Commissioner Trims Rate Increases in Establishing 2007 Hospital Budgets
Montpelier -- The Department of Banking, Insurance, Securities, and Health Care Administration (BISHCA) administers the annual binding budget program for all Vermont hospitals in an effort to understand and contain hospital costs. The annual budget process includes an analysis by the Department and testimony by the hospitals at public hearings held before Commissioner John Crowley and the Public Oversight Commission. The hearing process took place over a three-day period, August 22, 23 and 24, 2006. The Vermont hospital fiscal year for 2007 runs from October 1, 2006 through September 30, 2007.
It is the policy of the state of Vermont to ensure that all residents have access to quality health care at costs that are affordable. Vermonts community hospitals must operate within budgets set by the Commissioner. Those budgets must (1) be consistent with the Health Resource Allocation Plan adopted by the Governor on August 2, 2005; (2) take into consideration national, regional, or instate peer group norms; (3) promote efficient and economic operation of the hospital, and (4) reflect budget performances for prior years.
When establishing the FY 2007 budgets, the Commissioner reviewed testimony from the hospitals during the budget hearings, the staffs analyses, the Unified Health Care Budget forecast, the Health Resource Allocation Plan, and the comments of the Public Oversight Commission.
The Commissioner examined the budgets using a variety of factors, including: budget assumptions pertaining to utilization, new programs, operating surplus, inflation, prior period budget performance, and the individual circumstances of each hospital. Fundamental to the Commissioners decisions is the recognition that Vermonters continue to firmly believe the Vermont community hospital system is integral to Vermonts local communities and the economy of those communities.
The average 7.1% rate increase requested by the hospitals was comprised of individual hospital rate increase requests that ranged from 4.1% to 8.5%. The Commissioner's decision results in a change from the requested 7.1% to an average rate increase of 6.6% for the system. It is important to note that the 6.6% rate increase will result in only a 4.1% increase in net revenues to the hospitals because the hospitals do not receive full payment for the rates charged.
The Commissioner established the following revised rates and expense reductions for the FY 2007 hospital budgets:
RequestedRate IncreaseRevisedRate IncreaseExpense Reductions
Brattleboro Memorial Hospital5.1%5.1%
Central Vermont Medical Center4.8%4.3%
Copley Hospital4.9%4.9%
Fletcher Allen Health Care8.0%7.5%$500,000
Gifford Medical Center5.8%4.8%
Grace Cottage Hospital4.4%4.4%
Mount Ascutney Hospital6.5%5.5%$181,822
North Country Hospital5.6%4.6%
Northeastern VT Regional Hospital6.5%6.5%
Northwestern Medical Center7.0%7.0%
Porter Medical Center6.0%6.0%$220,173
Rutland Regional Medical Center6.0%5.25%$250,000
Southwestern Vermont Medical Center8.5%7.0%$718,361
Springfield Hospital4.1%4.1%
System Average7.1%6.6%$1,870,356
For more information, call Michael Davis at the Division of Health Care Administration at (802) 828-2989.