The Brattleboro Memorial Hospital campus on Belmont Avenue. Photo by Kevin O’Connor/VTDigger
BRATTLEBORO — Ask administrators at Brattleboro Memorial Hospital about a multimillion-dollar operating budget shortfall and they’ll point to everything from too many unpaid patient bills to their own staff’s rising health insurance costs.
“We fully recognize that we are in a very bad financial condition,” one hospital official said at an Aug. 6 budget review hearing. “We need to increase cash and decrease our payables and receivables.”
Vermont health care regulators, for their part, cite a bigger problem: fiscal figures they say don’t add up.
READ MORE
“BMH has not accurately or completely answered many questions,” the state’s Green Mountain Care Board wrote in an Oct. 1 decision on hospital spending. “This missing, incomplete and inaccurate information makes it challenging to understand BMH’s current financial position.”
No one, for example, can pinpoint the exact sum of the shortfall attached to the $119 million annual budget that ended Sept. 30. At a Sept. 3 hearing, the board said hospital filings were projecting a deficit of $2.8 million and, at the same time, reporting a year-to-date loss of $10.8 million.
Regulators, expressing fears that “the hospital may be at risk of a sudden solvency crisis,” have told Brattleboro leaders to resubmit “corrected and accurate” budget numbers or risk becoming the first Vermont health care facility to receive outside intervention under a new state law.
As administrators revise their math, the hospital’s more than 500 staffers and 45,000 residents in its service area are questioning both the budget and this month’s unexplained leave of absence of CEO Christopher Dougherty.
Dougherty has referred all inquiries to the hospital’s communications office, which isn’t elaborating “out of respect for Chris’s privacy,” it has emailed corporators.
The hospital also is limiting comment on its finances, saying only that administrators are cooperating with regulators. But the extent of the challenge can be gleaned from Green Mountain Care Board records, reports and recordings full of red ink.
‘Significant financial challenges’
The hospital, one of Brattleboro’s three largest employers, hasn’t reported a positive operating margin since 2020, according to board figures. But regulators didn’t initially see that as a red flag, as Vermont’s 13 other community hospitals also faced budget problems during the Covid-19 pandemic and a subsequent boom in patients that drove up spending.
Brattleboro, which ranks eighth in the state for net patient revenue, isn’t as large as Burlington’s University of Vermont Medical Center, Rutland Regional Medical Center or Berlin’s Central Vermont Medical Center, all which can offer more profitable subspecialties. On the flip side, Brattleboro’s 61-bed count isn’t small enough to be one of the state’s eight “critical access hospitals” (up to 25 beds in a rural location) that qualify for federal support.
Brattleboro’s financial plight became public in May, when the hospital warned it had four months to find $4 million in reductions and new revenue to balance its budget by Sept. 30.
“Like rural hospitals here in Vermont and across the nation, BMH faces significant financial challenges that have been imposed on us in large measure by both the state and federal governments,” Dougherty wrote in the email to community supporters.
The not-for-profit pointed to its status as the state’s only Medicare dependent hospital, meaning at least 60% of its admissions are Medicare patients age 65 or older. Brattleboro’s Medicare reimbursements for professional services have declined by almost 3% annually, Dougherty wrote. At the same time, the hospital is paying $600,000 a month in Vermont health care provider taxes — charged to facilities statewide — to help fund Medicaid expenditures for people with limited incomes.
“While part of that money comes back to us,” Dougherty wrote of the provider taxes, “the state recently reduced the percentage of annual return to less than 10%.”
‘System inefficiencies’
State regulators see the numbers differently. In last year’s budget decision, they noted that Brattleboro Memorial Hospital’s low Medicare payment-to-cost ratio, clinical productivity data and higher-than-average wait times indicated “system inefficiencies” that could be reduced through better management of expenses.
Hospital administrators went on to launch a hiring freeze and let go of six administrators in hopes of lowering its staff count from 543 last spring to 513 this fall. The hospital also recently won selection to a Centers for Medicare & Medicaid Services’ Rural Community Hospital Demonstration project that helps with financial reimbursements.
But during the state’s annual budget hearings in August, hospital administrators detailed an even longer list of troubles. Unpaid patient bills had risen as high as $50 million after the arrival of Covid-19 and a 2024 cyberattack on its electronic claims processor. And costs had increased for everything from a self-funded employee health benefit plan to salaries of travel nurses and other contract workers.
As for the future, administrators told the board the hospital could lose nearly $4 million a year if the federal government doesn’t extend a subsidy provided to Medicare-dependent and low-volume facilities. Another $700,000 is at risk annually if the hospital is dropped from a national drug pricing program called 340B that offers financial help.
Administrators also are unsure about the impact of new U.S. tariffs and a coming switch from the OneCare Vermont accountable care organization, closing at the end of 2025, to another company.
In response, state regulators praised Brattleboro’s high scores in patient satisfaction before pointing out their own problems receiving budget data.
Asked to submit management salaries, for example, the hospital didn’t provide numbers but instead simply noted, “We were just recognized by the Lown Institute as the best hospital in Vermont for pay equity, which they measured using our CEO’s comp in comparison to a median (support) employee.”
‘Survival of the hospital’
After repeatedly requesting other facts and figures to no avail, regulators began to make noise.
“It’s not a surprise to Brattleboro Memorial Hospital that GMCB staff have been consistently concerned about the accuracy of information that’s been submitted,” Mark Hengstler, the regulators’ attorney, said at a recent hearing, underlining the board’s multiple inquiries.
“It is really hard to properly evaluate your budget when we just have discrepancies, inconsistencies and unanswered questions,“ added board member Jessica Holmes, a professor of health economics and public policy at Middlebury College. “I don’t think I’ve ever said that to a hospital in the 10 years that I’ve been doing this.”
According to the hospital, its two staffers charged with helping regulators had been busy addressing the shortfall.
“Our financial condition has really interfered with preparing and submitting the documentation,” Laura Bruno, the chief financial officer, told regulators in August. “I’ve been fully focused on the survival of the hospital.”
The board wasn’t swayed.
“I understand your financial condition and we’re very worried about it, and so we really need to ensure that the data that is submitted is accurate,” Holmes said in response. “Your regulator is asking you questions and it is your obligation to answer.”
The state reiterated that in its Oct. 1 budget ruling.
“Stated as directly as possible, we are deeply concerned about BMH’s solvency,” the board wrote. “We believe that its leadership must make big strides to adjust course.”
Since then, the hospital has announced Dougherty’s leave and the appointment of two new acting co-CEOs, orthopaedic surgeon Elizabeth McLarney and primary care physician Tony Blofson.
“While we do not yet have a budget resubmission date, we take the concerns in the budget order very seriously,” McLarney and Blofson said in a statement to VTDigger. “We are in the process of evaluating the hospital’s overall financial status and are making progress to secure an outside consultant to conduct a thoughtful and thorough evaluation of the issues raised.”
“We will be working with the GMCB to address all questions,” the acting co-CEOs added, “and will continue to do so moving forward.”
The state, for its part, said it would review the hospital’s revised budget once submitted — no date has been stipulated — and publicize any follow-up hearings.
“This is an important hospital, one that we feel very strongly needs to be there for the community,” board Chair Owen Foster said at a recent meeting. “Some of the data may not seem that important on the hospital side, but we rely on this to make really important decisions. The data needs to be right.”