Care at UVM Medical Center is pricey, compared to both other hospitals in the state and nationwide.
The study from the Rand Corporation, which was released earlier this fall, reports that people with private insurance pay 358% of what Medicare pays for the same service — or about 3.5 times — at the state’s largest hospital.
That’s about 60 percentage points above the next most expensive Vermont hospital included in the study, Rutland Regional Medical Center.
Even compared to hospitals nationally, UVM Medical Center “certainly is a higher-priced hospital,” said Chris Whaley, a Rand policy researcher.
But whether the medical center is worth the price depends on the quality of care, he said. Whaley compared health care to buying a car; UVM Medical Center may be priced like a Ferrari, but there isn’t enough information yet to know if it drives more like a Ford.
“If it’s a high-quality hospital system, maybe it’s actually perfectly fine that it has a high price,” he said.
Whaley noted that Medicare did give the hospital a quality rating of just three out of five stars. That’s “at least one indication it’s not a Ferrari,” he said.
The data, which Whaley presented to the Green Mountain Care Board last week, offers the latest reminder of Vermont’s high health care costs. State health care prices rose 167% between 2000 and 2018, according to an August report from Doug Hoffer, the state auditor. If costs had mirrored the national rate over that period, Vermonters would have saved $1 billion, the auditor found.
Of the seven Vermont hospitals in the Rand report, prices ranged from a low of 178% of Medicare at Springfield Hospital, which declared bankruptcy last year, to UVMMC at 358% of what Medicare pays. The research didn’t include every Vermont hospital and the data was not comprehensive, Whaley said.
In a statement Wednesday, UVM Medical Center officials disputed the accuracy of the data and said the research was incomplete.
Hospital costs for each procedure are often invisible to patients, who pay the price in insurance premiums and deductibles. Hospitals don’t share publicly how much they get paid by insurance companies for each procedure, which can lead to price variations.
In any other sector, consumers have the information to choose cheaper, higher-quality options, Whaley said. “We have a whole mechanism for allocating resources for everything else in the economy,” he said. But in health care, “there’s no transparency.”
Why exactly UVM’s costs are high requires more research, said health care advocate Mike Fisher. “It does shine a light on how much we could do to bring down the price,” he said.
To get a measure of hospital prices, the Rand Corporation looked at the amount employers and employees paid compared to the prices that the federal government pays through Medicare. Medicare pays a set fee per procedure that’s adjusted for cost of living and wage differences. It provides a baseline for comparison of health costs.
The National Academy for State Health Policy also presented a report to the Green Mountain Care Board Wednesday on where hospitals were getting that income, and how they were spending their money.
During the hearing, Marc Stanislas, vice president of finance at UVM Health Network, argued that the UVM hospital network has the sickest patients in the state and offers certain expensive services such as dialysis and pediatric pulmonary care. The prices will inevitably be higher “if you want specialty care in-state and if that specialty care is 24/7,” he said.
In an emailed statement, spokesperson Annie Mackin raised questions about whether the data was comprehensive enough to draw conclusions. The hospital is committed to reducing cost, she said, but the studies don’t address “the full scope of services needed to ensure Vermonters receive the care they need in their communities.”
UVM Medical Center also has substantially more money in reserves than other similar academic medical centers, according to a presentation by the National Academy for State Health Policy. The hospital had a similar profit margin (5%) as Mary Hitchcock Memorial Hospital and Albany Medical Center, but had more than a third more money in reserves ($1 billion) than the Lebanon and Albany hospitals.
It also spends just 1% of its operating expenses on free care, the smallest percentage of any hospital in the state.
Researchers dodged questions about how to interpret the data, or why UVM’s costs could be so high. It could be a result of consolidation, said Whaley, which has been shown to raise costs.
But the work primarily meant to provide more transparency to patients and employers so they can make more informed decisions about where to get care, said Maureen-Hensley Quinn, senior program director at the NASHP in an interview.
”We know that hospital costs make up the largest portion of health care costs. And so, as states or employers or other health care purchasers, we’re looking at costs as a way to reduce health care premiums and other things for consumers,” she said.
The data could help the Green Mountain Care Board to more effectively analyze, and ultimately control health care costs, said board member Jessica Holmes. “More data and new insightful analytical tools can help inform our decision-making as regulators,” she said.
Holmes warned against drawing conclusions from specific data points. The sample size for the study was small, she said, and the board would need to analyze all of the state’s health care claims and see the underlying data before drawing any conclusions.
Board chair Kevin Mullin said he didn’t yet know whether the information in the report could lead to concrete action from the board. But, he said, he would consider it. “We’re always trying to use tools we can use to increase access and affordability,” Mullin said.