Montpelier
The Green Mountain Care Board on Wednesday approved a 3.2 percent growth target for hospitals’ net patient revenues in fiscal year 2019. That’s down from the 3.4 percent rate the board set for the current fiscal year.
While that might not sound like much difference, any change is significant given the amount of money in play: In fiscal year 2017, Vermont hospitals reported nearly $2.45 billion in net patient revenues.
“It’s a movement in the right direction for cost control,” Care Board Chairman Kevin Mullin said.
The 3.2 percent growth guideline was slightly lower than had been requested by the hospitals. But it’s also higher than what the care board initially proposed.
“We believe that the Green Mountain Care Board took into consideration our concerns about the implications of setting an artificially low (patient revenue) target,” said Jeff Tieman, president and chief executive officer of the Vermont Association of Hospitals and Health Systems.
The Green Mountain Care Board’s regulatory responsibilities include annual oversight of hospital budgets and financial performance. This summer, hospital administrators will submit budget proposals to the board for their next fiscal year, which begins Oct. 1. If a hospital strays too far from its state-approved budget, the board can take actions including cutting rates, which are the prices a hospital charges insurers.
For fiscal year 2017, several hospitals exceeded the board’s allowable growth in net patient revenues — a term defined as revenues from patient care before expenses are factored in. As a result, the care board is considering rate cuts for two of those hospitals – University of Vermont Medical Center in Burlington and Central Vermont Medical Center in Berlin, Vt.
At Wednesday’s meeting, board members looked ahead to fiscal 2019 hospital revenues.
Last month, an initial care board proposal called for a 2.86 percent growth rate target for next fiscal year. That rate consisted of 2.36 percent growth in net patient revenues and an additional 0.5 percent for investments in health care reforms like primary care and prevention.
That proposal prompted a quick response from the hospital association, which expressed “serious concerns” about a rate that “jeopardizes the long-term financial stability of all Vermont’s hospitals.”
In subsequent appearances before the care board, association administrators and hospital executives made their case for a 3.4 percent target. They pointed to substantial, recent decreases in the growth of hospital revenues. Tieman said that’s due to hospitals working within the care board’s guidelines.
From 2011 — the year the board was created — to 2017, hospitals’ net patient revenues “would have been nearly $600 million higher if we did not have the regulatory framework to help us achieve better results,” Tieman told the board earlier this month.