State regulators signed off on a mid-year budget adjustment Wednesday that will allow Northwestern Medical Center to bring in extra money this year — even as they rejected the St. Albans hospital’s proposal to raise their rates with commercial insurers.
The Green Mountain Care Board’s unanimous decision will allow the medical provider to bring an additional $1.6 million in new business from expanded marketing efforts. Regulators do not typically encourage hospitals to increase patient traffic, but this is an unusual case.
Northwestern is one of Vermont’s cheapest hospitals, and its closest neighbor to the south — the University of Vermont Medical Center in Burlington — is often the most expensive. Regulators reasoned that business steered to Northwestern might help the cash-strapped hospital whittle away at its deficit while also lowering costs to the system as a whole.
“We hope this is shifting care to lower-cost sites and not increasing utilization unless it's expanded access,” Sara Teachout, a member of the Green Mountain Care Board, said before voting in favor of Northwestern’s amended budget. Regulators expect the hospital to measure the impact of its marketing efforts on the wider system and report back later.
The St. Albans hospital had also asked to raise its rates with commercial insurers an extra 3%.
Jonathan Billings, Northwestern’s interim CEO, told regulators that even with such a rate increase, the hospital would remain one of Vermont’s best deals. Without it, he said the hospital risked breaking a covenant with its lender.
“Having to pay off the bank or other draconian matters would precipitously draw down days cash on hand,” Billings said. “We are concerned about our burn rate on that, and concerned about our ability to maintain key services in northwestern Vermont.”
But regulators said no to higher prices, although they suggested the hospital might get a break when they return to the board to set their budget for the upcoming fiscal year. For now, however, board members said they weren’t comfortable asking private insurers to pay more.
“Any rate increase does impact a financially vulnerable insurer and add to our extremely high commercial insurance costs,” Green Mountain Care Board Chair Owen Foster told hospital leaders.
