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State establishes 2006 Hospital Budgets

first_imgv\:* {behavior:url(#default#VML);}o\:* {behavior:url(#default#VML);}w\:* {behavior:url(#default#VML);}.shape {behavior:url(#default#VML);} State of Vermont Timothy McQuiston 2 2 2005-09-16T14:05:00Z 2005-09-16T17:13:00Z 2005-09-16T17:13:00Z 1 1532 8738 Banking & Insurance & Securit 72 20 10250 10.2625 Clean Clean 0 pt 0 pt 0 0 0 pt 0 pt MicrosoftInternetExplorer4st1\:*{behavior:url(#ieooui) } /* Style Definitions */ table.MsoNormalTable {mso-style-name:”Table Normal”; mso-tstyle-rowband-size:0; mso-tstyle-colband-size:0; mso-style-noshow:yes; mso-style-parent:””; mso-padding-alt:0in 5.4pt 0in 5.4pt; mso-para-margin:0in; mso-para-margin-bottom:.0001pt; mso-pagination:widow-orphan; font-size:10.0pt; font-family:”Times New Roman”;}PressReleaseState of Vermont…Department of Banking, Insurance, Securities &Health Care Administration (BISHCA)89Main St. Drawer 20 Montpelier, VT 05620-3101 Main Number:802-828-3301                                          Commissioner:  John P. CrowleyDivisions: Banking,Insurance, Captive Insurance, Securities, and Health Care Administration(BISHCA) _____________________________________________________________________________________________________________________ The Commissioner reviewed and considered all of these factors and: 1) Accepted and established the following FY 2006 hospital budgets as theywere submitted in July: [Rate increase requests indicated inbrackets.] Brattleboro Memorial Hospital  [8.7%] Central Vermont Hospital [6.4%] Copley Hospital[0.0%] Fletcher Allen Health Care [8.0%] Gifford Memorial Hospital [3.6%] Grace Cottage Hospital [11.0%] Mt. Ascutney Hospital & Health Center[5.3%] North Country Hospital & Health Center[4.8%]  Northeastern Vermont Regional Hospital[8.5%]Northwestern Medical Center [4.5%]Porter Hospital[5.0%] Springfield Hospital[8.0%] 2) Established the Rutland Regional Medical Centerbudget with a reduction in their rate request from a 9.0% to a8.0% rate increase along with a commensurate reduction in expenditures. This establishes an operating margin of 3.2% for the hospital.3) Established the Southwestern Vermont Medical Centerbudget with a reduction in their rate request from a 9.8% to a8.8% rate increase. This establishes an operating margin of 4.1% for thehospital.4) The Commissioner is also requiring that Rutland Regional Medical Center, Southwestern Vermont Medical Center,Central Vermont Medical Center,Northwestern Medical Center, and Brattleboro Memorial Hospitaleach:Conduct a comprehensive debt capacity and financial feasibility study andsubmit the findings to the Department. The studies shall include an analysis ofthe debt associated with current and projected (over the next 5 years) capitalprojects and new programs, and include an analysis of projected operating revenues,expenses, and related capital as well as utilization and related cashflows.  The studies shall describe the anticipated impact of the financialprojections on each hospitalcenter_img Contact: Michael Davis, Division ofHealth Care Administration; 802-828-2989  Date:  Sept. 16, 2005CommissionerEstablishes 2006 Hospital BudgetsMontpelier –The Departmentof Banking, Insurance, Securities, and Health Care Administration (BISHCA)administers the annual binding budget program for all Vermonthospitals in an effort to contain hospital costs. The annual budget processincludes an analysis by the Departments staff and testimony by the hospitalsat public hearings held before Commissioner John Crowley and the PublicOversight Commission. The hearing process took place over a three-day period,on August 23, 24 and 25, 2005. The Vermonthospital fiscal year for 2006 runs from October 1, 2005 through September 30, 2006. When he established the FY 2006 budget levels for the hospitals, theCommissioner reviewed the testimony received from the fourteen Vermonthospitals during the August public hearings, the staffs analyses, the UnifiedHealth Care Budget forecast, and the comments of the Public Oversight Commission.  In addition, the Commissioner also consideredthe Health Resource Allocation Plan (HRAP) adopted by the Governor on August 2, 2005.  In particular, the Commissioner noted theseven key factors identified in the HRAP:  Demographics: the emergence of the baby boomers into middle ageChronic Illness: the leading cause of illness, disability, and death, and the chief area for health care expendituresPrevention: a key area for addressing health care resourcesWorkforce: shortages in certain health care servicesHealth Care Information Redesign: information technology needed to improve processes and outcomesPopulation-based Analysis: projecting use and need, and allocating resources accordinglyIntegration of Care: improved efficiency and effectiveness by integrating primary, specialty, physical and mental health care. In addition to permitting rate increases for the hospitals,the Commissioners FY 2006 budget decisions require all of the hospitals towork with the State over the next six to nine months to address significantexpense and revenue pressures on Vermontshospital health care system. Despite the lowest overall hospital spendingincrease since 1997, the Commissioner determined that although the currentoverall financial health of the hospitals appears stable, the future financialpicture raises the following concerns:Difficulty in recruiting certain health care professionals is a significant and ongoing problem representing a significant financial risk to community hospitals.Cost control is a challenge for Vermonts hospitals that are focused on retaining or adding some services while at the same time looking for ways to limit increasing expenditures. Key funding sources such as Medicare, Medicaid and the Critical Access Hospital reimbursement program may become stressed in the next few years and the ability to cost-shift to insurers may diminish.Cost shifting is not a sustainable method of financial stability. To the extent possible in Vermonts non-profit hospital market, cost control is absolutely critical.Professional liability insurance costs are rising significantly at some hospitals. Responses to this vary and a coordinated approach would be useful.    Many hospitals are planning significant capital spending that stresses the financial health of the institutions. In response to these pressures, the Commissioners budgetorders will call for Vermonts 14non-profit hospitals to engage in activities to  increase efficiency and decrease costs.  In order to provide reports and studies thatwill be used in next years budget decision-making process,the hospitals will be required to do the following:   Evaluate all cost drivers, and determine which may not be necessary to the most critical missions of the hospitals.Develop plans to (a) meet physician recruitment needs, and (b) to implement contingency plans to respond to a smaller supply of physicians and other key health care professionals.Explore methods to control professional liability insurance costs, including the potential adoption of captive insurance plans including those covering multiple institutions.Identify and adopt best practices throughout hospital operations and management to increase efficiency and quality.Develop long range financial plans including the use of alternate health care delivery models to provide needed services and maintain and update physical plants.Plan for changes in health care delivery systems such as changing technology, improved information systems, the shifting of care from the acute care setting to the non-acute care setting, and improved chronic disease management.Develop strategies to implement information technology investments. The Department based the final budget levels on a variety of factors,including the budget assumptions pertaining to utilization, new programs,operating surplus, inflation, prior period budget performance, and theindividual circumstances of each hospital.  Fundamental to theCommissioners decisions is the recognition that Vermonters continue to firmly believethe Vermont community hospitalsystem is integral to Vermontslocal communities and the economy of those communities.   The average 7.5% requested rate increase was comprised of individualhospital rate increase requests that ranged from 0.0% to 11%. These raterequests were determined by the individual hospitals as needed to meetincreasing costs and to provide operating margins.   A review of hospital testimony and staff analysis has found that the costincreases were largely driven by utilization growth, inflationary growthrelated to wages, fringe benefits, pharmaceuticals, new programs, and expandingtechnology.  In addition, the hospitals’ testimony before the Commissionerindicated that the hospitals are budgeting to achieve adequate operatingmargins in order to: maintain and improve a financially healthy hospital systemand make capital expenditures to address technology and infrastructure plans.last_img read more