On Monday, Vermont health care regulators approved a new $1.9 billion budget for the state’s largest hospital — and once again, the hospital's leaders aren't happy.

The University of Vermont Medical Center wanted to charge private insurance companies an extra $140 million, or 20 percent, next fiscal year in an attempt to cover rising inflation and labor costs. But the Green Mountain Care Board, wary of rising costs for patients, trimmed the request by about 5 percent, leaving the hospital with a $35 million hole it will need to fill some other way. The board made similar cuts to the budget of the UVM Health Network's second-largest hospital, Central Vermont Medical Center in Berlin.

Regulators rationalized their cuts by pointing to some anticipated federal changes that could help the network, from higher-than-projected Medicare reimbursements to some additional money for teaching hospitals. And they said they might even be willing to allow the network to use nearly $20 million previously set aside for psychiatric beds to further close the gap.



UVM Health Network execs still blasted the decision. In a statement, president and CEO John Brumsted accused the board of making "deep, arbitrary cuts" that undermine the health network's ability to care for patients. He said he planned to review all of its options, from an appeal of the decision to potential service cuts.

"After finding reductions, tightening our belts, and significantly dipping into our reserves, these were the most responsible budgets possible," Brumsted wrote.

"Today’s decisions are a severe blow to our ability to serve our patients, improve access, and increase health equity," he continued. "It leaves our hospitals weaker in the face of challenges being experienced nationwide."
Monday’s vote comes as part of the Green Mountain Care Board’s annual summer budget cycle, during which the powerful regulatory board reviews spending plans for all 14 of Vermont's nonprofit hospitals.

The board expected higher-than-normal proposals this year given the pandemic’s widespread disruption of hospital finances. Most proposed increases in the double digits, including UVM.

To build their budgets, hospitals project their revenues by estimating how many people might seek care. The UVM Medical Center's budget shows it taking in $225 million more in net patient revenue next fiscal year.
Regulators are often wary when hospitals project taking in a lot more money in a single year, because hospitals that fail to meet their patient care projections can end up in financial trouble.

The care board chose not to trim UVM's budget, though, hoping instead that the health network’s efforts to improve access will get more people in the door.

Improved access isn’t the only place the UVM Medical Center is betting on itself. The hospital has also proposed cutting expenses by about $50 million, primarily by reducing the amount of expensive travel nurses it employs.
Whether those savings will actually materialize is unclear; the number of travelers wasn't coming down at "anywhere near" the pace needed to meet the budget assumption, the network's chief financial officer, Rick Vincent, said on Monday.

Network leaders argued that this and other built-in budget risks could compound the harm of the board's cuts. But regulators weren't swayed.

The burden of health care inflation can't fall solely on the shoulders of people using commercial insurance, who themselves are facing the same sorts of financial pressures, board member Thom Walsh said. 

"We all deal with risk, right?" said Walsh, who's also a professor of health policy at Dartmouth College. "We risk being in an accident or getting sick, and so that it's not as though UVM is burdened with more risk than anyplace else."