Tieman: Supporting hospital budgets

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Tieman: Supporting hospital budgets

Tue, 08/04/2020 - 10:17am -- tim

by Jeff Tieman, VAHHS President and CEO The global pandemic has been difficult for all of us – individuals, families, parents, students, employers, employees, the list goes on. Health care providers too have faced new challenges and stepped into new roles.

Hospitals incurred significant unexpected expense as they planned for a possible surge in Vermont COVID-19 patients. We retrofitted space, created new staffing models, set up testing regimens, purchased expensive and hard-to-find protective equipment, and adopted new policies and guidelines to respond to rapidly changing conditions.

While this work was disruptive and costly, it was largely successful due to effective collaboration between the health care system and state and community partners. In fact, Vermont’s results have been lauded as a model for the nation.

In addition to unanticipated administrative expense, hospitals experienced significant loss of revenue as a result of COVID-19 measures. Beginning in March, and lasting for more than eight weeks, hospitals shut down non-urgent medical procedures to make room for possible COVID-19 admissions.

We are fortunate that cases remained low, but our hospitals experienced a major revenue decline and are still working to ensure they are ready for the next wave of infections, which could once again necessitate suspending some medical procedures and reducing revenue.

Last Friday, all Vermont hospitals filed budget requests for the coming fiscal year with the Green Mountain Care Board (GMCB), kicking off the annual review process. VAHHS considers these recovery budgets after years of financial challenges—even before COVID-19, half of our state’s hospitals had negative operating margins that have only been made slimmer.  

Hospitals are asking regulators for reasonable margins ranging between 0 and 2.5 percent. Margins represent money remaining once expenses have been covered. Because Vermont’s hospitals are entirely nonprofit, those dollars are reinvested in facilities, equipment and other initiatives to benefit patients and communities.

Our hospitals stepped up in response to COVID-19, and now we must together prioritize recovery.

Understandably these are difficult times for our state’s economy.  The hospitals’ proposed budgets are responsible and thoughtful, representing months of careful and intense work in the face of a pandemic that has created such great uncertainty.

As I have said may times, Vermont’s hospital budget review process is unique in our nation. It offers unparalleled transparency on hospital finances and operations. Given the unique set of circumstances we now face—and the critical leadership of our hospitals in managing the pandemic that is still very much under way—I look forward to an important and thoughtful hearing process.

Vermont Association of Hospitals and Health Systems 8.3.2020