Northwestern Medical Center this year asked the Green Mountain Care Board for just shy of a 20 percent increase for its next year’s budget. Last week the board granted the hospital a 13 percent increase, 10 percent for a commercial rate increase and three percent to account for the impact of the coronavirus. The increase was reported as perhaps the highest rate hike in the regulator’s history, an outcome that carries with it a negative perception on several fronts.
The rate hike for NMC is nothing more than playing catch-up, an inevitably created by the regulator. This is the same hospital that, for the last half dozen years would present the GMCB with low to middle-of-the-road rate hike requests only to be denied and, instead, told to cut rates.
The obvious problem is that the hospital’s costs kept increasing as its revenues [through forced rate cuts] declined. Early on this imbalance with NMC didn’t worry regulators who were looking at a hospital with over 350 days cash on hand, more than any other hospital in Vermont. The board wanted NMC to use its savings to make up for the revenue lost through the rate cuts. The forced budget cuts helped the GMCB meet its goal of reducing the overall cost of health care in Vermont.
But the cost to NMC of that “benefit” for the board, started to take a toll. Losing money year after year tends to do that. Eventually, cash reserves disappear and the hospital no longer has the bandwidth to address other issues that might arise, the pandemic being one.
This process should concern us. There have been very real consequences to NMC as a result of the board’s lack of understanding, or, more likely, its political bent to be seen as the state’s force to lower health care costs.
NMC has had to slash its budget and close to 100 employees lost their jobs. Important programs were cut that reduced the hospital’s value. The community openly worried about the hospital’s future. Had the board been more accepting of NMC’s budget proposals in years past, this crisis might have been averted and the rates charged would have been close to where they will be when the 13 percent rate increase takes effect.
In other words, The board created the problems it had to correct with this month’s rate increase decision for NMC. There is also the concern that the 13 percent increase is not enough. The hospital asked for almost 20 percent. It got roughly half [no one is quite sure how to deal with the three percent Covid-19 hike. Is it temporary? How do the insurers figure it into their rates?] If NMC can’t make money with a 10 percent hike, then the problem continues and the board can, and should, expect a larger than normal rate hike request next year.
NMC is not alone in this battle. The UVM Health Network — representing University of Vermont Medical Center in Burlington, Porter Medical Center in Middlebury, and Central Vermont Medical Center in Berlin has essentially declared war on the GMCB. In a letter sent to the board last week, the network charged the regulator with gross negligence saying its decisions have jeopardized patient care and have put the financial health of hospitals at risk. What has been happening to NMC is now happening to UVMMC and other Vermont hospitals. If regulators do not amend their decisions, the financial strength of these three hospitals is also questionable.
That’s not acceptable. The board is in desperate need of direction. Health care in Vermont constitutes 20 percent of the state’s economy. Our hospitals are the economic centers of Vermont’s communities. We can’t afford to be guided by a board whose decisions are increasingly arbitrary and whose purpose and direction is not understood.
by Emerson Lynn