GMCB establishes FY24 hospital budgets 'balancing affordability and sustainability'

by Timothy McQuiston, Vermont Business Magazine The Green Mountain Care Board (GMCB) approved hospital budget increases of 6.6% system-wide Net Patient Revenue (NPR) over current year projected results, representing an increase of $218 million in revenue across the 14 community hospitals. The two-year NPR increase (FY22 Actuals - FY24 approved budget) is 18.2% system-wide ($548 million), compared to the 8.6% guidance set by GMCB. 

In FY24 decisions, GMCB made adjustments to seven hospitals’ budgets to limit the rate increases that impact commercially insured patients, representing a 7.8% reduction ($145 million) from submitted budgets.  

Several hospitals received their proposed budgets, or nearly so (none received more), while a few saw substantial FY24 reductions, including CVMC (5% vs 10% proposal); Copley (8% vs 15%); NVRH (8% vs 15%); and UVMMC (3.1% vs 10%). 

The UVMMC number skewed the overall average down, as it is by far the largest hospital. Rutland Regional, the second largest hospital in the state, had $305.4 million in net patient revenue in FY22 and UVMMC had $1.5 billion, or almost exactly half the statewide revenue; the Vermont system-wide total was $3.0 billion. 

(See UVM Health Network response below.)

“The hospital price increases are more than double medical inflation over the last two years,” said Owen Foster, GMCB Chair. “While we recognize the extreme costs these increases impose on Vermonters, it is important we invest in and support our hospitals. Where appropriate, the Board limited hospital price increases and required additional reporting and planning to promote efficiency and access.” 

GMCB approved seven hospital’s budgets as submitted and required adjustments to seven hospital’s budgets, focusing on a reduction in the change in charge and commercial rate increases for those hospitals (see table below).  

This year GMCB reviewed each hospital’s budget against the revenue growth guidance that GMCB established in its hospital budget guidance, along with the other factors in the guidance and criteria set by statute. In determining which hospitals’ budgets warranted reductions, GMCB considered the factors outlined in its hospital budget guidance, including those relating to hospital expense management, standardized pricing, reimbursements, utilization, efficiency, past budget performance, public comment, administrative costs, as well as GMCB’s mission to improve access, affordability, and quality.   

This year also marked the first year of GMCB’s new evidence-based tools to examine expense growth against established national and regional benchmarks. This approach allowed GMCB to evaluate how rising hospital costs impact charges that are passed on to Vermonters with commercial insurance. 

*The 2-year Medicare inpatient market basket growth is 7.0% from FY22-FY24. The 2-year median wage growth in Vermont is 8.6% from CY22-CY24. The weighted system-wide 2-year GMCB-approved charge increases from FY13-FY22 (including mid-year) is 8.8%.  

** For FY23, the UVMHN hospitals used commercial effective rates as their approved rate increases, which were: 12.50% for CVMC, 11.50% for Porter Hospital, and 14.77% for UVMMC.   

UVM Health Network statement on GMCB votes this week:  

"As a nonprofit academic health system, the UVM Health Network (Central Vermont, Porter, UVMMC) is focused on keeping the people of our region healthy and providing life-saving care as close to home as possible, while working with our partners across the state to control growth in the cost of that care.

"We are proud that widely respected studies show the UVM Health Network is one of the lowest-cost, highest-value health systems in the country, but at the same time we recognize there are patients struggling to pay their health insurance premiums, and waiting to get access to the care we provide. We have presented what we believe is needed to deliver the care our patients expect from us, to recruit and retain our vital staff during a national workforce shortage, and make investments that keep us on the cutting edge of medicine. We will continue to build on the success of our strategic work to increase patient access to care while identifying additional savings and efficiencies.

"We are beginning the process of reviewing the impact of this week’s decisions regarding Central Vermont Medical Center, Porter Medical Center, and the UVM Medical Center. When the Board’s detailed written orders are delivered later this month, we will carefully review them to determine what they mean for our patients, employees and communities. We are committed to remaining transparent about the impact of these orders as we better understand their consequences."

The Green Mountain Care Board (GMCB) is a 5-member, independent Board with a vision of a sustainable and equitable health care system that promotes better health outcomes for Vermonters. The GMCB was created in 2011 with an ambitious mission to drive system-wide improvements in access, affordability, and quality of health care to improve the health of Vermonters. Through public meetings, the GMCB ensures a transparent approach to health care regulation and a voice for stakeholders, including health care organizations, clinicians, and members of the public. With a holistic, data driven approach, the GMCB carries out its regulatory duties, supports innovation in health care delivery and payment reform, and serves as an important resource for independent, transparent analyses of Vermont’s health care system performance.  

Source: 9.15.2023. Montpelier, VT – The Green Mountain Care Board. Top photo courtesy of UVMMC.