UVM Health Network leaders tell Vermont senators high costs reflect mission, urge payment reform

University of Vermont Health Network leaders told the Vermont Senate Health & Welfare Committee on Feb. 6 that the network is working to balance providing specialized and rural services with financial sustainability and urged a statewide move to value‑based payment models to address high health‑care costs.

Sunny, president and CEO of the University of Vermont Health Network, told the committee the network’s goal is “to serve the patients of Vermont and Northern New York” by delivering “high quality, equitable, affordable care.” She said the network operates some services at a loss — dialysis was cited as an example — and that those losses must be subsidized by other services and by negotiated commercial rates. Sunny said the network posted a 2.5 percent operating margin in fiscal year 2024, near the lower bound of what she described as sustainable (about 2.5 to 5 percent).

Jessica Michella, senior vice president for High Value Care, described the network’s efforts to manage patients differently through longitudinal care management and care teams that include nurses, pharmacists and social workers. She said the network now manages about 6,000 patients in its Longitudinal Care Management program and has opened roughly 8,000 primary‑care panel slots by adjusting panel acuity and using team‑based care.

Why it matters: Committee members and witnesses framed the issue as statewide, not just institutional. Senators expressed concern that high hospital prices are driving rising family insurance premiums and hurting affordability across Vermont. Sunny and Michella told the committee those price pressures reflect several structural factors — an older, poorer population, high Medicare and Medicaid patient shares, low service volumes in rural settings, rising labor and supply costs, and the cost of maintaining specialty services used by patients from northern New York.

Key details and context

- The network said it loses “millions” annually on some services (dialysis cited) and that those losses are offset in part by higher commercial reimbursement. Sunny said roughly two‑thirds of the network’s patient volume is on Medicare or Medicaid, where payment rates are set by federal and state programs and cannot be lowered by the network.

- Sunny said the network and its community‑based board set executive compensation using outside benchmarks and that overall executive pay is below national medians for comparable systems; she reported administrative/executive pay is roughly at the 30th percentile by one internal benchmark.

- The network told the committee it is preparing to shift payment arrangements beginning in 2026 and hopes to be substantially operating under new total cost‑of‑care or other population payment arrangements by 2027. Both leaders said that shift requires coordinated participation by Medicare, Medicaid and commercial payers.

- Sunny described the role of out‑of‑state patients in sustaining tertiary services, saying roughly $250 million in revenue comes from patients traveling from New York to Vermont to receive specialized care; those volumes help sustain cardiac surgery, neurosurgery and other services that would be difficult to maintain on Vermont‑only volumes.

Committee requests and next steps

Senators asked the network for more detail on proposed payment models and on metrics that could be standardized by the Green Mountain Care Board for year‑over‑year performance monitoring. Sunny said the network supports shared statewide metrics but emphasized hospitals and critical access facilities require different benchmarks because of differences in mission and patient population. She agreed to return to the committee to “drill down” into specific models for transitioning commercial, Medicaid and Medicare payments and to provide more information on how Vermont‑specific programs (for example, the Blueprint for Health) interact with the network’s care management work.

What leaders said about trade offs and access

Sunny described candidly the trade‑offs involved in sustaining low‑volume, high‑need services: closing or centralizing a service such as dialysis would reduce losses but force some patients to travel long distances for care. That trade‑off, she said, is a policy question for the state — whether to subsidize local access or consolidate services to save money. Senators repeatedly pressed for faster steps to reduce costs for families; network leaders said fee‑for‑service payment limits options and that broad adoption of total cost‑of‑care models is the most direct path to aligning incentives for affordability and population health.

Ending

Committee members thanked the witnesses and said they would invite network leaders back to present detailed payment models and implementation timelines. No formal votes or regulatory actions occurred during the testimony; senators indicated they want more data and standardized metrics from both the network and the Green Mountain Care Board before moving on policy changes.