By Keith Whitcomb Jr.
RUTLAND HERALD
Some Vermont hospitals are going back to the Green Mountain Care Board asking it for rate increases to offset increased labor costs fueled by the omicron surge.
Facing a $7.6 million operating loss, the Rutland hospital is asking state regulators to let it increase its rates by 9 percent.
The request is for an amendment to a previously approved fiscal year 2022 budget that carried a 3.64 percent rate increase.
“UVM (Medical Center) came in today and asked for a 10 percent increase,” said Green Mountain Care Board President Kevin Mullin on Friday.
While the requests had differences in their reasoning, the cost of labor was a major driver in both, he said.
“I don’t think it’s a surprise, based on what we’ve known for the last six months,” Mullin said. “Clearly, at the end of the summer, everybody was in a different position when these budgets were set. Nobody foresaw the length of severity of the omicron variant and how long hospitals were going to be dealing with that and for the most part, most of the hospitals were predicting in the budget cycle last summer that they were going to be using less travelers this year than in the past and certainly that prediction was way off.”
Details of the UVM amendment request weren’t available on the Green Mountain Care Board’s website Friday, but Rutland Regional Medical Center’s request was.
The Rutland hospital says the amendment to its rates is necessary because of changes in budgeted revenues and expenses stemming from, “both the unanticipated and enormous demand for services year to date and the serious expense challenge for RRMC to recruit and maintain sufficient staffing in all services and departments,” wrote Rutland Regional Medical Center President and CEO, Claudio Fort, in a Feb. 25 letter to the Green Mountain Care Board.
He wrote that it’s critical the increase be approved by April 1, “in order to avoid a substantial year end deficit and to support the workforce needed to staff RRMC’s services.”
“Given the significance of the changes in both our revenue expectations and expense commitments, we re-projected our expected financial performance to account for these changes,” wrote Fort. “The heightened volume and the recent federal relief funding has supported some of the inflationary expense overrun. No additional federal relief is expected, however, nor is either the Medicare or the Medicaid program recognizing the inflation in workforce costs.”
Staffing costs are 27 percent higher than what was expected in the 2022 fiscal year’s budget, according to Fort. This reflects an increase of $35 million in operating expenses, $11.6 million of which is from the inflated costs of temporary or traveler staffing companies. Hourly rates for traveling staff have risen between 250 percent and 300 percent since the 2019 fiscal year.
“For instance, the rate charged for an emergency department nurse had been $70 per hour in 2019, but has risen to $180 per hour in 2022,” Fort wrote. “The rate for a traveling ICU nurse was $120 per hour in 2020, but is now $200 per hour. A traveling respiratory therapist cost $55 per hour in 2019 and now costs $175 per hour.”
Fort wrote that these costs will not go down, and despite increasing staff compensation, the hospital still has 170 open positions, 84 of them being licensed nursing assistant positions.
“The rate increase request has been calculated to target specific services and will not be imposed as an overall rate increase,” wrote Fort. “We have selected the services to be impacted by the increased rates based on our current payer mix with sensitivity for preserving access to supportive primary care services and with consideration for the market rates in each service affected.”
Fort said the increase will generate $31.8 million in gross revenue, for a net of $7.4 million. The increase will be seen the most in outpatient services.
The higher costs are a result of the pandemic, which Fort wrote was also stated in a previous letter to the Green Mountain Care Board. He wrote that the 3.63 percent increase the board already approved doesn’t cover inflation, leaving the hospital to rely on volume. His letter claims that the Rutland hospital’s rate increases over the past five years have been relatively low compared to others in Vermont.
“RRMC has worked diligently to maintain low rate increases, but current conditions relating to staff expense have resulted in unsustainable operating losses, and it cannot continue this approach of relying on volume and investments,” Fort wrote. “This mid-year rate increase request still seeks to be as conservative as possible.”
The Green Mountain Care Board had a number of questions for the hospital, to which it responded in writing on March 11. One question was, what is the hospital’s plan if this request isn’t approved? The response, signed by Fort and Judi Fox, chief financial officer for Rutland Regional Medical Center, was that there isn’t a contingency plan.
“Our 2022 budget was a breakeven budget so we will not have a budgeted operating margin to sustain operating losses,” they wrote, adding that they’d likely have to make difficult decisions on limiting clinical services linked to primary care.
On Thursday, the Rutland hospital made a presentation on the request to the Green Mountain Care Board. Mullin said no decision was made and the board will deliberate again Wednesday. There’s no guarantee a decision will be made then, either.
Mullin said he can’t comment directly on any one hospital’s pending request. He’s not sure if other hospitals will also ask for amendments to their rate increases.
“I don’t think anybody ever expected the great exodus from the workforce that has occurred,” he said.
keith.whitcomb @rutlandherald.com
As your daily newspaper, we are committed to providing you with important local news coverage for Sullivan County and the surrounding areas.