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The University of Vermont Medical Center complex. Photo courtesy of UVM Health Network<\/p>\nThe University of Vermont Medical Center complex. Photo courtesy of UVM Health Network<\/p>\n
It\u2019s been a long year for the University of Vermont Health network.<\/p>\n
Last year, regulators took a particularly critical view of the network finances<\/a>, which prompted a leadership change at the highest level of the organization<\/a>, followed by significant slimming of its executive level positions<\/a>. As it carried out those regulatory budget orders, charged less for certain pharmaceutical drugs<\/a> and inked a 2026 contract with BlueCross BlueShield that cut what the insurer paid the hospital, the flagship medical center in Burlington found itself operating at a loss of hundreds of thousands of dollars a day. In May, an independent liaison found that the group needs to cut its expenses<\/a> by $300 million in the next three years.<\/p>\n Then came large layoffs<\/a>, cuts to employee benefits<\/a> and a frantic push to see more patients.<\/a><\/p>\n And still, more change is in store, the state\u2019s largest healthcare provider told regulators this week as part of its annual budget-setting process.\u00a0<\/p>\n Every summer, the Green Mountain Care Board reviews the budget of each of Vermont\u2019s 14 hospitals and issues binding budget orders by the start of the Oct. 1 fiscal year.<\/p>\n This year, the network has struck a notably different tone across the budget hearings.<\/p>\n \u201cIt was the most transparent accounting of our current finances, our plans for the future and the really, really challenging and difficult decisions that we\u2019re making right now,\u201d Dr. Steve Leffler, who leads both the UVM Health network and its Burlington flagship hospital, UVM Medical Center, told VTDigger.\u00a0<\/p>\n It\u2019s also the first time in recent memory that the hospital has submitted a budget with a negative operating margin.<\/p>\n The network expects to lose more than $14 million across the system in the coming fiscal year, even with an estimated $3.16 billion in network-wide revenue. It expects UVM Medical Center to operate at a $43 million loss.<\/p>\n That number, according to Leffler, \u201crepresents our best attempt to balance required expense reductions for affordability and our commitments to maintaining access to Vermonters,\u201d he said in his opening remarks to the care board.<\/p>\n This year\u2019s budget process notably prioritizes cuts to hospital expenses, while past years have focused on charging patients and insurers less \u2014 and thus, decreasing revenue.\u00a0<\/p>\n Cutting expenses\u00a0<\/p>\n Already, the network has proposed $140,000,000 in cuts<\/a> to expenses such as administrative staff, clinician time and supply costs. Even with those aggressive cuts, the network still expects its spending to increase more than $97 million compared to this year.<\/p>\n One of the largest cuts to expenses<\/a> comes from slashing non-clinical, administrative staff across the network \u2014 in areas like IT, human resources and legal departments. The network estimates the cuts will save $15 million.<\/p>\n The network also indicated it would use fewer traveling nurses \u2014 from 228 in 2025 and 173 this fiscal year to a proposed 114 for 2027. It\u2019s a cut that is also expected to save nearly $15 million.<\/p>\n Similarly, the medical center said it\u2019s trying to reduce overtime and urgent pay by better staffing departments according to patient volume, which should yield nearly $25 million in savings.\u00a0<\/p>\n Judy Peck-Lee, the medical center\u2019s chief financial officer, told regulators that the hospital\u2019s emphasis is on moving care to lower-cost sites and reducing length of patient stays in the hospital.<\/p>\n READ MORE<\/p>\n \t\t\t\t\t\t\t\t It\u2019s all part of a larger push to increase clinician productivity, which the hospital hopes can bring in higher revenues while also trying to decrease wait times for patients.<\/p>\n The Medical Group \u2014\u00a0a separate UVM Health body of more than 1,500 doctors and other clinicians who work across the network\u2019s hospitals and clinics \u2014\u00a0 is going through some of the biggest changes, Leffler told regulators.<\/p>\n As part of the new productivity focus, the network set a 36-hour standard minimum number of patient-facing hours per week. The network is also streamlining its scheduling processes and trying to better match patients\u2019 needs with the right level of clinician, such as staffing an advanced practice nurse when one might be more appropriate than a doctor, Peck-Lee told regulators.<\/p>\n A spokesperson for the hospital said it\u2019s \u201cunclear at this time\u201d if increasing productivity in this way will also result in higher revenues for the network, but it\u2019s something they will continue to monitor.<\/p>\n Fine balance between revenue and expenses<\/p>\n Historically, the Green Mountain Care Board has focused primarily on how much money the hospital network makes, not how much it spends.<\/p>\n Last year\u2019s intense focus on curbing hospital revenue pulled more than $200 million out of the networks\u2019 hospitals\u2019 budgets, according to a memo from an independent oversight group<\/a>. The network did that by pulling down prices for commercial insurance payers and reducing the hospital price of drugs.<\/p>\n Those slashed costs meant that commercial insurers in Vermont \u2014 BlueCross BlueShield of Vermont and MVP \u2014\u00a0could keep their insurance premiums lower for consumers.<\/p>\n This coming year\u2019s budget proposes no increase to what the hospital group charges commercial insurance \u2014 though the care board had originally asked them to reduce it by 1%.<\/p>\n Yet those cuts to revenue need to match cuts in the hospitals\u2019 expenses in order for the network to break even. But neither the 2026 nor the proposed 2027 budgets strike that balance.\u00a0\u00a0<\/p>\n \u201cWe anticipate that we\u2019ll end the year significantly in the red at UVM Medical Center and at (Central Vermont Medical Center). The reason is fairly straightforward,\u201d the network\u2019s Chief Financial Officer Rick Vincent told regulators Monday. \u201cThe revenue reductions have happened very quickly, and by contrast, our expense efforts are taking longer to implement.\u201d<\/p>\n The care board, in approving hospital budgets, has a tricky balance to strike \u2014\u00a0to keep healthcare prices affordable for consumers while also keeping the hospital solvent.\u00a0<\/p>\n \u201cWe want high quality and the best types of care, but that money comes from somewhere. The most clear (place) it comes from is either taxpayer dollars or paychecks,\u201d Chris Whaley, a healthcare economist not connected to Vermont\u2019s regulatory process, told VTDigger.<\/p>\n Still more reduction<\/p>\n The independent liaison group tracking UVM Health\u2019s finances says that the hospital network still needs to cut an additional $50 million from its expenses this coming year to prevent the network from eating into reserves. Specifically, the liaison team suggested that those cuts come from supply chain costs, administrative costs and making its independent group of clinicians more efficient.<\/p>\n The spending proposed by the hospital group is still less aggressive than the goal of a 2.4% increase in expenses that the care board had set for UVMMC earlier this year, a number that aimed to set just enough room to keep pace with inflation.<\/p>\n Peck-Lee told regulators that UVMMC is trying to bring this figure down even further by negotiating cheaper contracts for medical and surgical supplies.\u00a0\u00a0<\/p>\n But the hospital has said that it doesn\u2019t know exactly where those cuts might come from.\u00a0<\/p>\n \u201cWe did not have those savings completely identified yet, which is why our budget has a negative margin,\u201d Leffler told VTDigger. In the past, the hospital has patched budget holes like this with abstract, placeholder numbers, called \u201cplugs.\u201d This year, instead, its leaders wanted to wait to clarify the cuts more concretely.<\/p>\n \u201cI really don\u2019t like plugs because plugs don\u2019t actually identify what you\u2019re going to do,\u201d Leffler said. \u201cThey just feel kind of like you\u2019re kicking the can. So we were honest. We said we don\u2019t have the full savings right now.\u201d<\/p>\n READ MORE<\/p>\n \t\t\t\t\t\t\t\t
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