by Andrew Stein September 5, 2013 vtdigger.org Fletcher Allen Health Care will submit a pared-down hospital budget to the Green Mountain Care Board this week.
CEO John Brumsted told the board during hospital budget hearings in late August that the state’s largest hospital would reduce its fiscal year 2014 budget proposal by more than $8 million, citing a decline in patient demand.
‘In the relatively short time since we completed our budget, we’ve seen the trend in the volume of services we’re providing decrease,’ he told the board. ‘We believe these decreases are the direct results of real substantive changes in the way health care is delivered. In light of this, I’ve gone to Chairman (Al) Gobeille and requested the opportunity to recast our 2014 budget to stay within the 4 percent net patient revenue target that you all established.’
In early 2012, the Green Mountain Care Board reeled in the amount hospitals can raise in revenue from patients. The board, which is in its second year of regulating hospital budgets, capped the patient-revenue growth rate at 3 percent in 2014, 2015 and 2016. The board is allowing an extra 1 percent next year for expenses related to health care reform, such as setting up preventive care systems and shifting to more progressive budget models. The 1 percent cushion brings the maximum net patient revenue cap to 4 percent.
Fletcher Allen President and CEO Dr. John Brumsted. VTD/Josh Larkin
When Fletcher Allen submitted its budget, the hospital was one of three in Vermont to overshoot the 4 percent target with a net patient revenue hike of 4.8 percent, or more than $48 million. The other two hospitals that exceeded the threshold include Northwestern Medical Center in St. Albans, with a hike of 5 percent, and Brattleboro Memorial Hospital, with a proposed increase of 6.2 percent.
Only Fletcher Allen is resubmitting its budget. This is especially notable because Fletcher Allen’s more than $1 billion in patient revenues account for about half of the state’s $2.2 billion patient revenues. An $8 million reduction in Fletcher Allen’s budget is the equivalent of a 0.8 percent decrease in the amount patients would pay in health care costs. Part of that reduction, however, will likely be attributed to less hospital use, not substantially lower rates.
Net patient revenues across all hospitals were set to grow by 3 percent in 2014, but that was before Fletcher Allen made its announcement. While hospitals are still looking to raise more money from patients than they have in recent years, the rate of that growth will be much slower in the near future. By comparison, Vermont’s 14 community hospitals increased their patient revenues by 6.5 percent in 2013, by 5.5 percent 2012 and by 5.3 percent in 2011.
Gobeille said that Fletcher Allen’s decision to resubmit its budget was an important step for the entire health care system.
‘You can’t lead without being below the number,’ he said. ‘And if Fletcher Allen isn’t leading this â ¦ we’re in a world of trouble. I think he (Brumsted) made a good decision, and I’m glad that what he has been working on has had an effect on utilization.’
Fletcher Allen will submit its new proposal Wednesday and the Green Mountain Care Board plans to approve, modify or deny hospital budgets by Sept. 16.
Gobeille has asked hospitals to include revenue impacts associated with the end of the state-subsidized Catamount and VHAP health insurance programs in 2014. Thousands of Vermonters enrolled in those programs are expected to use commercial plans on the state’s new health insurance exchange, called Vermont Health Connect.
Gobeille and his team estimate the exchange will generate an extra $40 million for Vermont’s medical care providers ‘ not all of which are hospitals ‘ because commercial insurers reimburse hospitals at a much higher rate than the state and federal governments do.
Gobeille asked hospitals to analyze what the shift from subsidized care to commercial insurance for former VHAP and Catamount patients would mean for their budgets and present their findings to the board.
The public hospital budget hearings did not attract members of the public, much to the chagrin of board members.
‘We didn’t have patients, so to speak, in any meaningful number,’ Gobeille said.
Next year, the board may hold budget hearings at hospitals around the state, in order to solicit feedback from patients.
Trinka Kerr, Vermont’s Health Care Ombudsman, said she is concerned that hospitals are not involving consumers enough in their decision-making and planning processes.
‘The things we’re suggesting are they have more consumers on their board, that they have consumer advisory councils to get a broader range of input from consumers, and try new strategies other than patient satisfaction questionnaires,’ she said. ‘I think they should be trying to pull consumers in to be more engaged in their care.’