Vt. hospitals worry over care costs

Three community hospitals on the Vermont side of the Upper Valley are raising concerns about cuts in reimbursements for the care of needy patients and also have not yet committed to participating in a major reform in how to pay for health care.

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Vt. Hospitals Worry Over Care Costs By Nora Doyle-Burr Valley News Staff Writer Saturday, August 26, 2017 Print WINDSOR VT RANDOLPH VT HEALTH CARE SPRINGFIELD VT MT. ASCUTNEY HOSPITAL GIFFORD MEDICAL CENTER SPRINGFIELD HOSPITAL Montpelier — Three community hospitals on the Vermont side of the Upper Valley are raising concerns about cuts in reimbursements for the care of needy patients and also have not yet committed to participating in a major reform in how to pay for health care. Officials from all three Upper Valley hospitals that fall under the regulatory authority of the Green Mountain Care Board — Gifford Medical Center in Randolph, Mt. Ascutney Hospital and Health Center in Windsor and Springfield Hospital — in presentations to the board this month described various new efforts that aim to better address the needs of their patients and communities in areas such as mental health, oral health, substance use, transportation, housing and food. At the same time, they are seeking rate increases ranging from 4 percent to 6.5 percent to cover the cost of that care in fiscal year 2018. In filings with the board, Springfield proposed spending of $59.8 million in 2018, Gifford proposed spending $59 million and Mt. Ascutney proposed spending $52.9 million. Officials from all three hospitals propose increases to net patient revenue, which measures receipts after discounts included in contracts with insurers, below the 3 percent maximum allowed by the board. The 25-bed community hospitals also struggle to recruit and retain employees, particularly in the shadow of the higher-paying academic medical center, Dartmouth-Hitchcock, and the Veterans Affairs Medical Center in White River Junction. “D-H competes with Boston for talent and we compete with D-H,” Mt. Ascutney Chief Executive Joseph Perras said during his presentation to the board last week. Perras, an internist, was appointed to his post in January. In some cases, Perras said the differential can be one dollar an hour, but in others it can be tens of thousands annually. Vermont hospitals near the border with New Hampshire sometimes lose providers who are drawn to the Granite State by its lack of an income tax, he said. Difficulties in recruiting providers, particularly surgeons, negatively affect the hospitals’ patient volumes and associated reimbursements. It can also require the use of expensive temporary physicians and require community hospitals to offer higher salaries or work with other hospitals to attract qualified candidates and provide needed services to their patients. For example, Gifford had vacancies in three surgical positions this year: obstetrics and gynecology, general surgery and orthopedics, said Dan Bennett, Gifford’s CEO, during a the Green Mountain Care Board hearing earlier this month. In recent weeks, Bennett said Gifford has filled the post in obstetrics. Gifford officials plan to partner with “a tertiary hospital to the south of us” to provide orthopedic surgeries beginning in October, and they aim to hire a general surgeon this fall, said Bennett, who came to Gifford last year. In the meantime, Gifford has incurred costs from hiring temporary employees. Because such providers do not usually offer elective procedures, they aren’t usually seeing the same volume of patients as a permanent provider would, he said. “It costs you more to have a temporary position,” Bennett said. As a result of the vacancies, Gifford incurred a 1 percent operating loss in the first nine months of its 2017 fiscal year. But Bennett told the board that he expects to return to a positive operating margin in 2018 as a result of filling the surgical vacancies. Mt. Ascutney is predicting a 2.2 percent operating loss of $1.2 million in 2018, but that is expected to be balanced by a “system allocation” from Dartmouth-Hitchcock, with which Mt. Ascutney is affiliated. Springfield officials said in their Green Mountain Care Board filing that they are aiming for a 1.7 percent positive operating margin in 2018. All three hospitals anticipate a reduction in Medicaid “disproportionate share hospital” (DSH) payments, which are intended to offset uncompensated costs such as those associated with serving uninsured patients or the shortfall of costs not paid by the Department of Vermont Health Access or the Centers for Medicare and Medicaid Services, in the coming year. Gifford anticipates a DSH reduction of $223,219;, Mt. Ascutney expects to lose $140,768; and Springfield to get $949,940 less than the current year. “We did project that our DSH payments would be decreased,” Springfield Hospital’s Chief Executive Timothy Ford said during his presentation to the GMCB last week. But, Ford said he “didn’t expect that it would be decreased by 50 percent from last year.” Overall, DSH payments to Vermont hospitals are expected to decrease $8.4 million due to legislative changes this year, according to the Green Mountain Care Board. The state is reducing DSH payments because the free care hospitals provide has been reduced through the Affordable Care Act and Medicaid expansion. On the expense side, Vermont hospitals anticipate continuing to pay a Medicaid provider tax that the state collects to put toward its share of the cost of Medicaid expansion. None of the three hospitals have yet committed to moving away from fee-for-service reimbursement to risk-based arrangements, in which hospitals receive monthly payments for providing health care to their patients through what is known as an accountable care organization (ACO), in 2018. Earlier this summer, OneCare, the ACO which is jointly owned by the University of Vermont Medical Center and Dartmouth-Hitchcock, submitted a $779 million budget to the GMCB. Officials from the three community hospitals in the Valley said their board members are nervous about taking on the risk associated with participating in an ACO because most of their patients’ most expensive care is provided at Dartmouth-Hitchcock, so those costs would be out of their control. Mt. Ascutney has long been a member of the ACO known as OneCare. But, Perras, who in addition to being Mt. Ascutney’s CEO also serves as D-H’s representative on the OneCare board, said he could not figure out how the capitated payments would work for a small critical access hospital. “There’s little I can do to prevent a six-week ICU stay at D-H that would frankly blow us out of the water,” he said. Instead, Perras said he would watch from the sidelines in 2018, planning to rejoin OneCare in 2019, when there may be more penalties for failing to participate. Benefits of joining an ACO include being rewarded for making changes such as reducing lengths of stay and reducing readmission rates, things that Springfield Hospital officials are already working toward, but they do not benefit from under a fee-for-service model, Ford said. Springfield and Gifford, both federally qualified health centers, are part of Community Health Accountable Care, the ACO that represents community health centers. Neither hospital has committed to participating in risk-based payments in 2018, though Springfield is considering it and officials will be discussing it in the coming weeks. For his part, Ford said he is in favor of joining the ACO, but was unsure whether his board would support it. Officials of all three hospitals offered details of wide-ranging efforts to address the needs of their communities. In 2018, Gifford officials plan to begin using a new electronic medical record system, which they said would assist them in tracking patients’ health. Doing so, they said, would allow them to follow up with patients with chronic conditions and those who are heavy users of costly emergency services to bring them in for preventative care, for example. Though Mt. Ascutney has struggled to hire a second psychiatrist, officials there plan to contract with D-H to provide telepsychiatry services, Perras said. And, in order to address pediatric oral health needs in Windsor, where there hasn’t been a dentist for almost two years, Perras said Mt. Ascutney sends pediatricians and nurses into the schools. For the most part, Perras said Mt. Ascutney does not pay providers bonuses based on the number of patients they see. “No one comes to work in Windsor looking to cash in,” he said. “They’re looking to make a difference.” Springfield officials said the population they serve struggles with poverty and addiction. For example, Ford said that half of the babies born at Springfield Hospital are born to mothers who are addicted to substances. Ford described the trend in Springfield mothers’ struggles as “stable.” “It’s a high number and it’s not really going down,” he said. “(We’re) not seeing a significant increase either.” Joshua Dufresne, Springfield’s chief of practice operations, said he sees hope for the future in the hospital’s efforts to bring health care and information into the schools. Springfield Hospital provides dental care in area schools and, Dufresne said, the hospital aims to add mental health and pediatric care to its array of school-based services. Doing so, he said, “could bring us to this minor population that is otherwise trapped.” The Green Mountain Care Board is expected to issue hospital budget decisions next month. Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.