A consultant is urging the state to make dramatic changes to its health care system, including repurposing inpatient units at four hospitals, consolidating services at others and reforming how and how much facilities are paid for care.
If fully enacted, the recommendations, contained in a 144-page report published Wednesday, would lead to a sweeping transformation of Vermont’s health care landscape. The report envisions a system in which much care takes place outside hospitals, existing full-service hospitals pivot to providing specific types of care and charges to private insurance are kept down through regulation.
Without the proposed transformations, Vermont would be forced to subsidize struggling hospitals into the future — with an additional $700 million to $2.4 billion needed over the next five years just to break even, according to the consultant’s projections.
“The platform of health care in Vermont has burned,” Bruce Hamory, a physician and partner with consultancy Oliver Wyman, told the Green Mountain Care Board in a presentation Wednesday, “and requires rebuilding in a modern form, with more sustainable governance and funding methods.”
Hamory spent months collecting data and meeting with thousands of hospital administrators, medical providers and local community members to assess the state’s health care landscape. That process culminated Wednesday in a report that lays out, in great detail, a series of steps that Vermont and its hospitals should take in order to keep care sustainable and affordable.
The analysis comes to a close as many Vermonters grapple with what the consultant has called a “broken” system: fast-rising insurance premiums, hospitals operating in the red, long wait times for procedures and a lack of access to primary care.
‘Major restructuring’
Hamory identified four Vermont hospitals — Grace Cottage in Townshend, Gifford Medical Center in Randolph, Springfield Hospital and North Country Hospital in Newport— as “at-risk” and in need of “major restructuring.”
Those hospitals sit in communities with declining populations, and without alterations they are projected to see declines in patient volumes and revenue — and require “substantial” subsidies annually to stay afloat, he said.
Within the next three years, the report concluded that Grace Cottage, Gifford, Springfield and North Country should repurpose their inpatient units to provide other services: mental health, geriatric psychiatry or memory care. The hospitals should also stop performing certain relatively low-volume procedures, such as colectomies, hernia treatment and joint replacements.
Meanwhile, the report envisions broad reductions to administrative costs at the University of Vermont Medical Center. Those costs — including administrative staff salaries — are significantly higher than comparable institutions, according to Hamory.
Hamory recommended that UVM Medical Center retain an outside consultant to find areas for those cuts.
“We are recommending they get support from an outside group to aggressively cut costs,” Hamory said, “as testimony before this board suggests they have been unsuccessful doing this internally.”
‘Centers of excellence’
Other hospitals could also see dramatic changes under the new system envisioned by the report. The consultant recommended creating regional “centers of excellence,” where certain Vermont hospitals focus on providing care in five distinct areas: surgery, specialty services (such as orthopedics and neurology), women’s health, mental health and specialized elder care.
To that end, various hospitals should abandon certain procedures to increase the frequency of others within their designated specialty. Hamory noted that exactly which hospitals focus on which specialty should be determined with input from the state and local communities.
“At the hospital level, hospitals will need to reconfigure their services and the sites where they deliver them,” Hamory said, “so that more is done away from the inpatient units of the hospital, and indeed, often from the campus of the hospital.”
The report also included a lengthy series of recommendations for the Vermont Legislature and Agency of Human Services, some of which the consultant has previously presented.
State regulators should cap hospital rates through a tactic called “reference-based pricing,” in which hospital charges to commercial insurance are pegged to Medicare reimbursement rates, Hamory said.
And Vermont hospitals should transition to a “global budget” system of payments. In such systems, hospitals receive a predetermined chunk of money on a regular basis, rather than payments for each individual service or procedure. The goal is to increase focus on preventative care to forestall more expensive hospital procedures.
Hamory also listed a series of other, state-focused proposals: Vermont should remove barriers to building affordable housing, fund upgrades of emergency medical services and require hospitals to use the same accounting firm and methods to build and submit their budgets to regulators so that they can be interpreted and compared more easily.
Vermont should also streamline regulations to make it simpler and less expensive to build health care facilities, and licensure rules should be changed to allow nurses, EMTs and pharmacists to provide more services, Hamory said. He also recommended that the state consider a subscription to Starlink, a satellite network internet service, to aid rural emergency medical services and residents with poor internet access.
‘Equity, access and affordability’
On Wednesday, Michael Del Trecco, the president and CEO of the Vermont Association of Hospitals and Health Systems, said that the organization was still digging into the recommendations, but raised concerns about how the changes could potentially affect patients’ access to care.
“Four of the recommendations spoke of closing inpatient units in certain areas, and that needs to be understood clearly — the impact to those communities, and what that might look like to patients,” Del Trecco said in an interview.
He pointed out that hospitals are often keystones of local economies and municipalities.
“Every one of our Vermont hospitals, in many ways, is the engine of vitality for our communities. We are the economic driver of these communities, we support local sports teams, we support local outpatient areas, we support local arts, and we are the hub of that community,” he said. “So, yeah, I am deeply concerned about the ripple effect.”
It now falls to state entities, including the Agency of Human Services, the Green Mountain Care Board and the Legislature, to act — or not — on the recommendations outlined Wednesday.
At Wednesday’s hearing, Owen Foster, the chair of the Green Mountain Care Board, underscored the necessity of reforming Vermont’s health care system. Vermont, he pointed out, has some of the highest health care costs in the country.
“The care board sees this every single year when we have hospital rate requests and insurance rate requests,” he said. “Vermonters and businesses feel it when their health insurance premiums go up 15 to 20% year after year after year, yet people can’t adequately access the system they pay for.”
The consultant’s analysis, he said, “is some of the most important work being done in our state.”
Read the story on VTDigger here: Consultant says 4 hospitals need ‘major restructuring,’ recommends consolidating services around the state.