Copley Hospital in Morrisville is asking state health care regulators to allow it to raise rates by nearly 10 percent next year, saying it has done its part over the past several years to curb costs, to the detriment of its bottom line.
In its budget proposal to the Green Mountain Care Board, the hospital projects a $1.2 million operating loss this year, marking the fourth year without income generated from operations. In order to help build up cash reserves, the hospital is asking the board to approve a 9.8 percent rate increase.
“It is imperative that Copley achieve a reasonable operating margin over the next several years to rebuild our cash reserves,” the hospital’s budget proposal reads.
Copley projects it will end the year with 67 days of cash on hand. According to the July 31 hospital submission report by the Green Mountain Care Board’s finance team, which tallies up the budget proposals by all 14 Vermont hospitals, Copley’s budget is the second lowest in the state, second only to Springfield Hospital, which recently filed for bankruptcy in an effort to restructure about $20 million in debt.
Copley cited the medical leave “of a prominent orthopedic surgeon” — presumably the popular Dr. Bryan Huber, who has been ill — as a significant financial challenge. The hospital’s pediatric dental surgeon is also gone, having retired.
Mansfield Orthopaedics is Copley Hospital’s marquee practice, and the budget proposal claims that the “prominent surgeon” is attributable to more than $5 million in net patient revenue — gross receipts from patient care after expenses are subtracted. This has led to changes in scheduling and required surgeons to do more “cross-training.”
“The immense team effort required to make these changes has helped to offset much, but not all, of the absent surgeons’ lost revenue,” the report reads.
The hospital estimates that net patient revenue will be roughly $1.9 million lower than expected in the current budget.
Other financial hurdles cited in the budget proposal include an increase in the mix of services provided to Medicare recipients, which are reimbursed “at a significantly lower rate” than those provided to commercial payers.
On the expense side, Copley has had to deal with the increasing cost of supplies and drugs and “unfavorable health insurance claims.”
In response, the hospital has clamped down on costs, limiting its hiring, education travel and capital investments — it built a $12.5 million surgical unit in 2017. It also joined the New England Alliance for Health, giving it the “purchasing leverage” of 18 health care facilities throughout Vermont and New Hampshire.
In its budget proposal, Copley says it’s done its fair share of keeping costs down. The hospital has reduced its average gross charges by 6.6 percent since 2015, which makes its five-year cumulative increase only 3.2 percent.
The proposal acknowledges that “we understand that this change in average gross charges is high for one year,” but added Copley has “contributed significantly to bending the cost curve.”
“The state as a whole has increased rates by nearly 11 percent since 2015, making Copley one of the lowest cost hospitals in Vermont and the largest contributor to the reduction of healthcare prices in the state over the last four years,” reads the proposal.
Copley isn’t alone — most of the state’s 14 hospitals are asking the care board to approve budgets that include rate increases for consumers and insurers. Six of them, mostly smaller, rural hospitals, report they will have lost revenue by the end of the fiscal year.
Northwestern Medical Center in St. Albans says it will lose $4.7 million.
But Copley’s proposed rate increase is the largest. The average proposed rate increase across Vermont’s hospitals is 3.2 percent, leading to a total growth in revenue of 4.5 percent.
In March, the Green Mountain Care Board, which regulates health care costs in Vermont, set a “maximum growth target” of 3.5 percent — up from 3.2 percent last year — to help hospitals retain employees by boosting wages.
If the care board approves the budgets, the medical centers would take in $118 million more next year than they are expected to this year.
According to Copley’s spokesperson Dean Mudgett, hospital officials made their budget presentation to the Green Mountain Care Board Wednesday, after this paper’s deadline.
Kevin Mullin, the chair of the Green Mountain Care Board, said that in weighing budgets, the panel has to balance improving access and quality of care with affordability.
“Certainly, any time that you allow hospitals to grow faster than the economy grows, it puts that pressure on affordability because somebody’s paying for that growth in revenue,” he said.
At the same time, the board understands that hospitals are facing financial strain.
“These are especially trying times for the hospitals because of inflationary pressures on wages,” Mullin said. “You can’t suppress wages and think that you’re going to keep providers in the state of Vermont.”
VTDigger contributed to this report.