The state’s rural hospitals are continuing to bleed, reporting higher costs and fewer patients to cover expenses.
Six of Vermont’s 14 hospitals lost money in fiscal year 2019 — twice as many as the previous year. They’re also increasingly reliant on money from sources other than patient care to make ends meet, such as pharmaceutical discounts, grants, and private fundraising, according to a Green Mountain Care Board staff presentation Wednesday.
Patrick Rooney, director of health system finance for the Green Mountain Care Board, declared the prognosis “bleak.” Still, “the results weren’t a surprise,” Rooney said. The care board receives monthly reports from the hospitals to “actively monitor the situation.”
The problem is not unique to Vermont. Since 2005, 166 rural hospitals across the country have shuttered. A quarter of hospitals in rural areas are at mid- or high risk of financial distress, according to a report from the University of North Carolina.
In Vermont, too, “that risk has been growing,” said Alena Berube, director of Value Based Programs & ACO Regulation for the Green Mountain Care Board.
Hospitals attributed their cash shortages to skyrocketing prescription drug costs and workforce shortages that leave them with vacancies. Often, facilities are forced to hire more costly visiting nurses to fill the gaps.
There has also been turnover at the top. Since 2017, every hospital except Southwestern Vermont Medical Center has lost a CEO or CFO. In all, nine positions changed in 2019, according to the report from the care board.
Five hospitals — Central Vermont Medical Center, Copley Hospital, Gifford Medical Center, Grace Cottage Hospital, and Springfield Hospital — reported losses over each of the past three years.
Vermont’s aging demographics, declining population, workforce challenges and low reimbursement rates from Medicaid and Medicare played into the hospitals’ economic challenges.
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Copley Hospital in Morrisville saw what Rooney dubbed a “shocking” decline in the number of patients, both in the emergency room and in primary care.
Central Vermont Medical Center blamed its losses, in part, on a higher percentage of Medicaid patients and the burden of providing more free care.
Northwestern attributed a portion of its $9 million negative operating margin to a new electronic health record system, which decreased the productivity of its doctors, according to Rooney.
Springfield Hospital filed for bankruptcy in June, and reported $9 million operating losses in fiscal year 2019.
The University of Vermont Medical Center was the stark outlier in an otherwise grim landscape: The hospital had 89% of the systemwide operating margin over the last five years, according to care board statistics. During the same period, the medical center reported $293 million in operating margin — revenues over expenses for patient care.
Last summer, the Green Mountain Care Board asked six of the hospitals with the worst financial outlook to submit a “sustainability report.” On Wednesday, care board staff members outlined a list of metrics and data that hospitals would be required to file as part of that report.
That analysis would include discussion of the services offered by each hospital — whether each is fiscally sustainable, or whether certain procedures or services should be outsourced to another medical center. No timeline has been set for the reports.
Care board member Maureen Usifer noted that the sustainability reports should not be seen as a top-down effort to dictate the future of small hospitals.
“We’re trying to do this to help the hospitals, to really look at what services are they providing, how are they providing them,” Usifer said. “If changes aren’t made now, and they continue in the red … there will be more hospitals closing. We can’t continue with three more years of negative.”
The reports will require substantial work for small hospitals with already limited resources, said Jeff Tieman, executive director of the Vermont Association of Hospitals and Health Systems.
Nonetheless, he said he backs the proposal. “We agree with the potential benefit and hopeful outcome” of long-term sustainability, Tieman said.
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