University of Vermont Health Network Takes Difficult Steps to Comply with Vermont Budget Reduction Orders

Executive Summary: As Vermont’s population ages, the demand for more expensive, higher levels of care is increasing rapidly. This sharp rise has placed additional stress on hospitals and providers across Vermont facing staffing shortages and, in many instances, well-documented long appointment wait times. Over the last several years, University of Vermont Health Network has worked to respond to these increasing health needs by accelerating initiatives that both reduce wait times and control health care costs. As a result of this work, more Vermonters received the care they needed in less time.

Despite this progress, University of Vermont Medical Center –the state’s only academic medical center hospital – was penalized by its regulator, the Green Mountain Care Board (GMCB), for exceeding the amount of care it could provide by $80 million, even though University of Vermont Medical Center lost money in providing that additional care. The penalty set by the GMCB orders, in addition to the budget cuts made for the current year, have forced the health system to reduce $122 million in revenue from University of Vermont Medical Center and Central Vermont Medical Center. In health care, “revenue” is patient care, which means both hospitals will need to reduce the care they provide to Vermonters at a time when demand is increasing. 

University of Vermont Health Network vigorously disagrees with these budget orders because it limits the ability to respond to the needs of patients, in addition to the negative economic impact it will have on Vermonters who will need to travel further, in some cases out of state, for care. The health system is taking legal action to seek relief from their orders. As this process unfolds, University of Vermont Health Network is moving forward with significant steps to meet the GMCB budget orders, but with a strong concern that reductions in patient care will harm patients and negatively impact its workforce.

University of Vermont Health Network leaders have taken a consistent approach in identifying expense and service reductions to comply with the budget orders, with each decision weighed against three guiding principles:

1. Provide access to lower cost, high-quality care
2. Promote health equity
3. Support our nonprofit academic mission

The plan announced Thursday includes the following steps, with additional detail in the full press release below:

• Reduce the number of patients who stay overnight at University of Vermont Medical Center from approximately 450 to 400 and limit regional incoming non-emergency patient transfers.
• Eliminate Surgical Renal Transplants at University of Vermont Medical Center and collaborate with Dartmouth Health on care alternatives. University of Vermont Medical Center performed approximately a dozen kidney transplants this year.
• End University of Vermont Health Network staffing and operation of kidney dialysis clinics outside of our primary service areas in Vermont, impacting approximately 115 patients across three clinics.
• Consolidate locally some Family Medicine and Rehabilitation clinics that are part of Central Vermont Medical Center (CVMC), which should not impact access to CVMC-run primary care services for existing patients.
• Close the Inpatient Psychiatric Unit at CVMC, which has had an average daily census of approximately eight patients.
• Cut more than $18 million in administrative expenses, with reductions in expenses, open positions and employees. 

While this is happening, the health system is continuing its work to improve timely access to care for patients, leveraging technology to enable connected care and focusing on the care it delivers to provide the best patient experience.

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See Below for the Full Press Release

University of Vermont Health Network Takes Difficult Steps to Comply with Vermont Budget Reduction Orders

Burlington – University of Vermont Health Network is moving forward with reductions to administrative and clinical services to comply with Vermont state budget orders and enforcement actions issued by the Green Mountain Care Board (GMCB), the health care regulator in Vermont.

These actions will have both an immediate and long-term impact on patients served in the region and, based on current information, will ultimately result in a workforce reduction estimated to be as many as 200 people who currently serve the health care system, including both employed staff and temporary/travel staff. Changes will take place both immediately and over the next several months. Patients will be informed when the timelines and care transitions for impacted services are clear.

“Health care is not affordable for many who need it – it’s expensive for patients and providers. That’s why we’re always taking thoughtful steps to control the costs we can for the people we serve,” said Sunny Eappen, MD, MBA, president and CEO of University of Vermont Health Network. “We believe the orders that made these cuts necessary will have the opposite impact. Ultimately, they will make care less affordable and less accessible for those in need.”

These actions respond to decisions by the GMCB to cut the budgets of two of the health system’s Vermont hospitals – Central Vermont Medical Center and University of Vermont Medical Center. This along with an enforcement action penalizing University of Vermont Medical Center –the state’s only academic medical center – for responding to the health needs of its community and providing more health care than approved by the regulator last year. The cumulative impact of the budget orders requires $122 million of revenue to be eliminated at a time where the demand for care has been steadily increasing. In health care, revenue is patient care. University of Vermont Medical Center has provided care to more than 25,000 new patients over the last five years, with over 8,000 new patients in the last year alone.

“These decisions we are being forced to make are painful because there are patients connected to each one of them. I apologize to our patients and to our employee colleagues who will be impacted,” Dr. Eappen said. “As a nonprofit academic health system rooted in the rural communities we serve, we know these cuts will affect our friends, our families and our neighbors who need the lifesaving care we provide.”

The revenue and expense reduction plan addresses the Vermont state regulator’s budget orders for this year, which went into effect October 1. University of Vermont Health Network has taken legal action in an attempt to seek relief from the GMCB penalty for providing higher than approved amounts of health care last year. Even as efforts to appeal the enforcement unfold through the legal process, University of Vermont Health Network leaders must take measures to comply with the legal orders issued by the GMCB earlier this year.

“These are not decisions we wanted to make because we know they impact patient care at a time where people need greater access to services,” Dr. Eappen said. “We are taking every step we can to prevent deeper cuts, and we will be transparent throughout this process. The truth, however, is rebuilding from the impact of these actions will take an extraordinarily long time, even if we succeed in the courts.”

Decisions were shared with University of Vermont Health Network’s Board of Trustees, who are volunteers from communities across the health system service area as well as some who are national leaders in health care. Their role is to hold leaders accountable for fulfilling the system’s mission to serve its communities. Allie Stickney, who serves as the board chair, said trustees take the forced cuts very seriously because they deeply understand the potential for negative impact to patients.

“We are all patients of University of Vermont Health Network, and our families, friends and neighbors depend on the Network for care, too,” Stickney said. “We are small business owners facing increasing costs of health insurance for our employees and ourselves; physicians who know firsthand the importance of access to care; community members who work with low-income Vermonters in our professional lives. We understand the importance of holding the line on cost, while still providing the highest level of service we can. That doesn’t make these choices any easier.”

Patient Care Service Reductions Reflect Tough But Necessary Decisions

Over the last two months, University of Vermont Health Network leaders have taken on extensive work to identify administrative and clinical reductions, both in patient care services and in staffing.

A consistent approach was created, with each decision weighed against three guiding principles:

• Provide access to lower cost, high-quality care
• Promote health equity
• Support our nonprofit academic mission

Services identified for reduction or elimination were identified based on factors including low patient volume, high cost and whether the services operate at a loss.

Resulting from that process, the following services will experience changes over the next year:

Surgical Renal Transplant Services at University of Vermont Medical Center: To Close and Care Will Transition to Dartmouth Health

• We have begun discussions with Dartmouth Health’s Dartmouth Hitchcock Medical Center in Lebanon, New Hampshire, about a collaboration for the care of patients needing kidney transplant surgery. Being explored is a collaboration where University of Vermont Medical Center would continue to provide medical care for its patients on waiting lists to receive a kidney transplant, with the actual transplant procedure taking place at Dartmouth.

“Dartmouth Health is proud to collaborate to ensure patients in Vermont have local access to kidney transplant services at Dartmouth Hitchcock Medical Center,” said Edward J. Merrens, MD, Dartmouth Health’s chief clinical officer. “Our goal is a seamless transition. We will provide additional information as our collaboration advances.”

Kidney Dialysis: End University of Vermont Health Network Staffing/Operations of Treatment Locations Outside Primary Service Area

• University of Vermont Medical Center has been operating kidney dialysis treatment centers to serve patients across Vermont, even in communities beyond its primary service area. The hospital will end its management of dialysis clinics in St. Albans, Rutland and Newport. This change will impact approximately 115 patients. With the goal of maintaining these vital health care services for the patients in need, the health system is seeking alternative providers to operate the current sites, whether through existing organizations or through an RFP process to third-party organizations. Access to dialysis in these communities is critical, as patients will otherwise have to travel longer distances for care.

“We will do everything we can to support our patients and our employees affected by these difficult decisions,” said Stephen Leffler, MD, president and COO of University of Vermont Medical Center. “We are working to ensure patients receive the care they need, but we will no longer be able to provide certain types of care in order to comply with our budget orders. These actions are in direct conflict with our nonprofit mission to be here for the patients who need us, and we are very sorry for the negative impact this will have on Vermonters.”

Central Vermont Medical Center Family Medicine and Rehabilitation: Clinic Consolidations

• Central Vermont Medical Center will merge its Family Medicine main campus and Mad River sites, as well as its Mad River and Barre Rehab clinics, with providers and staff moving to already existing locations in relatively close proximity. This will open space on the hospital’s main campus for needed specialty care. The Mad River locations have been operating with fewer patients than are effective for running practices of similar size. Consolidating clinic locations will increase efficiency and reduce costs of providing care.

“I know these changes will impact patients, staff and the communities we serve, said Anna Tempesta Noonan, BSN, MS, president and COO of Central Vermont Medical Center, “I deeply understand this impact and stay committed to the critical role we play in caring for the people of central Vermont.”

Inpatient Psychiatric Unit at Central Vermont Medical Center: Close Unit, Shift Care Model

• Despite the continued need for additional mental health capacity in Vermont, the inpatient psychiatric unit at Central Vermont Medical Center will close. The census of the unit has been capped at eight patients. CVMC will continue to explore options for a patient-focused, holistic approach to mental health services. Earlier this year, CVMC implemented a Primary Care Mental Health Integration model, which places mental health clinicians in all primary care clinics. The hospital will also support mental health needs through innovative staffing in the Emergency Department and through community partnerships like the recently opened Mental Health Urgent Care in Burlington through a partnership between University of Vermont Medical Center and community partners.

“I have been in health care for over 40 years, 30 of which I have served in senior leadership roles. These are some of the most difficult decisions I have ever been a part of. We need to balance all of this, while working to ensure our organization is financially sustainable for the long term,” Noonan said. “Our patients, Woodridge Rehabilitation and Nursing residents, and staff remain my priority as we provide high quality care for the patients we will continue to serve.”

Overnight Stays at University of Vermont Medical Center: Reduce Number of Patients and Limit Patient Transfers

• To comply with the orders to reduce the revenue generated by providing patient care, University of Vermont Medical Center will be reducing the number of patients staying overnight. This will result in approximately 50 fewer overnight patients each day – a nearly 12% reduction. The hospital will achieve this reduction by addressing challenges that prevent patients from being discharged when it is safe for them to leave the hospital or be moved to a more appropriate level of care, like a rehabilitation facility or nursing home. The hospital will also limit non-emergency patient transfers from regional hospitals. The result of limiting transfers will lead to more patients across the region being denied access to care at the region’s only Level 1 trauma and acute care center.

“Smaller community and critical access hospitals in Vermont, like Porter, rely on being able to transfer our most serious patients to University of Vermont Medical Center,” said Bob Ortmyer, president of Porter Medical Center. “Limiting patient transfers to the state’s only high acuity care center is serious and will have a negative impact on our patients.”

Steep Administrative Cost Cuts Slow Gains in Patient Access and Care Upgrades

The health system is continuously refining its budgets and is accelerating efforts to work more effectively and control costs. A prime example is the personnel review process that takes place at a health system level to scrutinize hiring. The organization is also implementing long-planned initiatives, prior to the GMCB’s orders, to leverage new supply chain services to reduce spending. 

Despite ongoing efforts to control costs, University of Vermont Health Network is cutting over $18 million in administrative costs this year due to the latest budget orders. These deep cuts are being achieved by scaling back initiatives to reduce wait times, delaying facility maintenance and technology upgrades that support patient care and reducing budgets across the board. The progress the health system has made in recent years to increase patient access will be eroded by these cuts.

These cost reductions come after the health system cut non-clinical expenses last year by $20 million and eliminated approximately 130 open positions due to cuts in the previous budget by the GMCB. These earlier cuts also delayed initiatives to expand patient access to care and facility upgrades to support those efforts and help train the next generation of doctors, nurses and caregivers in our region.

Actions Reflect the Latest Effort to Comply with State Orders

After the budget orders were announced, University of Vermont Medical Center took the difficult action of delaying construction of its Outpatient Surgery Center in South Burlington, which was already challenged due to the restrictive Certificate of Need approval earlier this year by the GMCB. Without the new center, it is estimated the health system’s already stretched current surgical capacity will fall well short of demand by the end of the decade, leaving over 4,000 patients a year experiencing a backlog for surgeries, a conclusion verified by GMCB independent consultants.

Thursday’s announcement by the health system reflects steps taken to comply with the GMCB budget orders for the current year. In its legal appeal, University of Vermont Medical Center noted the GMCB did not follow Vermont law in holding a dedicated hearing on the enforcement outside of the annual budget process, allowing the hospital to present its case in how the revenue overage was a direct result of providing more care to patients. Despite the revenue overage, the hospital lost $23 million from delivering the additional care.

“Rural health care providers are the lifeblood of tight knit communities across the country, providing critical services that would otherwise be hours away, as well as supporting economic development and growth,” said Bruce Siegel, president and CEO of America’s Essential Hospitals, a leading advocate for US hospitals that serve communities most in need. “Budget cuts to essential hospitals affect disadvantaged populations hardest and are a step backward in health equity. I commend University of Vermont Health Network for taking a thoughtful approach to these tough choices and urge the State of Vermont to reconsider the path it is sending its safety net health system down.”

Next Steps Dependent on Multiple Factors

To minimize disruption to patients, in some instances it will take months to implement the changes to clinical care announced Thursday. The health system will continue to monitor its progress in following the GMCB orders throughout the year. The need for additional service and administrative cuts and adjustments will depend upon this progress and whether the enforcement action on providing additional care last year is ultimately upheld by the courts. 

To support patients who experience uncertainty due to these announcements, those directly impacted by these changes will be contacted proactively by their care provider with guidance on next steps, which may include transition to care within University of Vermont Health Network or with other health care providers.

The GMCB’s unprecedented enforcement action is the first of potentially more steps by the regulatory agency to reduce patient care expenses for the health system.

“Given our focus on expanding physical access to care and innovating new ways for patients to seek services, we fear there will be additional enforcement in the future,” Dr. Eappen added.

Investments and Initiatives to Support Community Health Needs Remain a Priority

In spite of the challenging actions announced Thursday, University of Vermont Health Network is accelerating critical work responding to the growing health needs of its patients and elevating patient care, highlights include:

• Recently, University of Vermont Medical Center celebrated the opening of the Mental Health Urgent Care clinic, created in partnership with local community partners, which offers a new alternative to care for adults in crisis.
• This year the health system will continue to expand its implementation of the eConsults service that provides virtual connections with primary care providers and specialists to decrease patient wait times for specialty care.
• The multi-year plan to upgrade and replace linear accelerators at health care partners within University of Vermont Health Network, which provide targeted cancer care, remains on track.
• Care Management, a specialized program that works to improve health outcomes by identifying and addressing barriers to care and services, is now active in most primary care clinics across the health system.

“Our commitment to our patients doesn’t stop when we face challenging times,” Dr. Eappen said. “We will be here to provide great care now and into the future, and we’ll do it by being innovative and thoughtful about the work we do. That’s the promise we make to the people who depend on us.”

To share thoughts or ask questions about these actions, please contact: CommunityRelations [at] uvmhealth.org (CommunityRelations[at]uvmhealth[dot]org)