In 2024, the University of Vermont Health network abruptly announced a series of sweeping, patient-facing cuts after state regulators cut into its budget. Dialysis, primary care, a psychiatric unit — all were on the chopping block.
The hospital system’s move provoked public protests and incensed state lawmakers, who returned the following year to Montpelier and passed a law giving the Green Mountain Care Board the ability to block hospitals from closing services.
“There was this kind of sense of outrage,” said Rep. Alyssa Black, the Democratic chair of the House Health Care Committee.
But now, barely a year after passing that law, lawmakers are already second-guessing themselves. The state Senate has passed legislation that would task the Vermont Agency of Human Services with weighing in on service cuts with a non-binding recommendation, and return to hospitals the final say.
Lawmakers are considering getting rid of state oversight because the two entities that regulate hospitals — the Green Mountain Care Board and AHS — both say they don’t want to make the call.
The debate in Montpelier will dictate how easily hospitals can close low-margin services. Labor wards, primary care clinics and mental health services are perhaps the most vulnerable to closure. But it also reflects how ambivalent officials are about having to make some of the hardest decisions before the state as Vermont attempts to get its skyrocketing health costs under control.
“I think it's easy to say… ‘We need to save some money, but we're not going to affect any care.’ And I think the realities of what's in front of us is more challenging than that,” said Mike Fisher, Vermont’s chief health advocate.
The bill, S.189, was prompted by leaders at the Green Mountain Care Board, who say that while regulatory oversight is necessary, the board is ill-equipped to tell hospitals which services they should or should not cut. Members of the independent board have said their jurisdiction is hospital budgets, and argued that AHS, on the other hand, is much better suited to weighing in on service line changes, since the state agency is currently at work on larger hospital reform efforts.
AHS is leading ongoing talks between hospitals about how to stay solvent while maintaining critical services and lowering costs system-wide. Board members say that given the work AHS is already doing — and the millions in funding it’s been given to do it — the agency should be responsible for saying which service cuts align with that larger vision.
And because AHS is a payer — it oversees Medicaid — the GMCB has also said AHS has the added power to raise reimbursement rates if it wants to intervene to save a service.
But AHS officials have made clear they do not want the burden of making such a high-stakes decision. Jill Mazza Olson, the state’s Medicaid director, has argued it would be “awkward” for the state to both consult with hospitals on reform and also block service reductions.
“It’s not really possible to be the regulator of the thing that we’ve consulted on and helped to create,” she told House lawmakers Thursday.
“It’s not really possible to be the regulator of the thing that we’ve consulted on and helped to create."Vermont Medicaid director Jill Mazza Olson, on the idea of the Agency of Human Services blocking hospital service reductions
While regulators may be hesitant to take responsibility for service cuts, hospitals say they are eager to have their discretion restored. And Devon Green, a lobbyist for the state’s hospital association, has also repeatedly reminded lawmakers that the state’s hospital transformation plan remains in development — and will be for years to come.
“We are in a little bit of no man’s land. Where we don’t have a plan, and we do have these financial pressures on us,” she said.
Green has also argued that it would not be in the hospitals' interest to aggressively cut services to save money, since the Green Mountain Care Board would retain the ability to adjust a hospital’s budget accordingly.
Senate lawmakers’ response has been to say they’re willing, for now at least, to take hospitals at their word that patients will not be left in the lurch.
“If I hear — as I have from hospitals in my committee — that ‘We won't let the worst thing happen,’ I'm going to trust that. And if that trust is broken, that's a learning experience,” said Sen. Ginny Lyons, the Democratic chair of the Senate Health and Welfare Committee.
Besides, Lyons said, the bill requires public notice, which will give people impacted by potential closures the ability to have their voice heard.
But Fisher, the health advocate, said public notice is not by itself sufficient, particularly given how much pressure hospitals are under — including from regulators — to cut spending.
“I think it is very important at this time to make sure that there is somebody to call the balls and strikes, somebody to make sure that what the hospital is contemplating for itself works in our broader health care system,” he said.
More from Vermont Public: Regulators signal they aren’t done asking hospitals to cut costs
The Senate’s bill is now in the House Health Care Committee, where it has encountered skepticism, particularly from Black, who said some form of state oversight remains necessary.
But Black said she is sympathetic to hospitals. They face immediate regulatory imperatives to cut spending, she said, and that will require shuttering some services.
“There’s a lot of pressure not to do that. But how do I stop Vermont from being the most unaffordable state in the entire country for health care?” she asked. “We cannot do it all, and we can't have it all.”
