NMC Commentary

Does Green Mountain Care Board Understand NMC’s Financial Situation and Plans?

Yes, I believe that mutual understanding continues to grow between NMC and the members of the Green Mountain Care Board (GMCB). We have been transparent with them and appreciate their listening. An atmosphere of collaboration rather than confrontation creates an environment where we can work together on the complex and fragile financial situation currently facing NMC and other community hospitals in Vermont.

Last week, NMC’s Director of Finance Stephanie Breault and I met with the GMCB to review NMC’s financial performance in Fiscal Year 2018 which fell short of projections. Stephanie did an excellent job of presenting the data. NMC continues to be busy, but we are in the midst of a transition of how care is delivered which reduces our revenues. As the healthcare system shifts from fee-for-service to population health with an emphasis on prevention, we are seeing the beginnings of reductions in inpatient admissions and Emergency Department visits. We are also seeing increases in physician office visits and urgent care visits. As we work to keep people healthier and catch conditions before they become serious, this is good news. However, revenues for care delivered in the outpatient and non-emergent settings are lower than those for inpatient or emergency care. So, NMC receives less funding as the care shifts. It has proven challenging for NMC to swiftly adapt our expense structure to match this shift in care and revenues, as the complexity of the patients we continue to care for on the inpatient unit and in the Emergency Department is high. For example, mental health issues frequently require significant clinical attention and even one-on-one staffing. This complicates staffing of these and hampers our ability to shift resources and lower expenses. Another factor in healthcare reform impacting NMC is the increase in high deductible insurance plans. We are seeing an increase in “Bad Debt” (the financial term for patients who are unable to pay their bills but who do not qualify for free care) as patients cannot meet their obligated deductibles. This is lost revenue for care provided. At the same time, we are investing in prevention, care management, and other strategies key to our future, but which are not yet reimbursed for in most cases under the current fee-for-service system. With the State’s goal of 70% of patients being within the capitated population health system by 2022, we must make those changes now and find a way to stay sustainable during the transition.  NMC has been recognized by GMCB as a leader in this and one of their members praised it as “doing the right thing” in a recent discussion with the NMC Board.

I shared an overview of NMC’s Operational Improvement Plan with readers in March and the GMCB seemed receptive to that plan in our presentation last week. We must continue to reduce expenses while investing in our future. We are entering our strategic planning process to ensure we are sustainable in the new healthcare system. This will require significant strategic thinking in the coming months regarding how we continue to transform, where we need to invest, and where we may have to divest.  I am thankful for the strength of the hospital Board, our management team, and our medical staff leaders. These will not be easy decisions.

— Jill Berry Bowen, RN, NMC’s Chief Executive Officer