Healthcare and the Role of Vermont Hospitals

As a grateful user of Vermont’s healthcare system (UVM hip replacement last year), an observer of its growth (the house I grew up in in Morrisville was next to a pasture in which the current Copley Hospital was built in 1958), and a participant in its growth (I chaired Fletcher Allen in 2003). I value and care deeply about healthcare in Vermont. And, full disclosure, I’m an advocate for universal healthcare coverage and hope to see it in my lifetime.

Having said all this, it may come as a surprise that I believe we need fewer hospitals in Vermont. Our human services institutions should be deployed based on need and population density and both have changed significantly in my lifetime. Today, it’s become evident we can’t sustain the 14 hospitals we have now.

We now have land and air ambulances with significant on-board medical capability en route to the E.R. or trauma center. We have an interstate highway system. Of necessity, we’ve learned that telemedicine works in many emergent cases and is more cost-effective for both patients and providers. Body imaging done locally is transmitted to India by satellite, read, interpreted, and returned to hospitalists within a day. We’re accruing and sharing knowledge and data in real-time about disease, trauma protocols, lifestyle illnesses, genetics, and immunology.

Our network of hospitals was built in a different time to meet different community needs.

When I was young and watched the new hospital being built next door, the trip to Burlington was two hours. It seemed like a foreign city, and we only went twice a year. And when my mother lay dying in her bed next to my panicked father 200 yards from the emergency room and there was no local ambulance service, my father convinced his good friend to transport his dying wife next door in his hearse, which was against the law.

Prior to Medicare’s debut in 1965, healthcare for those over 65 was supported at the community level. But the cost of providing healthcare to the remaining uninsured soon overwhelmed hospital budgets. Deregulation of Pharma and skyrocketing drug prices, the escalating costs of specialists, diagnostic, and treatment technologies all began to stress the system, and hospitals started competing with one another for patients. 

Furthermore, competing policy interests led to a quarter of our national hospitals becoming for-profit businesses. We realized in the ‘70s that competition among hospitals was increasing rather than decreasing healthcare costs, as hospitals acquired new and duplicative technologies and specialties to attract new patients. 

In 1978, a regulatory decision was made in Vermont to award a “certificate of need” (operating license) only to non-profit hospitals. Henceforth, Vermont hospitals would be public entities with an “obligation to treat” anyone presenting regardless of cost. 

Then came OneCare Vermont, an innovative healthcare funding model focused on prevention and maintaining wellness rather than just treating disease after it occurs. Established as a for-profit, it’s been accused of lack of transparency and accountability. Although its current board composition would preclude it becoming a non-profit, under a challenge from Secretary Smith it’s exploring doing so. It’s been a bumpy road, but there’s been some progress in realizing its mission to improve patient access and care and to lower costs. 

Then came the pandemic and healthcare had to refocus on managing an influx of Covid-19 patients, suspending most lucrative non-critical and elective care and leading to losses across the hospital system of $100 million a month. Secretary of Human Services Mike Smith has recommended that $300M of the $1.25B from the federal Coronavirus Relief Fund be allocated to healthcare institutions and professionals in all related fields. 

Providing affordable healthcare to all Vermonters going forward will necessitate redeployment of our existing healthcare institutions: two tertiary care hospitals (UVM Medical Center (UVMMC) and Dartmouth), eight critical-access hospitals, five mid-size rural hospitals, a growing number of community clinics, and small-group practices. This can be done fairly and in a cost-efficient manner – evenly distributed across population density. In this new healthcare environment, reducing inpatient beds doesn’t and shouldn’t mean any loss of emergent/urgent care capacity but will focus us on real “healthcare” as opposed to “illness care.” 

A sticking point for some: a few hospitals will need to downsize to community clinics. But this creates a corollary opportunity for communities to utilize redundant space for community spaces for essential early ed, adult learning, and other community needs rather than building additional infrastructure. 

In the face of accelerating change, Vermont is overbuilt. We have more local fire departments, police stations, EMS services, schools, colleges, and hospitals than we can now afford. The difficult trade-off in adjusting to these changes is that many of these services are adhesive elements in our shrinking towns. But if we’re imaginative, we can rebalance our infrastructure assets and our community needs and redeploy them much more cost-efficiently, perhaps even sharing missions as with the recent exploratory discussions about using the public education system to deliver healthcare and life-sustaining services to young Vermonters in need, especially since it already does. 

Responding to the current financial stress, UVMMC has introduced a 3-5% reduction in compensation for physicians and an 8% reduction for leadership positions, but more is needed. Healthcare provider governing boards must confront their obligation to develop institutional compensation philosophies that both control costs, acknowledge change, and market forces. The current justification for top professional salaries running from $50,000 for a starting nurse to $2+ million for a CEO and $1 million plus for marquee surgeons denies the greater and growing need for primary care doctors, geriatricians, and pediatricians. The existing pyramid rewards treatment instead of prevention, the ultimate cost-saver. The justification that current compensation philosophy is responsive to a “middle market” benchmark frankly acknowledges that it’s tied to a deeply broken national system of compensation in this country that widens the wealth gap and shrinks the opportunity gap. 

Many Vermonters are anxious to return to the pre-pandemic era. That will never happen. Too much has changed. We’ve learned too much, and the pandemic and Black Lives Matter movement have exposed deep inequities in our national health care system.

Here at home, we must focus on how to right-size our healthcare infrastructure and professional providers to meet the needs of Vermonters in a rapidly shifting environment. We must also imagine how we might use existing institutions to share in healthcare delivery and understand that in the digital age infrastructure can be a terrible drag on efficiency, as many other institutions are learning. 

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