By EMERSON LYNN
The Green Mountain Care Board has cut the UVM Medical Center’s requested 4 percent rate hike to 2.5 percent, which will cost the hospital an estimated $6.75 million in reduced revenue. The board noted that the hospital has “healthy” margins, a lot of cash in the bank, and can cut its costs to make up the difference.
No big deal.
It’s the job of the care board to keep the cost of medical care in check, and UVM’s Medical Center accounts for almost 50 percent of patient revenue statewide. If the board fails in its job with the medical center, it fails statewide.
And from a political perspective, there is little sympathy for a medical center that dwarfs all others in size and in influence.
But that’s also the issue. The political side of the equation is beginning to dominate the board’s decision making process. It’s more about being seen as controlling costs than it is following the rules and preparing for the future.
When the medical center put its budget before the care board the request was for a 1.1 percent increase in net patient revenue. The care board had set a statewide target of 3.2 percent. The medical center assumed that by following the rules, and coming in with a net patient revenue figure that was two-thirds lower than the target, that the care board would approve its budget.
That the care board elected to punish the hospital by slashing its proposed rate increase leaves the hospital in the position of not knowing how to plan going forward. What is the incentive to play by the rules if the board itself doesn’t follow them?
But that’s the obvious question. The bigger concern is what the Green Mountain Care Board is doing to keep our health care system stable, and to prepare us for the transition to the all-payer health care model.
When the care board points to a hospital and says it has healthy margins, and can afford a reduction in rates, is the objective to push the hospital to the point where it doesn’t have healthy margins?
When the care board says the hospital can absorb extra costs because it has enough cash in the bank, is the purpose to deplete the account?
In the moment, the hospital can afford to eat the costs, and that plays well in the political realm. The board, and its members, can boast of reduced health care costs, and, as we all know, the only issue of any political importance these days is affordability.
But that’s today. It does not address what’s coming before us, which is the all-payer model that shifts us from a fee for service model to one based on outcomes and one funded on a per capita basis.
This new model will require a substantial change in hospital procedures, governance, and priorities. It will require sizable investments on the part of hospitals, and hospitals will also be put in the position of assuming substantial risks.
The all-payer model is one in which hospitals will be paid according to the people they serve. Basically, in block-grant form. If the cost of the services provided exceed the amount of the block grant, the hospital is on the hook for the difference.
This puts the emphasis on primary care, early intervention, and whatever can be done to delay the onset of chronic illness. Much of this emphasis is embraced in RiseVt, a healthy lifestyles program that had its beginning in Franklin County and has now gone statewide.
This emphasis is not something that can be done with any sort of immediacy. It takes time. And money. It’s also hard work. It involves, to no small degree, a shift in our culture.
But the end goal is one of great value. The intent is to change Vermont’s health care model to one that places a priority on wellness. Ultimately, it’s the only defensible way to lower health care costs long term.
The Green Mountain Care Board shows little evidence that it’s even aware of the all payer model and the responsibilities that are to be assumed by our hospitals. The board shows little understanding that hospitals will have to invest money now [in primary care, etc.] to be able to save money latter.
These future savings will never materialize if the Green Mountain Care Board doesn’t help hospitals prepare for our all-payer health care model, and that can only be done by keeping our hospitals strong and financially healthy.