71% of spending not for patient care

By Michael Bielawski

A current board member of the newly formed Vermont Healthcare Coalition 911 says that non-patient-related labor costs are higher than the national average and are one culprit for soaring healthcare costs.

“National data shows that non-patient care labor costs are among the highest in the country including the costs of labor for administration and management,” writes Bill Schubart, a Coalition board member and the former chair of the Fletcher Allen Healthcare Board. The full presser can be read here.

He adds that UVM Medical Center’s Board gave out about $3 million in questionable administrative bonuses even as their facilities suffered a recent ratings downgrade by Medicare. He added that this was done while some board members were on the Center’s payroll.

In January, VDC covered the formation of the Coalition, which was created to help reign in runaway healthcare costs – especially insurance premiums – and was highlighted in a press conference featuring former Governor Jim Douglas. Former Senator Chris Pearson chairs their board.

Douglas said, “In terms of attracting businesses to locate or expand here, in terms of attracting employees who come to work in Vermont, in terms of attracting more families to make this their home.”

VDC noted non-patient care driven costs.

“Their data showed that a higher percentage of healthcare costs in Vermont go to administrative costs compared to similar providers in other states. The economic impact is hitting both business and housing sectors,” VDC reported.

The stats include 71% of UVM Medical Center’s total operational costs going to administrative work. That number is lower for the state average but remains significant at 54%.

Schubart calls for accountability.

“Our key question today is why the governing boards of UVMMC, and the University of Vermont Health Network (UVMHN), allow this to happen,” he wrote. “How did we get to the point where our nonprofit academic medical center stands out as one of the most expensive and least cost-effective centers in the nation?”

Rewards for failure?

He wrote about quality downgrades by Medicare for “excess readmissions and an unacceptable rate of hospital-acquired infections (infrastructure hygiene).”

This downgrade occurred while up to $3 million went to administrative “performance” bonuses.

“The UVMHN board’s decision to award its President a $480,000 performance bonus and lesser performance bonuses to the rest of management — some $3M in all? How much of the clinical care that Dr. Eappen chose to cut could have been supported by these bonuses awarded for negative performance?”

Conflicts of interest?

Schubart notes that five of the 21 trustee members that run the network are also on its payroll, which he calls a potential conflict of interest.

“In general, it’s unusual for highly compensated employees to serve on the boards that oversee their operations,” he wrote. He went on to say that exceptions are sometimes allowed at university hospitals if the person has valuable knowledge regarding the facilities and the work.

He wrote that there must be rigorous oversight of these members, including that they “must abstain if the discussion and vote relates to their authority or compensation.”

He suggested getting more folks on the board who represent populations that need the hospital most. For example, “advocates for expanded mental health and substance abuse disorder treatment and Vermonters without shelter or adequate nutrition, both of which are known to be ‘moral determinants of health.’”

Not concerned with profit?

Schubart points out a lesser-known fact about Vermont’s healthcare, being that UVM Medical Center is not technically a hospital as it is often interpreted.

“Chartered as a nonprofit, it’s a business acquisition, aggregation, and integration network of six nonprofit hospitals in Vermont and New York and two home health agencies,” he wrote.

He noted that as a nonprofit, the business strategies are not always driven by economics first, which can lead to budget woes.

The author is a writer for the Vermont Daily Chronicle and hasn’t paid for health insurance in nearly a decade because he uses Charity Care, an income-based pay-per-visit way to pay for healthcare.