Editor’s note: This commentary is by Richard Slusky of South Burlington. He is a retired CEO of 28 years of Mt. Ascutney Hospital and Health Center, retired director of payment reform for the Department of Vermont Health Access. Slusky has served on boards and committees of the Vermont Hospital Association and the American Hospital Association. He currently serves on the Vermont Information Technology board of directors, and is a lifetime fellow in the American College of Health Care Executives.
[M]ike Smith, in his recent article for the Digger, raises two important questions: (1) What is the motivation for hospitals to innovate or to be at the cutting edge of medical advancement if success is penalized, and (2) Have policy-makers failed to adequately explain to Vermonters how health care reform initiatives such as payment reform, delivery system reform, and population health will reduce health care costs and improve quality and access.
Having spent 28 years as a hospital administrator in Vermont, and more recently nearly six years working with the Green Mountain Care Board as director of payment reform, I think I have some perspective on Mike’s questions. Whether or not I can answer them satisfactorily is another matter altogether, but I will try.
In regard to the Copley Hospital situation, I tend to agree with Bob Zeliff’s response. Copley should be given credit for the reputation they and their orthopedic surgeons have earned throughout the state. Anecdotally, I repeatedly hear positive comments about the orthopedic care at Copley hospital from friends in the Burlington area who have personally had procedures at Copley or who have family who have. When I ask them why they chose Copley, they reference their reputation, ease of getting an appointment, the state-of-the-art surgical techniques, and the convenience (even though many have to travel nearly an hour to get there).
So, why should they face the possibility of being penalized for doing well? The answer relates to the second question which is about communication. Copley Hospital is not being punished for doing well. They are facing the possibility of penalties for not meeting the terms of a certificate of need (CON) in which they produced estimates of the number of surgeries they anticipated providing, and ultimately on the impact of the cost of those surgeries on the total cost of care in their hospital. All hospitals in Vermont have their budgets reviewed annually by the Green Mountain Care Board, and the board, in its quest to control the growth of health care costs in the state, has placed predetermined limits on the annual growth of hospital revenue budgets. I believe this past year the limit was 3 percent growth in revenue with an additional 0.4 percent allowed if the hospital participated in health care reform initiatives, for a total revenue growth allowance of 3.4 percent.
As I understand Copley’s situation, they exceeded both the number of surgical procedures that they estimated in the CON, and they exceeded the 3.4 percent cap on the revenue growth that was allowed in their budget approval. Had Copley stayed within their revenue budget by either reducing rates on hospital services or potentially eliminating other services that perhaps could be done more efficiently elsewhere, they might have had a better argument to convince the GMCB to overlook the unanticipated increase in their orthopedic volume.
In my opinion, the GMCB would sacrifice any authority it has if it overlooks non-compliance with the conditions of the CONs that it approves, and does not enforce the limits on hospital revenue budgets that it has set. Everyone in any regulated industry knows that a regulatory body that does not enforce its own regulations is, in effect, a “toothless tiger” that will be ignored. If anyone needs evidence of that, ask former members of the Hospital Data Council or the Public Oversight Committee how successful they were in holding down the growth in hospital costs.
While it may seem odd that Copley should be held accountable for the commitments it made to the board on its CON and hospital budget, the public should try to understand that regulation without enforcement will only lead to continued growth rates in health care costs that are unsustainable. The GMCB is the authority the Vermont Legislature established to be its regulatory body. The public should expect them to do their job.
In regard to Mike’s second question regarding communication, although many Vermonters think that health care reform died when Gov. Peter Shumlin pulled the plug on a government-funded single payer system in 2014, the fact is that most of the principles and goals described in Vermont’s 2011 health care reform legislation (Act 48) have been addressed, and the structures are now in place to achieve the health care reform goals that were so clearly articulated in that act.
From early 2014 through mid-2016, representatives from a variety of Vermont’s health care organizations and health insurance companies met weekly, under the guidance of the Green Mountain Care Board, to shape Vermont’s health care reform initiatives in accordance with the spirit of Act 48.
These reform initiatives involve the participation of 10 of Vermont’s 14 hospitals, two federally qualified health centers, 24 independent physician practices, most home health agencies, six mental health centers and 19 skilled nursing facilities. These organizations are committed to work together, through the accountable care organization (OneCare Vermont), to strengthen the delivery of primary care services and better coordinate care for Vermonters with chronic conditions in order to help them avoid unnecessary emergency room visits and hospitalizations. These reforms are intended to result in the reduction of the growth of health care expenditures over time, improve the health of the population (especially those with chronic conditions), improve the quality of care provided, ensure access to care, and reduce the administrative burden on health care providers. All of these goals are consistent with the intent of Act 48.
So how will this be accomplished?
In January 2017, the state of Vermont entered into an all-payer ACO model agreement with Medicare/CMS. As part of this agreement, OneCare Vermont (the ACO) has agreed to accept payments from Medicare and Medicaid that will move from fee-for-service to value-based payments over the next five years, and is negotiating similar payment agreements with BlueCross Blue Shield and other commercial payers in Vermont.
Value-based payments means that rather than providers receiving payments based on the volume of services they provide, providers will agree to accept annual fixed payments, usually paid monthly, for all services they provide to a defined population. Some providers, mostly the hospitals, have agreed to accept financial risk in the event they, collectively, do not meet the cost, quality and outcome goals that are part of their participation agreements. The annual growth rate of total health care expenditures may not exceed 3.5 percent on average for the next five years, which provides Vermont with a predictable health care expenditure growth rate that is well below historical norms.
Specific quality and outcome goals identified in the agreement include improving access to primary care providers, reducing the number of deaths from suicide and drug overdoses, and reducing the prevalence and morbidity of chronic disease (COPD, diabetes and hypertension).
If Vermonters continue to feel that they do not have enough information to understand how health care reform initiatives such as payment reform, delivery system reform, and population health will reduce health care costs and improve quality and access, and why this is important, I would suggest they go to the Green Mountain Care Board website where they will find ample information about these reform initiatives. The website includes the agendas and minutes of board meetings, presentations from OneCare, the hospitals, other health care organizations, and comments from community advocates. There are also specific reports on payment reform, the all-payer model, ACOs, and more. Although this is a complicated subject, there really is plenty of information available, and it’s not that hard to find.
Despite all the national controversy around health care reform, the structures are in place in Vermont to achieve the health care reform goals defined in Act 48. If successful, Vermont could lead the nation in demonstrating that health care reform is possible, that growth in health care costs can be constrained and the quality of care and health outcomes improved. What is needed now is for Vermonters to show the courage and will to build on what is already in place, set aside institutional and personal biases, and give the process an opportunity to succeed. If we don’t do this, what is the alternative?
