The chief financial officer for the University of Vermont Health Network is backtracking on recent statements about whether the network’s flagship hospital transfers money to hospitals in New York.
Todd Keating said in an email last week that the University of Vermont Medical Center makes cash transfers to smaller hospitals within its network and has made a $7.5 million transfer to a hospital in New York that covered a budget shortfall.
Keating made the comments a week after he gave an interview to VTDigger in which he said categorically that the Vermont hospitals do not subsidize the New York hospitals.
The UVM Health Network is the largest hospital system in the state and has three hospitals in upstate New York and three hospitals in Vermont. While the Vermont hospitals have repeatedly taken in more revenue than budgeted and have run surpluses in recent years, two of the three New York hospitals together have lost more than $25 million since fiscal year 2013, according to financial information provided by the UVM Health Network.
Champlain Valley Physicians Hospital in Plattsburgh, a 300-bed facility that joined the network in late 2013, had losses of roughly 2.5 percent in fiscal year 2016. Year over year losses were $2.4 million in fiscal year 2015 and $7.9 million in fiscal year 2016. The hospital now appears to be operating in the black, according to the financial information.
Alice Hyde Medical Center in Malone, a 76-bed hospital that joined the network in 2016, had a 7 percent loss in fiscal year 2016. Year over year losses were $909,000 in fiscal year 2013, $466,000 in fiscal 2014, $5.7 million in fiscal 2015, $2.4 million in fiscal 2016, and $6.4 million in fiscal 2017, as of August.
“UVM Medical Center has made a variety of cash transfers to our NY hospital affiliates,” Keating said in his email. “Some of these were transactional in nature and directly tied to the affiliation agreements, and some involved short-term loan transactions that are to be repaid.”
“One transfer in the amount of $7.5 million was made to (Champlain Valley Physicians Hospital) without expectation of repayment,” Keating said. “The transfer filled a gap in their budget created when they joined a cost-effective, professional liability insurance program through the Network.”
Keating said UVM Medical Center has at times “made similar cash transfers to sister affiliates in Vermont.”
“Inter-affiliate funds transfers across state borders are essential to the successful operation of an integrated health network like ours, operating in two states,” Keating said. “They are also essential to the Network’s goals of improving the health of people in the communities we serve, by assuring that they can get quality health care in financially stable hospitals close to their home.”
Keating’s comments last week conflict with statements he made in an Aug. 31 interview in which he said that “every boat’s supposed to float on its own bottom.”
While Vermont and New York regulators have given approval for certain transfers, Keating said “both states have been very, very clear that they don’t want money from one state going from one state to another.”
Asked whether the more profitable hospitals subsidize the smaller ones, Keating on Aug. 31 categorically said “no.” He also used the example of what would happen if one New York hospital lost $5 million, saying, “We’re not going to just take $5 million to sit there and float them.”
On Tuesday, Michael Carrese, the spokesperson for the UVM Health Network and UVM Medical Center, said in an email that there is no statute or regulation in either Vermont or New York prohibiting these kinds of interstate transactions.
Carrese said that an official for the UVM Health Network would not be able to comment further about Keating’s statements until this week.
At that time, he said an official would “talk about all of the ways we support our NY and VT affiliate hospitals financially and otherwise, the amount of money involved, what the financial challenges are, what’s being done about them, and most important, what all of this means to the health care system most of your readers rely on.”
A spokesperson for the New York State Department of Health, which regulates the network’s hospitals in New York, told VTDigger that the state does not restrict transfers of money from Vermont hospitals to New York hospitals.
Three hospital networks in New York
The UVM Health Network is one of three similar out-of-state hospital systems that own hospitals in New York state, according to a spokesperson for the Healthcare Association of New York State, a membership organization for the state’s hospitals.
The others are the Guthrie health care system, a Pennsylvania-based system operating a hospital west of Binghamton, and the University of Pittsburgh Medical Center, which operates a hospital in western New York, according to the health care association.
“New York state allows revenues generated by the University of Vermont Health Network to be used by their New York affiliated hospitals,” a spokesperson for the New York State Department of Health said in an email.
“The state of Vermont may have specific restrictions or limitations on the use of these funds,” the New York Department of Health said. “(The UVM Health Network) has provided financial resources and services to its NY hospital affiliates in the areas of information technology, finance, legal, planning and strategy.”
On Thursday, Vermont’s top health care regulator asked about the financial transfers.
At a meeting regarding hospital budgets for fiscal year 2018, Kevin Mullin, the chair of the Green Mountain Care Board, directly asked Mark Stanislas, a vice president of finance for the UVM Health Network, whether the Vermont hospitals subsidize the New York hospitals.
Stanislas responded: “In our 2018 budget there are no subsidy dollars.”
Mullin asked: “Will there be in 2019 and 2020?”
Stanislas said: “I can’t speak ahead to that. I can only speak to our 2018 budget.”
Mullin said in an interview after the meeting that he has no knowledge of a specific prohibition on sending cash from a Vermont hospital to a New York hospital, but he said the board could impose such a regulation.
“I don’t think they’re prohibited from doing it, but I think that we have the ability to set rates that would make it so that they wouldn’t have the cash to send over,” Mullin said.