipating an attack on equity in provision of health care (taking only full paying patients and leaving Medicaid and charity cases to current providers, aka “cherry picking”), Green Mountain Surgery Center testified that their payor mix would not be significantly different from the current providers.

Reviewing their arguments, David has hurled two pebbles precisely at the forehead of Goliath and has scored two direct hits. First – he can provide the same health care at half the costs saving $5.5 million of current dollars annually. Second – he can do this without sacrificing equity. He has clearly and directly engaged the IOM aims. At the least, Goliath is stunned but may prove to have a cerebral hemorrhage.

Following questions to Green Mountain Surgery Center proponents from state regulators, the current providers briefly but ineffectively challenge the economics by quibbling over taxes. They did not provide a quantitative analysis of the economics from their perspective. Most of their arguments centered around their lost revenues and the existence of sufficient capacity in the region without the new facility. They presented nearly 30 PowerPoint slides largely filled with true but irrelevant/poorly defined (per IOM aims) facts and political rhetoric. While advancing the ethical purity of “not for profit” institutions and their dedication to “mission” and effective control by “regulation,” they degraded the “for-profits” and the “unregulated.”

The most concise criticism of the current providers came from board member Con Hogan. After a long presentation on their collective virtues and accomplishments, he asked current providers to explain in 30 seconds the relationships between their arguments and the proposal. A relevant (per IOM aims) answer was not forthcoming. Clearly there is a chasm between the IOM aims and current providers’ approach to health policy. It was apparent that Green Mountain Surgery Center’s cost savings is the current providers’ revenue stream to be used by them in an opaque manner to pursue their missions. Lacking quantitative analyses addressing IOM aims, current providers resorted to rhetoric.

The Green Mountain Care Board decision is due in August. State legislation identifies them as the responsible party to ensure that the Vermont health system incorporates the values found in the IOM aims. Should they decide in favor of Green Mountain Surgery Center they will align with the IOM aims and set a precedence for future decisions. Should the GMCB decide in favor of the current providers, they will perpetuate a health policy culture characterized by rhetoric and irrelevant/poorly defined information. As the current providers are major players in the accountable care reform effort “to pay for value” planned for Vermont by Gov. Peter Shumlin, a decision in their favor is worrisome for successful reform and will likely perpetuate the decades of failure to justly balance health care costs and benefits.

If we hope to improve the health of Vermonters while controlling health care costs, we must demand quantitative policy arguments focused on the IOM aims and eschew the use of political rhetoric in health policy analysis. Protecting Vermonters’ health and pocketbooks demands more than rhetoric. While there will be no legislative revolutions in health care, two decades of policy decisions that align with the IOM aims based upon quantitative analyses would take us to a very different place from where we are headed. That would be a new strategy.

If you read us, please support us.

Comment Policy

VTDigger.org requires that all commenters identify themselves by their authentic first and last names. Initials, pseudonyms or screen names are not permissible.

No personal harrassment, abuse, or hate speech is permitted. Comments should be 1000 characters or fewer.

We moderate every comment. Please go to our FAQ for the full policy.

Commentary

Recent Stories

Thanks for reporting an error with the story, "Robert Holland: David vs. Goliath at the Green Mountain Care Board"
  • Dave Bellini

    Vermonters want faster, less expensive, high quality care. If the hospitals in Northwest Vermont are as overwhelmingly superior as they claim, why does competition frighten them? Goliath is too expensive, too slow and has an attitude.

  • John Klar

    With his accustomed creativity, Dr. Holland here makes an excellent analogy with his David/Goliath characterization. The fact that Goliath is so determined to oppose this project (using distraction, and not able to respond cogently to the most important features offered by this Center), suggests that indeed it is trying to obfuscate in order to protect its financial turf at the expense of common sense. Fortunately Amy Cooper joined the fray, as recounted in today’s vtdigger coverage (“Surgical center investor contests ‘misleading testimony”). (It would have done no harm to the biblical tale if David had been aided by another brave combatant!). Ms. Cooper pulled back the proverbial curtain on University of Vermont Medical Center’s hypocritical effort to paint those supporting this efficient expansion of medical care as “profit-driven,” while the UVM Center sought to discount or conceal its own for-profit ventures. Like a Vermont David, Dr. Holland is indeed correctly described by Ms. Cooper’s depiction of the current applicants: “… primarily community-driven, rather than primarily profit-driven. [He] dedicate[s] the majority of [his life] to serve others, and I think a little more consideration of that fact would be appropriate.” Let us pray that Goliath will not employ its powerful armaments of intransigent bureaucracy and crony access to defeat the Davids who wish to deliver equitable and more efficient services to our lovely state.

  • John McClaughry

    This is an insightful contribution to a debate much worth having. UVMMC has become a true Goliath, even donating (with government approval!) $12 million to rent a cheering section from community groups. I recommend Clayton Christensen’s The Innovator’s Prescription (Harvard Business School, 2009), which explains how the business model for Big Medicine is years out of date – but still bravely defended.

  • Bill Schubart

    Dr. Holland draws heavily on his biases in favor of Green Mountain Surgery Center and spins out his own selective reasoning. He also ignores history and the considerable progress we’ve made here in Vermont.

    The David and Goliath metaphor is immediately suspect, like the Robin Hood defense. The Goliath in health care is actually the for-profit sector of hospitals and insurance companies. I am a retired business man who thrived in the for-profit sector. I was also a former Board Chair of Fletcher Allen Health Care (now UVM Medical Center) precisely after its nadir in the community. The problem is not the capitalist system. The problem is that non-profit and for-profit systems have different rules and goals. We see that in places like England, whose national health care system is collapsing in urban areas, as they’ve tried to accommodate private health care interests at the serious expense of the non-profit national system.

    We learned from our own – and the nation’s – prior experience that competition has not lowered health care costs but, in fact, accelerates them, as hospitals compete with more and more medical technology that they then must use to pay for. We’ve seen the endgame of hybrid for-profit and non-profit hospitals trying to coexist in major cities, wherein the non-profit hospitals, burdened with an obligation-to-treat anyone showing up in their E.R.s, go bankrupt trying to maintain a dozen different clinical services to cover everyone. By contrast, the for-profit specialty hospitals, largely owned by docs, offer a streamlined service, like joint replacements or chemotherapy – generally high-reimbursement services – and have no obligation to treat the general population.

    Dr. Holland further chooses to ignore Vermonters’ solid consensus dating back at least to 1992 that committed us to creating a cost-efficient, patient-centered, non-profit, statewide health care delivery system where patients enter the system at a point appropriate to the acuity of their presenting problem. This necessarily involves some painful change but does not justify conflating Vermont’s improving performance statistics and national performance statistics. Not only have we bucked the trend, but we’ve been recognized nationally for doing so.

    While most of the free world has committed to health care as a general right for their citizens, special interests, long comfortable milking the system to their advantage – current estimates of Medicare fraud are around $60B for last year – have spent millions lobbying Congress against a national health care system. When efforts that began in the Truman and Nixon administrations and were then tried again in the Clinton administration failed, Vermont decided to try and make its own way. The Legislature and various policy boards limned out a plan that was broadly supported to develop over time a highly-regulated system that would focus on cost, access, and quality. We are well down that road and the Green Mountain Surgery Center is the camel’s nose under the tent. We either stay the course or lunge backwards.

    • Robert Ronald Holland

      Thank you responding Mr. Schubart. My central argument is not for-profit vs non-profit though in this case the GMSC wins. My central argument is focus on patient-centered, effective, efficient, equitable, timely and safe health care. Who ever can do it best – let them do it. The real problems that need to be addressed are: Lack of overall leadership for the health care system, lack of necessary information to make both clinical and management decisions, no ethical means for limiting health expenditures, individual rights uncoupled from personal responsibility, and some profoundly negative bureaucratic rules and behavior. Let’s address those issues and not spend time arguing rhetoric of for-profit vs non-profit.

    • walter carpenter

      “The problem is not the capitalist system. ”

      I agree with your commentary here, except for this sentence. I think capitalism and our worship of it is the problem in many ways in health care, otherwise how would the special interests get away with “milking the system to their advantage” for so long? You’re right on there, though.

    • Paul reiss

      Bill,
      There is now extensive evidence that CONs serve to protect monopolies and drive up costs. The previous paradigm where competition in health care drives up costs is no longer. The payment landscape has changed. Patients and employers have taken on price sensibility.
      Non profits do not necessarily look to hold down costs when there is minimal pressure. GMCB members will admit they are outgunned by the monopoly health system, and generally get what they want. The UVMMC endowment is huge, and they are not a fragile non profit by any stretch. administrative structure has grown far beyond clinical services, and they have the extra resources to take over other hospitals, physician practices, and become community benefactors using their excess revenue.
      UVMMC just entered a deal to pay way above market prices, with health care dollars, to become an anchor for the downtown Mall redevelopment, when they don’t need to be downtown, and there is much less expensive space elsewhere. This is Not a organization that is highly regulated, nor acting as a non profit.
      This little surgery center is a less than 2 million dollar private undertaking that will save us all millions, make little or no profit for its investors, and improve access. I don’t see the problem with that. If UVMMCs mission is high value health care, they should be cheering it on.

  • Gerry Silverstein

    Multiple articles in the peer-reviewed medical literature detail that competition not only decreases healthcare costs, but it also improves patient outcomes. To a certain extent the decision by the GMCB is a test to see whether the Board will follow the outcomes assessment that has been done on a nation-wide basis by multiple evaluators, or whether it will defer to a very large healthcare entity that wants to be the single dominant healthcare provide in the State of Vermont.

  • Neil Johnson

    So the hot dog lady wanted to sell hot dogs at Gillette Stadium. Gillette stadium says we have plenty of capacity to sell far more hot dogs. The hot dog is $7 at Gillette a non-profit. The hot dog lady sells them for $2.50 and makes a healthy profit.

  • Robert Wood

    It is incumbent upon anyone wishing to discuss health care reform and finances to review the works of Richard Himmelstein, Steffie Woolhandler, Michael Iammarino, Norton Hadler (and many others). Their observations have been validated over the last 25+ years

    Simply put, the only sector in health care which mirrors the geometrically progressive escalation in health care costs is the increase in administrative costs. This is a well recognized effect of any monopoly.

    Those costs include administrator salaries as well as the clerical costs incurred by entering and tracking all of the often meaningless, bean counting metrics [cf Hadler and hemoglobin A1c] the GMCB holds so dear.

    Whatever “faults” conjured up by the image of “for profit” health care, such institutions tend to avoid bloated bureaucracies, have lower costs while maintaining availability, and overall have an admirable track record of trimming the fat. Aren’t these major issues in health care reform?

  • Tom Koch

    One of the reasons that health care reform in Vermont has proven to be such a conundrum is that there is virtually no effective competition. The system is a monopoly, and it just keeps growing.

    The proposed Green Mountain Surgery Center presents an opportunity to introduce just a wee bit of much needed competition. Let’s hope that the GMCB issues a Certificate of Need!

    • walter carpenter

      “One of the reasons that health care reform in Vermont has proven to be such a conundrum is that there is virtually no effective competition.”

      Since when has competition lowered prices in health care or anywhere. It might for a while and then these surgical centers will become their own monopoly and then what?

    • Robert Ronald Holland

      Competition works to restrain costs if there is good information about the product and easy entry and exit to the market. Neither condition generally exists for health care, it happens to work for ambulatory surgery – if GMSC can get in the market.

    • Daniel Carver

      Tom,
      A primary driver of an ineffective system is the apathy of the patient sector.
      The doctor says, get at least seven hours of sleep each night, adopt a healthy diet, add some physical activity to your life. The patient says, “Doc, that sounds like too much work. Just give me some pills to make me feel better and send my insurance company the bill.”
      Got an opioid addiction? Not to worry; the government will fix it for you. Solving this has nothing to do with competition; just shear laziness, self-loathing, and apathy by the patient and serves as a “green light” of a potential revenue stream for the government and business sectors.

  • bobzeliff

    The title of this commentary is a classical sound bite! Catchy, with a bit of plausibility but fundamentally wrong!

    A better analogy is a parasite that profits by cherry picking profitable procedures.

    One example is colonoscopies. Those of us of a certain age have those, some every few years. Most are simple, straight forward and trouble free.

    Green Mountain Surgery Center will optimize the STANDARD procedure, both in processes and equipment to do there efficiently, and minimum equipment to do these at lower cost. The will only do STANDARD procedures! This will allow them to pay their Doctors competitive pay and accumulate the more significant surplus profits to distribute to its owners at year end. Real $$$$ why they exist.

    On the other hand our hospitals MUST provide expensive diagnostic equipment (think MRI) and specialists to back up ALL colonoscopies …not just the easy STANDARD ones. This adds cost to the hospital!
    Also if your colonoscopy goes wrong at the GMSC, they will immediately call an ambulance to take your to your hospital to save your life. GMSC will not have the skill or equipment (too expensive) on hand to do that. This adds cost to the hospital!
    GMSC will not have to meet the quality and safety procedures that hospital have to comply. This adds to the hospital costs.
    On top of this they will not accept Medicaid as acceptable payment, by itself, as adequate payment. So if you are a Medicaid patient with out additional means don’t go to GMSC. This add to hospitals costs!

    GMSC does have a charity plan. Only 5% of their budget! To get this one must apply and pass a rigorous multiple step application process. Few will chose to try this process when they can get their colonoscopy done at the hospital. This add to hospital costs!

    So GMSC is good for its owners $$$$, lowers costs for people with means, lowers cost to insurance companies….but drives up costs of our hospital who SERVE EVERYBODY!

    Why would we want to drive up our hospital costs so a few can save money or make big profits $$$$ ?

    • david schwartz

      I appreciate your point of view but don’t agree with it.