[V]ermont’s small hospitals are trying to adapt in order to overcome financial struggles, but administrators say change is neither easy nor cheap.
At a Wednesday Green Mountain Care Board meeting spurred by recent hospital budget shortfalls, two chief executives detailed ways in which they’re trying to address the issue: rebuilding their workforces; collaborating with other institutions, both large and small; and investing in health care payment reform in spite of still-uncertain returns.
Steve Gordon, president and chief executive officer of Brattleboro Memorial Hospital, and Dan Bennett, president and CEO at Gifford Medical Center, offered no simple solutions. And Bennett warned that cost-cutting alone won’t solve the problem.
“For us, success is going to be measured on whether we’re able to continue to meet the needs of our community,” Bennett said.
The increasingly severe challenges Vermont hospitals face is reflected in recent budget reports showing that a majority lost money on operations in fiscal year 2018. Springfield Hospital reached the brink of closure earlier this year, saved only by a $800,000 loan from the state.
Care board member Maureen Usifer said the number of hospitals with negative operating margins has risen over the past few years. “We’re seeing our hospitals are beginning to financially struggle, and it’s not sustainable over the long term,” she said.
It’s not just a Vermont trend. The Vermont Association of Hospitals and Health Systems produced data showing that more than half of rural hospitals nationwide had an operating margin of less than 3 percent, and many of those institutions were in the red.
More than 100 rural hospitals have closed across the nation since 2010. In addition to providing local access to critical health care, hospitals are economic engines: Association statistics say Vermont hospitals employ 17,000 people and pay $1.5 billion in salaries and benefits.
Workforce is also is part of the problem in Vermont, where hospitals are spending millions of dollars on temporary staffers – often at double the rate paid to full-time staff – to fill shifts due to severe shortages of nurses, doctors and other health care workers.
Meanwhile, the existing workforce is aging. Bennett said 56 percent of Gifford’s primary care doctors are over age 60, as are 80 percent of family medicine and internal medicine physicians. “This is the reality on the ground in rural Vermont and in rural America,” he said.
Administrators also pointed to demographic issues such as an aging population and declining birth rates. Additionally, hospitals are feeling the effects of the state’s mental health crisis and the opioid epidemic.
Gordon said there are pressures for hospitals to expand their missions in order to meet growing health needs.
“The blue ‘H’ has to change,” he said, in reference to the traditional hospital sign. “We have to move from just addressing the medical needs in our community to addressing the social determinants (of health) in our communities. Because if we don’t do it, who’s going to do it?”
Gordon told care board members that Brattleboro – which has dealt with three consecutive years of operating losses – has been working on “new models for care delivery” in order to meet the current challenges. That includes using telemedicine, hiring psychiatric nurse practitioners and partnering with the United Way of Windham County to open a dental center.
Brattleboro also has sought new ways to find staff, including a partnership with Community College of Vermont to train medical assistants. The hospital also has recruited Canadian physicians.
Additionally, operational collaborations are key for small hospital survival, administrators said. Brattleboro Memorial offers services including emergency medicine, radiology, pathology, podiatry and rheumatology through agreements with Lebanon, N.H.-based Dartmouth-Hitchcock Medical Center and its Keene, N.H.-based affiliate, Cheshire Medical Center.
On a smaller scale, Gifford – which has its own, ongoing budget struggles – maintains partnerships so that primary care and mental health care are available in the town of Chelsea. Gifford also has teamed up with a group called HealthHUB to expand mobile dental services.
“Transportation is an issue,” Bennett said, “so having those services in that area is very important.”
Gifford also established Gifford Health Care, a primary care-focused federally qualified health center that is the hospital’s parent organization. As a result, “we feel that we are well-positioned to be strong in the health care reform environment,” Bennett said.
That was a reference to the all-payer model, Vermont’s multiyear agreement with the federal government that’s aimed at transforming the way health care providers are compensated. There’s a strong emphasis on primary care in the all-payer model.
Eric Shell of Stroudwater Associates, a national health care consulting firm, told care board members that the traditional fee-for-service method of medical payment is failing and won’t survive. Hospital association Chief Executive Officer Jeff Tieman agreed. “We can’t keep doing the same things the same way,” Tieman said. “And so we’re not.”
At the same time, hospitals are paying at varying levels into the all-payer model through OneCare Vermont, the Colchester-based organization coordinating the program.
Vermont’s state auditor, Doug Hoffer, wants the Legislature to pass a bill that would allow him to audit OneCare, arguing that the state should be closely involved in efforts to overhaul how it pays for health care. OneCare spoke out against the bill, saying the Green Mountain Care Board already has plenty of oversight.
Hospital participation in the all-payer model is voluntary, and they also accept financial risk if the program doesn’t perform well. Most Vermont hospitals have gotten involved for at least one insurance type, “but the risks are significant and the challenges are many,” Tieman said. “So not every hospital can be in right away, or maybe at all.”
That’s especially true for Medicare. It’s partly because the Medicare portion of the all-payer program carries the most financial risk for hospitals, but OneCare Interim CEO Kevin Stone said it’s also because the federal government has struggled at times to process claims under the new payment model.
“Because we’ve had such turmoil in receiving accurate and consistent reports – particularly from Medicare – it makes it hard for the hospitals to feel really confident that the work that they’re doing is, in fact, bearing fruit,” Stone said. “I think that creates anxiety and is daunting in the minds of some of the smaller hospitals.”
Bennett said Gifford is involved in the all-payer model via Medicaid but is “really struggling with how and whether” to also sign on for Medicare. Gordon said Brattleboro Memorial jumped fully into the all-payer model early on. Administrators are so concerned about the instability of the current payment system that “we have no choice but to embrace health care reform,” he said.
OneCare’s administration of the all-payer program has spurred criticism, and the organization has not yet met its enrollment targets under the federal agreement. Advocates say the program needs time to work through the enrollment difficulties.
Rep. Bill Lippert, D-Hinesburg and chair of the House Health Care Committee, said officials “need to recognize the deep challenge of communicating more effectively” on the complexities of health care payment reform.
“I think this is a fundamental, basic issue for us as we take on these challenges,” Lippert said.
Learn more about the pressures on Vermont hospitals in our Deeper Dig podcast:
