With eye toward changes, hospitals mull where to trim
by Alan Panebaker vtdigger.org As Vermont’s 14 community hospitals submit their proposed budgets to the state in the next couple of weeks, they are looking toward a thinner future.
Whether that means tighter ships or a decrease in services is up for debate and up in the air.
Brock held a press conference at Rutland Regional Medical Center recently to draw attention to what he calls an “unintended consequence” of health care reform. The hospital’s board recently voted to shutter its inpatient rehabilitation center to make up for part of a $7 million budget shortfall.Randy Brock, the Republican gubernatorial candidate, and skeptics of the Shumlin administration’s health care reform efforts say the tighter budgets (hospitals are limited to a 3.75 percent increase for the 2013 fiscal year — stricter limits than the last two years) say efforts to contain costs could result in decreases in available services and even rationing.
Hospitals have a June 30 deadline to submit their proposed budgets to the Green Mountain Care Board, which has exclusive authority to approve those budgets starting this year.
Tom Huebner, president and CEO of Rutland Regional Medical Center, said reducing costs is a necessity, but it presents a lot of difficult choices.
That tighter cap combined with reduced federal reimbursements for Medicare and Medicaid has made hospitals take a closer look at how they spend their money. Whether the cost containment results in closing of more services, Huebner said, depends on how the state does it.
“There’s no doubt at all that we’re all going to have to reduce health care costs,” Huebner said. “Independent of who’s elected to any state office, we can’t sustain the health care expenditures we’ve seen over the past decades.”
The result of that tightening of hospital belts, Huebner said, could go a number of ways. One possibility, he said, is hospitals could find ways to eliminate unnecessary expenses and improve the health of their communities.
A hallmark of health care reform at the state level is moving away from “fee-for-service” care where patients essentially get one unit of health care for each dollar spent, to programs like “accountable care organizations” where a hospital or group of hospitals takes responsibility for a number of patients and receive financial incentives for demonstrating a healthy population at lower costs. Eliminating duplicative services and being more efficient can help simultaneously reduce costs and ensure a healthy community, but Huebner said, it can be a fine line.
“I worry about when we cross the threshold of getting the waste out and getting to a point where we’re actually having an impact on the quality of care,” he said.
One possibility, and the one some health care reform critics fear, is that hospitals will do the same thing they have in the past, just with less money.
One likely trend, regardless of the politics, is a move toward more centralized care — where some specialists will likely be located only at the state’s larger facilities. That isn’t necessarily a bad thing, Huebner said, but it will create tough decisions.
“The hard question is going to be what services do we need to be where?” Huebner said. “Everybody can’t have everything they’ve always had and expect the costs to go down.”
Rutland Regional is not the only hospital that has altered the types or method of services it offers in the past year. North Country Hospital in Newport replaced a full-time oncologist in January with two part-time physicians. The hospital had been losing money on the program. Fletcher Allen Health Care, the state’s largest hospital, tried to spin off five of its outpatient kidney dialysis clinics to a for-profit company since it had been losing money on them. The Vermont Department of Banking, Insurance, Securities and Health Care Administration (now the Office of Financial Regulation) refused to approve that deal, however.
Claudio Fort, president and CEO of North Country Hospital, said the decision to replace one full-time oncologist with two part-timers was not a downsizing but rather a means of aligning with Dartmouth-Hitchcock Medical Center, one of the best cancer centers in the country. He said the cost savings was secondary.
Fort said the hospital is facing the tightest budget process he has seen, but it is not looking at cutting any services at this point.For more rural hospitals, like North Country, Fort said, there is a need to provide essential services to the local community. Newport is 45 minutes from the next closest hospital and two hours from tertiary care centers.
“Speaking for North Country, we don’t have any plans on reducing or cutting any services, but we are starting to look more closely and starting to have those discussions,” he said.
He said there are some services that it is crucial to offer locally. For example, access to orthopedic surgery allows an elderly person who breaks a hip to get care in her town as opposed to driving two hours to a larger hospital. Having close-by care could also mean an elderly person could continue to live in her home rather than having to move into a care facility.
“When you have to send someone two hours down the road, there are hidden costs in sending someone away from those support services,” Fort said.
He said the hospital is not doing anything directly because of health care reform. There is, however, a lot up in the air.
“I would characterize this as the most uncertain time in health care that I’ve seen,” Fort said.
There is plenty of uncertainty for hospitals and with health care reform in general, particularly with a decision expected from the U.S. Supreme Court this month on the federal health care law.
Skeptics speak out
Randy Brock has made health care one of his main campaign issues. Incumbent Gov. Peter Shumlin, a Democrat, wants the state to implement a single-payer system in 2017.
Brock said Rutland’s cutting its inpatient rehab facility is indicative of pressures on health care generally.
“What we’re seeing here is the direct cause and effect of government-mandated decision to impose revenue caps and how it works out in terms of patient care,” Brock said.
Brock said closing the program will just shift the health care costs to other facilities and possibly not save any money.
Jeff Wennberg, executive director of the group Vermonters for Health Care Freedom, said he thinks the closing of the rehab clinic in Rutland is a result of tightened hospital budgets.
“What happened in Rutland and what is happening elsewhere is direct and completely predictable to the Green Mountain Care Board ratcheting down growth in overall spending and overall costs,” he said. “The ultimate result will not be lowered costs. What it does do is result in rationing and substantial inconvenience and wait times.”
Wennberg said the state’s efforts to develop a global budget that will set a cap on how much can be spent on health care will lead to extensive wait times as patients have seen in Canada. According to a recent study by the Fraser Institute, a conservative think tank, specialist physicians in 10 Canadian provinces reported a total waiting time of 19 weeks between referral from a general practitioner to treatment by a specialist. Wennberg said that wait time is a result of limited spending in Canada through global budgets. The Green Mountain Care Board is considering creating a “unified health care budget
Dan McCauliffe, a dermatologist in Rutland, has become an outspoken skeptic of some health care reform efforts.
He said the Green Mountain Care Board may consider consolidating services, so smaller hospitals could cut services or even shut down entirely. This could have serious effects on communities, he said.
“The problem with consolidation is you can do that and measure the system savings,” he said. “What doesn’t get measured is the effects on the community, the effects on the people. The thing they don’t measure is patients traveling back and forth and effects on community supported by the hospital.”
Health care financing through a different lens
Anya Rader Wallack, the chair of the Green Mountain Care Board, agrees that containing health care spending costs can be painful. But, she said, many of the problems with cutting services or positions are a result of the current health care financing system.
For example, Wallack said, under a fee-for-service model a program needs to collect more money than it costs. Just because a particular service line, like orthopedic surgery or rehabilitation, produces a margin of return, doesn’t mean it’s producing good results. An unprofitable program could provide a very good service.
“One of the goals we’re pursuing in payment reform is a wider scope of consideration when we think about ‘Is this a wise investment?’” Wallack said.
So instead of looking at the dollar value of a program, she said, patient satisfaction should be a factor in deciding whether to offer it. Wallack uses the example of palliative care — which focuses on relieving and preventing patient suffering.
“You know that if you invest in palliative care, first and foremost, quality of care and satisfaction goes up,” she said. “Almost as a secondary consideration, costs usually go down.”
Wallack admits that “regionalization” or concentrating certain services at larger hospitals is part of the discussion. But that’s not necessarily the only conclusion, and which services community hospitals decide are fundamental is up to them, not the state, although those decisions are driven by state and federal funding and policies.
Deb Richter, a doctor in Montpelier and single-payer advocate, said one of the problems with the current system in Vermont and the United States is that hospitals tend to expand in areas that are more profitable, like cardiology or ophthalmology, at the expense of other areas that are not as well reimbursed.
“Now, we tend to evolve to what’s profitable,” she said. “Hospitals have to survive. They have to chase the money to keep the doors open.”
A single-payer system would help hospitals survive, she said. Instead of relying on the money-making programs, they could begin with a global budget and work around that framework to decide which are the most important service.
“What we need to recognize is that first of all we will all be using these services,” she said. “The theory is you treat it a lot like any other public good.”
That means that the services that most of us need should be available everywhere. More obscure, specialty services could be consolidated. This would result in fewer specialists who are real experts in their field. After all, Richter said, if you are having a really specialized surgery done, you probably want a doctor who has performed it more than 100 times.
As for quality of care, Richter points to data from the Organization for Economic Cooperation and Development that shows care in the United States is not necessarily better than other developed countries that spend less on health care. While United States citizens do not have longer waits for non-emergency surgeries, they do generally have a more difficult time getting care on nights and weekends and are more likely to forgo care because of costs.
Beatrice Grause, president and CEO of the Vermont Association of Hospitals and Health Systems, said providing local services for small communities is always an issue. It is just more pronounced recently.
“The current economy and the reality that hospitals have to cut costs is more prominent now than it has ever been,” she said. “There is a need to cut expenses and balance what the community needs are.”
Grause said instances of Fletcher Allen trying to sell its dialysis units and Rutland Regional shutting down the rehabilitation clinic are not part of a trend but more a reflection of hospitals trying to serve their communities’ needs while making sure they can afford the services.
She said there is a lot of potential to provide better services while saving money in health care reform. The possible pitfall is if hospitals try to maintain the current system, just with less money.
Making sure the former, and not the latter, happens is the tricky part.
“In Vermont we’re doing a lot of the right things,” Grause said. “The struggle is we would all like it to be easier to bend the cost curve, it’s just going to be difficult.”