A report released this month about the health of the state’s hospitals showed there is definitely cause for concerns.
According to a Green Mountain Care Board report titled “Fiscal Year 2018 Vermont Hospital Budgets,” several Vermont hospitals appear to be hemorrhaging. Eight of 14 hospitals didn’t make money operating in fiscal 2018. (Only UVM Medical Center fell within the board’s 0.5 percent budget-variance parameter after the board adjusted the hospital’s base budget for fiscal 2018 to more accurately reflect actual revenues from 2017.)
According to the report, only six hospitals reported positive operating margins: Mount Ascutney ($1 million); Northeastern ($1.4 million); Porter Hospital ($1.49 million); Rutland Regional ($1.3 million); Southwestern ($7.6 million); and UVM Medical Center ($46.1 million).
Springfield Hospital had a negative operating margin of 12.8 percent, losing nearly $7 million. It was followed by Gifford Medical Center in Randolph, which posted a negative margin of 10.7 percent, or a loss of $5.37 million. The other hospitals that reported operating losses were: Brattleboro Memorial ($1.9 million); Central Vermont Medical Center in Berlin ($7.87 million); Copley Hospital ($2.2 million); Grace Cottage ($556,530); and Northwestern ($3.7 million). Overall, the system wide operating margin decreased 1.4 percent.
That data probably needs more analysis. While it varies from location, it certainly begs the question: What is driving up operating expenses? Experts in health care offer a range of factors, from salaries and equipment, to size and experience of workforce, to demand on services. It is hard to point to specifics here in Vermont.
There were other reported trends from the Green Mountain Care Board report:
• Overall, the 14 hospitals generated just over $2.5 billion in revenue. (CVMC brought in $194.5 million, or 7.7 percent of the total; Rutland Regional Medical Center brought in $254.2 million, or 10.1 percent of the total.) The University of Vermont Medical Center in Burlington brought in $1.25 billion, or just over 50 percent of the total.
• Overall, in fiscal 2018, hospitals experienced a 3.1 percent increase over fiscal 2017 in net patient revenue/fixed prospective payment statewide. For CVMC, that was a 0.3 percent decrease from 2017 to 2018; for Rutland Regional, it was a 5 percent increase. Gifford Medical Center was down the most, 10.1 percent.
• Hospitals also experienced a 5 percent increase over 2017 in operating expenses. CVMC was up 2.8 percent; Rutland was up 7.2 percent. Springfield Hospital, which has dominated headlines for being in financial trouble in recent months, saw the sharpest increase in operating expense of $61.8 million, or 7.6 percent over 2017.
The hospitals reported a 1.1 percent increase in acute admissions, and a 3.7 percent increase in outpatient admissions was reported.
All of that data points to bigger questions about what’s next.
Vermont hospitals are nonprofits, even though they more or less operate as businesses. As has been noted by critics of the hospital system here, while the hospitals have boards of directors to whom they are accountable, they do not have shareholders (nor do they usually pay property taxes) — like most businesses. Profits often go to salaries.
And yet their struggle is our struggle and a real one. Even when Vermont hospitals are making investments that they hope will generate dividends, they are not always able to turn around a yield. The industry in bigger cities and other corners of the nation is moving far faster and efficiently.
As we have seen, there’s no easy fix in the health care industry. While the variances in the 2017-18 comparison show nearly an equal number of positives to negatives, it would seem as though some hospitals here are in trouble. Their closure would be scary for communities that depend on them.
In a recent editorial board meeting between Rutland Regional’s CEO and president, Claudio Fort, and editors from the Rutland Herald and The Times Argus, the challenges were outlined: rising costs, greater demand on emergency rooms, workforce development and finding qualified personnel, among them. Rutland Regional has been in the fortunate position to pivot to the community needs, constantly evaluating where improvements can be made — in part because it has had the money and wherewithal to make the changes in the first place.
Smaller community hospitals have suffered in the status quo, handcuffed by the same demands the larger hospitals are facing with fewer resources or ability to adapt.
Vermont may be a canary in the coal mine for how health care challenges can be examined and resolved. But it won’t come without a hard examination and tough diagnosis.
Today, the prognosis could go either way. Let’s hope for good news in the future.
From the Rutland Herald
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