UVM Health Network’s Three Vermont Hospital Affiliates Submit FY2021 Budget Request
Budget Aims to Get CVMC, Porter, UVM Medical Center on Path to Recovery
MONTPELIER – Last Friday, the Vermont-based hospitals of the University of Vermont Health Network – Central Vermont Medical Center, Porter Hospital, and the University of Vermont Medical Center – submitted a collective fiscal year 2021 budget to the Green Mountain Care Board that charts a path to recovery, while meeting essential patient care needs and supporting employees with a slim, combined margin target of 2.2%.
Due to exponential increases in pharmaceutical expenses, Vermont’s critically stressed labor market, and caring for older, sicker patients, patient care expenses have been growing faster than approved revenue growth. These factors have combined with significant budget shortfalls stemming from the temporary suspension of elective procedures and extensive costs responding to the COVID-19 pandemic. The budget maintains a commitment to affordability and delivery system reform, while allowing the hospitals to remain prepared for possible future COVID-19 surges.
The budget relies on the very best estimates for the coming year. As a non-profit health system, the “margin” is how health care providers invest in their people, equipment and facilities, and is a significant basis for bond rating agency determinations.
“The work to recover from COVID-19 will take years, persistent monitoring, and careful expense management, and this budget outlines what we need to move forward and ensure we are here to provide high-quality care for our communities,” said John R. Brumsted, MD, President and Chief Executive Officer of the UVM Health Network. “When we communicated about financial challenges facing the UVM Health Network before the COVID-19 pandemic, we committed to being transparent, thoughtful and diligent in our efforts, and we will continue that commitment as we navigate through these unprecedented times.”
COVID-19 pandemic expenses, losses compound existing financial challenges
Just after announcing that it had missed financial targets for Fiscal Year 2019 and reporting a negative $10 million operating margin in the quarter ending December 31, 2019, the UVM Health Network turned its focus to COVID-19. The Network prepared to care for COVID-19 patients while remaining able to safely care for the sickest Vermonters; expanded testing capacity to serve the entire state; purchased personal protective equipment on behalf of other hospitals and providers in the region to get the best value; and mirrored federal COVID-19 assistance by paying employees earning less than $99,000 extra to recognize their commitment in the face of challenging circumstances.
Those efforts came at a high cost – by early summer 2020, the UVM Health Network was projecting a deficit of nearly $115 million for just its Vermont affiliates for the fiscal year. Several factors have helped close the projected gap, including maximizing federal and state support for health care providers to offset onetime losses due to the pandemic; reduced expenses, including cutting pay and retirement benefits for the highest paid leaders across the Network; and the tireless work done to safely bring services back online to serve patients who had their care delayed by the pandemic. The Network still projects a loss.
Commercial rate request follows years of increases far below health care inflation
A key factor in the budget review process is the commercial rate request each hospital makes. For FY2021, after onetime funding sources and cutting costs wherever possible, CVMC is seeking an 8.5% increase; Porter is seeking a 5.75% increase; and UVM Medical Center is seeking a 7.97% increase. These requests come after years of increases far below health care inflation. Two years ago, CVMC and UVM Medical Center received rate increases of just 0.7%.
“These requested increases are higher than we would like, but they are the product of intense work to reduce them,” Dr. Brumsted said. “This request of the Green Mountain Care Board is a critical step in moving forward and ensuring these three hospitals can continue to provide the care our patients need.”
UVM Health Network’s Vermont hospitals look to the future
“Throughout this pandemic response, we have been reminded why community-based hospitals like CVMC are a critical resource for the populations they serve,” said Central Vermont Medical Center President and COO Anna Tempesta Noonan, RN, BSN, MS. “Our CVMC team did an amazing job responding to the many challenges of this pandemic. At the forefront of our efforts is the provision of high quality care and the assurance of the safety of our patients, residents and staff. Our FY21 budget reflects what we need to continue to provide the level of care that Central Vermonters deserve.”
“The COVID-19 pandemic has posed unprecedented challenges for everyone, and certainly for Porter Medical Center, to remain prepared and vigilant for changing clinical needs as we maintain our commitment to providing a safe work and care environment,” said Porter Hospital interim president and chief operating officer Tom Thompson. “But behind the scenes, the work to address the serious financial consequences of COVID-19 was extremely important. The negative impact of COVID-19-related actions on Porter and our health care system was profound. Through difficult decisions to reduce expenses and incredible efforts to secure special one-time funding, we have been able to navigate this crisis to date, and I truly believe that our FY 2021 budget represents a responsible next step in ensuring that Porter can fulfill our promise of providing local trusted care as part of the UVM Health Network.”
“At UVM Medical Center, we’re incredibly proud of the role our people have played in preparing for COVID-19 and caring for the Vermonters who have gotten very sick from this disease. We are now safely welcoming back our patients for routine care while remaining prepared for future COVID-19 cases,” said Stephen Leffler, MD, president and chief operating officer of the UVM Medical Center. “This budget will enable us to continue providing high-quality, safe patient care as we recover from these financial challenges.”
About The University of Vermont Health Network
The University of Vermont Health Network is an integrated system serving the residents of Vermont and northern New York with a shared mission: working together, we improve people’s lives. The partners are:
- The University of Vermont Medical Center
- The University of Vermont Health Network Medical Group
- The University of Vermont Health Network – Alice Hyde Medical Center
- The University of Vermont Health Network – Central Vermont Medical Center
- The University of Vermont Health Network – Champlain Valley Physicians Hospital
- The University of Vermont Health Network – Elizabethtown Community Hospital
- The University of Vermont Health Network – Porter Medical Center
- The University of Vermont Health Network – Home Health & Hospice
Our health care professionals are driven to provide high-quality, cost-efficient care as close to home as possible. Strengthened by our academic connection to the University of Vermont, each of our affiliates remains committed to its local community by providing compassionate, personal care shaped by the latest medical advances and delivered by highly skilled experts.