Citing Inflation, UVM Health Network Demands Big Budget Increases | Health care | Seven days

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  • University of Vermont Medical Center

The University of Vermont Health Network wants to bill commercial insurance companies an additional $140 million in the next fiscal year to help cover rising inflation and labor costs in its three state hospitals.

The claims represent double-digit percentage increases over what hospitals currently charge and could have major implications for the cost of health care in Vermont, where many privately insured people are already struggling to keep up with the inflation – at the gas pump, in the grocery store – and have long said they can’t afford to pay higher premium rates.

The network says it has no choice. Blaming high inflation, continuing labor shortages, years of unfavorable regulatory rulings and a wave of pandemic service cuts, UVM leaders say their hospitals have depleted their reserves at a rapid pace. unsustainable and desperately need a lifeline.

“We are now at a point where, any further deterioration and the years it will take to dig this hole will be extraordinary,” said Rick Vincent, chief financial officer of UVM Health Network.

The network’s request comes amid the Green Mountain Care Board’s annual summer budget cycle, during which the powerful regulator reviews the spending plans of Vermont’s 14 nonprofit hospitals. The deadline for budget submissions is late Friday afternoon, and the care board won’t start reviewing proposals for a few weeks.

As costs rise, Vermont’s biggest hospitals demand more money

The University of Vermont Medical Center

As costs rise, Vermont’s biggest hospitals demand more money

By Colin Flandre

Health care

State regulators have been bracing for a big demand from the UVM Health Network since they denied most of a mid-year budget request in April that would have allowed two of the network’s hospitals to demand higher payments from commercial insurers during the year. (Hospital fiscal years run from October 1 to September 30.)

UVM executives said the request came in response to more than $100 million in unplanned costs that wiped out their operating margins and created a budget hole of nearly $45 million. Regulators were sympathetic but reluctant to approve mid-year requests given that most companies had already budgeted for their healthcare costs.

Shortly after, the health network announced that it was putting aside its plans to build new psychiatric hospital beds, because it no longer had the means to finance the project. Network executives said the decision would not have changed even if they had received their full application by mid-year.

The UVM health network ends an essential psychiatric bed project

The UVM health network ends an essential psychiatric bed project

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While UVM hospitals have managed to save around $50 million since then, network officials say that’s not enough to cover their ever-rising costs, let alone generate enough revenue to complete the next fiscal year in black.

Hospitals responded by dipping more into their reserves: In May, UVM Medical Center had enough cash to stay open for about 131 days without taking a single dollar. This financial stability marker was approximately 184 days at the start of the year. Officials warn that the network’s credit rating could soon be at risk if this figure continues on its downward trajectory.

The network says it has developed a two-tier plan in its quest for financial stability.

The first part relies on Green Mountain Care Board approval of the requested commercial rate increases. Network wants 11.5% raise at Porter Hospital in Middlebury; a 14.5% increase at Central Vermont Medical Center in Berlin; and a 20% increase at UVM Medical Center in Burlington. Those, combined with smaller increases expected from government-pays plans, would generate about $165 million in additional revenue, according to the network.

But the network says it doesn’t rely solely on insurance companies. The budgets were built on the ambitious assumption that hospitals will be able to save nearly $190 million through various belt-tightening measures. They include a reduced reliance on expensive travel workers, a more efficient surgical unit, expanded pharmacy service, and continued adoption of remote working, which the network says will provide opportunities to consolidate space and reduce real estate costs.

UVM Medical Center spends tens of millions on temporary travel nurses

UVM Medical Center spends tens of millions on temporary travel nurses

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If both network strategies materialize, the three hospitals forecast they could end the next fiscal year with a “modest” operating margin of $46 million, which officials say is vital for making future investments. .

It’s a big if, however, given the lingering pandemic, long-running labor crisis, and the federal government’s struggle to contain inflation. Not to mention the uncertainty over whether regulators will be able to sustain such a large increase in a year when many other Vermont hospitals say they are cash-strapped.

Indeed, while the care board has yet to publish any of the proposals on its website, comments from the state hospital trade association suggest it could be a costly budget cycle.

Projecting millions in losses, largest Vermont hospitals seek rate increases

Projecting millions in losses, largest Vermont hospitals seek rate increases

By Colin Flandre

Disabled message

Almost every hospital in Vermont is losing money right now, the Vermont Association of Hospitals and Health Systems said in a news release Friday. That, added interim president and CEO Mike Del Trecco, is why the care board must approve budget requests in their entirety.

“Only then can we see our path to begin to recover,” Del Trecco said in the statement.

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