Vermont hospitals say aging, higher-acuity patients and workforce costs are straining system; propose talent pipelines, bed-capacity tool and interoperability

Devin Green, government relations at the Vermont Association of Hospitals and Health Systems, told the House Healthcare Committee on Jan. 15 that Vermont hospitals are facing rising patient acuity, workforce costs and regulatory constraints that together threaten system sustainability.

Green said the state's rural geography and an aging population have made it harder to get patients "to the right care at the right time," and that hospitals are seeing both higher case-mix indexes and longer lengths of stay. "Vermont's landscape is rural and aging," she said.

The association's presentation said Vermont has 16 nonprofit hospitals, including eight critical-access hospitals and one academic tertiary center (University of Vermont Medical Center). Green said the state also has five inpatient psychiatric units located inside hospitals, one freestanding psychiatric facility (Brattleboro Retreat) and a VA hospital.

Why it matters: Hospitals represent about half of Vermont's health-care spending, Green said, and many of the state's affordability and access problems are interconnected across hospitals, home- and community-based providers and behavioral-health services. Green told lawmakers that cuts in other parts of the system (home health, mental health) feed back into hospital costs and capacity.

Key numbers and regulatory points cited by Green included a reported case-mix index of about 1.54 (compared with a referenced average near 1.36), an average annual hospital-price increase target of roughly 4.4% as hospitals normalize after COVID-era pressures, and a description of certificate-of-need (CON) jurisdictional thresholds that Green said currently sit near $1.5 million or $3 million depending on the service. She described CON as a barrier in at least one recent example: Southwest Vermont Medical Center's proposed adolescent inpatient psychiatric unit, which Green said is held up in the CON process.

Green also described the hospital provider tax and how it is used to draw down federal Medicaid match: "We collect about $250,000,000 from hospitals. With federal match, we get $450,000,000," she said. The association's slide deck, as described in testimony, estimated inpatient hospital costs at roughly $350,000,000 and said the state had roughly $95,000,000 in additional funds stemming from the tax-and-match arrangement that are not directly accounted for in that inpatient total.

On affordability and sustainability, Green told the committee that workforce compensation accounts for about 60% of hospital expenses and that wage increases made during the COVID period cannot be reversed. She said hospitals are part of the affordability conversation but asked legislators to examine the whole system rather than focusing solely on hospital cuts.

Proposals presented: Green outlined short- and long-term items the association is pursuing or supporting: - Expand talent pipelines and workforce training programs (she cited success of WorkFirst pipeline funding in other contexts). - Develop a passive, statewide bed-capacity tool that would automatically surface open beds for transfers rather than relying on manual, point-in-time reports. - Centralize some administrative functions, such as credentialing, to reduce duplicative costs for smaller hospitals. - Promote provider and patient stewardship initiatives to reduce unnecessary care and resource waste. - Pilot interoperability efforts so the state's largest electronic medical records (EMR) systems can exchange data more reliably; Green said the goal is governance and operational agreements among major vendors rather than deploying a single statewide EMR. - Support housing initiatives to address social needs affecting both patients and staff.

Legislative items: Green asked lawmakers to consider changes to certificate-of-need rules so state-funded initiatives would not have to go through CON, to preserve the 340B drug pricing program (referred to in testimony as maintaining the program at status quo), to maximize Disproportionate Share Hospital (DSH) payments and to maintain funding for successful workforce pipeline grants (she noted a $2.5 million WorkFirst pipeline allocation in 2022 that the association cited as effective for enrollment outcomes).

What lawmakers asked: Committee members pressed Green on the sustainability of recent permitted price increases (a referenced 4.1% figure for 2024 was discussed in context), the mechanics and uses of the provider tax revenue (members asked whether some of the tax proceeds flow to the general fund rather than Medicaid), and the feasibility and cost-benefit of interoperability and bed-capacity tools. Green acknowledged some questions required follow-up and offered to return with more detail.

Ending: Green closed by summarizing that hospitals want to be part of affordability reforms but stressed that systemwide strategies are needed. She said VAHHS would follow up on specific legislative questions and on the feasibility of proposed technical and workforce interventions.