The independent watchdog group tasked with assessing UVM Health’s finances since spring 2025 used the final months of its assignment to propose a broader look at how regulators, lawmakers and insurers can address healthcare affordability beyond the state’s largest health network.
“We wanted to lay out some direction for everyone to pay attention to,” Mike Smith, who helmed the three-person liaison team, said in an interview.
Smith, healthcare policy expert Nancy Kane and industry executive Stephen Gorman comprised the oversight group as part of the University of Vermont Medical Center’s 2025 settlement with the Green Mountain Care Board for earning more than the regulator had allowed. The team began analyzing the hospital group’s finances and operations in May of 2025 and concluded last month.
“In our minds, everything has to contribute to making healthcare affordable, and that includes the insurers, that includes the providers, that includes the regulator, that includes the unregulated,” Smith added.
The Green Mountain Care Board regulates 14 hospitals in Vermont, but those hospitals only make up 43% of Vermont insurers’ healthcare claim costs, the team’s memo noted. The remaining medical groups outside of hospitals, out-of-state hospitals and pharmacy costs are not subject to the same scrutiny.
“This must change,” the authors wrote in their final memo. They outline a series of suggestions that could work to mediate this imbalance.
Over the course of 16 months, the group has produced six memos that have proven influential on the care board’s regulation of UVM Health and the hospital network’s own policy decisions. In May, the group found that the hospital network would need to dial up its physicians’ productivity and cut its expenses by $300 million in three years to remain solvent. The hospital group started to put those suggestions into practice soon after, with fast patient turn-around efforts, layoffs and an aggressive 2027 budget that prioritized expense cutting. A late July memo raised the alarm on how much Vermonters pay to support UVM’s medical education, and by September, the care board set a requirement on the hospital group to come up with a plan to address how much it spends on medical education by the end of the year.
Many of the team’s recommendations in their final memo call for a redesign of the Green Mountain Care Board’s process. The wide-reaching memo comes as the care board is already primed for a change. Its chair, Owen Foster, is set to step down, and the search for a replacement is underway. Smith, who leads the liaison team, is on the nominating committee for the new chair.
Currently, the care board approves rate increases for health insurance plans sold on Vermont’s Affordable Care Act marketplace, and to do so, board members consider how much an insurer needs to earn in order to pay out all of its claims and just how much ratepayers can afford to pay in premiums.
Regulators should flip that, the liaison team wrote. Regulators should decide how much more in premiums payers can afford, which then would drive how much insurers should reimburse for services, such as hospital care and drugs.
“I agree with that philosophically,” Foster, the board chair, said, but he doubts the feasibility of pulling down costs for the remaining 57% of claims that Vermont insurers pay out beyond regulated hospitals. For instance, he’s skeptical of how much power BlueCross BlueShield of Vermont, the main insurer on the state healthcare marketplace, really has to push pharmaceutical companies to lower prices. But hospitals are approaching their cost-cutting limits and can’t be the only source of savings, Foster said.
The care board has the authority to set hospital budgets each fiscal year, and it has become Vermont’s primary approach to regulating healthcare costs.
“How can we achieve affordability in other ways? It’s gotten harder and harder,” Foster said.
Smith agrees. His group’s recommendation that the hospital cut $300 million of expenses in three years, for instance, is a huge number, he said, and a one-time thing.
“Spreading the cost pressure beyond hospitals” is essential, he said.
For instance, the regulator and the state can address high pharmaceutical costs in Vermont, which are 13% higher than New England’s average, the team wrote. The authors suggest the care board commission a study to better understand why these pharmacy costs are so high and how the state can bring them into line with the region’s average.
What about the other unregulated costs insurers pay for — out of state hospitals, private medical groups, drugs? And what about all the people who get healthcare coverage from their employers? The state and the care board should broaden their approach to include those considerations, too, the liaison team wrote.
The authors suggested new metrics the board could use in its budget orders to hospitals. Doing so would require a change in statute, but Foster is all for it, he said.
That could include considerations such as patients’ payments relative to their household income, or how much an employer puts toward health insurance relative to employee wages. The care board and hospitals could regulate budgets with an eye to multi-year plans and longer-term sustainability, rather than on a year-to-year basis. The Vermont Association of Hospitals and Health Systems has been advocating for this type of longer-term budget review.
“Hospitals will continue to work on becoming more efficient and transforming care, but we’re not going to succeed with just cutting costs — we also need to grow,” Devon Green, a senior vice president of the hospital association, said. “Another side of the coin is growing our population and economy.”
As the liaison’s engagement concludes, its members will keep watching the projects they have set in motion. Stephen Gorman, one of the team’s members, will check in with the hospital network on its progress every three months, for the next year.