Hospitals seek "small but necessary" margins after carefully and thoughtfully crafting budgets that protect access to desperately needed services and ensure high-quality care for patients
Vermont Business Magazine The Vermont Association of Hospitals and Health Systems (VAHHS) today announced that its non-profit hospitals submitted what are among what they called the most complex and challenged budgets in recent history to the Green Mountain Care Board (GMCB), following years of negative margins and challenges exacerbated by the COVID-19 pandemic.
VAHHS said in a statement that for these Fiscal Year 2024 budgets all hospitals worked to reduce costs, secure efficiencies and make critical investments to support staff and ensure that access to care is protected. In particular, hospitals are forging and strengthening partnerships with organizations across their respective communities to address growing challenges in housing, transportation, primary care, long-term care, mental health and substance misuse disorder programs and services, and much more.
On average, margins are approximately 2 percent across the entire system. The budgets represent only what is necessary to begin the process of recovery from years of pandemic response, workforce crisis and caring for an older and sicker patient population.
“I am incredibly proud of our hospitals for building and submitting recovery budgets that demonstrate fiscal restraint, that are in line with health care inflation and generate only what is necessary to carry on our tradition of putting people and communities at the center of our work,” said Mike Del Trecco, President and CEO of VAHHS. “Much of the world has soundly moved on from COVID-19, and rightfully so, but its impacts on our health care system are profound and will be felt for years to come. We need look only the horrors of last week’s devastating floods to remember that our hospitals are on the front-lines of every state crisis, no matter their form. They must be strong and stable to face anything that comes our way and that is why these resources are so critical.”
These budget submissions are part of the annual budget review and approval process led by the GMCB. This year, GMCB guidance—that is the direction the GMCB provides to hospitals when developing budgets—was significantly below inflation, which created concerns that the non-profit hospital system would not have the resources necessary to meet its mission.
Preliminary reviews of budget submissions indicate the hospital system is requesting growth of approximately 8 percent, a growth rate that is in line with annual inflation numbers, but significantly exceeds the two-year guidance set by the GMCB. This disparity is larger than in any year since the creation of the GMCB and something that VAHHS expressed concern over during the budget guidance setting process.
“Ongoing recovery requires the expertise of our hospital providers and leaders to ensure we emerge strong, and these budgets are a critical step in that direction,” added Del Trecco. “Recovery is happening, but is slowed by the headwinds we face as a rural and aging state, as well as significant cost pressures and inflation. That is why our non-profit hospitals are working so hard to balance the need to be strong financial stewards of our limited health care dollars while also leading to ensure we have the infrastructure in place that Vermonters rightly deserve.”
Each hospital budget submission includes detailed efforts to reduce costs, invest in community partnerships and manage ongoing workforce challenges and increased patient volumes and care needs. This work includes:
• Expense management, including FTE position control and the elimination of positions and delays in hiring of staff, as well as contract evaluations to limit cost growth,
• Sharing of employees among hospitals including physicians and services where appropriate.
• Investments in facilities and equipment necessary to reduce wait times and improve access,
• Improving the workforce pipeline for the healthcare delivery system by partnering with Vermont State University and other institutions of higher education,
• Investments in technology like electronic health records to improve care coordination and achieve efficiencies where possible.
“The examples represent initiatives that many of our hospitals have been undertaking for years and they are a small fraction of the work being done to make health care more affordable and accessible for Vermonters,” Del Trecco stated. “We know that like hospitals, Vermont families and businesses are also feeling the pinch of higher costs for everyday goods and services brought on by inflationary pressures. The work that our hospitals are doing alongside community partners and state leaders is essential to the health and vibrancy of our entire state, as we all grapple with the same economic and workforce challenges.”
Each year, hospitals are required to submit their annual budgets to the GMCB on July 1 for review and ultimate approval. The GMCB has changed the process this year and will do an initial review of hospital budgets at their August 9 hearing before beginning individual hospital hearings at the same meeting on August 9. Deliberations and final budget orders typically take place in September, with budget decisions made no later than September 15. This timeline gives hospitals just two weeks to implement their approved budgets.
Individual hospital budget submissions can be found below or by visiting the Green Mountain Care Board hospital budget review page.
You can learn more about VAHHS’ advocacy and health care work at VAHHS.org
Source: 7.18.2023. Montpelier, VT – Vermont Association of Hospitals and Health Systems. Website