Editor’s note: This commentary is by Ken Libertoff, Ph.D., who was director of the Vermont Association for Mental Health in Montpelier for 30 years. Since retiring in 2010, he has served as a consultant on mental health and general health care policy issues.
[T]he cost of health care in Vermont, not to mention the rest of the United States, is staggering. It now accounts for 18 percent of our gross domestic product, and obviously it is a dominating factor in our state’s economy. Vermont has been a health care innovator in many regards whether it be the rather recent introduction of the accountable care organization model which may change some payment “schemes,” the adoption of the Blueprint for Health model, and the introduction of the “hub and spoke” system for addressing the state’s opioid crisis. While these and other initiatives have been well promoted, the reality is that health care in Vermont remains too expensive, too complex and too burdensome.
Discussions about health care can be complicated. Not only can they be complicated but the health care community, especially hospitals, have been guilty of being one of our least transparent industries when it comes to explaining policy design, cost of care and billing statements, and in providing “price information” regarding treatment procedures. That is why the Green Mountain Care Board’s deliberations that will unfold this month are worthy of attention and engagement.
The Green Mountain Care Board began its annual review of proposed budgets for the state’s 14 nonprofit hospitals this week. Much of the discussion relates to fiscal matters and budget figures. While many presentations are complex and filled with numbers and percentages, it is important to remember that in approving hospital budgets, the GMCB also provides guidance on health care policy as well as on the values and priorities that will guide the state’s health care system in coming years.
It is a painful reality that the cost of health care in Vermont is not sustainable. This is a troubling reality for everyone, including but not limited to providers of care, the business community, elected officials and most importantly, to consumers. Although efforts, well meaning efforts, have modestly bent the curve of ever-increasing costs, Vermont’s system will collapse or diminish from its own financial burden. Increasingly, having insurance in Vermont does not mean that one can afford care or gain access to treatment in a timely fashion. Our system of co-payments and deductibles are increasingly burdensome and serve as deterrents and barriers to care for the consumer and patient.
There are many factors that contribute to the cost of health care. Each component deserves continual study and review whether it be the impact of hospital consolidation, the introduction of new technologies, and the ever-increasing cost of pharmaceuticals and medical devices, to name a few.
It is time, actually well past time, to reiterate that there should be no “sacred cows” exempt from public discourse. This is an introduction to commentary about one driver of cost in our Vermont health care system, that being administrative salaries in our 14 nonprofit hospitals. Much of the focus is on the University of Vermont Medical Center, which is rightfully viewed as the flagship hospital system in the state, the provider of many high quality services, a medical school leader and the largest component, by far, of our hospital system that now also includes Central Vermont Medical Center and Porter Medical Center as well as three New York state hospitals. The UVM Medical Center has enormous impact and influence on all other Vermont hospitals. UVMMC sets the standard; other Vermont hospitals then follow.
The board of directors of the University of Vermont Medical Center have for a number of years been both blind to the “optics” of a grossly inflated administrative salary structure that is totally foreign to the values of Vermont such as common sense, fair pay and frugality while also deaf to the increasing chorus of critics who rightfully characterize the administrative salaries as either offensive or an outrage or both. The board has repeatedly argued that market surveys and statistics support their firm belief that a $2 million pay package for its CEO and the payment of more than $11 million to the hospital’s top 15 administrators represents fair and reasonable pay. And to support its position, they and other hospital executives are quick to say that the job is of a rare complexity and challenge. For the record, our governors, Howard Dean, Jim Douglas, Peter Shumlin and Phil Scott, all managed a demanding job within the limits of reasonable Vermont standards. Our current governor, Phil Scott, makes a salary of approximately $150,000 and unlike many hospital administrators who enjoy perks, be they bonuses and enhanced retirement accounts, Gov. Scott, does not even have the perk of taking residence in an executive mansion common to many other states.
In a strange and somewhat perverse way, the UVM board’s cavalier behavior on administrative salaries has greatly undermined so much that is good within the hospital system. Quality care, dedicated staff and a high level of performance are recognized and applauded. Clearly many hospital administrators are smart, competent and hard working professionals but their “gold elite pay status,” make them the target for criticism and even ridicule. And there is tangible evidence that within the broader hospital community, physicians, nurses and other employees feel demeaned, denigrated and disheartened over the disparity in pay. It cannot go unnoticed that when leaders at the UVM Medical Center express concern over the escalating cost of health care for their patients in many public forums and presentations, it is hard to know whether the appropriate response is to laugh or cry. Certainly if there was a decision to vastly reduce administrative hospital salaries, it would only modestly reduce health care costs but it is an appropriate action. It would send a message that there are no sacred cows in our health care system and that exorbitant salaries are not state of the art in a state like Vermont.
It is well past time for the UVM board to restructure their entire salary structure, redesign or replace its compensation committee or consider a plan to enhance further diversity in the board’s composition. Considering that these options will take time, the UVM board of directors might agree to hold two public forums, perhaps one in Burlington and one in Montpelier, this fall to engage community members and elicit feedback and recommendations on this subject.
Since the inception of the Green Mountain Care Board in 2011, they have been slow to respond, exhibiting little or no appetite to analyze, review and even encourage public transparency about the escalating administrative salaries of our leaders of nonprofit hospitals. Formal requests were made over several years to publish the salaries of top administrative leaders of the state’s 14 hospitals. These requests for transparency and public disclosure were rejected. One reason for this rejection was the reluctance of the board to intervene in internal hospital matters. Perhaps a more profound reason is that hospitals in Vermont, especially UVM Medical Center, hold enormous political and financial power. Indeed, a hospital network like the UVM Health Network maybe already be too big and too powerful to regulate.
To the credit of VTDigger, on Dec. 19, 2013, the online news service produced a special comprehensive report on administrative hospital salaries. This marked the first major disclosure in a public report on the subject of administrative salaries. Back then, the average pay for chief executive officers in our 14 hospitals was more than $500,000. Not surprisingly the report confirmed that many hospital administrators made salaries way above any other industry in Vermont. As an aside, one can safely assume that the growth in administrative salaries at UVM Medical Center and at our 13 other hospitals has increased at a rate far exceeding any other component of our hospital delivery system including all sectors of direct care since the 2013 report. It would make for a worthy study that could further guide future policies.
When the GMCB was created, it was given enormous powers and expansive responsibilities. Having power is one thing; using it is another. The initial board had good people and they accomplished some important priorities. Challenging and questioning the salary levels of hospital administrators was not one of them. Now because of term limits, the board basically has five new members. Kevin Mullin was appointed new chairperson of the GMCB last year by Gov. Scott and one of his early decisions, approved by the board, was to make hospital administrative salaries public and part of the annual (hospital) budget review process. Perhaps the GMCB can and will have the backbone and fortitude to challenge one driver of ever increasing health care costs — that of administrative salaries — and take an important tangible step in realizing of Vermont’s key goals, that of making health care affordable for all Vermonters.
