The financial constraints that have led to the closure of 181 rural hospitals nationwide since 2005 have yet to play out in Vermont. But in the summer of 2019, one institution in the Green Mountain State came dangerously close to joining that list.
Springfield Hospital, a 25-bed facility in Windsor County, had been operating at a deficit for years. As bills mounted in 2018, there wasn’t enough money to keep the heat on or cover salaries. Hospital leaders filed for bankruptcy in June 2019 after Springfield’s debt ballooned to $18 million.
The facility emerged from bankruptcy the following December. Now, after years of losses, Springfield leaders recently told state representatives from Windham and Windsor counties that the hospital is inching toward financial stability, according to state Rep. Kristi Morris, D-Springfield. Morris said legislators wanted to know how the hospital is faring now, months after bankruptcy proceedings ended.
“We want to see them survive,” said Morris, who also serves on the town’s selectboard.
The hospital ended its 2019 fiscal year — the same year bankruptcy proceedings began — with a $9.6 million deficit, according to filings with the Green Mountain Care Board, a regulatory body that oversees hospital budgets in Vermont. These losses shrunk to a projected $1.8 million in fiscal year 2021.
But Springfield needed a significant boost in growth targets in fiscal year 2022 to continue that trajectory, interim Chief Financial Officer Kayda Wescott told the care board last month.
“It’s just allowing us to stabilize our cash and stop the decline,” she said.
If approved, Springfield would have been given the green light to increase its patient revenue by an additional $53 million in fiscal year 2022. Without that increase, Springfield executives said in September, losses in the coming year could exceed $6 million.
Members of the care board, however, called Springfield’s budget unrealistic and nixed that proposal. The board allowed the hospital to raise its commercial insurance rates, a move that would net the hospital additional $1.2 million but wouldn’t cover the projected deficit in full.
Board members also said Springfield’s leaders would need to be creative if they wanted the hospital to weather the rocky financial terrain ahead.
Leaders at the rural facility have “to really think about what is the appropriate size for Springfield Hospital,” said care board member Jessica Holmes. “Is it possible that your fixed costs as they currently stand simply can’t be met by the declining patient demand?”
Board chair Kevin Mullin delivered an even sharper rebuke. “I’m confident that the hospital will survive this year,” he said in an interview — but he said Springfield’s long-term survival is uncertain, unless the hospital makes some big changes in its operations.
Hospital spokesperson Anna Smith, however, delivered a far rosier prediction. Patient volumes have rebounded, she said, and the hospital’s efforts to cut costs are paying off.
Still, she acknowledged that the coronavirus pandemic could erase some of these gains.
“Whether Delta will change that, whether services will have to be stopped again in the future is really out of our control … if it does, we’ll plan accordingly,” she said.
No mergers or affiliations for now
The road to financial stability has not been easy, Smith said. Layoffs and restructuring efforts aimed to cut costs whenever possible. Then, in June 2019, hospital officials discontinued Springfield’s labor and delivery unit, a service they said was too costly to keep local.
The pandemic has only deepened the hospital’s crisis, with ever-rising staffing costs and patient volume swings. Even with more patients coming into Springfield’s recently reopened 10-bed psychiatric unit and adult day care, members of the care board cast doubt on the hospital’s future, saying that leaders are banking on a temporary uptick in services that may well not last.
These cuts have only partially helped, said Tom Huebner, a former Rutland Regional Medical Center executive who works with Springfield Hospital on behalf of Gov. Phil Scott. The challenge would be bringing in more patients to sustain current operations.
“There’s some evidence in recent months that that’s happening,” he said. “Whether it happens sufficiently, frankly, time will tell.”
Hospital executives told the Green Mountain Care Board that Springfield’s imaging equipment needs to be replaced, as does the building’s air circulation system. Executives also wanted to contribute to the employee retirement fund match for the first time since 2020 to attract and retain employees.
The hospital’s employee workforce has already shrunk somewhat, from 450 employees in December 2020 to 413 employees in August.
Huebner told the board the hospital has already made all the necessary cuts. At this point, he said, Springfield should work to preserve its market share to make it attractive for possible partnerships with larger hospital systems.
The hospital got close to such a partnership agreement just before the first documented Covid-19 case in Vermont in March 2020. Huebner said Springfield explored a partnership with Mt. Ascutney Hospital in Windsor and the Valley Regional Hospital in Claremont, New Hampshire, with the support of Dartmouth-Hitchcock Health, a large Lebanon, New Hampshire-based hospital chain that’s affiliated with both institutions.
The agreement fell apart as the first wave of the pandemic swept the nation, but Huebner pointed out that Springfield’s board has representatives from Dartmouth-Hitchcock Health and UVM Health Network, two regional chains that could offer such collaborations.
Representatives from both networks said last month that full-fledged affiliations are not in the works, though collaborations around specific services are possible.
Springfield’s leaders, however, said nothing is off the table.
“We envision a sustainable future either as an independent hospital or as a system partner, and we remain open to pursuing partnerships,” Springfield Hospital CEO Robert Adcock told the Green Mountain Care Board last month.
Members of the care board have said the way forward may not be as smooth as Springfield officials predict, especially since Springfield works with a large number of Medicaid patients, who bring in low reimbursement rates. Competition from nearby facilities — Brattleboro Memorial Hospital; Cheshire Medical Center in Keene, New Hampshire; and Rutland Medical Center — also could slow Springfield’s recovery.
But a closure would be a blow to residents, some of whom are on Medicaid and cannot afford to travel outside of the community for their care, said Springfield Town Manager Jeff Mobus. The local economy, too, would suffer if the hospital, a major employer, shut down.
“It’s access to medical care,” he said. “ … It provides [residents] a great deal of comfort knowing that medical care is available right there in their own community.”
