NMC Commentary

Are ‘Disproportionate Share’ Funds Crucial for Hospitals?

Yes! Those funds are crucial to the ability of Vermont’s not-for-profit hospitals to provide the care to our most vulnerable Vermonters.  Disproportionate Share Hospital (DSH) payments goes towards covering the costs of care to those who are unable to pay their hospital bills as well as supplementing Medicaid payments, which do not cover the cost of care. Accordingly, this separate DSH payment is crucial to NMC’s financial status – and amounts to approximately $1.9 million for NMC.  Losing any part of that funding reduces NMC’s financial stability and undermines our ability to subsidize services like our Family Birth Center which  needs help covering costs due to population size and low reimbursement).

I am very concerned about current discussions in the Montpelier regarding possible cuts to DSH funding for Vermont’s hospitals. This is not a productive problem solving approach to a difficult budget situation.  It is simply inappropriately underfunding of local providers for care provided to Vermont’s vulnerable populations.  Cutting DSH funds to hospitals threatens our opportunity to bend the cost curve long term by providing strong access to care and investing in primary prevention which lead to better care, better health, and lower costs for Vermonters.  Without DSH funding, hospitals will not be able to afford to invest now for future outcomes.

At NMC, we have our eye on efficiency and cost reduction and are committed to bending the cost curve. It simply has to happen and is happening.  Given the strong work of the NMC team, our ‘cost per adjusted admission’ is lower in Fiscal Year 2017 than it was in 2014! That means our team is beating the rate of inflation and containing our costs. That is a huge step forward.  Ironically, that kind of cost-saving work is hard to maintain if the hospital is under-funded.  Add the conversations around cutting hospitals’ DSH payments to other financially harmful conversations, such as potentially allowing a for-profit ambulatory surgery center to skim off strong-paying easy surgical cases, and the financial status of Vermont’s hospitals is at risk for hit after hit.  That is no way to sustain access and improve wellness.

I was pleased that NMC CFO Chris Hickey and I had the opportunity to discuss the DSH issue with Speaker of the House Mitzi Johnson (Grand Isle) and ranking Appropriations member Rep. Kathy Keenan (St. Albans).  They listened to our concerns and I believe they understand the importance of properly funding local healthcare. We appreciate their time. Things move quickly in Montpelier, so let me speak to where this issue is at as I write this.  There have been talks of pulling away 10% of the DSH funds from hospitals (which would mean a $190,000 loss of funds for NMC).  By the time we reached out to express our concern, the talks had passed that initial threshold (with a 10% cut already seemingly considered by some to be a ‘done deal’) and some in the legislature were talking of taking 20% or more!  That is a significant hit to a hospital like NMC.  A 20% cut in our DSH payment redirects $380,000 in funding that would otherwise go towards the care of Vermonters whose care is under-reimbursed or who cannot pay for their health care.  Losing that money restricts what NMC can do for all our patients and what we can do within our community to help create a healthier future.

We understand that his is a difficult budget year for Vermont and that healthcare is expensive. NMC is working to reduce our costs while improving health through prevention to reduce the need for costly medical services. Pulling DSH funding that helps support those efforts away from hospitals to help other budget areas is short-sighted and counter-productive.  We are fortunate to have an accessible, responsive delegation representing our community in Montpelier. They appreciate hearing from their constituents about what matters to each of us. Don’t hesitate to reach out to them about the value of local access to health care, the need to continue to invest in wellness, and the importance of Disproportionate Share funding to hospitals like NMC as we work towards a healthier future for all Vermonters.

— Jill Berry Bowen, NMC’s Chief Executive Officer