NMC Commentary

Does the Proposed State Budget Threaten Hospitals with Continued Funding Cuts?

Yes.  They come on the heels of significant cuts to hospital funding last year and these continued cuts to hospital funding are increasingly problematic. Hospitals are leading Vermont’s efforts to reduce the cost of care and the results are measurable. We are being asked to take on the risk and fund the transformation of Vermont’s healthcare system away from fee-for-service to a reformed approach based on being paid to keep a specified population healthy.  We are investing in increased care management to help patients move smoothly through the system and in primary prevention to help improve community health to reduce the demand for costly treatments.  These system advances – and care at the local level in some instances – are threatened by the magnitude of the continued cuts being proposed for hospitals.  For NMC, just one of the proposed cuts amount to nearly $200,000, so it is truly a serious situation.

Here is an overview from the Vermont Association of Hospitals and Health Systems of the proposed cuts which are currently included in the Governor’s proposed budget:

  • The proposed budget cuts DSH (Disproportional Share Hospital) payments to hospitals by $4.74 million (17%). All but one of Vermont’s acute care hospitals receive DSH payments to help offset the cost of providing uncompensated care and low Medicaid reimbursement.  This 17% cut is on top of a 27% cut to DSH payments to Vermont’s hospitals last year. The further cut is being proposed despite the fact that uncompensated care has increased by $16.3 million from 2016  and 1 in 4 Vermonters now has Medicaid as their primary coverage.
  • The proposed budget cuts Primary Care Case Management Payments, which is an estimated $1.5 million cut at a time when the state seeks to promote and incentivize primary care.
  • The proposed budget cuts the AHEC (Area Health Education Center) Loan Repayment Program, which is a valuable recruitment tool for hospitals. Cutting the program will put hospitals at a disadvantage with the rest of the country, as most new-graduates and early-career providers carry significant educational debt and these funds are crucial in their ability to have a sustainable practice in a rural community such as ours.
  • The proposed budget cuts State Cost Sharing, which will likely increase the amount of uncompensated care provided by hospitals (the financial burden of which, as mentioned above, already increased by $16.3 million from 2016).

The consideration of continued funding cuts to hospital is particularly frustrating because hospitals are being praised for our investments in healthcare reform and are frequently touted as important leaders in advancing improved community health.  On our own initiative, NMC and our fellow hospitals are working with our communities to coordinate care, with a focus on primary prevention for Vermonters.  Our work is rooted in our Community Health Needs Assessments, so the community is helping set the priorities.  We have come together in the Accountable Care Organization to create a more sustainable approach to healthcare funding.  Our local RiseVT movement to embrace healthy lifestyles has caught so much momentum that it is now being scaled-up statewide. Most frustrating of all is that up to $209 million was allotted to assist hospitals with this reform work, however these funds never materialized due to a lack of state dollars to draw down the Federal funds.  That means hospitals are absorbing the costs of health care reform, which becomes far more challenging in the face of cuts.

We are asking Vermont’s elected officials, appointed regulators, and each of you as citizens to please support Vermont’s hospitals as they transform health care while continuing to provide high-quality services to Vermonters. The time is now to rework the proposed state budget to prevent damaging cuts to hospital funding, including: restoring Disproportionate Share Hospital Payments (DSH); restoring Primary Care Case Management Payments; restoring AHEC Loan Repayments; and restore Cost-Sharing to avoid further increase in uncompensated care. Thank you for your efforts to help ensure that NMC can continue to care for our community and be a strong leader in the journey to a healthier future for all Vermonters.

— Jill Berry Bowen, NMC’s Chief Executive Officer