Health Care

UVM Health Network appeals budget order with scathing letter to regulators

John Brumstead
John Brumsted, president and CEO of the University of Vermont Health Network, criticized regulators for their decision on recent hospital budget requests. Photo by Glenn Russell/VTDigger

UVM Health Network CEO John Brumsted blasted state health care regulators in a letter Wednesday, as he appealed their recent hospital budget decisions. 

“The Green Mountain Care Board’s budget review process has become untethered from the equitable, legal, and financial principles that should guide it,” Brumsted wrote to the board. He criticized the board for abandoning its mandate and “jeopardizing patient care and adding to the uncertainty and burdens facing hospitals.”

Brumsted submitted the letter after the board last week authorized lower budgets than were requested by the three network hospitals — Porter Medical Center in Middlebury, Central Vermont Medical Center in Berlin, and the University of Vermont Medical Center. The network also includes three New York hospitals. 

In an interview, Brumsted portrayed the hospital as the victim of overly aggressive regulation. Over the past several years, expenses had risen and the board had limited the hospital’s revenue. Last week’s decision  “was the proverbial straw that broke the camel’s back — we’re at a point where we have to demand reconsideration,” he said in an interview.

“This is at the end of many years where they have not approved our needed — not our wanted, our needed — rate increases,” he said.

If the board doesn’t acquiesce, Brumsted threatened to cut services at UVM Medical Center. 

“We will have no choice but to reassess whether we can continue to provide the full array of specialized services that Vermonters have reasonably come to expect to receive at Vermont’s only academic medical center, but which we deliver at a financial loss of millions of dollars each year,” he wrote in the letter.

The board will review the health network’s arguments at a special meeting Tuesday and decide whether to amend their decision. Board Chair Kevin Mullin declined to comment on the arguments raised by Brumsted in the letter because the case is ongoing.

“UVM is going to have to present a compelling enough case on … why the decision should be reconsidered,” he said. 

The whole process was unfair, Brumsted contended in his letter. He criticized the board for enacting a temporary Covid boost, which he said made it impossible for the network to plan for the future. The board didn’t say how long the temporary rate would be in place. 

UVM Medical Center asked for an 8% increase; the board instead granted them a 4% commercial rate hike and a 2% Covid increase. Brumsted has requested that the board make the entire increase permanent. 

He also asked for higher rates for Porter Medical Center; the Middlebury hospital runs, and subsidizes, Helen Porter Rehabilitation & Nursing. Porter was granted an 4% increase (1% of which was a Covid increase), compared to a requested 5.8%. 

Porter spokesperson Ron Hallman said the board’s decision was arbitrary, and could result in a major financial hit for the nursing home. “We met all of the targets and criteria for the budget presentation. After fulfilling our portion of the equation, we ended up still getting a reduction,” Hallman said. “It just feels like not a good process.”

Board member Tom Pelham, who voted against UVM Medical Center’s increase, said the state’s largest hospital had historically taken in more cash than it deserved. Between 2015 and 2018, the Medical Center earned a combined $264 million of revenue over expenses. 

Brumsted’s objection came on the heels of a bumpy budget process, laden with uncertainty due to Covid-19 losses, shifting amounts of federal relief money allocated to hospitals, and the looming unpredictability of 2021. Hospitals submit their budgets to the Green Mountain Care Board, asking to spend more money and to charge more to insurance companies for the medical care they provide. The board votes on limits to revenue growth for the following year. 

Rate requests ranged from just over 3% to nearly 20% by Northwestern Medical Center. Some asked for an operating margin of less than 1%; Porter Medical Center budgeted a margin of 4.5%. Some received millions from the federal government in Covid Relief Funds. Most hospitals assumed in their budgets they’d have the same number of patients as they did pre-Covid. 

The inconsistencies raised issues in the budget process, said Mullin. “If you look at what happened in the filings this year, some hospitals recognized the very trying times we’re in, others may have taken advantage of it,” Mullin said. He vowed to convene the board later this year to reexamine that process. “Our guidance will have to go much deeper in the future so there’s equity across the system,” he said.  

Among its decisions, the Green Mountain Care Board approved the highest rate hike the board has granted in recent history: 13% to Northwestern Medical Center. Of that total, 10% was for a commercial rate increase, 3% was part of the Covid rate.

The massive request is the hospital’s latest effort to right itself financially; Northwestern came to the board last spring asking for an emergency rate hike. Spokesperson Jonathan Billings said this week that even though the rate increase was high, the St. Albans hospital still provided some of the most affordable care of any hospital in Vermont. 

The “significant rate increase” allows Northwestern to “avert that concern” of shuttering or substantially cutting services, he said. 

All the rate increases will ultimately be drawn from Vermonters’ purses, said Mike Fisher, the state’s health care advocate; when hospitals get higher rates from insurance companies, the costs are transferred to patients through higher commercial insurance rates. 

That adds up, said Fisher.

“Across the system, the budget and rate increases are too much for consumers,” he said. He argued that UVM Medical Center in particular was raking in too much money. 

“I understand and respect the challenges that community hospitals have,” he said. Nonetheless, “people are being priced out of getting the care they need.”

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Katie Jickling

About Katie

Katie Jickling covers health care for VTDigger. She previously reported on Burlington city politics for Seven Days. She has freelanced and interned for half a dozen news organizations, including Vermont Public Radio, the Valley News, Northern Woodlands, Eating Well magazine and the Herald of Randolph. She is a graduate of Hamilton College and a native of Brookfield.

Email: [email protected]

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