NMC Commentary
03.12.2019

Is NMC Reducing Expenses?

Yes, as we need to better align our expenses with our revenues. In a January column, I shared that our Leadership and Management teams were working with our employees, Medical Staff, and Board on a plan for “tightening our belts even further.” This is a necessity, as medical inflation is increasing at a rate that exceeds what the State-regulated revenue cap provides for hospitals to keep pace. To be sustainable, we must reduce expenses without compromising our commitment to exceptional care and while still meeting community need and transforming to the capitated population health based healthcare system being implemented in Vermont.

After weeks of idea generation, in-depth discussions, careful consideration, and hard decisions, the NMC Board endorsed the Operational Improvement Plan brought forth by our Leadership Team.  I communicated that plan out to our managers and staff at the end of last week and want to share an overview of it with you as our patients and our community.

NMC’s Operational Improvement Plan is designed to restore our ability to “break even” in Fiscal Year 2019 and to create an appropriate financial margin in Fiscal Year 2020.  The plan targets a $2.8 million improvement in FY’19 which annualizes to $5 million of savings in FY’20. Examples of improvements include significant savings from the renegotiation of contracts in the Laboratory and Orthopaedics; reductions of expenses in Community Relations, RiseVT, and even meal catering; maximization of the benefit of the 340b Pharmacy program; reductions of no-show rates in our departments and practices; and not filling targeted vacant management and staff-level positions. All of this is supported by the ongoing creative thought of our staff to achieve even greater day-to-day efficiency, which is recognized with some shared-savings opportunities for our staff through our “Bright Ideas” program.

Our approach was designed to avoid as much direct impact on existing hospital employees as possible, as our people are our most important asset. 25.5 of the 27.5 positions we eliminated come from not filling open positions. Still, two non-clinical members of our management team left our organization in relation to this and their roles will be absorbed rather than being replaced. We have resources available to help them with transitions, as they are talented people who will do well in their next roles with their next employers. These individuals have been appreciated parts of our team and this aspect of the work is clearly the most difficult. Meanwhile, we continue to work to fill our currently posted open positions, as those roles have been fully vetted and need to be filled.

While this effort points NMC in the right financial direction, we know changes will continue in the hospital’s role in healthcare and in how we are reimbursed for the care and services we provide. We will have to continue to make strategic choices of what to invest more heavily in to meet the needs of our community and the demands of the transitioning healthcare system and what to invest less in, or actually discontinue, due to the changing environment.

The future of the healthcare system in Vermont, and ultimately in our nation, is in a population health based approach where providers are compensated for helping populations stay healthy (rather than being paid to treat them every time they are sick). That requires a greater emphasis on prevention and greater coordination of care starting well before hospitalization. It is an exciting and promising future, but it requires change by all of us and change can be hard. As I said in January, as we move forward, NMC’s focus on our patients and our community will be unwavering. Thank you for entrusting your care to us and joining with us in prevention efforts as we rise toward a healthier and more sustainable future.

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