Brattleboro Retreat, state at odds over funding


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BRATTLEBORO — The Vermont Agency of Human Services and the Brattleboro Retreat are in a funding dispute that has led the psychiatric and addiction treatment hospital's board of trustees to plan for selling or closing the institution if things cannot be worked out.

"We're optimistic that we can resolve this with the state but they felt like the governor and Secretary [of Human Services Mike] Smith need to know that if there wasn't any further support coming from the state of Vermont, the ultimate disposition of the Retreat might be to sell or close," Louis Josephson, president and CEO of the Retreat, said in an interview. "So it wasn't an ultimatum, but we felt like they needed to know that was an option."

Smith issued a statement Sunday regarding the Retreat. He said less than two months ago, his agency and the Retreat entered into a special agreement that will affect the state's fiscal year 2020 and 2021 budgets by almost $5.3 million.

Smith blamed the need for increases on "alleviating a reoccurring financial crisis."

"I will be meeting with the Retreat again this week, and hope they will have reasonable and detailed proposals that take measurable steps toward improving their current and future financial viability," he said. "I want to be clear: just asking taxpayers to put up more money, in order to avoid necessary change, is not an option I can support, or an option I believe the governor or Legislature would want me to bring forward."

Smith said the rate increase was valued at an estimated $3.5 million annually, and it comes on top of the state's recent $16 million investment to build 12 new beds at the Retreat and pay for ongoing operations of those beds. He recalled hospital representatives coming to a meeting last week with a request of $2 million.

Josephson disputed presenting an actual figure.

"We're flexible certainly," he said. "I don't want to negotiate in the papers but we're always flexible. I think the issue really is if we can't continue to serve the people we're serving, it's going to cost the state a lot of other money."

The Retreat is asking for the increase after falling short of its anticipated revenue.

"I think the challenge really for the state of Vermont is that they want us to be there for patients," Josephson said. "And so whether we have 105 people in the hospital in a given day or 85 people, they want us to be there. The problem for us is when we're at 85 people, we don't have revenue to cover the cost."

Smith said the request comes at a time when similar facilities are not experiencing the same number of decreases in patient count.

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"I rejected that request for the following reasons: First, their financial strategy appears to be built on a flawed premise — that continued financial bailouts from taxpayers is an effective long-term solution or is expected when Retreat management makes a financial miscalculation (budgeting a higher patient count)," he said. "Second, the Retreat has not made any significant management or strategic operational changes. And third, there is little clarity on where they stand financially and the prospects of better financial conditions in the future, including how they plan to pay over $1 million of taxes that are owed to the State of Vermont."

Josephson said he did not know if the $1 million figure is accurate "but it is part of the picture." He noted that the hospital has been working with the state in addressing its financial issues for about three years now.

The Retreat annually serves 2,500 inpatients and 150 individuals for medically-assisted treatment services for opioid dependence, according to his letter to Gov. Phil Scott and Smith concerning the situation. Josephson said the hospital provides partial hospital care for 198 people each year, outpatient and psychotherapy services for 1,900 individuals, and placements for children in educational and early childhood programming. He estimated more than 800 jobs with benefits would be gone if the Retreat closed.

"In consultation with the Board of Trustees, we are exploring every avenue to change the Retreat's unsustainable business model and reimbursement but no matter what the outcome, the Retreat, if it exists at all will be a very different organization in the future," he wrote. "The Retreat is proud of its long term commitment to serving Vermont's neediest people and has tried to work through the financial challenges of being a Medicaid dependent provider while managing increased staffing costs in a tight labor market."

Josephson called for the state agencies of human services and education to "stand ready to assume responsibility for our patients and students quickly should we lose the capacity to do so."

"Make no mistake, any threat of closure is both the decision and the result of the Retreat's current leadership," Smith said. "On Monday I will communicate with the board and management that their decision must be executed in a manner that protects patient safety. I understand, however, the pressure that closing would put on the mental health system, and the adverse fiscal impact it would have on the Brattleboro region ... The agency has provided every reasonable financial option it can, but the Retreat is clearly at a point where significant management and operational changes are necessary to save it — and the jobs there. It is the responsibility of the Retreat's board to accomplish this task or assemble a team that can."

The Windham County Legislative Delegation issued a statement Sunday, stating in part that it "has been aware of ongoing financial challenges being experienced by the Brattleboro Retreat related to multi-year, inadequate medicaid reimbursements, unexpected census declines, and the increasing cost of contract RNs and MDs due to national and state-wide workforce shortages.

"As we see play out every day across the country and our state, adequate funding for public healthcare remains an unsolved challenge. Since Tropical Storm Irene, the Retreat has served as a contracted arm of the Agency of Human Services in the provision of state mental healthcare services. This means the Retreat has repeatedly been faced with decision making that requires it prioritize the public good over profit.

"We support the decisions the Retreat has made to answer the Agency of Human Services repeated requests to expand its state beds and services in order to help the State of Vermont provide mental healthcare to Vermonters in the most acute need. To say we are disappointed by Secretary Smith's public statement issued today is an understatement. We have no doubt that the State of Vermont will continue to work, responsibly, in partnership with the Retreat to continue to provide care for all patients. We will work diligently with the Scott Administration and the Retreat to ensure that is the case."

Reach staff writer Chris Mays at, at @CMaysBR on Twitter and 802-254-2311, ext. 273.


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