Vermont’s top health care regulator is raising questions about whether the University of Vermont Medical Center should be giving executives bonuses that are linked to regulatory applications.
Kevin Mullin, the chair of the Green Mountain Care Board, said Wednesday he is concerned about the UVM Medical Center’s decision to award bonuses to its CEO and other executives in relation to a successful regulatory application.
The Green Mountain Care Board’s main responsibilities are regulating hospital budgets and health insurance premiums. The board also approves, modifies or denies major capital investments when hospitals apply for a permit called a certificate of need, often abbreviated CON.
In the spring of 2013, the hospital gave the Green Mountain Care Board informal notice that it hoped to build a new facility with a price tag of at least $85 million, according to regulatory documents. By the fall of 2014, the hospital completed an application to the Green Mountain Care Board to spend $187 million on a new inpatient building.
The board opened a regulatory proceeding in 2015 and issued the CON that summer. The building, which is under construction, will create private rooms for patients, replacing shared patient rooms in the hospital’s current building. Patients’ family members will be encouraged to stay with them and be part of the treatment team.
Scottie Ginn, the chair of the compensation committee for the UVM Medical Center, told VTDigger on Aug. 18 that the committee decided to award bonuses to the executive team in 2015 as a reward for getting regulatory approval for that project.
“The operational goal that year was to have the CON completed for the inpatient bed replacement,” Ginn said. She said that was the appropriate incentive in 2015 “because CONs are complex and require pulling together a lot of different parts of the hospital to get all the answers you need for the Green Mountain Care Board.”
Asked why the compensation committee would incentivize the hospital’s expansion, Ginn said the project was not about expansion, but bed replacement to improve care for patients. “Single rooms have become the standard of care, and we needed to get to a point where we had enough single rooms,” she said.
On Thursday, Michael Carrese, the spokesperson for the UVM Medical Center, said Ginn misspoke. While the hospital did award bonuses related to that CON, the bonus was for submitting the application on time, he said, not for getting it approved.
Additionally, the bonuses came in December 2014, after the CON application was submitted, not December 2015, after the application was approved, Carrese said.
Mullin questioned the notion of bonuses tied to the permit process.
“I don’t think it’s appropriate for anybody to receive a bonus for a successful certificate of need application or another state permit, so that to me is troublesome,” Mullin said in an interview. “I’m looking into what we can do about that.”
The certificate of need process is designed to ensure that hospitals and other health care facilities are not spending too much money on new facilities, Mullin said. He said bonuses are part of that facility cost.
“What’s concerning is that we’re going through a certificate of need process to make sure that the project is a cost-effective approach to whatever the need of that hospital service area is,” Mullin said.
“And to think that there’s going to be compensation tied to it, unless it’s disclosed in the CON application, I don’t think it’s really an adequate disclosure of the actual cost of that project,” he said.
Carrese said the hospital wanted the CON process to move forward because having private rooms is better for patients than having shared rooms. “That’s why they felt it was a good idea and an effective management tool to use incentives to move this thing along as quickly as possible and set that deadline,” he said.
Mike Fisher, the chief health care advocate for Vermont Legal Aid, called the bonus related to the CON “troubling,” but he said the bigger issue is whether hospital executives need large bonuses to do their jobs effectively.
“Yes, the bonus itself is troubling, but what’s really troubling is the bonus on top of incredibly high compensation,” Fisher said. “It looks to me like a way to give even more money to somebody who’s already being paid at a very high level.”
“I suppose the question should be asked, ‘Does anybody think that a CEO of a hospital would not perform well in attempting to do the tasks of their job if they didn’t get bonuses?’” Fisher said. “I sure hope the answer to that would be no.”