Hospital says leeway needed in revenue caps

Saturday February 23, 2013

BENNINGTON -- The state has released target numbers for hospital revenue increases and the local hospital is saying it needs more leeway to make improvements that will save money in the long run.

The Green Mountain Care Board, which oversees hospital budgets and large capital expenditures, announced Thursday it would seek to keep revenue that hospitals get from patients from rising higher than 3 percent. A hospital can increase it by an extra 1 percent if that 1 percent is going to pay for a project that will reduce costs, said Anya Rader Wallack, chair of the Green Mountain Board.

Southwestern Vermont Health Care Spokesman Kevin Robinson said for the local hospital that one percent reflects about $1.5 million, which would not cover the cost of something like an information data system for the emergency room. In the coming years the hospital would aim to spend close to $10 million on systems that would reduce the cost of health care in various ways. Robinson said last year, given that inflation was 1.7 percent, the targets set by the Green Mountain Care Board may not provide enough room for a hospital to make solid reform efforts.

According to Wallack, the 3 percent limit will be applied to fiscal years 2014 through 2016, with the 1 percent for "health reform investments" decreasing to 0.8 percent and 0.6 percent in the subsequent years.

"The board believes it is imperative that we constrain health care cost growth to more closely match growth in Vermonters' incomes," said Wallack. "Under this policy, growth in spending on Vermont hospitals will be reduced and will be below national health care inflation, but will still be slightly above expected growth in the economy. We think this is a prudent approach."

On average, hospital budgets grew by 5.8 percent last year. Wallack said some hospitals were under the target set by the Green Mountain Care Board while others were over. She said exceptions were made when the increases were shown to be needed to keep a hospital in business.

Wallack said in a statement that routine exceptions to the limit would not be made.

Keeping costs down in the long run will require changes to how health care providers are paid. Wallack said one of the state's goals, which is shared by many in the health care system, is to move away from fee-for-service and toward one that rewards healthy populations and long-term patient outcomes.

Hospitals and the state are trying to change how health care is provided "and to do that you have to make some investments," Robinson said. In Southwestern Vermont Medical Center's case, its medical office building was constructed in an era where integration between doctors was not seen as imperative. Robinson said the health care system is moving toward a system where there is greater cooperation and communication between primary care physicians, specialists, and patients.

For example, he said a person who sees their primary care physician will have a number of medical tests run on them. If they go to a specialist, that provider does not necessarily have access to the data the primary care doctor obtained and so duplicate procedures are sometimes done, driving costs up. Creating a system where the doctors can communicate with ease and can track the patient's status requires investments in facilities and information technology systems.

"All of us in Vermont must come to terms with the investments needed to achieve reduced health care spending in the long term," Robinson said. "It will not be easy, but we cannot cut or cap our way to a new system. We must exempt from the cap projects that will make real progress on reducing utilization in the future."

Contact Keith Whitcomb Jr. at or follow him on Twitter @KWhitcombjr


If you'd like to leave a comment (or a tip or a question) about this story with the editors, please email us. We also welcome letters to the editor for publication; you can do that by filling out our letters form and submitting it to the newsroom.

Powered by Creative Circle Media Solutions