NMC Commentary

Is NMC Concerned for Springfield Hospital?

Yes, as a fellow Vermont community hospital, we are naturally concerned regarding the reports you may have seen in the media about financial challenges at Springfield Hospital.  These are not easy times for not-for-profit community hospitals to maintain strong sustainability to meet community need.  We are all working under a revenue cap with a swirl of complex Federal and State regulation, fundamental shifts in payment mechanisms, shrinking reimbursements, and increasing competition from for-profits. Hospitals’ cost-containment efforts continue, but expenses and medical inflation around us continues to outpace our allowed revenue. By regulation, we cannot ‘grow’ our way out of these challenges and in practicality, we may not be able to ‘cut’ our way out, either. Springfield’s situation is an indicator of the impact of those factors.

Springfield Hospital is an important and valued part of its community. We are hopeful they will be able to address their concerns. It is good news that Springfield is working locally on how best to move forward and that both the Green Mountain Care Board and the Governor’s Office are actively involved.  We are also hopeful that Springfield will find value in engaging Quorum, the national healthcare consulting company which NMC has had a management contract with for more than thirty years.  Quorum’s breadth and depth of expertise have proven valuable to NMC and we expect Springfield will benefit from their expertise.

As I have talked about NMC facing tight financial times in prior columns, I want to say that NMC is in a different financial situation than Springfield. While we have had operational losses in recent years with rate reductions, we are fortunate to have financial reserves put in place intentionally by our community Board of Directors over the years in part to help the organization weather tough financial times. Still, NMC’s reserves are not unlimited and our recent operational losses and the stock market decline have impacted them. Therefore, to be sustainable, we must ensure that our expenses align with our revenues while still not losing traction on our path to the future. Short-term, that means tightening our belts even further and continuing to seek out every efficiency. Our Leadership Team and Management Team are working with our employees, Medical Staff, and Board on this right now.

Community hospitals are redefining themselves and by that I mean all of us will have to make strategic changes in what we do and how we do it to be sustainable in the coming population-health and capitation-based healthcare system. We cannot give up the future as we try to navigate current financial challenges, so we will have to make strategic decisions. Prevention and wellness are crucial strategies. Robert Wood Johnson research shows that if Vermont’s aggregate Body Mass Index (BMI) was reduced 5%, it would create medical savings of $1 billion over 20 years. That’s a staggering number – even if only half of that number was realized! Still, as positive as that would be, those reductions would come in part from the traditional care hospitals provide so we must adapt our services and expenses in response to those changes.

Vermont has taken on a transformation of our healthcare system and we are still in the early stages of the journey. As we move forward, NMC’s focus on our patients and our community will be unwavering. The entire NMC team will continue to work to ensure our sustained ability to care for our community as we pursue a future that is incentivized and reimbursed based on how healthy the population we serve is.

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