Hospitals cite Covid as they ask for more revenue, bigger budgets

Northwestern Medical Center in St. Albans has requested permission to raise its budget by 20%, the highest request among Vermont’s 14 hospitals. Photo by Colin Meyn/VTDigger

Vermont hospitals are asking to raise their patient revenues for 2021 in the wake of the coronavirus, including an unprecedented 20% rate request from Northwestern Medical Center. 

The budgets received by the state regulatory Green Mountain Care Board for approval earlier this week reflect the uncertainty hospitals face as they prepare for the future, and the deep financial damage wreaked by Covid-19.

The increase requests ranged from 2.1% from Northern Vermont Regional Hospital in St. Johnsbury to nearly 20% by Northwestern Medical Center in St. Albans. All told, the requests averaged about 7% across Vermont’s 14 hospitals — double the state’s target of 3.5% annual increases.

“Without a doubt, taken as a whole, the hospital budget requests are an indication that the system is stressed,” said Mike Fisher, health care advocate for the state. 

But he worried that any additional cash coming in for hospitals will ultimately come out of the pockets of Vermonters. 

“The question … is who can bear the burden?” he said. “Any consideration that consumers who need health care are flush, and can bear the expense of increased rates is tone deaf.”

The growing costs and decreasing revenue over time “is not sustainable” for patients or for hospitals, said Alena Berube, director of health systems policy for the Green Mountain Care Board. “We need to figure out how we’re going to solve this as a state.”

During the height of the coronavirus pandemic in late March through early May, hospitals canceled all non-essential appointments and surgeries. Revenues plummeted, and health care facilities saw higher bills as they prepared for a surge of patients, bought personal protective equipment and Covid tests. 

Many hospitals submitted 2021 budgets with the assumption that the number of patients visits will return to pre-Covid levels. But predictions around future numbers of Covid cases and patient visits are “really an educated guess,” said board Chair Kevin Mullin.

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The vast disparities in budget requests can be attributed to that uncertainty and differences in financial impact from the pandemic. Hospitals received varying amounts of aid from the federal government, and some cut staff members and services while others tried to wait out the pandemic.

“It’s all over the map in terms of what they’re asking for,” Mullin said. 

Kevin Mullin
Kevin Mullin, chair of the Green Mountain Care Board. Photo by Glenn Russell/VTDigger

The Green Mountain Care Board will hold hearings this month and make its decision on the budget requests next month, but hospitals won’t necessarily get more money. Each must then negotiate that higher rate with insurance companies. Those figures aren’t public, but typically insurers give hospitals the money they ask for, Mullin said.

For example, Gifford Medical Center in Randolph typically gets about 75% from insurers of the total rate request, according to Wayne Bennett, interim vice president of finance for the hospital. 

At the same time, BlueCross BlueShield of Vermont and MVP Health Care are also asking the Green Mountain Care Board for rate increases, which will be funded by Vermonters’ monthly insurance premiums. Hundreds of people voiced their opposition to the rate increases last month, saying that they couldn’t afford higher costs during an economic crisis. 

Northwestern Medical Center’s request

Mullin said he’d never seen a budget increase request as high as the 19.9% requested by Northwestern Medical Center. “But I also haven’t seen a pandemic,” he noted. 

(Last year, Springfield Hospital, which had already declared bankruptcy, requested a slightly lower, 19.2% increase.)

The St. Albans hospital attributed less than a tenth of the increase, about 1.2%, to Covid-19. 

Northwestern Medical Center attributed the expenses to higher staffing costs, fewer patients, Covid-related expenditures, and participation in the state’s all-payer model, which is about a third of the total increase. The dues and financial risk associated with participation in the all-payer program outweighed the financial benefits, said Robyn Alvis, NMC’s chief financial officer.

Jonathan Billings, vice president of community relations for Northwestern Medical Center. Photo by Colin Meyn/VTDigger

“We do not enjoy being in a position where a rate increase of 19.9% is needed, or to be making the request during a pandemic,” hospital officials wrote in the budget filings. “Nevertheless, … it is our desire to present a solution allowing us to preserve Northwestern Medical Center.”

In April, Northwestern Medical Center asked the Green Mountain Care Board for a mid-year 15% rate increase, which is typically not an option for hospitals. Even before Covid, the hospital had lost money on staffing, and their electronic health records system, Northwestern officials argued. The board denied the request, telling the hospital to cut costs and tap into its reserves. 

In response Northwestern stopped running a clinic that offered addiction recovery services, and issued a plan to cut more than 60 employees. 

In an interview, Alvis defended the current request, saying that even with a 20% rate increase, the hospital provided more affordable services than many other facilities in the state. Even with the rate increase requested by Northwestern, patients at UVM Medical Center will pay $1.40 for every $1 they’d pay at Northwestern, she said.

The hospital will not follow Springfield Hospital and go bankrupt, said spokesperson Jonathan Billings. 

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“We’re not in emergent impending peril of closing,” Billings said. But, he added, “the trajectory of operating losses is concerning, and needs to be addressed, not only by NMC and by the board, but by our regulators.”

John Brumsted
Dr. John Brumsted, the CEO of the UVM Health Network, at a press conference about the state’s second presumptive case of Covid-19 on March 12, 2020. Photo by Mike Dougherty/VTDigger

UVMMC asks for 8%

Hospitals across the board reported high costs in working with OneCare Vermont, the accountable care organization that administers the all-payer system. OneCare CEO Vicki Loner said the group had reduced dues and were trying to cut financial risk to alleviate pressures on Vermont hospitals. 

Smaller hospitals — Brattleboro Memorial Hospital, Southwestern Medical Center, Gifford Medical Center, and Northern Vermont Regional Hospital and Grace Cottage — all asked for increases of 4% or less. 

“We don’t think we need more,” said Gifford CEO Dan Bennett. 

During the pandemic, the Randolph hospital had tried to prioritize responding to the community and its needs, Bennett said. That, along with cutting costs and increasing patients, is a recipe for success into the future, he said. 

“We analyze what we’re doing and what we can do differently,” Bennett said. “We’ve had success with that plan. That’s a pretty good blueprint.”

Larger hospitals were hit harder — in part because they received less federal relief money, Mullin said. 

UVM Medical Center asked for an 8% rate hike for 2021, and its affiliates Porter Medical Center and Central Vermont Medical Center requested 5.8% and 8.5%, respectively. 

“These requested increases are higher than we would like, but they are the product of intense work to reduce them,” UVM Health Network President John Brumsted said in a press release. The medical center expects to end the current year at a $6 million loss. 

On Wednesday, the Green Mountain Care Board approved a measure that would require the hospitals to undertake sustainability planning. Hospitals will be required to submit data and plans to the board over the coming months to determine their viability and path forward. 

The budget submissions show that the hospitals are losing money,board members agreed, and need to be stabilized — and fast. “Time is of the essence,” said board member Jessica Holmes. 

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