 Why don't we get going? I'll call to order the Green Mountain Care Boards meeting of January 18th, 2023. Today we have a presentation by two national experts in rural health systems and rural health hospital finance. As all of you know, there's a lot of bright spots in our healthcare system here in Vermont that we should be proud of, but we're also experiencing some significant challenges in connection with affordability and access, and our healthcare system is seeing signs of financial difficulty. Many rural health systems across the country are experiencing similar challenges, and the board together with AHS is working on understanding these issues through our work on Act 167, which was passed last summer. And today the board has asked two esteemed experts on rural health systems to present so that we can understand some of the national trends and contextualize what we're seeing here in Vermont and hear about strategies that have been implemented or could be implemented here in Vermont. Dr. Mark Holmes is from the University of North Carolina, and he's the director of the Shep's Center for Health Services Research and has been since August of 2016. He's a professor and associate chair for research in the Department of Health Policy and Management in the Gilling School of Global Public Health, and he has a PhD from the Department of Economics at UNC Chapel Hill, and his work focuses on hospital finance, rural health, workforce, health policy, and patient-centered outcomes research. He's been recognized with numerous awards, including a rising star award and 40 under 40 awards. We also have with us today Eric Shell, who is the chairman of Stroudwater Associates, a national healthcare consulting firm that works with rural and community hospitals, health systems, and large physician practices. Mr. Shell has experienced working with hospitals throughout the country, including here in Vermont. His area of focus includes assisting rural hospitals, rural health clinics, and physician groups to improve financial and operational performance and develop strategic and operational plans. He is a featured speaker at rural health conferences across the country and speaks to issues including critical access hospital financial and reimbursement issues. I'd like to thank them both for being here today and sharing their expertise and experiences. We also will be hearing today from an equally impressive expert that we have right here in our own state, Sarah Kinzler. She's especially local for those of us here at the board, given that she's our director of health systems policy, and we're blessed to be able to pick her brain and speak with her at any given moment. Ms. Kinzler has a master's in public health from the Dartmouth Institute for Health Policy and Clinical Practice, and she is going to provide an update today on the board's work in connection with Act 167. And with that, I'll turn it to Ms. Susan Barrett for the executive director's report. Thank you, Mr. Chair. I want to announce that yesterday the board submitted its 2022 annual report to the legislature. Thank you to the board members, the staff who all everybody contributed to that report. It is located on our website under what's new. It's also been submitted, as I said, to the legislature. And if anyone has any questions regarding the report, please reach out to us. I also want to share the ongoing public comment that period that we have regarding the next potential all payer model between CMMI and the state of Vermont. As I've shared previously, the next potential model will be is being negotiated and led by the agency of human services and the governor's office. And we are accepting any comments that the public has on this potential model. We share all of those comments with our partners at the governor's office and AHS. And with that, I will turn it back to you, Mr. Chair. Great. Thank you very much. We'll take up the board minutes from January 11, 2023. Is there a motion to approve the minutes from January 11, 2023? So moved. Is there any board discussion? All right, those in favor of approval of the minutes from January 11, 2023, please say aye. Aye. And the vote is unanimous and the minutes are approved. Before we get to our speakers today, I wanted to acknowledge that members of the House Health Committee are here today. And I wanted to thank them for their work and leadership in this space and for their attendance. From time to time, we do have members of our legislature attend. Today, I know they'll be in attendance. I want to thank them for that. I also saw at least one staff member from our federal congressional delegation. I want to thank them for being here as well. We additionally have a number of tomorrow's leaders here with us, members, Holmes and Lunge. I'm sorry, I'm getting some feedback so if everyone could just mute. Members, Holmes and Lunge teach a January term class on health, law, policy and economics at Middlebury College and a number of their students are with us today. So I want to thank them for attending. I'm sure you all have many opportunities once you leave Bukalic, Middlebury. And I hope that you'll consider staying here in Vermont in careers and public service. They're extremely challenging careers and work, but it's extremely rewarding. So thank you all for coming and learning from members, Holmes and Lunge, something I do often and we're glad that you're here. In really briefly, I wanted to discuss the open meeting law. I've been receiving a number of questions about what it is and why the board has all of its meetings on camera or in public. Vermont has an open meeting law which requires that all meetings of public bodies be open to the public. The statute has some particular definitions as to what qualifies as a meeting, and there are some exceptions. And if you're interested in those, you can find them at 1 VSA section 310 through section 314. But in short, when a quorum of the board gathers to conduct board business, we must invite the public and conduct that business in public. And so that's why even informational board meetings such as this one are carried out in public. It's one of the unique features of the board and how we do our work and the public input in this process is very important. And with that, I'll turn it over to our presenters. Great. Thank you, Chair Foster. Should I just go ahead and start and jump right in? Okay, great. Let's see if I can get to the right window. There we go. Go back to the window. So I'll do that thing where I ask, hopefully everyone can see it, but someone will yell if you don't see a screen that says rural hospitals, financial health, a national perspective. So I'm delighted to be here today. And I'm prepared to speak for about 25, 30 minutes and happy to take questions at the end subject to the chairman. So if you are like me and have a short attention span, trying to give you the gestalt right up front, the presentation in one slide here. So I'll spend about the first half really talking about the state of hospital finances nationally, giving the perspective of national trends and what rural hospitals have looked like over the past decade. It was a lot of focus in the last couple of years. And really trying, spending some time separating the notion that CARES was really valuable for hospital support, but it can lead to somewhat misleading conclusions based on those data and the importance of really understanding what you're looking at in terms of hospital finances during this CARES era. And then the last three bullets are all talking about trends overall in the hospital industry, pivoting away from outpatient focus, pivot to outpatient focus facilities away from inpatient as a primary book of business, talking a little bit about mergers and the pluses and minuses of those, and then spending a little bit of time in the rural emergency hospital as a representative model that the feds and others have tried to look at to look at in terms of recognizing this trend. Here's my slide where I pretend to be a lawyer, but the first bullet basically says thank you to the federal government for providing the resources to do this kind of work. I have no conflicts to report. My focus generally will be a concentric circle kind of idea, national hospitals overall, rural national looking at the northeast in terms of the US Census Bureau definition. So that's from Pennsylvania up and using those as different benchmarks. And most of the data here are really drawn from the Medicare cost reports. These are publicly available data that every hospital has to submit. They're non audited and you can have a lot of different definitions of what each of these terms that I'm using means. But basically, they're pretty good data. They're almost certainly going to differ from anything else that you use if you're using a different data source, but the general takeaways should be there. So when I say the operating margin is 4.21% and you get 4.18% using a different data source, we're going to declare victory on that, but we're looking at overall trends, not just not really focusing on the definition such as what does rural mean, for example. All right, so let's jump right in. So if you search for rural hospitals or hospital profitability in the last couple of years, you'll see a lot of coverage that says record profits and hospitals are doing great. And the fact of the matter is a carers money and the pandemic support really offset, for lack of a better term, a cratering and operating margin. And I think everyone here on this call understands. And so it's important to separate total margin from operating margin. There's all kinds of different definitions that we can use. But let's we're going to note patient margin as a very specific type of operating margin. It really is only patient care. And so in particular, what we're really worried interested in with patient margin in this definition is it shouldn't have any of the carers money in it. So here is the trend in margin that we can look at for the pre-pandemic. So the two vertical lines here are March 1, 2020, and a year later, we have different definitions of when the pandemic was really hitting. I was at the CDC, I think on March 2, 2020, and it was a very surreal event because everyone sort of knew what was coming at that moment. But the pandemic really started somewhere between March 1 and March 15, depending on your definition. What you can see here, the orange line here represents total margin. Green line represents patient margin. You can see generally the orange total margin, this is the average margin looking at moving over time, all hospitals across the country. Over the past decade, pretty much solid there and that 3% to 4%. Not much trend up or down. We're seeing seasonality and it sort of looks like an EKG, so to speak, but really not much of a drift. Patient margin, probably a downward drift until about 2014, jumps up a little bit there and sort of follows a trend from that point. Looking what happens during the pandemic, okay, so here's what we've been talking about. Patient margin is green line. People stayed away from the hospital. Any non-emergency cancels, non-emergency surgeries were canceled. In April of that month, I was gardening and really did a number on my foot. I should have gone and gotten probably five stitches, but did it at home because they didn't want to go to the emergency room. That's what was happening across the country. You see this green line representing the patient margin really falling off at that point. The orange line, which represents total margin, these are margins that are recognizing the care support and the federal support. What's really interesting about looking at these two lines in parallel or in tandem is you could see the huge impact from the green line, which is that patient business losses the average hospital down at 9% loss from patient business. The average, of course, means many were below that, but the orange line, we're seeing the highest average profits that we've seen in the whole decade. What's happened since then is a return to normal faster from the patient side. It's pretty much back where it was, and the orange total margin is trending back down as the carers money winds down and it comes back down. The key lesson here really is the overall what's happening for the trend. A little bit of a drift perhaps in the green lines in two different stories. They're pre-ACA implementation that probably shipped up after that, but really the last two years have been highly turbulent. We can overlay a national trend for rural as well as this. The thick line here represents rural hospitals, both the same setup. Orange being total margin, green being patient margin, and there's a couple of things we can look at there. One of them is that for the most part, that distance between the two is relatively constant, gets closer sometimes, gets farther and others, but for the most part, rural basically follows the total trend, but is below. With the exception that during the carers period, during the pandemic, that total margin for rural aligned with the national trend. What that says, or one interpretation of that is this is really the carers money that we knew was targeted disproportionately to rural hospitals because we knew they were more vulnerable and it did its job. It narrowed that, kept the rural hospitals solvent during the pandemic. Let's look at more about northeast hospitals now. So now we're comparing thick line rural northeast, thin line rural national, pretty similar for the most part. And if you look at the orange line, total margin similar throughout for the most part, the average rural northeast hospital looks like the average rural national hospital with a little bit of diverging total margin over the last year or so. Patient margin pretty much similar through about 2016 when the northeast hospital starts to slip down and probably more so during the pandemic, about a 5% decline in that patient revenue. So in other words, total margin pretty much the same rural northeast versus national, a little bit of a divergence here over the last pandemic as the rural northeast hospitals saw less of an increase in total margin on the national trend. Patient margin for the most part pretty identical first part of the decade, maybe just slipping a little below over the last part of the tens with more of a divergence recently. Now, why is that? Well, here's a chart that shows how net patient revenue in the northeast compares to in rural northeast hospitals compares to net patient revenue in rural hospitals nationally. So these are all indexed so that 2019 is 100% or one. And you can see generally as you look from 2011 to 2019, all four regions are seeing an upward trend, a secular increase in that patient revenue. No one really jumps out, maybe the Midwest is growing a little bit slower because it started from a higher level before it got to 2019. But for the most part, all the regions kind of look the same. Post-19, the red line here representing northeast, while the other three had a average net patient revenue in 20 that was comparable to 19, what we saw in the northeast is about a 5% decline and that difference kind of persists in 2021. So in other words, rural hospitals in the northeast region saw more of a decline from during the pandemic period than other parts of the country and they've recovered more slowly. They're about a year behind in terms of the recovery would be another way to think of it. So I mentioned why CARES Act was so important for rural. Well, we know that for decades that rural hospitals generally have weaker finances than urban. There's lots of reasons behind that. But to account for that, there was a design in the CARES money that recognized that and specifically had additional resources through CARES for rural hospitals. You can see here in this chart that we've developed here and sources from a MACPAC issue brief there that funding for CARES was about 11% of operating expense for rural hospitals and about half that about 5% for rural hospitals. So the CARES money was very important for rural hospitals. Here's another chart that gives you a similar conclusion of what we've talked about before. Green here represents total margin. Orange is operating. Blue is this patient margin that's very specific and green and orange would include the CARES support. So a couple things from this. You can see the difference from 19 to 2021 in the urban side is relatively four percentage points. I guess I wouldn't necessarily call relatively small, but it's definitely smaller than the effect we saw in rural hospitals of a 2.2 to a 3 percentage point increase to a 5.6 percentage point increase up to 2021. Again, recognizing that the CARES Act was very beneficial for rural hospital profitability. But again, behind that veneer, what's going on the patient side, rural hospitals, the average rural hospital has been losing 5%, 6% on their patient business since 2016 and before, whereas the average urban hospital is profitable on the patient side. So rural's are starting from behind. We see the massive decline in 2020 with recovery to 21, but you're still recovering to a loss. Thank goodness this year we only lost 6% margin on our patient care. So it's a very you know, it's like the old Hershey bar aphorism where I lose a penny on each Hershey's bar, but I make it up on volume. Rural hospitals are starting out, they are losing money with their core business and they have to do other things in order to remain solvent. And again, we're seeing that operating margin floating around 0%. Again, just sort of outlining and contrasting these two different stories, the rural versus the urban. All right. So where does that leave us? So for over 10 years, we've been tracking rural hospital closures. The bottom line here, bottom panel there shows the bar chart of closures 2020. There were 19, 2 in 21, 3 in 22. I don't, I guess I need to update this, I think we have been one in the last couple of months. But you can see really there's a very different experience the last two years than it was in 2020. Is that it? Are we done? Rural hospital closures are over. We've weathered the storm. We've seen profitability like we haven't seen in a decade. It's all over. Thank goodness that's all done. No, absolutely not. And just as I've shown you with the patient margin charts from before, there's been a lot of effort to make sure that people understand that, yes, there's some very high profitability being reported because of the CARES money, but there's a lot of bad news behind that. And now that the CARES money has stopped and rural hospitals are returning to where they were pre-pandemic, where there's a lot of concern and certainly on our side that we're not going to just return to where we were, but maybe that CARES money was actually keeping some afloat that otherwise would have closed and expecting to see a lot more closures nationally over the next 12 to 18 months. So I want to spend a little bit last few minutes talking about some current issues affecting rural hospitals that are important for the landscape. I know Eric's going to go into these issues more as well, but I'll just touch on them to some extent here. I mentioned that rural residents are increasingly receiving inpatient care from urban hospitals. So we can look at inpatient business overall, and it's flat to decreasing nationally depending on how you look at it, whether you're adjusting for population or not. But what we do know is that that's not the experience in rural. Rural hospitals are unequivocally seeing less inpatient use. Average acute daily census fell 13 percent over seven years in the early part of the 10s. Not much change in urban hospitals, and this was largely driven by an increasing tendency of rural residents, Medicare rural residents, to be admitted to urban hospitals. So we sometimes call this bypass. The notion is that the rural resident doesn't go to their local rural hospital. They go to an urban one for whatever reason. And what that does is it's decreasing the inpatient volume at the rural hospital. We know that volume is a key factor of key predictor of financial success in hospitals and rural in particular. And as that inpatient volume dries up, it becomes more and more challenging to be competitive and financially sustainable. So you may recognize this from depending on which generation you're in. This was a board game called Sorry. And the idea here was you would land on this. If you landed on this triangle, you would slide to the circle. And if your family member had a token on the bar, you kicked them off. And that's when you'd say sorry. And you could come back to start. I'm including this as just as a reference here as we're starting from the triangle and sliding to the circle. And so that's how you want to think about this sort of dumbbell plot would be another way to think of it as we start on one end and slide to the other. And that's the way to interpret this chart here. We're starting at the green dot, which was 2011, and then sliding to the 2019 dot. So each of these charts are showing the trend in the percent of revenue of patient revenue that is represented in the outpatient side. And so you can see at the very top how important outpatient business is to the average rural hospital. Whereas now we've passed over half of hospitals, rural hospitals are getting 75% of their business from the outpatient side. A little bit of a trend regionally, certainly a trend in terms of the kinds of hospital it is. But it's important to understand and recognize that we have this rural hospital is increasingly becoming an outpatient centered facility. Whereas the inpatient is a smaller and smaller portion of the book of business, again, on average. Looking at urban, on the other hand, about half of their business is coming from outpatient. The other half from inpatient. So it's a very different business model between the two. Comparing Vermont to other northeastern states, Vermont's a little more outpatient oriented. Green bar here represents 2011. The blue is 2021. It was second to Massachusetts in 2011. It's right there tied with Maine in 2021. So again, sort of consistent, maybe a little higher than the rest of the region and nationally as well in terms of that. System affiliation or system systemization, maybe hospitals are more likely to be part of a system are increasingly becoming affiliated and especially rural hospitals. This is a national trend. The black line here represents urban hospitals. 61% of total patient revenue in urban hospitals was in a hospital as part of a system in 2011 that's gone up by 10 points in 21. In rural is about 41% of rural hospital revenue was part of a system in 2011 and in 2021 that's 56%. So gone up in both still higher in urban but rural seeing a faster increase. And yet that's sort of the Vermont is the exception that proves the rule probably. Again, if we want to wait by patient revenue, so we're not counting hospitals, we're looking at the percent of revenue. Not only the Vermont start as some of the most independent, they are currently by far the most independent of all the rural of all the states in the northeast. So that is a one thing that makes Vermont a little more uncommon from its, I guess, peers in the region. Is that good or bad? Well, again, you can sort of have an economist. So I always have to have three hands, right? On the other hand, and then there's a third opinion that there be to cover everything. But there's some evidence that mergers lead to better quality. So here is a study with all the citations to the right if you want to learn more. But AMI, my AMI mortality improved in hospitals post merger, some evidence of five year improvements in mortality for heart failure, stroke and pneumonia. So this sort of says mergers are good for quality. On the other hand, there might be access problems. Their merged hospitals were more likely to cut maternal and surgical services and less likely to increase their substance use. All three of these we know are really important in rural communities, often facing challenges. This is often framed in the context of independent hospitals. The decision is made locally about what services are needed in the community, whereas in a system, it might be made centrally. So there might be more commitment to meeting the needs of the community and independent hospitals. It is interesting, though, that the merged hospitals were more likely to provide mental health. So that was an exception there where access was improved in hospitals that were part of the system. There was a pretty confusing paper that looked at to hospitals that become part of a system, are they more likely to close or less likely to close? And the way that I interpret this finding is that mergers can are often you can sort of put them in two buckets. There is the rural hospital that's doing great. And the large urban center says we want to acquire these guys. They're doing great work. We're really proud to bring them into the system. And we're really going to leverage that and continue our service to the community, increase our footprint, blah, blah, blah. Then there's another group of hospitals that may merge because they're unstable. They're struggling to stay open. And they're basically looking for someone to buy us in order to keep us afloat. And so what the authors of this study found was that the ones that were barely staying afloat, the ones that are financially weak, they were less likely to close after they merged. But the ones that were really doing well pre-merger, they were more likely to close. So it's sort of the system, becoming part of a system, merging makes you sort of mitigate or attenuates your closure rates. So with all these trends in hand, Congress developed a new model, the Rural Emergency Hospital. This has been kicked around in different forms in Washington and across the country for over a decade in various forms, if not longer. And the basic idea, here's some some details on it, but the big idea that if you're not familiar with this model is it has to be an existing rural hospital with fewer than 50 beds. Basically, the hospital has to close its inpatient wing. You can do, you can offer observation beds, but no inpatient. Has to have a fully staffed ED 24-7. Other services are possible, largely played on a Medicare fee for service with a little bit of plus up from that. But the real difference here is this almost $3 million additional facility payment, which is a, you might call it a grant, but it's a fixed fee, an underwriting that Medicare provides to these rural emergency hospitals to remain financially sustainable, or at least to help with that. Because as they close their inpatient, obviously they're going to see a huge decrease in their revenue. This AFP is meant to support and address that gap and keep them sustainable. So how important is this new model? In theory, REHs could start 17 days ago, January 1, 2023. There's probably been lackluster interest or probably be the way to describe it. And good friend Oscar on the left here says that, well, why is it not important? There's not enough for this additional facility payment. That's not enough to keep us going. In order for this facility to be a successful REH, it should need to be a big capital upfit and really redo the building. No one's paying for that. Would leave big gaps in service. If we did this, OB would be gone. Would the community view it as a real emergency room? And so what would be the view of this in terms of a quality standpoint? And would this allow closures of otherwise healthy providers? There are some that are worried that this may be an excuse for systems, for example, to close a hospital that's doing fine, convert them to this REH when they really didn't need to. Elmo on the other hand, because he's overly optimistic or optimistic in the way he views things, he recognizes that some communities cannot support hospitals that have his inpatient. And sometimes the vibe's just not there. If you have one person a night in the inpatient wing, that's really difficult to make that work on a financial standpoint. Might be closer to a frontier model. You stabilize and transfer certainly better than a complete closure. And if the hospital can't survive with what it's doing today, I'd rather have an REH than nothing. This AFP was double some early estimates. And maybe this is just the opening gambit. There's some history here with, for example, critical access hospitals with Congress saying, all right, this is who we're going to allow to be eligible and then slowly kind of makes it larger and larger, makes it a little bit more of an attractive option. Maybe that's the case here. And if the take up in our age is as low as some people are expecting, maybe Congress is going to say, all right, let's try and tweak this a little bit and make it a little more attractive to meet the rural needs. If you want to know more, there's all kinds of reading available out here on this. We published three of our most, four most recent briefs have been on the REH. You can get them there. And then the National Advisory Committee for Rural Health and Human Services put out a policy brief on REH, I guess about eight months ago. Well, four months ago. Geez, I can't count. But just October 2021 there that covers that. And both those are available on Google everywhere. If you want to find out more about rural health research and the kinds of things that us and the other research centers that are funded by the Federal Office for Health Policy do, there's a great place to look for that. Contact information here is my email address, the website for our publications, and our Twitter handle. And thank you, Chairman. I can stop now. I will stop presenting and happy to take any questions under your direction. Thank you very much, Professor Holm. So it's really interesting data, which I myself had not been aware of. So for process, what we'll do is we'll go through board member questions and comments, and then the healthcare advocate. And then we'll turn to the next presentation and have Mr. Schelgo and we'll hold public comment until all the presentations are done. So is there any board question or comments at this point? I can hop up to the other Professor Holmes. As soon as you said that, oh, and my ears went up. So thank you so much. Really, really helpful. I might have to snag the Oscar, the Grouch, and the Elmo slide there. That's great. I'm just wondering so much information here. As you think about rural bypass and this shift towards more outpatient care and even new technological developments like remote monitoring and hospital at home, how do we think about planning for future inpatient capacity needs in a state, a rural state, largely rural state that has declining populations in certain areas, but also aging populations in certain areas? How do we start to plan for what is appropriate inpatient capacity, particularly we just had a pandemic, right? So how do we think about all of that? Yeah, that's a great question. So I think there's a couple of things to react to there. Certainly we've seen, as we're seeing this declining inpatient demand, we're seeing that largely being seen mostly in the rural hospitals, consolidation of services in urban that makes inpatient services in rural hospitals more challenging to offer. Certainly the mask gets really tricky when you're having one to two people there per night. Really hard to staff that and cover your costs. So having a purposeful view and of course being aware of the circumstances in the community. So I know a little bit about Vermont. I'm going to draw instead more from North Carolina since I don't think anyone here is going to know as much here as they are about Vermont, but like recognizing, for example, the role of weather and seasonality. And so I guess I'm not drunk from North Carolina, but well, in the Western North Carolina part where we have what we call mountains, that's certainly a different kind of context than what we have down east and understanding the peaks and valleys both in terms of topography as well as seasonality and the role that plays. I think also understanding cross-border patterns. And so Vermont, of course, has many neighbors. How does that play out? In many ways, I think being part of North Carolina, which has become a very much a system-based rural hospital state, has different challenges in the sense that a system can look at and say, all right, we got two hospitals that are 10 miles apart. What we're going to do is consolidate, put one in the middle, and we can basically build from scratch and do something that's going to meet the needs of the community better. That's harder when you have independence because that means a very different kind of approach. But I think the truth is that rural communities across the country are facing this challenge that we're seeing these secular trends even though we've seen some population rebound over the most recent data. I think there were out the last couple of days. Rural communities continue to see declining population overall, and that's part of the decrease with technology advances, as you've indicated. For example, hospital home, remote monitoring, there's less need for that. And so looking at it and making the hard choice, what is it about? What is it we can do in this community? What do we need? And does it make sense to consolidate and rethink how we're delivering care here? There have been some places where they've had all the inpatient move to one hospital, and then the outpatient moves disproportionately to the other. And so it's more of a specialty kind of thing. So rather than four people in each hospital at night, there's eight in this one, but all the outpatient stuff is done over here. Something like that, a little more of a system-based approach kind of thing. I don't know if I'm answering your question. No, you are. And it's actually, it's really helpful and it's leading into a little bit of my next question, which is, as we think about that, the central versus local decision making and envision a more affordable, financially sustainable hospital system, your points are really well taken in terms of, we've got population decline, there's fixed costs of delivering certain services that may not be met with those population declines. There's also the quality issue, as volumes decline are the quality metrics being met with such low volumes. And so I'm wondering, what evidence do we start to look to to think about that distance versus quality trade-off or that volume trade-off? What services really do need to be essentially delivered locally at some distance? And what services could potentially be delivered at a farther distance, but consolidated in such a way with a center of excellence, as you just described, where costs would be lower, quality would be higher. How do we look, what is the evidence that we start to look for to understand that distance to volume trade-off, as we're thinking about a system here? The American Hospital Association, I didn't, I remember just now that I intended to put this table in the talk and I've kicked myself for that, but the American Hospital Association has a table of essential services that they think every community should have access to. I do want to underscore, though, that there's going to be a huge component of local awareness. And what I mean by that is, so for example, the demand for orthopedics near ski resorts is going to be very different than it is in Eastern North Carolina, whereas the demand for people with diabetes care is going to be higher in our area. So really looking at the community need and understanding what is it about our community that is, what does our profile look like in terms of our health need? I mean, I think, I don't know which point I'm going to make here, but I'm going to start anyway. One thing we learned from the pandemic was a relentless pursuit of margins really keeps capacity to margins that cannot sustain anything that's extraordinary. And what I'm saying here of course is that rural ICUs had very little capacity as soon as we had a global pandemic, we saw quickly that those were filled. And that's a decision that every system government has to sort of grapple with is, it would be awesome if there was a pediatric anesthesiologist in every hospital across the country. Would that save lives? Yes. Can we afford that? Well, if we want to sacrifice other things. And so it comes down to how much are we willing to tolerate a little bit farther access. And when we talk about maternity, which is one we look at a lot, being an hour from an OB, we've seen this in Western North Carolina, if you're low risk, that probably is, you can probably manage that okay. But for high risk, people who are delivering, being an hour from OB means you're not going in every week. And so you're going to have inequitable impact when you have to make those decisions about distribution. Great. Well, thank you. I've taken up enough time. I'm going to pass it back to you, Chair Foster. Thank you very much, Dr. Holmes. Any other board members have any questions or comments? Please go ahead. Mr. Walsh. Thank you. And thank you, Mark, for joining us today, spending some time with us. There's so much there. I want to spend some more time with it. But I also just want to ask a question or two about something that I didn't see. And that's the effect of this consolidation and the bypass effect that can occur with consolidation. What your team has seen with the effect on prices for commercial payers? And how has the consolidation that you've witnessed and the movement toward these rural emergency settings, what have you seen with the overall pricing, the prices that hospitals are charging and what people are having to pay? Great question. That's not something we've looked at in terms of commercial prices, you know, post-merger or as consolidation. People like Harold Miller have done a lot of fair amount of work in that. They've generally found, you know, most of those findings have found that as systems consolidate, the commercial prices increase. But I can't speak any more than that other than the, you know, I've read the summaries of the studies and sometimes read them. But that's not something we've gotten into at all. I appreciate you saying that. So it's something that we would have to consider, right? That there's, there are some, you pointed out nicely that there are some improvements in quality. In my understanding of that research, it's kind of mixed, right? And it depends. And of course, we have to be conscientious of our geography in the local needs. I think the caution that I take from this is that prices are likely to go up if we follow consolidating trends with consolidation. So we really want to make sure that we're meeting the needs of the local community, right? And not trying to put in some cookie cutter approach that we've seen someplace else. But you pointed out nicely the area around a ski resort might be different than the lakeside community. And how do we understand what those community needs are and really spend some time grappling with that, really trying to understand our local needs so that we can make sure those are being addressed, right? Because some of this, the consolidation, it looks like there are some costs with it. It's not always a, the savings haven't materialized the way that we thought economies of scale and care coordination would lead to savings. We just haven't seen those across the country. And so being clear about how we're struggling with the trade-offs, I think is important. And I really am glad you're here with us to share what you've done in North Carolina. Thanks, Sam. I don't have any reaction to your question. I think you've stated the trade-off very well. It comes down to exactly the attention that you've identified. So thank you. Thanks, Professor Holmes. It's a great presentation. I'm Dave Mermin and I'm one of the other board members. And I'm an emergency physician at a, not a rural hospital, but a mid-sized hospital, but definitely one of the things that I would think professionally that I get nervous about is working at a hospital where you're just an independent DR without all the resources that I have available to me. And when you mention driving an hour for a high-risk OB patient, I'm thinking of a patient who's got difficulties accessing transportation, comes in an early labor. I want a NICU bed. I need transportation. I need an accepting facility. So to me, when I think of this stuff from my clinical standpoint, I think of this sort of elegant coordination of various hospitals, resources, transportation, and all that infrastructure that needs to sort of grow simultaneously as hospitals reconfigure themselves to be just these freestanding emergency departments with an odds. I don't know if you have any reaction to that, sort of more of a comment that I'm thinking of than a question. Yeah, no, I think, thank you for that comment, Dr. Berman. I think the way I would react to that is what you've really touched on is the equity concerns. And again, in North Carolina, I think I suspect it's probably similar in Vermont, you're never really too far from a mid-sized hospital. At least that's the state in North Carolina. There's a couple of places in the state where you can say, yeah, you're about, you know, you're more than 30 minutes from a hospital with 75 beds, for example, kind of thing. Of course, that works if you have a job with sick time, you have a car that works, you have someone who can keep the kids when something happens, all those other sort of issues. And you know, there are certainly, there's a large academic medical center that I'm familiar with, which has a commitment to high risk deliveries. And the way that that generally works is they have to be in front of the Dollar General at 6.30 in the morning, they get on the van, it takes them to the academic medical center, and it brings them home at 4.30 p.m. Not super accessible if we want them to do that once a week. So the additional context, you know, what does the transportation system look like? What does broadband look like? You know, all those other factors that really lead to potential inequity, I think, also needs to be considered in this context. Yeah, I mean, in Vermont, there's large regions that are far more than 30 minutes from a hospital with more than 50 or 75 beds. And I do think you really hit on this equity issue and thinking about the sort of the critical access and the safety net and all of these terms that we use to describe rural hospitals, I think is really, really important in thinking, you know, how if we were to ideally, you know, conceive of a system, what resources they would have, maybe beyond what financially makes sense, but is ethical from an equity standpoint. A question I had for you is, do you have information where you break down the payer type by rural hospital financial stability? I'm kind of thinking on this idea of, you know, many rural hospitals, you know, seeing the preponderance of Medicare, Medicaid patients, probably less, you know, large employers, less economic wealth. Is that information that you have in similar slide formats that we can see at some point? We have some, I'm pretty sure Eric, if I remember his slides, I think he's going to touch on it. I have some that I can find and share with you as well. That'd be really helpful. Thank you. And then I guess the other question that you mentioned, hospital home at home and oh, all the various new technologies to try to keep people out of the hospital. For my clinical experience, we don't have that really available here, but I try to think of when I see patients, would they be someone that would work for and so often, at least in my region where patients often drive 20 to 45 minutes to get to the hospital. Nailing that specific narrow subset is challenging. Do you have any, have you seen much uptake of this, these technologies in rural hospitals at all? And if so, did you describe some of that? Trying to think of some. There's some that have been, let's call this maternity based. It was, there's a program in Georgia that was dealing with the loss of maternal and field medicine and brought in, I don't think this is quite what you're asking, but telehealth to like health departments with, that was driven out of Mercer, the school of medicine with largely a focus there. And so it wasn't quite exactly that, but embracing this idea that recognizes for something like high risk OB, I probably need more than someone on a smartphone in their living room. I probably need to be someplace with some healthcare professionals to support. So that would be, that would be an example there, really leveraging telemonitor, in this case, telehealth. And then there are other things like just from personal experience on, or was on a, involved in a trial for heart failure, which, you know, these telemonitoring daily scales kind of thing, identify trends before they require ED. So there's some promising in that kind of space. But I think it really comes down to scale. It's hard to implement that for 10 patients. It really has to be done on a broader, where volume is going to make that end up working better. That makes sense to me too. Yeah. Well, thank you. I believe you have a stop at 3pm professor home. So I'll just ask one real quick one. Just in terms of the patient margin and the operating margin, can you give us a sense of some of the key contributors to operating margin that are not patient margin, you know, things like 340B and the others, because those seem particularly critical to the financial health of some of these rural hospitals. Yeah. And these would be, a lot of it comes down to where the money is recognized. So it might be things like cafeteria, gift shop, you know, those are going to be a huge portion. I'm struggling to think of other examples. I'm going to put my good friend Eric on the spot there. That's something I'm sure he can speak to much better than I can. We can take it up later. I wanted to turn it over. Robin, are you all set or did you have any questions? Nothing. That's burning. So I'd say let's keep going. Okay. Great. I wanted to give the healthcare advocate time. Please go ahead, Sam, if you have any questions or comments. Yeah. Super brief one. Hopefully. Thank you, Professor Holmes, both Professor Holmes for the question and presentation. I'm wondering if, I know you talked a bit about an increasing proportion of revenue coming from outpatient. I'm wondering if you feel like there is a ceiling for what percentage of revenue can come from outpatient or if there should be a ceiling. I'm just wondering if that trend continues to hold. Have you seen cases where hospitals consider moving to a fully outpatient model? Because I think there's concerns that have already been raised around inpatient provide provision to services. Thanks. So there was a hospital in North Carolina that publicly said we don't want to admit any more people. If someone shows up and we have to admit them, we will. But for the most part, our inpatient wing is closed. And they, I think they would admit like three people a year basically. And so why do they still offer inpatient? Well, they needed it in order to have the payment benefits of being a hospital. They had to have an inpatient wing that was available to admit people. So the ceiling in that context is 100%, 99.97% something like that. At what point does it, I mean, this, I think this is sort of like what we think of as a hospital. And there are plenty of hospitals in some states where their average daily census is less than, you know, they'll have like one night out of 10 with one person in a bed. They're still hospitals. They're effectively just outpatient facilities. Well, this is in this case, Hawaii, because basically, you know, it's the only inpatient site on the island and something like that. So those are still technically hospitals in the way that we think about them. But for the most part, they make all their decisions on an outpatient recognizing that that's an, you know, essentially what they are and what they do. Thank you. Great, Professor Holmes, thank you very much for your time and your presentation. We really appreciate the broader context and view and information. So thank you. And with, sorry, go ahead. Thanks. Thanks for the invitation and enjoyed speaking. Of course. Thank you. And with that, we'll turn it to you, Mr. Shell, please go ahead. I believe you're, Mr. Shell, I believe you're still muted. How's that? That's good. Yes, thank you. Can you hear me okay? Okay. I had to go to a landline because of my internet was unstable, but now I've switched back because I hope we're dealing with some stability at this point. I'm going to share my screen. Just give me a second here to get the presentation up and put it into presenter mode. How's that? Is that in the right mode for you all to see? Okay. Great. Great. Well, thanks, Chairman Foster. And thanks for having me present. As many of you recall, about a year and a half ago, I was asked to present kind of, you know, my thinking on Vermont where we stand relative to national trends. And before that, back in, gosh, it was either 2018, 2019, I came to Montpelier and presented to a number of folks there on the future of rural health care. So what I have is that, you know, unlike Professor Holmes, he promised you 30 minutes. I can't get through this presentation in 30 minutes, but I'll make it as fun and lively as we can. It really looks at where and why we see the health care industry moving to and then talk about specific strategies for rural hospitals to be successful from a national perspective. And then go back to and look at how what you all are doing in Vermont is comparing to what we see on national. Kind of tipping my cards a little bit. I think Vermont is the leading state in the union on advancing towards kind of the appropriate health care system of the future. I'll lead with that. So but with that, I'm going to try to get through this as quickly as possible. I'm not promising 30 minutes though. So let's move. So I think the big message here is that for the last, you know, essentially three years as we've been fighting in the provider field, the pandemic, you know, and the shorting staffing shortages and everything that's going on, the market is not slowing down. And I've got some slides to talk a little about how I see some of what's happening in the market and its future impacts on our hospitals. So the first one is the Kaiser Family Foundation prints out the health insurance premiums. And if we look at the top line, health insurance and the United States for Family of Four in 2022 was almost $22,500. A couple pieces that are relevant with that. First is that as we've become a third of the median household income. And also you see that there's a stepwise increase in costs. And you know, kind of, is that expected to go away? I don't think so. So you know, the outcome, what does this mean to rural providers is that as any, you know, economists would say as price goes up, two things happen. The first is that demand goes down. The second is supply increases. And if we just focus in on the demand side, you know, as we health insurance premiums would become a third of median household incomes, you would think demand to go down. But the good news is that there's an artificial marketplace for health insurance through the exchanges and the premium subsidies by the government, so that demand stays constant. But on the supply side, again, as price goes up, new supply comes in to equalize supply and demand with price, the supply comes in. And what's relevant there is that coupled with this trend that we see, and it's just this incredible acceleration of technology has enabled a whole new cadre of competition, this new supply coming into our healthcare system. And I had a number of slides just to touch on that. And you're well aware of all of them. Amazon has jumped into this and they acquired one medical for $3.9 billion. They've launched, they shut down Amazon care. They did not feel that Amazon care was transformational enough. Their Amazon pharmacy has now created relationships with a number of Blue Cross Blue Shield plans. And then a couple of months ago, they announced a Amazon clinic, a direct to consumer electronic platform for visits. So Amazon's jumping into this. Not to be outdone, Walmart, who considers Amazon its fierce rival, they've jumped into the healthcare industry. Again, as price goes up, supply increases. And here's more supply with freestanding health centers, direct to consumer telehealth, doctors on demand, you know, just incredible expansion of Walmart into healthcare. We've got Walgreens. And they kind of jumped into this big with a $5.2 billion investment in VillageMD to roll out primary care practices across the country. The interesting comment that their CEO said, and it's down here in this circling, is that Walgreens push into primary care aims to keep people healthy enough to avoid returning to the, and she said healthcare system. I would change that and call it into the sick care system. So ultimately Walgreens wants to keep people out of hospitals. And we need to be paying attention to this. CVS is another one that's jumping into this with their investments. Again, growing their health hubs, they had 1,500 health hubs open by 2021. They've made investments in housing. They create in 2023, they're creating a virtual care platform. And then more recently, they acquired for $8 billion signify health, which prior to this in September, back in April, they signify health acquired caravan, who many of you know, Lynn Barr's group that has created a whole bunch of rural ACOs. And then just a couple of weeks ago, it was reported that CVS is talking to Oak Street Health, a private equity backed primary care practice. And the discussion's there about $10 billion. So what we've got here is an incredible new market entrance coming in saying, we have technology, we are technology based companies. We believe that there's an incredible market play in healthcare and we're going to be jumping in. So big, big, big issues there. The declining in patient admission volume, I mean, right, we live the healthcare system today. A majority of the payment is fee for service, fee for sick care, price times volume is equal to revenue. And in this case, what we have is kind of across the United States, we've seen a decline in this inpatient volume. So half of that equation of price times volume is net revenue. We've seen this decline going on. Vermont, you all have written the books on going back even to 2010 where your inpatient volume has maintained relatively stable. I was giving a presentation a week ago in Mississippi and the starting number back in 2010 was 136 discharges per thousand. So, and they've come down to 114. So, but for the most part across the United States, we're having a decline in inpatient volume. Back in 2020, American Hospital Association reported that looking at outpatient encounters at hospitals for the first time in 35 years, there was a decline in outpatient services rendered in a hospital setting. Now, it's interesting, this, this, the third bullet down here talks about the fact that it's not that outpatient care has actually gone down. It's just that it's being delivered in alternative spaces such as urgent care or Walgreen CVS, etc. as they come on board. So, again, now you've got this price times volume is net revenue, where in hospital settings, both inpatient and outpatient volume is starting to deteriorate. And then, and I'd like to show this because this each each year in March MedPAC comes out and releases profitability by margin. I know I know Professor Holmes touched on some of this. But, you know, it's interesting because going back to 2013, the rural hospitals, both including and excluding critical access hospitals, were actually above, you know, positive Medicare margin. And then that deteriorated and it continued to deteriorate. If you look at all hospitals, you know, excluding the rural, their margins started a negative 5% declined to around negative 10% and then increased. I look at the big reason for this decline that you see that I'm pointing to with my arrow is that one, it was some of the volume reductions that we were talking about. The second is that that is part of the Affordable Care Act. This was Obamacare passed in 2010. There was a provision that said, what we're going to do is we're going to look at inflation, and we're going to pay you inflation less 0.75%. And we're going to do that. And we're going to pay that less 0.75% beginning in 2012. But that 0.75 started stacking. So on top of each other, again, we live in this world of price times volume is net revenue. When price by your largest payer, i.e. Medicare, is going up at less than cost, you're going to get behind that fee for service world that we're living in is starting to crumble. And then with some of the volume declines. And so that would be the reason why I see this decline. Now, this uptick was because of, you know, and what Dr. Holmes talked about was some of the CARES Act funding. So again, as the market, this is all during the pandemic. I just want to keep going back. All this is going on during the pandemic. You know, we had Dr. Liz Fowler, who's the head of Centers for Medicare and Medicaid Innovation. She presented, this was back in 2001, spring of 2001. She said a couple things at this conference. And it's interesting to see how those things are playing out now in regulatory regulation. So the first thing she said is we can't have fee for service remain a comfortable place to stay. The second thing she said is regarding risk. She said we can't have a one-size-fits-all. We have to accommodate hospitals where they are, but we got to move the laggers into risk-based models. So those two things. So if I'm the federal government and I want to, and I want to, you know, my biggest lever around making fee for service an uncomfortable place to stay is around reduce, you know, kind of bringing price down relative to cost. How does that play out? Well, this is the final rule that just came out in the summer of 2022 related to payment for 2023. And, you know, the government heralded this as the largest increase in the history of the Medicare program, where from the inpatient side, the payment rate was going to increase 4.3 percent. It's the 3.8 plus the 0.5 percent. Great. And the reason why they said we're only going to pay 4.3 percent is because they said in 2023, we believe inflation is under control. Now, the challenge here, and again, you go back on Dr. Liz Fowler's comments, we're going to make fee for service uncomfortable. The challenge is that during 2022, the year that just passed, our costs went up between 8 and 12 percent across the board in hospitals. And the government's pay increase in 2022 finalized in the 2021 summer was around a 3 percent increase. So we have this locked in cost higher than price. It's going to be locked in indefinitely. And, you know, you want to make fee for service uncomfortable? This is how you do it. The outpatient rule that came out was finalized in November, showed a, I believe it was a 3 percent increase for, or 3.8 percent increase for 2023 relative to costs that we believe are going to go up higher than that. And then the physician fee schedule, you know, after the inflator, excuse me, after the omnibus bill was passed, is a net decrease of 2.5 percent. So again, you know, if you want to make fee for service uncomfortable and you have a lever, the government has the lever, pay, give a pay increase less than what costs are going up. And then how do you make a, how do you make the laggers, you know, kind of jump or be more interested in alternative payment models? And this came out in the physician fee schedule rule that was finalized this year on November 1st, where the government said, hey, we're going to go back to 2014. And for rural hospitals without experience in accountable care organizations, we're going to provide significant incentives. We're going to give you $250,000 upfront. And then for the first eight quarters of a five year agreement period, we're going to advance you, essentially advanced shared savings payments to fund your operations on your ACO. The second thing that they did is they said, we're going to have it so that you don't have to take on risk for up to seven years. And the third thing they did is not on this is that they said that we are going to move towards administratively setting the benchmark tied most likely to some form of inflation rather than your own experience. All incredible opportunities for organizations to get into ACOs. And so again, you know, from a national perspective, you know, kind of what's what's the summary here is traditional fee for service payment is transitioning to value based payment. You all again, as I mentioned in my opening comments in Vermont, you've written this book, we're going to have to continue to pursue efficiencies. Clinical integration is going to be absolutely necessary. We'll talk about that, but inflexibility has to be ingrained. You know, we would have thought this thing would have rolled out much sooner than it has. But there's the challenges are, you know, kind of extraordinary in terms of how we're going to move this thing. So what's this new world look like? It's an equation called patient value is quality over cost applied to a population. What we want to do is improve quality, reduce cost applied to a population and the patient value goes up. I look at it as payment systems. And again, as what you guys are looking at here in Vermont, or you've moved to in Vermont, excuse me, I look at an accountable care as a payment system where providers monetize value derived from increasing quality, reducing cost applied to a population. And frankly, you know, there's let me say that again, accountable care as a payment system where providers benefit from efforts they take to improve quality or reduce cost, they benefit from it. And it's it takes all different types of forms, you know, bundled payments, value based payment, self-insured health plans, ACOs, you know, all of these are forms where providers can monetize this value of increasing quality, reducing costs. And it's not managed care. It's not managed care. It's not, you know, kind of going back to the 1990s. The reason why the accountable care, I believe, is a payment system that is the future, is that the providers have the provider organizations that have the greatest opportunity to affect quality and cost have the incentives to do so. In managed care, the organizations that benefited from the providers increasing quality, reducing costs, it was the insurance companies. So I think this is a very different opportunity this time. The second thing is the government's all in. We have new information systems to manage costs and quality. We have science that we can base medical decision making on. And frankly, going back is not an option. If you didn't hear my first, you know, 10, 12 slides around these new market entrance coming in, they're not coming in to play games. They're coming into, you know, 19 and a half percent of the GDP into this industry to make money. And going back is an option. We've got to figure this out as our traditional providers. You know, I'd like to just touch on this slide real quickly, just because I think rural hospitals, you know, Vermont is full of rural providers. And the point I want to make with this is that I think rural hospitals have significant value in this new world, in this new world of accountable care type payment mechanisms. And it really came out of, you know, back in 2011 when I remember reading the regulations on the ACOs that came out of the Affordable Care Act, there was a comment that said, a primary care physician can belong to one ACO, hospitals and specialists can belong to multiple ACOs. And that struck me as, wow, there is, there is the silver lining in here for the rural hospitals, because rural hospitals are predominantly a primary care based delivery system. So what does that mean? If you think about it, if primary care physicians can belong to one ACO, hospitals and specialists can belong to multiple ACOs, if you think about it from, you know, kind of business 101, you can only attribute revenue to one source, right? Expenses you can cut up, you can slice and dice and spread around. What that was saying, that one kind of comment in the ACO regs was saying, your primary care physicians with their patient attribution are your revenue centers of the new generation, hospitals and specialists are bricks and mortar. And to some degree, when we start thinking about how we reward and hold accountable revenue centers versus expense or cost centers, you know, cost centers, you give a budget and you hold them to it, the revenue centers, you really try to encourage, you know, activity that grows that volume. And so I think the rural hospitals that are primary care based have significant value in this new world. This is a really important slide and a concept because to some degree, it sets the stage for how important the change in payment in Vermont is right now. I believe firmly in this premise that form follows function, follows payment, that we organize ourselves around the functional imperatives of the payment system that exists. And if you follow with me on that, if you think about the functional imperatives of a fee for service payment system, right, fee for sick care, you got to do three things and you can do those three things independently. First, you got to figure out how to offer more sick care services. Second, you got to figure out how to increase price for those services. And third, you have to learn how to manage expenses. And an organization on its own can do those three things to maximize the fee for service payment system. So to some degree, the form that followed out of the payment system of fee for service were independent organizations competing with others for market share. It's a market share play. When we start talking about moving to the payment systems that you all are looking to in Vermont, a population or an accountable care where providers monetize the value of increasing quality, reducing cost, it's very different functional imperatives because the now the payment is, to some degree, a rural hospital or even a large hospital can't do that independently. So it takes aggregation of tertiary, rural, post-acute care, public health, diet, health and wellness, all of these become pieces of a health system to reduce the total costs of care by increasing health by maintaining access to sick care. The other thing it requires is aggregation to aggregate lives to diversify some of this insurance risk. And so the form likely to evolve out of this payment system that we're kind of facing down a barrel is aligned organizations competing with other aligned organizations for covered lives based on quality and value. They're competing to offer the patients in their systems the highest value. I think this slide right here sets up a whole lot of the rest of the conversation because payment does drive. And to some degree, I look at what's going on in Vermont and the fee-for-service payment system that predominates really the payment system, it created so much structural kind of structural setup that it's been tough to move away from it. So what does this payment system transition look like? And obviously we've got the fee-for-service with no links to quality and value. And this was defined by CMMI several years ago. You have fee-for-service with links to quality and value. Most organizations live in this world right here. You have this category three, alternative payment models built on a fee-for- service architecture. And then finally you have population-based payment built on a population-based architecture. There's only one health system in the United States that's here at this point and they are very successful. Thank you very much. It's called Kaiser. And so again, if payment sets the functional imperatives which drives form, then let's understand what those functional imperatives are and the form as we evolve from these four payment models. My favorite slide, I know my marketing people hate me for posting this one, but it is the shaky bridge. Some of you in the northeast, you call it the boot and two canoes or something like that. Anyway, I look at this slide after this one picture tells an entire story here around the challenges that we have. Over here, we have a very stable pillar on the left, right? You have a fee-for-service payment system. And it was a great pillar because the payment system and delivery system were completely aligned. The more secure you do, the better off you do financially. Complete alignment between the delivery and payment system until price starts going down relative to cost, until inpatient volume starts eroding with pharmaceuticals, until you have new competition coming in like CVS and Walgreens and et cetera, et cetera. And then all of a sudden, this pillar is starting to smolder. Over on the far right, the green, you have a 100% aligned payment delivery system. The more health care you do, the less secure you do, the more money you make or at least you can stabilize yourself. But to get here is not for the faint of heart. And so I look at the four payment systems categorized by CMMI on the previous slide. The first one is right here, fee-for-service with no incentives for quality or utilization. The second one is right here, fee-for-service with quality and utilization incentives. The third payment, alternative payment models built on a fee-for-service architecture is right here. And I think where you all are in Vermont are kind of right here. Here, your feet are right above the crocodiles. And then your feet start to evolve away as we move to population-based payment on a population-based architecture. We can't just step from 2014 to 2034 because we don't have a health care system. We have a sick care system. It's going to take time to develop. So here's the issue. If we're here in Vermont, we're kind of where I'm circling here, your feet above the crocodiles, right? The question is, do you go back or do you go forward? And I'll put that out there because here's the challenge. If you go forward, it's going to get uglier before it gets better. And you're seeing that in some of your margins across the state of Vermont. It's gotten uglier because you guys have advanced. Do you turn around and go back? I would say that this pillar doesn't exist anymore. And so it's going to take the bold soul to be able to take this step forward so that we can advance on. And the question is, what do we have to do to stay short of time here so that we can get to beyond here? So again, pretty tacky slide, but there's a whole lot going on there that we have to understand. Several years ago, we came up with kind of a framework for how hospitals should think about this transition. Let me explain it briefly, and then we're going to kind of move, we'll finish up the national and then go to Vermont specific. So here's, again, if payment dictates form and function, then let's set payment as a driver of organizational planning, fee for service. This is that first column, phase one. This is fee for service with incentives for quality and utilization. This is phase two. This is feet right above the crocodiles. Alternative payment models built on a fee for service architecture. And this is where you start to lift your feet above the crocodiles, where we're moving towards alternative payment models built on, you know, kind of that alternative payment model infrastructure. To think about this correctly, we got to transform a delivery system, our sick care system. We have to create a health care system, and that's the blue bar in the middle, and we have to transform payment. Because we're primarily in phase one of payment right now, there are essentially seven things that organizations should think about doing and keep them all in lockstep, because you don't want to create too much health in your community if you're still getting paid predominantly fee for service. You create too much health in your community, and you're still getting paid fee for service, you're in trouble. So we've got to keep these areas timed. So some of these, you know, kind of, and the one last thing I will explain is that the orange bar is the strike point. So when an initiative, you know, initiative one hits the strike point, we got to do it. So the first is we got to improve operating efficiencies, quality, patient engagement. We got to do this. We've lost 138 hospitals that haven't figured this out yet. We got to align with primary care as the revenue centers of the new world. So we better plan today. So when the payment system gets to phase two, we're aligning with primary care. I would say that when hospitals close in these first two phases of payment, they haven't either done this well in phase one, or they haven't come together with their primary care physicians. These are market-based closing. These are not planned. As the payment system evolves, the next is service air rationalization, coming together to take out big chunks of fixed costs. When we were working with the four hospitals in northern New Hampshire, the discussion was, okay, we have four hospitals in a two-county area. Do we need four hospitals? Could we transition one to urgent care? Nothing happened, but at least those were discussions because once you have a payment system not paying and providing incentives for sick care, you can have planned approaches to fix cost reductions. So transforming sick care around creating health care. Just think about that as crawl, walk, run, sprint, and then we got to pick up and move payment because if we don't and we create health care, so today, the areas that we have opportunities for, fee for service, quality utilization, implementation, self-funded health plans, transitional payment models in phase two. So plan today for the ACO's low-risk models then full risk. So in the end, what we believe is that in order is payment drives as we drive payment as our functional imperatives change and as our form changes, we've got to make sure that we're checking the boxes in phase one of payment of all of these. As payment system evolves to phase two, we check all the boxes here and then et cetera. In the end, we believe sick care, health care, and payment under one umbrella is the large provider-based health plans that we're starting to see emerge all around the United States. So national strategy, how to think about that? Several years ago, I was on a trip to Hawaii and I was asked to present out in Hawaii and I said, wait a minute, everything is based on payment and shame on us for that. Shouldn't we base payment to pay for the form around maximize the functional imperatives of a planned health care system? What does that mean? What is the vision? What did we say for 2030? What is it we said? What is it we wanted? The Vermont health systems partner with their communities to improve health, truly health, while preserving access to high quality sick care that we've always had. Let's flip that plan. Let's start with the end in mind and then figure out how to pay for it. And so, okay, what's the functional imperatives that we want? What is it that we truly want? And essentially it's here. We want health systems partnering to improve the health of a defined population. It's those social determinants of health. It's that health equity, chronic disease management and increased relevance of our health systems in health care, not just there for the sick care as a backstop to be more proactive around health, while at the same time maintaining access to high quality sick care. Isn't that the function that we truly want? And what are the requirements? It's common vision for health care of Vermont, which you all have, payment systems that provide incentives. All right, what does the form look like? Well, in my belief, it has to be high level of integration. We have to be able to make decisions on, you know, kind of, one, we talked about earlier, we have to aggregate all the different players from tertiary to rural, to primary care physicians, to specialists, to public health, wellness, diet, all of this becomes part of this aligned provider group. We have new roles for health systems that the insurance function and the health systems come closer together. The integration of payment delivery system, the requirements, patient lives to diversifying central centralized decision to make appropriate right size delivery system and then common information technology platform all in the format. Okay, if we know what the function is, if we know how that's going to look from form, how do we pay for the darn thing? And I think the first thing is that the payment must fund necessary access to health care while preserving traditional patient care. We cannot have a disincentive for creating health in our communities, which the fee for sick care system that we have now does. So, the payment incentives cannot preclude health interventions. Payment systems cannot preclude access to appropriate patient care, sick care, but we have to be able to reflect income for both health care and sick care on the financial statements of our health systems. So, what are the requirements here? Well, you know, again, if health systems, if the hospitals of the future, the bricks and mortar are the cost centers, then, you know, maybe a global budget payment to providers based on attributed population, financial reporting methods to adopt new payment methodology, credit on income statement for improved health, and new cost centers provided budgets to manage within, as we just talked about. How do we see this as short-term imperatives? Proactive approach to determine vision for Vermont healthcare. Now, again, remember, this presentation, this part of the presentation came out before I was involved in Vermont. I changed it from Hawaii to Vermont just to reflect, you know, to be you guys, but, you know, to some degree, you're doing this. The statewide initiative is led by your governor's office and through the agency. Healthcare providers to accumulate scale and centralized decision-making. Care management, organizing framework, PHO, align medical staff, and then commercial partnership with commercial insurance to pilot these payment programs. To some degree, you guys are moving in this direction in Vermont. And so, again, all national stuff. Now, let's drill this down to what you're doing. And I want to touch on this stuff briefly because you know more than I do that, you know, all of the great things that are going on in Vermont, starting with the blueprint of health. You started this back in 2003. Did anybody think it was going to be so difficult that 20 years later, we're still trying to figure out how to advance this? But the patient-centered medical homes, the CHTs, the hub-and-spoke medical assistance treatment, all are great things under the blueprint. The Green Mountain Care Board, I think it's a great organization. It is exactly right for what you're trying to advance here. You know, the addition was the Act 167 that was just passed last year around hospital sustainability. The all-payer ACO model. And I think this payment model, which was a five-year program from 2018 to 2022, with you're in the extension year now and then you have an optional year, I would hate to see you guys give this up because I think it's an incredible vehicle to transition payment. And again, changing the functional paratives and then the form. The One Care Vermont. I love the fact that you have a one-state Vermont in which all providers are participating in it. And I didn't reflect some of the recent news that just came out a couple weeks ago around Blue Cross pulling out. But I'm hoping that's just a temporary. I don't know. I'm not sure. But for the most part, you have a majority of payment coming into one vehicle that can then define payment structure. So the insurance companies can continue to compete on the attributes of insurance function, but having a consolidated payment system, which we can move payment in the state. Regarding the providers, you have 14 hospitals consisting of an academic medical center, five PPS hospitals, and eight critical access hospitals. If we look at the margins, we have declining margin. I think Mark talked a little about this a little while ago with the uptick here being some of the CARES Act funding. But definitely these margins going down. Unfortunately, what Mark doesn't have or Professor Holmes doesn't have is the 2022 information. And as I'm traveling around the country right now and visiting rural hospitals, the wheels flew off in 2022 with our cost increases of 10, 12 percent. And our payment increases of only 3 percent. Primary care, a mix of employed private practices, some operating as FQHCs and RACs, really good stuff here. Majority employed by health systems. Again, that's that integration and alignment. And nearly all practices participating in patient center medical homes. You know, I'm traveling to some parts of the country where I bring up the concept of patient center medical homes and people don't know what it is. You guys in Vermont are incredibly advanced in these areas. Around payment, you know, you've got two predominant payers in AVP or MVP, excuse me, MVP and Blue Cross Blue Shield. Lots of different good stuff there. The self-funded health plan represents a significant portion of insurance as well. The Medicare, 46 percent of inpatient hospital payment, 29 percent of hospital outpatient payment. And again, with the participating in the Medicare payment ACO model and running the claims through the Vermont, one care Vermont, I think real great opportunity to advance Medicaid, much smaller. You guys have gone to a total cost of care with a risk quarter, moving payment along nicely. And so again, you know, all of the things that you're doing are exactly spot on. And but we are where we are right now. As I've traveled over the country to last, you know, kind of last couple years, a little bit less during the pandemic. I've learned some things that I think may have some interesting value as it relates to how Vermont thinks about the future. First of all, I never would have thought it would have been taken so long. Again, you guys came out with these concepts in 2003. But the transition to population-based payment is going to be evolutionary, not revolutionary. And that is because there are so many strings that are pulling provider organizations back to fee-for-service. And we haven't figured out how to clip those strings so that folks can advance. There is no risk-free payment system. And I want to really emphasize that. Fee-for-service, when you're getting a 3 percent increase from Medicare and your costs are going up 10 percent, that is not a risk-free payment system. But it's the payment system that we know. At this point, there's no risk-free payments anymore. A next concept I think is really important is we like to talk about risk from the insurance function risk. And I like to change that and think about that as the residual claim on health. That insurance risk, if we are able to create enough health in our community to reduce the sick care costs, that becomes the residual claim on health. And I would really like us to start thinking about how we create health to reduce costs. Benefits provided to one pair are reaped by other payers. You guys have a pretty sophisticated payment system with Medicaid. To some degree, a form of capitation for the hospitals. Benefits that are provided to that pair are reaped by other payers. In other words, we should get as many providers involved in the same payment system. This concept, the more I think about it, the more it is critical to understanding why we're stuck. And it's the 80-20 fixed variable cost understanding is critical. What we're talking about here is that, and I would say in rural, it's probably 90-10. But the true cost of delivering care, we talk about, we spend 90% or 85% of costs of care in the last six months of a person's life. I mean, you hear these numbers out there. Well, it's because it's measured in claims. The problem with claims is there's a significant portion of fixed costs included in claims cost. When we're talking about the true variable costs of the last six months of a person's life, two variable costs are pennies on the dollar. And I would say if we go with this 80-20 rule, that as long as we don't have 80% of payment in Vermont or in any state in the union, in some type of a fixed payment arrangement, global budget or something like that, there will always be incentives to drive up sick care utilization because the contribution margin on one more unit of service, sick care service, is 80 cents on the dollar. And so in order to buck that trend, we're going to have to get 80% of payment into one form of payment model away from fee for sick care. And the last is that this full transition to population-based payment will take years, but when complete, will fundamentally align provider organizations incentives with the greater population's interests. That the provider organizations will be about as much about the backstop of providing high-quality sick care with the proactive approach to improving health in our communities. But it's going to take years for some of these reasons. And I would think that this 80-20 and even greater 90-10 rural hospitals, this is an important dynamic to understand. Some of the observations I have specific to Vermont, so those were kind of more natural, is again, I think you are the leader in sick care. I talk about you wherever I go because of all of the great things that you've got going on. You've got buy-in from the highest level of state. You've got a payment system aggregator, which I think is absolutely critical. And I'm not sure if any other states are going to be able to have what you have the ability to use and leverage. The comprehensive payment system perform well underway, however, challenges. Some of the challenges, rural hospitals, we want to hold them responsible as risk-bearing entities. But if they only receive 30% of the total claims dollars in payment and they're responsible for taking on risk for the entire 100%, it's tough for them to accept risk. I think some of the challenges, the commercial plans, 50-50 game share with no downside risk, there's not enough kind of of a stick there to have them not focused on growing that sick care and that contribution margin from incremental sick care. And that's what this point is right here. A majority of providers, the fee-for-service payment exceeds 20% of total payment, thus providing incentives for pay or sick care volume. That's that 80-20 fixed cost variable cost that we talked about. And then some of the other challenges is the optional health system and independent provider enrollment and alternative payment models based on programs that the hospitals can choose what programs they want to be participating in. And if fee-for-service makes sense to drive up contribution margin and profit, they're going to stay away from from kind of advancing the payment systems in those directions. So some of the considerations, and I proposed these to you a year and a half ago, I would say they all remain exactly in place 18 months later, highest level of state to participate. And I think you guys are doing that. I think we target 2030 for full transformation, which gives time to move, to kind of create the infrastructure to move away from sick care as so singularly focused and invest in health care related activities. It's going to take time. I mean physician contracts, you just think about the simple fact that physician contracts right now, generally there's productivity incentives in them. And the more sick care you do, the more surgeries that you do as a surgeon, the better you get paid. And it's going to take time to kind of make this transformation. But if we set a specific goal, 2030 is the goal, and we back into it, what are the things that we have to do to make that happen? One care of Vermont I think absolutely is critical to aggregate nearly all payment, at least 80% of payment, which is then the channel to providers. Health systems required to participate in all programs. Primary care practices required to participate in the CPR. Transition nearly all health system of payment away from claims payment reconciliation towards budget. Total cost of care, shavings risk for all payers. And then one care of Vermont, a statewide vehicle for payment change must have broader governance representation. And I'll say that broader governance representation involves health insurance representation, maybe state, maybe politicians in the state, the governor somewhere, but because it is such an incredible vehicle to aggregate payment, having it just be under the arms of the hospital, I don't think it's going to be enough of what I don't think it's going to be a vehicle for change unless we have this broader governance representation. And then the Green Mountain care board to actively participate in setting the total cost of care budget. All of these things are important observations. Conclusions, you know, really the fee for service payment systems designed for sick care, precludes incentives or payment for meaningful investment in health care. Currently the function of health care is dictated by finance as the fee for service payment system was designed to pay for episodes of sick care. If the health care system starts with the optimal function, it would require both sick care and health care. I think a global budget payment is a way to move in that direction, rewarding cost centers of the future with efficient use of resources. I think a shared savings incentive provides incentives to invest in true health care. And then with some tweaks, you already have so much of the necessary infrastructure to become a true health care system. It's really going to take tweaks rather than, you know, some states, you know, I was in Mississippi two weeks ago. They're so far behind, you know, where you guys are. You guys have an opportunity here. And so I'm really excited to see what you've done and the opportunity that is in front of you to advance this. So with that, I'm going to stop sharing my presentation. I probably took too long, but there was a lot of stuff we had to get out there. So thank you. Let me figure out how to turn this off. Thank you. I think you succeeded. And your timing was perfectly fine. Thank you very much for all that information, Mr. Schell. You're not seeing my screen anymore, correct? Okay, good. And with that, I'll turn it over to board member question and comment. I'm not hearing, Chairman. Chairman, I'm not hearing you. Oh, hang on. Susan, can you hear me okay? I can hear you. Okay, there we go. You got me, Eric. Yes, I'm sorry. Okay. No, no, no worries. Well, thank you for your presentation. And I'll open it up to the board members for any questions or comments that they may have. Chair Foster, could I go ahead? Please, of course. Thank you. Thank you, Eric. A lot of information there. I wanted to ask just a couple of questions about some material early in your presentation. The Walgreens, CBS, Amazon, in your experience, are those greater threats to independent healthcare provider offices or hospital systems? Each of them talk about getting people healthy enough to keep patients or people out of hospitals. To some degree, that's their goal is essentially, if you think about it, if we're 19% of the GDP, they're trying to take their share of it. It's got to come from somewhere. So one point is this direct attack on creating patients, improving the health of communities to stay out of hospitals, which as long as we're fee for service revenue, that's going to hurt. The second threat I have, you would think, is that what you're seeing is the Wall Street-backed organizations' investments in primary care over the last 24 months. It's almost astonishing. You got Oak Street, the word on the street, $10 billion. You got Village MD going out for $5.2 billion. And so if you think about it, as the demand for primary care goes up by Wall Street-backed companies, the price is going to have to go up, which is going to hit our health systems in Vermont in the hip pocket. That's how I see a couple different considerations, so both volume and cost. Thank you. It seems to me, and I want to explore this more fully, that those organizations seek to improve access to primary care services and therefore could be more of a threat to independent providers. And that would increase pressure on independent providers to consolidate. And the consolidation, although we expect improved care coordination, economies of scale, things like that, those haven't materialized as much as we've seen increased prices due to the consolidation. I appreciate you coming in and talking with us, but I want to try to think through that more fully. And as a board, we regulate hospitals, we don't regulate the independent practices, so it's some tricky stuff. But thanks for coming in and sharing your experiences with us. Yeah, thanks. I'll go ahead real quick. I had a similar question, and I guess it's how do you see, and I know this is a bit of a crystal ball question, but how do you see some of the new market entrance into healthcare interacting with some of these payment reform mechanisms? For instance, if you're talking about global budgets, but then we have some, I guess we'll call it a disruptor with huge financial incentives, how does that interplay work out? And how do we think about that as we negotiate new arrangements with CMMI? For example, if you're saying that a huge amount of the primary care is going to go to Walmart or whoever, and we're setting a hospital budget and we're paying people based on the health of their population, but we have this outside party coming in, how does that work in your vision? Yeah, that one is a tough one. One of the first things I think about is for years we've attributed, we determined revenue based on attributed lives to primary care, right? The total cost of care budgets attributed through lives, and if the lives now are being assigned to Walgreens, our hospitals are going to be left on the outside. And so to some degree with Vermont, it may have to be more of a community attribution of the hospital portion of the total cost of care to determine budgets rather than direct primary care. That's a really good question, Chairman. This is all new. Again, this is all in the last 24 months has been the big influx of all of this activity. Does my only real burning question now turn it over to the other board members, if they have anything else? I'll just jump in on that particular issue that you just raised, Owen. I think one of the issues for us in looking at our primary care landscape now is that we have much of our primary care is connected to the hospital, a higher percentage than a lot of other states, and then another big chunk in federally qualified health centers, and then of course smaller chunk in independence. And sort of back to Tom's point too, to me it seems like the new market entrance, there's multiple potential disruptions for us at the hospital level, the independent level, the FQHC level, depending on whether that, I don't think we've really seen those market entrants yet. So I think that's still something, although we have started to see a little bit of the venture capital driven, you know, Medicare only ACO business start to come in. So I'm not saying we're immune from it at all, but I think sort of given the landscape of our system, there could be multiple ways and implications. One of the things that I just think is that in terms of our practices, we've got to be much more retail based and more consumer oriented. You know, these technology based companies want to transform the patient experience. The reason why Amazon shut down Amazon care is they said it's not transformational enough and then they went out to acquire primary care practices. I mean, so I think what I've been telling people when I'm visiting rural hospitals is we've got to expand our office hours within our clinics. We have to have open access. If a patient's not feeling well, they got to be be able to see today. These are things that are, you know, kind of basic aunties into the game going forward. Just one question from me. I think one of your slides mentioned the need for 100% global payments and the shifting of insurance risk to providers. And I'm thinking about, again, your diagram, which I think is very effective, you know, around the bridge. And I'm thinking about that with respect to reserves actually in this case. So how do we think about reserves? Who holds them and how much in the sense that right now we've got insurance companies holding reserves, right, to mitigate unexpected medical expenses. Providers aren't holding any reserves in a fee for service world. So as they take on more risk, they're going to need to reserve more. Insurance companies are going to need to reserve less. Hospitals may try and seek commercial rate increases to cover that new risk. When in fact, the system already has some reserves held it in insurance companies and risk based capital reserves. They already have some thinking about, as you're thinking about that bridge with respect to moving from fee for service to value based payment, I'm wondering what you think about the funding of reserves, shifting of reserves, duplicating reserves, all of that as we're moving to that new model. Well, I, you know, my thinking, and again, we probably all have thoughts around this, is that the insurance and provider functions have to come closer together to align incentives. I don't think that, you know, insurance companies should be giving up their insurance functions, but they should be coming together, you know, with, you know, and maybe what coming together is, is the comment that I made or the consideration around expanding governance on One Care Vermont. So that the insurance company sits at the place of, of the, you know, cash distribution system to the hospitals, where we have that function, we bring together that function. I think it's going to be important to maintain reserves in the system. And I think that system is a coming together of the two functions. How we define that is specifically, I'm not sure, but there's a lot of really, really smart people on this call that would probably could sit down in an hour and figure that out. But ultimately, it's the, we've got, you know, the provider organizations that have the greatest ability to affect quality and cost have to be able to be on the hook for that residual claim on health, i.e., we call it risk today in fee for service, but it's that residual claim on health. They have the greatest ability to affect that. Now, in partnership with the insurance companies who have the claims and all of that, again, you're coming together in those functions, it's a more meaningful opportunity to affect, you know, kind of health. And so I really, I really, I hope I'm not putting myself in trouble here within the state, probably am, but it's just that coming together. Thank you. So I, thanks so much for the presentation. It's very interesting. Like everyone else, I agree with just a lot of information, a lot to think about. So I work as an emergency physician. So I am one of sort of the big funnels into the sick care system. And I just had some reflections that I wanted to share with you and then a few questions afterwards, which is that one is that I think that when you look at the low admission rates in Vermont and that stabilization of low admission rates, it's been a very interesting experience for me for the last decade working here when I worked in Massachusetts prior. And it's not a good, here we have conversations with their patients trying to convince them to stay in the hospital when they really need to stay in the hospital, wearing Massachusetts. I was trying to convince patients, no, they were really okay to go home, but they wanted to stay in the hospital. And everybody, I mean, it's so many stories of people who have pets and dairy cows to milk. And, you know, can I come back in the morning for my, for my further cardiac evaluation? And we have an aging population. So I do, I do wonder if we're in a different position than a lot of other states. If we're already at our nadir of, of sort of what our admission rate can be. And actually now we're aging and we may have people that are living longer, but maybe needing more intermittent sick care. I don't know, I guess, I guess just start with that if, if you have, you know, if that's sort of something that you've thought about, or what your thoughts are on that. Well, again, you know, if we remove fee for services, the payment system, right, just, just, just forget about it. And we think about the true costs of caring for that patient, whether they admitted into the hospital or not, you 80 to 90% of your costs are already spent before that a patient is admitted to the, admitted or not to the hospital. So, so you admit this one patient that, you know, I want to go home. No, you have to stay. What did your cost just change in your hospital? Not much. It was a little complicated, right? You know, lately, because we're so, we're completely a capacity. And so what the costs that are changing now, not lately in the hospital is hiring more traveling nurses to, to staff those beds, which are really, really, really expensive. I do think too that part of, and I'm struggling with this concept a little bit, as, as I try to understand it better is the idea that, you know, inherently, me as a provider who works in the, I mean, I'm in a mixed fee for service. I don't really understand the system of the patients of, I mean, when I'm working clinically, I don't know how my patient, but their payer status is I'm blind. It's that information I never asked that's emergency medicine. And what I do know, though, is that I often have patients that are sick enough to come into the hospital. They can't manage at home. They can't walk. They can't take care of themselves. They need nursing care. Family isn't available to do it. Maybe they have nursing care needs themselves. Elderly couples living in rural locations, just getting by crossover threshold, not getting by. In our system now, the complexity is in a fee for service system that I see is that we don't have a admittable billable diagnosis. And, and yes, we do, we work very hard to get these patients to stay in the hospital, but it's this complicated, you know, billing milieu. And I'm trying to understand that, you know, in this idea that, you know, inherently as provider, the hope when you move to global payments is people like me. The assumption is that I am motivated to do work out of payment, which I don't, I don't see that among myself or my colleagues in the system that I work in. So I'm trying to understand. I think there's a long lead time that we have before we get to the point where we're going to see the health care system as opposed to the sick care system, and that we're going to have a long time before we really start reaping the financial benefit as a society. I hope we reap the health benefit of the society as soon as possible. It's an observation. It's something that I'm trying to understand. Again, if you have reflections on that, I'd appreciate that. Well, I do want to see the health, you know, so a couple things. One is that right now, for the most part, the payment system literally is a disincentive for wanting to improve the health of your community, your patient, anybody. Now, you may take it upon yourself, hey, you know, there's, there's, you're smoking, you got to stop smoking, or there's, you know, there's obesity issues, you got to address those. And you're going to do that because out of the, of who you are. But the system has no financial incentives to do that. I want to see the payment system. And because of that, we're 20% of the social determinants of health, right? The total cost of healthcare. I want to see us get paid. I want to see us have that residual claim on health that gives us an interest in really creating community health, you know, diet. I mean, you know, medical schools don't teach diet. You know, they, you know, my daughter, you know, you know, had me read a book called How Not to Diet. I don't know if everyone's ever, and he read that book. But, but an incredible book around, you know, how diet is, is, has a significant impact on the health of a population. I just think that if we got paid for, you know, if we did not, if the payment system did not come preclude incentives for healthcare, could we take our 20% shoulder determinant of total health cost of healthcare from a provider and increase it to 25% or 26% or 20% or 20% per seven? At that point, we could make a meaningful difference. Not sure if I answered your question, but it's, I feel that very passionately and it addresses some of what you were sharing. I think, I mean, I had another question for you, but I don't know if it's, we have the time to even, maybe this is a second separate conversation is, is how do we build a health, a healthcare system? And, and, and I guess my, my question on that is what is appropriate to attribute to the current health delivery system? And what is it appropriate to use other social systems to use that for, for delivery of health and wellness? I mean, we had a meeting with one care, you know, and what could you do best to deliver, improve health of Vermonters and what are some of the things and sidewalks come up? And I, and I agree with that. Like I agree that there's infrastructure, you know, trying to alleviate poverty, trying to deal with nutrition, pediatric obesity, I think is a thing that we just really need to think as a society about how we're going to try to help mitigate the long-term consequences. But anyways, I guess the one last, yeah, go ahead, please. Yeah, just a quick response to that. I mean, I look at, you know, Kaiser, right? Kaiser's revenue is premium dollar. And then they make resource allocation decisions around improving health and, and sick and maintaining access to sick care. They're successful when their hospital beds are empty. That's what their CEO will say. They just spent, you know, millions in housing. Right. I mean, so I think CVS health just put some big million dollar number into housing. CVS is Aetna. Right. And so it, I think you asked the question, how do we start creating this health system? And, and my answer is, yeah, let's fix the payment system. And then the answers will emerge. I, you know, a couple of years ago, go off on hand, I was, I was in a meeting in Pennsylvania, the Pennsylvania is rolling out the global budgets for, you know, up to 30 hospitals across here. I think they're at 18 now. And, and the meeting, it was a meeting with all the hospitals that were participating in the global budget. And one of my good friends, he's a emergency room physician, similar to you, also in the school of public health for Iowa. He led a discussion around, you know, with all the CEOs in the room saying, okay, if we, if the payment, if your payment system was fixed, what would you do to improve health? That room for an hour boiled over with all the things that these people could be doing to infect, you know, disease management, diabetes management, and ideas after ideas after ideas. And it was an incredible discussion. And, but it, it preff, the preface was the payment system was changed. And, and, you know, to me, how do we fix that? That is the number one rope that's pulling people back. And it has to do with that darn fixed variable cost incentive that until we can get 80% of payment into some type of alternative payment model, we're going to have incentives to drive up the contribution margin from sick care services. Oh, I get excited about this stuff. It's appreciated. So great. Well, thank you. Thank you so much. Okay. And with that, I'll turn to the health care advocate for any questions or comments they may have. Nothing for me. Appreciate it. Chair Fossum. Great. Thank you. Mr. Chill, thank you very much for your time and your thorough presentation and for coming in today. And hopefully we'll hear from you again soon someday. So thank you very much. Thank you, Chairman. I'll sign off because I gave a meeting to run, right? Yeah, you can stick around if you'd like. You can go, whatever you prefer. So thank you. I appreciate you guys. Take care. Bye. Thanks. And with that, we'll turn it over to Sarah Kinzler, our Director of Health Systems Policy, to discuss an update to our Act 167 work. Ms. Kinzler. So much, Chair Foster, and apologies for the delay while I get my various screens situated. Can you all see my slides? Noting that the meeting is running long today, I will, I'll strive to keep it brief and snappy. My slides are, my graphics are less interesting than either of our two panelists who we've just had who were excellent. So hopefully that will be okay. All right. So for the record, Sarah Kinzler, Director of Health Systems Policy at the Board, I'm here to provide an update on GMCB's work on Act 167, Sections 1 and 2, which shares a lot of themes with the presentations that you just heard and will allow me to tell you a little bit about what we are doing to kind of address the issues that our two speakers today brought up. So a little bit of background on this work and how we got here. And I think Eric Schell alluded to this a little bit in his presentation. But we've been building on, we've been building towards this for quite a few years now, both in the work of GMCB and in the legislature. So in 2019, the legislature tasked GMCB with convening a Rural Health Services Task Force, which was chaired by Member Lunge. And the purpose was to evaluate the current state of rural healthcare in Vermont and to identify ways to sustain the system and ensure that it provides access to affordable, high quality healthcare services. There were 14 members designated in statute. They met throughout the second half of 2019 and produced a report with some recommendations, which are kind of still, many of those themes are still the themes that we're following today. That same year, the board required a subset of hospitals to develop sustainability plans due to persistently low and declining margins and also the news that Springfield Hospital would enter bankruptcy, which was kind of a jarring wake up call to many in the state, I think. In 2020, that requirement to develop sustainability plans expanded to all hospitals following the COVID public health emergency. And in part, building on the Rural Health Services Task Force work, the legislature passed Act 159, which resulted in two major reports, the hospital sustainability report and the options for regulating provider reimbursement report, which I don't want to fail to mention because it kind of sets a regulatory framework for this. And because it was extremely lengthy, and I wrote it. So we should all probably go reference that report all the time. In 2021, there was lots of work on that hospital sustainability report, which was submitted in early 2022. And building out of that, the legislature had many kind of robust conversations with the board, with the Agency for Human Services, with providers. And out of this grew Act 167, which I will update you on today. Act 167 provided the board with $4.1 million in dedicated funding for the activities that I list here. These activities are Section 1 and 2 activities. Section 3 is the funding. So today, I'll be walking us through Section 1, which includes the development of a proposal for subsequent all-pair model agreement led by AHS. We are in collaboration. The development of value-based payments for hospitals to include a global payment model and or value-based payments for ACOs led by GMCB in collaboration with the Agency, alignment of GMCB regulatory processes with value-based payment models, and a recommended methodology for determining allowable growth rates for hospitals, which is the board's work, and finally, leaving a community engagement process to drive hospital system transformation. So we will talk about each of those at greater length momentarily. So now, leading us into Section 1, we'll start with the all-pair model. Current all-pair model agreement would have ended in 2022 had we not just embarked on an extension period, as Eric Shell had mentioned. The current agreement represents really close collaboration between GMCB and AHS. GMCB takes point on data and operations-related tasks, like reporting results to our federal partners, while AHS is really the policy and strategic lead, particularly as we think toward development and negotiation of a potential future federal state model with our partners at the Federal Center for Medicare and Medicaid Innovation, which I am bound to slip up and refer to as CMMI shortly. This past summer and fall, AHS convened a healthcare reform workgroup of key stakeholders to discuss both potential future federal state models and other issues. GMCB was a participant and planning partner in all of this discussion specifically related to the all-pair model, and actively collaborated on things like meeting planning and agenda and materials development, as well as in meeting discussions. As I alluded to just now, in December, an extension to the all-pair model agreement was signed by Governor Scott, AHS Secretary Samuelson, and Chair Foster. This extensive agreement for potentially two years, one in your extension, so that'll be 2023, plus another year at the state's option, which would be 2024, which could provide a bridge to a subsequent federal state model if Vermont chooses to participate. And again, those are conversations that the agency is leading with our federal partners. AHS has just admitted a report on this topic, which I wanted to call out here, and we can also provide a link to anyone who's interested. So moving on to payment model development. The statutory language is included here, and you'll see that while there is some openness in the language regarding what kinds of payment model or models will develop, global payments are one of the models we are required to focus on. Another area where we're having close collaboration with the Agency of Human Services, and since we're kind of co-convening these work groups, I wanted to make sure that folks had information on kind of how those have evolved. So previous slide I had mentioned AHS's healthcare reform work group. This included a global budget subgroup to help inform federal thinking on this issue, particularly regarding areas where Vermont hopes to retain flexibility to design and implement something Vermont-specific in, you know, a future federal state payment model for the Medicare program in Vermont. So starting next week we'll be continuing this work and really building on this work by bringing together a technical work group, a technical advisory group called the Hospital Global Budgets Technical Advisory Group, to really dig into the technical details of a payment methodology, a hospital global payment methodology. GMCB and AHS will be co-chairing this technical advisory group, and I'm very kind of focused on the details. On this page I wanted to provide a little bit more information about the group's makeup and the contractors that will support us, but suffice to say this requires significant contractor expertise, both kind of number crunching expertise, which we're getting from Mathematica Policy Research, and policy expertise and kind of policy options, which Baylett Health is supporting us in. Those are two contractors with significant expertise, both in global budget models, health payment models, and in Vermont their contractors who have worked with us before and are very familiar with our efforts, and so they will work with staff to kind of help guide us through this decision making. I've included some of the membership and as you can see, again, really focused on technical expertise. I did include a link to a webpage that does not currently have any materials on it because I'm unable to post them today, unfortunately, but there will be materials publicly posted from this group at this link, so stay tuned for that. On this slide I wanted to provide just kind of a sense of the things we'll be talking about in this work group, because we are going to be really kind of digging into the data. So those are listed at the high level here, but you'll kind of see defining the scope, figuring out how to calculate a baseline budget, defining what budget adjustments should look like for unpredictable or exogenous factors for shifts in utilization adjustments based on performance in a variety of ways, how and which pairs or providers would participate, strategies to support care transformation. So we'll be kind of working through all of these issues one by one with this group over the course of January through really December of 2023, the full calendar year. So the next work stream has a few different parts. This is really about evolving the board's regulatory processes to kind of match new payment models and reflect new payment models, but the legislature also has tasked us with recommending a methodology for determining allowable growth for hospital budgets and last considering the appropriate role of global budgets for Vermont hospitals. This work is led by Sarah Lindberg on our team, and I know that Sarah reviewed the plan for this work. At last week's board meetings we'll be particularly brief here, and you'll have, you'll notice that you've seen some version of a number of these slides just a week ago. So initially this kind of regulatory transformation work is really focused on our hospital budget oversight. This work was ongoing before Act 167 and we have a dedicated contract with Mathematica to support it. So again, good synergy between the contractors on these work streams. I've included Sarah's slide here with some of the questions that that team is asking as they pursue this work, which I just think shows kind of how we're thinking about this process and how we're and how we're considering how to evolve our regulatory efforts, which you know to kind of reflect the current reality. This slide's also familiar just showing the timeline of this work, and I think the key thing is that major changes to the regulatory processes will come in FY25. So the hospital budget review process that we'll be undertaking in summer of 2024. Looking ahead, I mentioned earlier there's kind of some other subwork streams here, and those are things that we'll be taking on following kind of the regulatory evolution on the hospital budget process. It may be that as payment models are developed and kind of the contours of future federal state models become clearer. We'll also be looking at other regulatory processes that might need to adapt, particularly I'm thinking our kind of ACO regulatory processes and all pair model related regulatory decisions that the board makes around the Medicare ACO benchmark spending target, but a lot of that is still TBD. So moving into Act 167, Section 2, I'm going to talk a little bit about the community engagement process, last but not least, certainly. So Section 2 of Act 167 defines a community engagement process for hospital system transformation, focusing on reducing inefficiency, lowering cost, improving outcomes, reducing health inequities, increasing access, and maintaining infrastructure for emergency management. So we're currently wrapping up the process of getting a contractor on board for the scope of work, and I'll describe the actual scope a bit more in a few slides. The contractor will do quantitative and qualitative data collection as well as funding allowing, providing intensive technical assistance to hospitals to help them develop transformation plans. And we expect this work to include a really broad swath of stakeholders, including hospitals and providers, payers, state agencies and departments, and Vermont is at large as well. So this slide kind of gives you the overview and the timeline. Over the spring and summer, the board staff and leadership work very closely with AHS to develop an RFP scope and to vet it with stakeholders. This is very unique in state contracting, not something I've ever done before, but we thought it was really critical in this scope of work to make sure that we had input and buy-in and kind of our scope was well vetted from the very beginning. We wanted to make sure that the scope that we procure for is the right scope. So I'll talk a little bit more about the key tasks, but just wanted to say that the key date here is contract execution, which we expect in March or April. We're hoping to notify a successful bidder by the end of this month so that we can get moving on contracting, because we also think it's very critical about the work start as soon as possible. So diving more deeply into each task. Task one is really about statewide and community-specific analyses and data profiles and making sure that we're utilizing existing analyses as much as possible. So that's a kind of quantitative data collection. Task two is qualitative data collection engagement in every HSA. So this likely looks like one or more public meetings or town halls in each hospital service area to make sure that we kind of have a touch point in every community. It will both include qualitative data collection, but also sharing out the data that we compile or analyze in the first task so that communities have a better understanding of the local landscape, both now and what's projected. And task three is really about asking, so now, what now? Now that hospitals and communities have the information that we've collected through tasks one and two, where can they go? How can the state help? In this task, to the extent that funding allows, the contractor will be providing more intensive technical assistance for transformation and facilitating also a group learning collaborative so that participating hospitals can learn from one another. We're anticipating that this would include a small handful of hospitals I think we estimated for in the RFP, which would participate voluntarily. I do want to note that funding for direct technical assistance to hospitals was not included in the final Act 167 budget. So this is something that we really want to do with the current budget if at all possible because we really believe in the importance of this work and in making sure that hospitals have the resource to develop solid plans for the future. And finally, this is kind of a timeline for this work once the contract is executed. You'll see here that the data analysis and broad community engagement tasks are really focused in the first six months of the two-year contract. So that work will need to get underway really, really quickly and kind of be super well planned out. The goal here is to get the technical assistance started as soon as possible and again budget allowing so that hospitals can have expert support and technical assistance as they work to develop those transformation plans. And that is all from me, Chair Foster. Thank you very much, Ms. Kinsler. Any board member questions or comments? Great. I have none either. I've been fairly very involved in this work, so I appreciate the update. It's very well done. Does the healthcare advocate have any questions or comments? No, just thank you, Sarah, for all the work on this and appreciate the opportunity to work together. And at this time, I will open it to a public comment on any of the topics that we discussed today. Mr. Carpenter, how are you? Please go ahead. Thanks, Owen. I have a lot of background noise, so I hope you can hear me. Just fine. Great. Thanks. Yeah, I'm in the cafeteria of the State House and there's a party going on. Here I am at the board meeting. What kind of an idiot is that? Anyway, thanks today for his comments on the emergency room versus the healthcare versus the sick day. Sick care, that was good. I always thought that a healthcare system was to take care of the sick, but maybe I'm wrong. And as someone who has been through the system, almost died from our system of private insurance, and the idea presented by Eric and by some of the others, that the patient is essentially a consumer, that the patient is someone who is financing a whole business and industry is kind of grotesque. And I'll leave it at that so the noise won't drive you. You know, we are not consumers. Thank you very much, Walter. Good to see you and I hope you get to enjoy some of the party yourself. Probably not. Come on down and enjoy it for me. They got ice cream? Yeah, they do, actually. Ironically, it's the Vermont Medical Society. Oh, ethical rules may prohibit my consumption. Well, nice to hear from you and thank you for your comment. Any other questions from the comment from the public? I see that our numbers of attendees has dwindled dramatically and I thought perhaps Professor Holmes wanted to take attendance to make sure her students remained through the entirety of today's meeting. I'll have to take a screenshot for you. All right. At this point, is there any old business to come before the board? Any new business? And is there a motion to adjourn? I move to adjourn. Second. All in favor, please say aye. Aye. And the motion carries and the meeting is adjourned. Thank you, everyone. Have a nice day.