By TODD KEATING
As I talk with my friends and colleagues in small business, I hear firsthand how challenging health care costs continue to be. These costs require businesses to make tough decisions about how to invest in their people and their companies.
At the University of Vermont Health Network, we are focused on keeping our costs down through careful budgeting and charting a new path for how we deliver and pay for health care. Unsustainable increases in health care costs shouldn’t be passed on to the people who pay premiums – employers and families. In our proposed budget for next year, we are requesting a 3 percent commercial insurance rate increase, the lowest request in five years.
Today, the UVM Medical Center – part of the UVM Health Network – is on much stronger financial footing than it was 10 years ago. We have an A3 bond rating from all three rating agencies with stable and positive outlooks. A high rating means we will spend much less on interest rates – money we would much rather have stay in the wallets of Vermonters. And, over the last five years, we have saved $38.1 million through supply chain efficiencies, earning us national recognition.
In the last decade, we have worked ourselves out of significant financial challenges through an ever-changing regulatory environment to a place where we are making important investments as we transition to a population health payment structure – where our doctors and hospitals are paid to keep people healthy rather than for each procedure or test they do.
This work has taken the time and the dedication of thousands of employees who come to work each day with a shared commitment to improving the lives of the people we care for.
The notion that because Vermont’s hospitals are all not-for-profits means we should not maintain sound financials – including sound operating funds and assets that allow for us to maintain state-of-the-art equipment, technology and facilities – is both misguided and dangerous.
Contrary to a recent news report, industry indicators suggest that many Vermont hospitals, including UVM Medical Center, have more work to do to improve financial positioning, especially as we transition to global budgets and a population health payment model. For example, as an A-rated hospital, our rating agencies expect us to carry approximately 230 days cash on hand. Cash on hand is only one measure of financial health. Today, UVM Medical Center maintains 196 days cash on hand, so we have more work to do in this area.
Collectively, Vermont’s 14 hospitals appear to be in better financial shape today than we were a decade ago. Contrary to what the news reports might suggest, this is good news for Vermont. As someone who has spent a career in health care finance, it is heartening to see a system of hospitals – while independent from one other – all working to support the mission of a healthier Vermont.
We are accomplishing this work with stronger balance sheets guided by best practices and industry standards, and by taking seriously our unique and important community roles. From a health care and economic perspective, strong and stable hospitals are essential for the communities we serve.
Vermont hospital budgets are thoroughly scrutinized and subject to state regulatory approvals. This process provides the community an opportunity to observe and participate. We have submitted our 2017 budget to the Green Mountain Care Board, and the Board held hearings on our proposal on August 17 at the Sheraton Hotel in South Burlington.
As we make our way through the next phase of health care reform, our hospitals must be on sound financial footing so they can make the appropriate investments and assume the necessary risk of this new payment system. Over time, this approach will slow the growth of health care costs and improve outcomes for our patients. And it’s equally important that we continue to keep costs down and squeeze out savings wherever possible. Too many Vermonters continue to struggle to afford health care. We have a lot to be proud of and much more work to do.
Todd Keating is the CFO of the University of Vermont Health Network.