Vermont hospitals request historic budget hikes
Vermont’s 14 hospitals have submitted their proposed budgets for next year.
And Mike Del Trecco, the president and CEO of the Vermont Association of Hospitals and Health Systems, says there has never been a wider gap between what the state estimates the hospitals should be asking for, and what they say they need to survive in a post-pandemic landscape.
“Much of the world has soundly moved on from COVID-19, and rightfully so, but its impacts on our health care system are profound and will be felt for years to come,” Del Trecco said.
Vermont is the only state in the country that has a regulatory body, the Green Mountain Care Board, that approves hospital budgets.
During the pandemic the board took the unusual step of creating a two-year window for hospitals to develop their budgets, understanding that COVID-19 created pressures on the system.
In 2021 the hospitals were supposed to develop two-year budgets that allowed for 8.6% growth.
But in 2022 the hospitals had a very tough year with nine of the state’s 14 hospitals showing a negative operating margin.
So they came into the current budget season with an expectation from the board of keeping their revenue growth at about 2%.
Del Trecco says the overall increase of the entire hospital system’s growth is at about 8%.
Much of the world has soundly moved on from COVID-19, and rightfully so, but its impacts on our health care system are profound and will be felt for years to come.Mike Del Trecco, Vermont Association of Hospitals and Health Systems
Hospitals typically submit budgets that are in line with Green Mountain Care Board targets, with the largest proposed increases coming in at the 4% range.
The average proposed budget increase has never been as high as it is this year.
Earlier this year the hospitals asked the Green Mountain Care Board to adjust the growth expectations, but the board refused to do so.
“Our health care system, including hospitals and independent providers, is under financial stress. So too are Vermonters,” Green Mountain Care Board chairman Owen Foster said when the hospitals asked for the target increase in May. “The Care Board takes its responsibility to promote an accessible and affordable health care system seriously. In light of these challenges, we have maintained our two-year 8.6% growth target and hospital budget requests will be fairly evaluated based on the clear, objective benchmarks established in our guidance.”
So now Del Trecco says the hospitals are heading into the upcoming budget hearings far apart from what state regulators are expecting.
“The request that we made was to recognize that the percentage growth, necessary because of inflation, because of the workforce challenges, because of all the things we’re trying to manage, was just out of alignment,” he said.
Some of the state’s hospitals were able to keep their projected growth targets low.
Southwestern Vermont Medical Center in Bennington, for instance, submitted a budget just slightly higher than the Green Mountain Care Board’s two-year growth target, while Gifford Medical Center in Randolph kept their two-year revenue growth at 7.2%, well below the two-year target.
But University of Vermont Health Network, which operates three hospitals in the state, and is by far the largest hospital system in Vermont, says Porter Medical Center in Middlebury needs a more than 28% budget increase, over the two years, while UVM Medical Center in Burlington is asking for an almost 24% jump.
And the budget hearings this year come as the Green Mountain Care Board is also considering big hikes in insurance premiums.
Blue Cross Blue Shield of Vermont wants a more than 15% average rate hike, while MVP Health Care is asking for an almost 13% increase.
The Green Mountain Care board will begin its fiscal year 2024 hospital budget hearings on Aug. 9, with decisions on each of the 14 budgets expected before Sept. 15.
“Recovery is happening, but is slowed by the headwinds we face as a rural and aging state, as well as significant cost pressures and inflation,” Del Trecco said. “That is why our non-profit hospitals are working so hard to balance the need to be strong financial stewards of our limited health care dollars while also leading to ensure we have the infrastructure in place that Vermonters rightly deserve.”
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