Latest move in budget battle with Vermont regulators

By Guy Page

The University of Vermont Health Network announced Tuesday, July 29 that it will be cutting millions in expenses by laying off 77 employees and eliminating 69 vacant positions.

According to News 5 reports, of the 77 layoffs, nine involved leadership positions, while the remaining 68 were staff roles. Hospital officials emphasized that the cuts were largely from the network’s shared services team — such as finance, human resources, and information technology — and would not directly impact clinical care or patient services.

“These were incredibly difficult decisions,” UVM Health Network leadership reportedly said in a statement, “but they were necessary to ensure the long-term financial stability of the network.”

The latest round of job reductions is expected to save the network up to $5 million. When combined with additional cuts announced Tuesday, the total savings are projected to reach $180 million. These come on top of $150 million in cost reductions implemented earlier this year.

UVM Health Network operates multiple hospitals and healthcare facilities across Vermont and northern New York. Officials say they remain committed to maintaining quality care while addressing systemic financial challenges affecting hospitals nationwide.

The budget cuts have been prompted by warnings and actions taken by the Green Mountain Care Board, the state’s health care regulator. 

In a decision predicted by the University of Vermont Medical Center “to cut patient care and support services,” the Green Mountain Care Board ruled last October that the state’s largest hospital is over-budget in patient revenue and therefore must take a ‘haircut’ in health insurance reimbursements.

“UVMMC’s FY23 operating results differed substantially from its budget. In this order, we correct UVMMC’s deviation from its budget by reducing its overall change in charge and commercial negotiated rate increase,” the GMCB Oct. 10 decision said. “Accordingly, we also deny UVMMC’s request for a retroactive adjustment to its FY23 budget.”

Per state law the GMCB regulates hospital budgets. Spend too much and the GMCB takes action – in this case, denying an increase in its reimbursement from patients’ health insurers. 

State law requires the GMCB to issue budget orders to “promote efficient and economic operation of the hospital.” A Board-established budget is not optional. Each hospital is required by law to “operate within the budget established for it by the Board, the GMCB order of October, 2024 said. 

At issue was a GMCB red flag that the hospital exceeded its approved patient revenue by $80 million. The hospital conceded the revenue overrun but says it was necessary to provide patient care.

“This was a direct result of the hospital providing higher volumes of patient care that responded to community needs, as well as initiatives to reduce wait times and backlogs. All of the unbudgeted revenue was used to cover the additional expense of providing necessary care to those patients; none of it was retained by the hospital as a positive margin,” hospital spokesperson Annie Mackin said in a press statement released Tuesday, October 22, 2024. “In fact, the hospital lost $23 million providing the additional care, but continued its efforts to increase access to much needed health care as part of its nonprofit mission.”