 Okay, so I do notice that it's 8.30. My name is Kevin Mullin, Chair of the Green Mountain Care Board, and we're gonna get started. Just wanna say that today is the first of five days over the next two weeks of hospital budget hearings. And this is an unprecedented year of uncertainty where there are more questions than answers. And it will be a difficult process and one that we hope that to all get through with making the correct decisions, whatever they may be. So with that, I'm gonna start out by offering the mic to Jeff Thiemann for some introductory comments about the hospital budgets, Jeff. Thank you, Mr. Chairman. Good morning, everyone. Great to be here as we start the hospital budget cycle. This is my fifth budget cycle as CEO of the Vermont Association of Hospitals and Health Systems, which of course represents our state's entire network of not-for-profit hospitals. As Kevin just pointed out, each year brings interesting challenges and narratives to this process for both hospitals and the Green Mountain Care Board. But this year clearly presents the most unique, most unexpected, and most perilous budgets that hospitals have prepared at my time and I imagine in their predecessor's time. The budgets themselves and the presentations that you'll hear over the coming days, I think are powerful and important testimonials to a few really important themes. First, the quality of care and commitment to change. You will hear how hospitals have continually worked to invest in reform, understand the specific need for healthcare in their communities and adapt programs and services to meet that need in a challenging rural environment while also investing in reform. Second, you'll hear about stewardship and financial management, how hospitals have worked hard to contain expense growth, squeeze out costs and seek economies of scale, even as inflation outpaces their revenue growth and regulation limits their maneuvering room. And third, you will hear about their response to the COVID-19 global pandemic. You'll hear about how hospitals have led our state's successful response. I know I may be a broken record on this, but I will continue to be. Hospitals work in partnership with state officials, with local communities and across the healthcare continuum is literally the envy of the nation. The work to respond to and manage the pandemic and even more importantly to prepare for the next wave is complex and profound. And it involves many, many elements, including to name just a few, setting up drive-up testing facilities and other staffing resources around the need for testing, cross-training staff to meet the evolving need of facilities, making rapid adjustments to physical plans, including emergency departments and even parking lots, securing additional beds and creating surge capacity, managing transfers to nursing homes and to mental health providers, obtaining PPE, which was scarce and is now expensive and unpredictable, coordinating the distribution of critical drugs and supplies and last but not least, providing critical, updated information to the public and being a resource to the Vermont Department of Health. With this set of issues before them every day and night, hospital leadership manage incident command in their own facilities and join three times per week calls at VOS to coordinate with their peers throughout the state. Having helped lead those calls, I can tell you that the work was fast and intense and difficult and it still is and involves the most important of human consequences. I could not be more proud of the group of people who you will hear from over the coming two weeks for the work they did and continue to do every day on behalf of Vermonters. Way before COVID, I advised the Green Mountain Care Board many times that part of a hospital's every day responsibility is to prepare for a mass casualty event, a public health crisis or other unexpected threat that requires a rapid and thoughtful and well-resourced response. Now we know how serious and lifesaving that work really is. We have seen it firsthand. We've seen the leadership, not just in our hospitals of course, but also from our state leaders, Governor Scott, Secretary Mike Smith, Dr. Levine and so many others that have together made Vermont so successful in terms of our infection rate and adopting the right policies at the right time and enforcing them in the right way. So with that backdrop, I would ask of you as regulators today, two things on behalf of the hospitals my association represents. First, consider the overall health of our system and its ability to meet the needs of Vermonters. As I have also said many times, I think one of your obligations is to first do no harm. Never has that been more important than now. Hospitals need to be strong and healthy to handle COVID-19 outbreaks and events. Please do not diminish their ability to respond and to be properly resourced. Such a move would harm not just hospitals, but Vermonters. And second, please evaluate each hospital request in the context of this new environment. Yes, we do have the same priorities as before, better care at a lower cost. But we also need to consider that budgets are still subject to significant change and uncertainty, including lost revenues, new expenses, staffing shortages, drug costs, and all the other factors that together make this cycle like no other. As always, I really appreciate the opportunity to provide these remarks and offer some context before the hearings begin. Our hospitals have a lot of important information to share about the care they deliver every day, the heroic work they do to save lives and make life better for others. And the amazing, often superhuman efforts they have undertaken in recent months to keep Vermont as safe and healthy as possible for all of us. I want our hospitals to remain strong and vibrant and focused on the right things. And I know you do too. Thanks for listening over the next two weeks and thanks for giving me the time this morning. Thank you, Jeff. Susan, did you wanna make some introductory remarks? Just some reminders. First of all, the public comment period for the hospital budgets started August 14th. It goes until August 31st with the reminder that we do take public comment 24-7, 365 days a year, but we would like those comments in before the 31st to be considered with these decisions. As folks are presenting, if you could use the slide number because folks on the line might be using our website to go through the slides, that would be helpful. The materials for the hospital budgets, the narratives, the slides, et cetera, are under, they're on our website under FY 2021 budget. So on the left-hand side of the page, you'll see hospital budget review and you're gonna wanna click on FY 2021 budget. Reach out to Abigail if you are having difficulty finding those materials. And then last but not least, Abigail did publish a message. I don't see it on the chat right now. Maybe Abigail, you can republish that. We wanna make sure that folks know that you cannot use the chat function as a public comment. We request that you either verbally share the public comment or send that public comment to the Green Mountain Care Board public comment webpage. So with that, I'll turn it back to you, Mr. Chair. Thank you, Susan. And thank you for mentioning. I was gonna ask everyone to refrain from using the chat comment. So that's a very good thing. There will be a period for public comment later. Claudio, how many witnesses will you have? Two, myself and Judy Fox are CFO. Kim, if you could swear them in. Good morning. Would you please raise your right hand? Do you swear the testimony you're about to give shall be the truth, the whole truth and nothing but the truth to help you God. I do. And would you please both just state your name for the record? Judy Fox. Claudio Fort. Thank you. And whenever you're ready, Claudio, you may begin. Okay, I am going to present. Can everybody see this presentation? We can. You can or can't? Can. Oh, can, okay, great. Well, Abigail briefed us well as she was preparing us for this unique type of meeting. I will tell you, I also tried to grill Abigail to find out really why is Rutland Regional the first budget presentation? Is it because we're kind of the fluffy warmup act or are you eating your broccoli first and we're going to have some challenges? So I guess the next hour or so we'll bear that out but I will tell you, Abigail was a steel trap. We didn't get anything from her. So anyway, here we have this morning myself. I'm the president and CEO at Rutland Regional Medical Center. This is my third budget presentation on behalf of Rutland Regional. Prior to that, I was 10 years at North Country Hospital in Newport. And as we said with me, Judy Fox, our chief financial officer who has done an exceptional job, her and her team trying to figure out and guide us through the COVID crisis to literally keep the doors open and keep the lights on here and to also try to figure out what our budget is and how we're gonna navigate through this coming year. With us also on the line and again, I don't know exactly who we have but we have members of our board of directors and we have members of our executive leadership team and others from the hospital who we've invited to join us. So as most of you know, you've been through this before and you've heard our story. Rutland Regional, we are an independent not-for-profit community hospital. We're the second largest hospital in Vermont. We serve an area in the southern part of Vermont that encompasses 60,000 patients. We're a full service community hospital. We have 144 inpatient beds. We have a 12 bed intensive care unit, step-down units, a very active emergency department, one of the second largest ED in the state. We have a little bit less than 1,721 employees. We'll talk to you about some of the cost cutting we've unfortunately had to do over this past spring and we have a full complement of medical staff. We are proud that Rutland Regional has always stuck to the knitting and focused on the things that matter, our employees, our patients, our quality of care satisfaction and the providers who deliver that care. And as you can see, we've realized a number of national awards and recognition for the quality of our care. Most recently, and this isn't something we subscribe to, US News and World Report named us one of the top 100 hospitals in the country for joint replacement. And that is a mark of pride for us. Dr. Boynton, our chief medical director and his orthopedic team and everybody in the OR from the housekeepers to everybody. What this means is you don't have to go to Rochester, Minnesota, to the Mayo Clinic to have some of the best outcomes in the country for your knee or hip replacement surgery. You can get it right here in Vermont, here in Rutland. So we have worked hard and under Judy's stewardship of the finances here to make sure that we are in compliance with Meet the Letter of the Green Mountain Care Board's budget parameters. We are also taking a leading stance in advancing healthcare in Rutland County. And we do some things that no other community hospital in Vermont is doing, providing mental health and substance abuse services. We are the only acute care hospital that has level one beds in-house when we stepped up after the closure of the state hospital due to Hurricane Irene and we provided those services and which have had a statewide impact. And then up until about seven years ago there was no medication assisted treatment program for people who were suffering from, and families who were suffering from the scourge of opiate addiction. And about seven years ago as a result of urging from Project Vision here in Rutland, Rutland Regional stepped up to the plate. My predecessor, Tom Huebner and the staff stepped up to the plate and opened the Westridge Center which provides methadone and suboxone treatment for people. And we, as of today, we have 350 to 400 people that we've given parts of their lives back. They can hold down jobs, they can function, they can be present for their families and loved ones. It is a really important part of our mission and what we do here. So with COVID, you're gonna hear probably 13 stories of hospitals like Rutland Regional that have done some heroic things in response to COVID. We've done a whole host of things. We, early on in this response, we developed three principles. First and foremost, to protect our patients. And so we started doing a whole host of things here to make sure that they were safe and providing alternative ways for them to access care through telehealth and so forth. At the peak of COVID, of the surge back in April, we had five active COVID patients in-house and we had about 10 PUIs, persons under investigation. That was at the peak of our surge. And of those five people that were in-house, four were ventilated in the ICU, three of whom we've sent home, like this gentleman in the slide above here who we celebrated after being here for about 60 days. We were able to send him out of here and back home. Tremendous response. The second part of our response was protect our staff. Everything we could do, all the resources of this organization and the reason we have had some balance sheet and so forth, we did everything possible to protect our staff during this crisis. So we were able to do a whole host of things to ensure they had access to personal protective equipment. We had a number of people from our communities that helped us out in that. Who are contractors and businesses who came out of the woodwork and provided us with N95 respirator masks. We did a whole host of things to try to conserve N95s because we didn't know at whatever price we could pay. We didn't know it wasn't a matter of cost. We just couldn't access those back in March and April. And we were tremendously afraid that our staff were gonna be doing high risk procedures like intubations, wearing bandanas around their face. And because of the work, the incredible leadership of folks like Betsy Asan, our chief nursing director, Todd Gregory, the medical director for emergency medicine, Rick Hildebrandt, our medical director for hospital medicine, Dr. Mel Boynton, our chief medical director and all the clinical leadership. We were able to make sure that our staff were protected. They had enough N95s, enough personal protective equipment and so forth. And then the final piece of our mantra during this was ensure the operational capability of Rutland Regional Medical Center. Make sure that we were gonna be there and be able to take care of patients no matter how many showed up at the door, no matter what happened at Castleton University, no matter what happened with the nursing homes and the schools. And we did a whole host of things to make sure that our facility was able to do that. Stripping out key services like endoscopy, shutting down that unit and converting it almost overnight to a 10 bed negative pressure COVID positive ward to make sure we had that. Here's a picture of us. Rutland Regional stepped up to the plate and a whole host of our staff worked to take over the Spartan Arena hockey rink and convert it into 100 plus bed alternative care site. Should we get for lower level patients, should we have a surge that we couldn't manage? Tremendous amount of work and we did a lot of things to try to connect. These are some examples of some full page ads we've run to try to get the word out, work with the Vermont Department of Health to get the word out to our community on what they need to do to protect themselves and help the hospital make sure we could manage this. And so we continue, this is like an example of a get behind the mask campaign to try to continue these efforts for community health. So we are going through and living through an unprecedented time in history. And I will tell you from my vantage point on the ground that Vermont and our health system has performed exceptionally. Starting with Governor Scott, Commissioner Levine, as Jeff Thiemann said, Secretary Smith, Vermont, the state agencies were tremendously supportive. They did all the right things. And I will tell you, I also include you, our regulator in that. We appreciate you understanding the stresses that our staff were under during the crisis period of COVID. And I wanna thank you for giving us some leeway because our finance folks, Judy and her team, they were boots on the ground just trying to make sure that we had liquidity and do all the financial maneuvering that we needed to do, unprecedented maneuvering to make sure we had liquidity, to make sure that we brought some of our costs down because we did not know if or when relief was going to come. And we felt we had to take matters into our own hands. And to make sure that when relief came that we accessed our fair share of that for our hospital and our community in order to protect our patients, protect our staff, and to ensure the operational capability of this hospital. So we, you are gonna hear, Judy's gonna take over in a couple of minutes and talk about some of the details on our budget, but we followed several principles to guide our budget. Our goals were to safeguard the long-term financial viability of Rutland Regional through this contingency phase of COVID to continue to provide access to our full range of healthcare services that are necessary to meet the needs of our community and to provide a safe environment for our staff to work and patients to receive care. Those are the principles that have guided our budget this year. And you will see Judy talk to you in detail about some of the things we did to manage liquidity and cash flows, what we did to react in our capital planning and pension management strategies and funding to make sure that we had liquidity and to respond to this unprecedented financial impact of COVID. You will see that we are continuing all the programs that we have provided. We are not cutting back nor do we have plans on closing programs or cutting back, although we've had to cut back on some staff and we'll talk to you about that. We also tried to work to live within the parameters and this has been very challenging to limit our rate increase growth, which has been very challenging this year because we have seen and we predict an ongoing unprecedented financial change in our finances due to COVID. And then we've continued to try to use this opportunity to do whatever we can to take additional measures to control costs. However, there is, as you know, and as you are finance people on the board too and folks with business and finance economics and health policy planning, you can't cut your way out of this. There is no amount of overhead you can reduce. At some point, you have to go to look at programs and we hope we don't get to that point. And the budget we've presented to you, if the assumptions hold true, we won't get to that point over the coming year. So this is the 11th or 12th hospital budget I presented in Vermont between Bishka and the Green Mountain Care Board and never before have we operated with the uncertainty that surrounds this year's budget submission. And Rutland Regional, and I think you're gonna hear from the other Vermont hospitals, we went into this crisis following several years of financial challenges and financial constraints. And as you'll see from our presentation, our recovery, our ongoing recovery from COVID is the basis for our financial plan this year. And we are certainly not out of the woods. Our message to our staff and our community, although we have great fatigue from this, is we need to stay the course. We still have an unprecedented uncertainty. We are still in the contingency phase of operations. We are not back to business as usual or conventional operations. So we've struggled to manage several competing goals as we presented our budget. Maintain, one is to maintain our health services to support our community through this COVID crisis, including expanding testing and all that goes along with that. Two is how do we continue to advance healthcare reform and move and make the transition towards value-based care, which ultimately will be the thing that makes the change in how we finance and deliver in controlling costs and increase in quality and healthcare, I firmly believe. And then the final thing is how do we manage the overwhelming financial tightrope of keeping rates low while maintaining essential services for our community? Rutland, Vermont is not an affluent state. And Rutland, certainly Rutland County that we serve is one of the more socioeconomically challenged counties of the state. And the challenge with that is if we don't provide some of these services here in Rutland, you know, most of the people on this call, we can get over to Dartmouth or to UVM or to Albany, New York or to Boston to get these services. A lot of the people we take care of, they don't have that option. So with that, I will turn it over to Judy Fox. And we are on, I'm sorry folks, I have my one instruction from Susan, I got carried away and couldn't even handle that. So I'm going from slide nine principles to guide the budget. And now we are on slide 10, the balance sheet and I'll turn it over to Judy Fox. So good morning. Just transitioning on from I'm getting a little feedback. Is anyone else? Yeah, are you using your phone and your computer, Judy? I am not. I think it's better now. I think we're good. Okay. So transitioning from Claudio's overview to the detail of the budget, we're going to take you through a very kind of financially based budget that honestly we got back to basics and looking at ways in which we just preserve our strength financially so that as Claudio alluded to, we're here to offer all of those services that our community requires as well supporting our staff and our patients. And central to that was our balance sheet. We knew this is not a year where we can build additional capacity and strengthen our balance sheet. Our focus was merely to maintain our balance sheet pre-COVID if you will. And in doing that, we looked at both our working capital and what's required there as well as long-term strategic plans. And you'll see that our balance sheet is an effort to maintain basically our 2019 balance sheet strength. And next slide, Claudio. Looking at some of the metrics that are driven off from that balance sheet, days of cash on hand. So it's been very volatile. As Claudio alluded to, we were very quick to look at liquidity options, both in lines of credit, Medicare advances. And we did see a spike in our, have a spike in our days of cash as of July and through September. That is eroded as we pay back $25 million to the Medicare advance. That's where you see we'll come back down to kind of pre-COVID measures sitting above about $215 on our days of cash. Our average age of plant, this is contemplated. You see that we have, in this case, an older plant is a weakening metric. That was contemplated. That was something that we felt we needed to do in order to maintain our balance sheet and maintain that strength. It's also in how we chose to invest in our assets. We're building a medical office building long-term 40-year asset. That does play into that average age of plant. So although we do see weakening there, that was something that we understood going into it. Our most restricted metric on our balance sheet is our debt service coverage ratio. You can see that this is a ratio that we've not been able to get back to pre-COVID in 1819 levels, and this is a result of restricting our operating margin. We are coming into this budget with an operating margin below 1%. The operating margin is what drives the debt service coverage ratio. So although we have additional capacity to take on debt, that is not something we would entertain at this time just because of that debt service coverage ratio or days of cash. Our cash balances are critical. You're gonna hear a latest kind of information on Rutland taking a deeper stance in one care and looking at our Medicare program, which we don't have reserves built for. Balance sheet strength requires that. And then of course our age of plant where we've really put in forth changes in our strategic position and how we invest in capital. Next slide. And with this, our focus for many of our strategic decisions in 2021 result primarily from our available cash flows. We look at where we are, we look at our contribution to margin, both from our investments and our operating margin, and then decided where our deficits were and what we could afford to fund off income statement. Those things primarily are pension funding, the way we invest back into our capital structure both with equipment and buildings. And in both cases, we've restricted both contributions to pension and our investment in capital. Investment in capital, we've taken $5 million off the table in funding. And with our pension, we've eliminated a $2 million pension contribution that we have committed to as an organization over the past number of years. There are different risks associated with both of those. There is still some risk in our available cash flow. This is predicated on a market that does return a margin and about 4%, which drives about an $8 million investment increase. It is predicated on us managing, which are gonna hear a $12.7 million decline or decrease in our cost structure. No additional inflationary pressures and that we do not have extensive capital investment requirements beyond what we know today for infrastructure and equipment as demanded by our response to COVID. The other piece that we're very focused on from a cash flow standpoint is in 2023, we will have to remarket debt and we'll have about $15 million that we need to remarket. We need to go into that remarketing at a point where we've demonstrated trends that are sustainable and profitable and something that we would have investors and banking institutions willing to take our credit. Next slide. We're on slide 13 now. 13. So a snapshot of our income statement we'll go into detail here, but what you see here is a fairly large reduction in our revenue base decline of almost 40 million, 38 and a half million dollars offset by a request for a 6% rate increase. We'll talk about that rate increase. We are not anticipating any additional cares funding in 2021. We've received about $20 million of thus far in 2020 and we do have an ask out to both FEMA and the Vermont CARES Act where we're hoping for at least a two and a half million to secure operations in 2020. When we first put this budget together we were anticipating that we would participate in one care for risk programs related to Medicaid, Blue Cross and our MVP. We're gonna tell you that we are looking at our participation again to also include a participation in the Medicare program which would add approximately 9,000 more lives and $100 million more in care. We'll look at that in a moment. And then our cost structure and this has inherent risk in it, reduced our cost structure by four and a half percent, $12.7 million predicated both on fixed cost and variable costs related to that decline in revenue and led by a reduction of 40 FTEs. Slide 14, but to get there and to understand where we landed for 2021 we really needed to come to terms with our 2020 performance. And where did we think we would end as of September 30th of this year? Given the just difficult past four months and the volatility in revenue, looking back at where we were in the heightened COVID days we were losing and $500,000 a day that's expenses over income and wondering and trying to determine where our patients were in confidence and coming back to receive care. So we have early on projected kind of a restart if you will of volume. You can see our projections there where we really began when we opened backup services in May. We projected a 20% increase and then layered on additional increases in June and July and holding as of July at about 80%. Those have rang primarily true, our projections such that if you look as of July of this year we are behind our budget by about $28 million in net revenue. So we've got August and September left to go. There's our CARES funding. And so the net impact of this is a deficit from budget. This is not an operating margin deficit but a difference of where we thought we would be in our budget of operating margin of 2.5% or $6.7 million. We think we're gonna come in somewhere around 1.3 million. Next slide. And it's important to understand why hospitals need an operating margin. This isn't something that is just kind of picked out of the sky if you will. It's very contemplated and it is a result of cash requirements outside of the profit and loss statement. And for Rutland, it has been very consistent in our approach to operating margins. And those operating margins were meant to fund pension, any capital investment over and above our depreciation and a third party settlements to payers and then to pay down the principal portion of debt. When we look at that and look at our strategies, that calls for a 2.5% margin or roughly $7 million in operating margin. When we looked at how to attain that this year in 2021 given the drastic decline in volume, we knew that that was not going to be attainable. And so we needed to make those decisions and those hard decisions around where we could minimize cash impact and not affect patient care services. And for us, that decision as we've talked about, we are not funding our pension plan. That's a cash savings of $2 million. We've held our capital investment to our depreciation. Our strategic position has always been that we would invest in capital at about 1.2 times our depreciation. This year that was not attainable. We don't believe we have any large third party settlements. We do have to pay principal on debt. So where we landed was with a modest 0.7% operating margin which yields $1.7 million in cash. And that is primarily to pay the principal on our debt. What this allows us to do is support operations with operations. This is very different than where we have been over the past five years. Over the past five years, if you look at our operating margin budget compared to performance, we're down by almost $12 million or 39%. This required that we transfer from investments to operations, $13 million. That was 8% of our corpus at that time of our investment. So we know that's not sustainable. We think this is real, realistic and we think we can manage to this. But again, this is the reason why we needed an operating margin and we can't go lower than this. Next slide, 16. Let me just add in here and provide a little color commentary. This is our operating margin, what we budgeted in the blue and what we actually achieved for the past several years here. As some of you recall, in 2016, we had somewhat of a windfall banner year where we had about a 5%, 6% operating margin. And midway through that year, we gave some of that back by actually having a mid-year rate reduction of about 5, a little over 5%. And as you can see in 17, 18, 19, given the parameters that we had to work with, we've never fully recovered from that. There is a negative compounding effect on a rate reduction. And as you can see, going through this, this was the challenges we entered into COVID. And, you know, 2021 is a conservative budget, but we will need to get back and get back to this standard level of 2.5% operating margins or we risk weakening ourselves financially. Okay. So in summary, very high level, our net patient service revenue, when we look at our position in 2020, we had a $267 million net patient service revenue. When we look at the impact of 2021, given COVID, our rate increases, we see from a net perspective, about a $28.7 million reduction in net revenue offset by about $8.5 million driven by a 6% rate increase. What that does is achieve $247 million in net patient revenue, $20 million less than we had last year. When we layer on our other operating revenue, which is primarily 340B in pharmaceutical revenue, what we have to support our cost structure here in Rutland is $268 million a year. If we were to comply or run up against the Green Mountain Care Board regulation that does allow us to grow our rates, our net revenue by 3.5%, we would have had to raise rates considering the volume decline by 27%. We knew that just was not realistic, not attainable, not anything that we could ask our community to bear. Slide 17. Part of the issue with a rate increase is that it is becoming more and more ineffective. And by that, I mean that fewer and fewer basis of revenue are contributing to the rate increase. This is the cost shift, we've all talked about it. If you look at our revenue and you look at Medicare in particular, you see that from a gross revenue perspective, Medicare accounts for 51% of our business. From a net revenue perspective, it's only 37%. Medicare and Medicaid both continue to see declining reimbursement ratios. You see Medicare from projection to budget 33 to 31%, Medicaid we lose a percent as well. This budget does not contemplate any significant changes or what I would call a deterioration in our payer mix. We are assuming stability, which in and of itself is a risk. Next slide. In terms of the rate increase, so it's 6%, it is not across the board. It is consistent across all payers though. And it's not across the board because of policies and rate setting strategies that we have in place. All of our pharmaceutical and supply charges are based on our acquisition cost. And so those rates based on our tiering structure fluctuate with our cost to procure those. We've not increased any professional services, physician fees at all in our increase, which means that all other charges on average are gonna increase about 8.5%. When you look at that impact from an inpatient to an outpatient perspective, you can see that the rate increases a bit heavier on the outpatient side at about 3.7% a bit lighter on the inpatient side. It's driving about $8.3 million of net revenue. Next slide. Slide 19. When we look at our past requests to the Korean Mountain Care Board and we look at where we are compared to other Vermont hospitals, we are on the lower end of the rate increase. And this is driven by that 2017 decline in our rates of 5%. And so essentially if we look at 17 and 18, those net to about zero. So we went for a couple of years without any effective rate increase. Going into this year, our average approved rate increase was 2.9%. Again, at the lower end of the scale. Slide 20. In terms of just the base of the budget volume, and this was important for us to understand, it is difficult to pin down. We are still understanding volume patterns with COVID. We have not anticipated a second surge of COVID. So what we are projecting is that we are going to see a slight decline in inpatient services, many driven from our surgical services, which ripples throughout the organization with testing and imaging and lab and pharmacy and bed rates. So on average, we think that we're gonna see a decline of about two patients a day on the inpatient side driven from surgical volume. That's roughly 500 patients a year. And then we'll see a slight decline in our med-onk unit of about two patients a day. When we look at our budgeted average daily census for 2021, we're pinning it at 82, 83 patients a day. We've got work to do to get there. As of July, our average daily census was 77. So between now and the first of the year, we've got to increase our inpatient services by about 8% in order to achieve this budget. Most of that will be driven through practices in surgical volume. Again, which drive volume throughout the house. Next slide. Slide 21, gross revenue. This is not something that we should look too heavily on because it's really about net revenue, but the underlying gross revenue, this is, we offer you some insight, both pre-COVID and after COVID. Pre-COVID, it was basically going to be a budget that looked very similar to 2020. We were going to write some revenue around, but honestly it was going to be almost net neutral. We have considered that impact of COVID. It was too extensive to list out by department on average through all of our services, gross revenue, we think is gonna go about $39 million under budget. This is all driven by inpatient services, inpatient professional fees, inpatient ancillary fees, inpatient bed rates. We've held our outpatient services to 2020 levels and honestly we're performing at 2020 levels. The rate increase, and this is an important metric, drives $32 million of gross revenue. It drives $8.4 million of net revenue. And that is where I say rate increases are really becoming more and more ineffective and that they are not generating much net revenue. Next slide. And here's the impact of that cost shift and those payers not participating in rate increases. When you look at our collection ratio and we tend to look at the net to gross, our net to gross fell in 2021 to 42.8% from 45.8. That alone drives a difference in net revenue of 17.3 million. It's what discounts us from that $32 million in gross charges to $8 million in net. And here's how that comes to be. We have $23 million of the rate increase that payers just don't participate in. This is our Medicare and Medicaid volume. It's about 70% of our volume. We are subsidizing a bit of that rate increase with a Medicare market basket of about 1.6, but definitely not at that 6% level. We continue to see changes in blue cross payments and then our own employees who are seeking care. We see what we have a domestic discount that's about a $2.2 million of additional reimbursement that we won't see as a result of those utilization patterns. We lost some state reimbursement for our psychiatric unit, our six-bed acute psychiatric unit. Most of that relates to care that's provided to those patients in our ED. That was about a million dollar loss. We have chewed up our commercial base to existing contracts, which was about $600,000. They have a slight change in our unreserved. And then all other, which is really service mix. And honestly, it's the change in that transition of waiting our revenue more toward a medical service than a surgical service due to that decline. That drives about another 1.3 million. Offsetting that is that rate increase of 8.3. And then additional fixed payments through Medicaid, one care related to the next Medicaid program and the expansion of those attributed lives will drive about $3 million. Netting the change to 17.3. Very important to understand that. Next slide. And then we have our bad debt and free care. This is something that we don't take lightly. This is a service that we try to be advocates to our patients. We are seeing about a 2.6% need to reserve with about 1.6 on our bad debt and a percentage on free care. We have one of the most generous, if not the generous free care programs in the state. And because of COVID, within the last six weeks we have halted account collection calls and sending any accounts to collection. That does stress and challenge our ability to meet our reserve levels. And we're also seeing, and we've talked about this and this will be the third year, that we are seeing patients who are getting into commercial plans that have high co-pay and deductibles and they just have no financial means to be able to meet those deductibles. If you look at the graph on the top, you can see that the red, green and purple, those are those high deductible high co-pay plans that are accessing free care because the patients just don't have a means to be able to support those. Next slide. So ACO risk. This is the piece of the budget that has changed since we submitted our information to you. When we submitted, we have made the decision with our community partners here, the FQHC in town as well as some private physicians that we would join continued participation in the Medicaid program, the Blue Cross primary, the self-insured program and the MVP qualified health plan. At that point, we had made the decision that we could not entertain a position with a Medicare program because the risk was too high and the risk with the corridors in place at the time would have been between eight and $10 million. Where we felt comfortable is with this lineup of risk programs, which would present about $840,000 of risk and would have Rutland taking care of about 20,000 lives within our risk program. Next slide. So on slide 25. Yeah, let me just comment in on this too. I think one of the things that we have seen is in response to the COVID crisis is the one care ACO has done a lot of very impressive and important things to try to make it feasible for us to stay in the program and potentially even expand our participation in the program to the Medicare program. And I understand that the Green Mountain Care Board also had some influence in negotiating with federal Medicare program about our risk corridors, but the founders of both UVM and Dartmouth and the Vicki Loner and the leadership of the One Care Accountable Care Organization have done some really challenging things to bring down their overhead in order to bring down our dues and to bring down our risk exposure so that A, we can stay in this important program for Vermont and for Vermonters and for our healthcare system and B, make it attractive to us that we might be able to, it might be feasible for us to look at extending into the Medicare program and thus help the state achieve some of the scale targets that were established several years ago when this program, this novel program was established. So very good work. And I don't think they're recognized enough from the Accountable Care Organization and the commitment of UVM and Dartmouth as the two founders of this on the work they've done to try to make this feasible and make this a successful program for Vermonters. Thanks. So as Claudio just stated, we've seen some remarkable response from One Care such that looking at our first year of participation had we not participated in One Care, our operating margin would have been $2.1 million more than what we presented. And there are primarily three reasons for that. The first is risk. We will be submitting a check to One Care for about $900,000 to cover our portion of the risk. We really bumped up against the risk corridors. Without those corridors in place, our risk would have been over $2 million. We see those ACO dues, which find the infrastructure of the ACO as well as all of those population health payments. That was about another million dollars. And then the other piece we track is the care we provided to our patients within our services here at the hospital versus those fixed payments. Had we not been in, we would have received about $280,000 more in fixed in a fee for service than we did in fixed payments. You can see in 2020 that is coming down. The biggest piece here is that it's still an unknown. We saw that just stoppage of services. How is that going to impact our Medicaid basis? Are there going to be ramped up and accelerated services at the end of the year? But really where we were focused on is 2021. And this is the hard work that Claudio alluded to of the ACO where really working with the payers and narrowing the risk corridors that was significant for us to be able to continue to take on risk. Engaging primary care and risk management helps us better align ourselves for community services and care management services here. We see the continued year over year reduction in the ACO's expense. And the other piece is just transition in care management from performance-based structure as opposed to a capacity-based. We see those as all positive indicators of program changes at the ACO. It is what will allow us to really contemplate joining Medicare. And again, that Medicare decision before us covers about 9,000 lives. It's about a hundred million dollars. Carries a risk of about another million. But what it will do is provide about a half a million dollars of additional care management support to our community so that we can continue to build and enhance those programs. Slide 26, Other Operating Revenue. The piece I'd really want to leave you here with is, so this is $20 million. It helps support our cost structure, really important. 75% of it comes from pharmaceutical programs, either our retail pharmacy or our 340B pharmacy program. Next slide. Without 340B, we would stand to lose substantial money. And in fiscal 19, we would have lost $10 million. We would have lost money in 18 as well as 17. We're not unlike any other Vermont hospital. Without 340B, all hospitals are at risk for significant instability and significant losses. This is a program that is under enormous amount of scrutiny, payers all want changes. The federal government is looking at changes. CMS is looking at changes all related to really minimizing this program for community hospitals. It is important to us. It funds our free care. So we provided free care to over 6,700 patients. It helps us with managing their uncollectible debt. It helps us provide access to care and those services that we know we lose money, behavioral health, substance abuse, women's health services, long-term care issues for patients who don't have a plan of discharge and end up being almost residents in our hospital. So I can't say enough how important 340B is to the stability of the Vermont health care and hospital network. Next slide. In terms of investments, so we have had some great years in investments. We've been able to really amass some savings and then we hit the volatile market this spring. We are not being exceptionally to crony in if you will and our investment returns. We are assuming a five-year average which says that we're gonna generate about 4.2%, which is equivalent of about $8 million of investment margin. This is in line with our benchmarks. What's important here to understand is that we have to cover our operational expenses to be able to maintain the stability in our investments. If you look at any growth in our investments, it has been truly just related to market. In fact, over the last four years, we've had to draw $13 million, about 8% at the time of our investment corpus to cover operational losses. And you see that in 2018, where we really had to move money in order to cover those operational needs because of the lack of an operating margin. Next slide. Here's where the tough work really came in. And honestly, there's an enormous amount of risk inherent in what I'm about to share with you. So when we looked at that net patient revenue and we saw the $20 million decline year over year, that had a direct impact on our cost structure. And so we were looking at ways in which we could curb our spending and or limit our operating margin. We had very engaged senior leadership team here who came together and really made some tough decisions. We have cut our cost structure by $12.7 million, 4.5% budget to budget, and no cost or program was off the table. Physician costs went down 4%. We reduced staff 40 FTEs, driving about a $2 million change. We've also put in some very tight protocols on premium pay and overtime. We have cut our temporary staffing and we have canceled close to 25 contracts over the past few months. Looking at only staffing with temporary staff and those hard to fill areas, primarily our OR. Pharmaceuticals, Jonathan Reynolds, a VP here over that cost center worked hard to find savings there. We've actually moved our wholesaler from Cardinal to McKesson. So we're seeing some nice positive reductions there. This is also linked to the decline in revenue as well. So there's a fixed piece and there's a variable piece. Our pension program. So even though we have led up on contributing to our pension program, we have a very engaged fiduciary team looking over our pension program led by actuaries, our investment advisory committee and our investment advisors. We were not at risk at all during COVID for a decline in our funded status of our pension plan. Our pension plan is considered model. And here is the result of a model pension plan. It actually gives back. So those returns in our pension funding status helped us maintain our cost structure here. Disproportionate share. This is a calculation at 6% of net revenue depreciation. This is really limiting our capital spending. Again, we took $5 million of funding off the table really trying to match spending to depreciation. And then everything else basically comes to about zero. We couldn't get any further. And so that's where we made the tough decision around our margin. And we reduced our margin by $5 million. And again, only covering that debt service with our existing debt and then the medical office building. What you don't see in that lineup of cost reductions is the cost avoidance. We also have made the very difficult decision that we would forego any salary adjustment program, cost of living market in 2021. This represents a cost avoidance of $2.7 million. And it also puts inherent risk on our table as we think about the labor market and our competitive recruitment environment and not running to temporary staffing to fill vacancies. So this is something that we continue to manage on a daily basis and really look at our recruitment and hiring practices. Next slide. I just wanna add in here, I wanna give a shout out to our union. This would not have been possible without their cooperation and compliance and agreement to put off wage increases for the coming year. And we've had a good partnership with them throughout all the challenges and changes that we've had. And I feel very fortunate that we have the nursing union that we have that has been really good partners in these extraordinary times. Slide 30. So the result is what you see, we call it bending the cost curve. If you look at our productivity results, our productivity results are getting us back to 2019. I can't tell you how difficult this is. It's a reduction of 40 FTEs. And with these productivity results, when you have a shrinking revenue basis, a shrinking volume basis, you have less base to allocate your fixed costs. And so this productivity result is remarkable for this organization and only the result of lots of disciplined hard work. Some of these FTEs relate to volume. A good portion of them relate to just changes in workflows and looking at value added as opposed to where we have been in the past and really eliminating some work requirement. This next slide lends itself to the same result when we look at our cost structure. So slide 31, Gladio, thank you. You can't see it? Is it up? Yep, can now. So this is based on patient days. Again, you see that same performance where we're getting back to levels. In this case, prior to 2019, again, $12.7 million cost reduction, driving this and outpacing what would have happened with just a reduction of variable costs related to volume. Next slide. You asked for service line adjustments. This is probably a slide that we are very proud of in that with all that has gone on, we have maintained every service that we have provided to our community. We have not cut back on any service regardless of its contribution to margin. We have full support in our behavioral health, substance abuse, women's health, those long-term care patients. We've not shifted any service to any other provider and we continue based on our guidance that our community health needs assessment provided us to invest back into our community, looking most critically at our housing and transportation needs. And I just want to add, it's not, these are some of the more common ones that people identify, but it's not just these services that lose money for the hospital. If we were to put them in columns, we'd have a very short column of things that make money and we'd have a very long column of things, obviously that are cross subsidized by those literally handful of services that actually make money. Outpatient surgery, not necessarily the inpatient care, diagnostic procedures, obviously our 340B and pharmaceutical programs, there's a small list of those things. So we could spend a whole hour talking about that and the cross subsidy and the challenges with maintaining those services. In terms of capital, we have a lineup of capital projects that total about 12.5 million, again equivalent to depreciation. The largest item on the list is a CON for the replacement of our MRI. That will be before you within the next few weeks. This MRI is old, it's over 15 years old, it's fully depreciated, is a workhorse in our organization. Aside from that and just tough decisions on balancing medical equipment with the need to keep our infrastructure up to date and efficient. What you don't see here is funding for additional COVID considerations. And this is why we've restricted our routine capital. We know that we have to consider air handling, testing, patient distancing, disinfecting, and we are in a process of looking at each of those. In fact, air handling, we are looking to make every ICU room a negative pressure room. That's gonna cost about a million dollars. You don't see that in our capital plan anywhere. We are also trying to move our curbside testing to a permanent location before winter strikes. Those individuals, both in the clinical side and the registration side out there and all of the elements, whether it's raining or 102 degrees in full PPE, very difficult situation for them. So that is a priority project. In those projects, we are going to look for state cares funding, FEMA funding first, and then we will look to our investments and we will use those investments very prudently to fund those projects. Let me just add on testing, this has been a real focus of our organization. We were the second hospital in the state to be able to ramp up and do in-house PCR molecular COVID testing in-house. We had an instrument in place, a high volume instrument, and we geared that up in order to be able to do that. The challenge has been is we have not been able to, we've had interruptions in the supply chain of reagents and materials to conduct this testing in-house. And the importance of doing this, both for the hospital operations and for our service area, the businesses, the jails, the nursing homes. Now I know the state is coming in and they're managing some of this, but for us to be able to do local COVID PCR testing and to be able to get results back to clinicians within the same day is really helpful for our businesses to be able to stay open and us to manage over the next coming year of the uncertainty that COVID's gonna have, especially in the fall, especially over the winter time and how we do. We have issued purchase orders for two other high volume PCR platforms. Our strategy is to diversify our base of testing for this. We have a local community benefactor that has graciously and very generously helped us. They have seen the importance of this for our community. And so we are trying to, however, the challenges as the rest of the country has heated up, our delivery dates for this equipment have been pushed back. But we do have a second platform that we hope to have online by the end of September that will be very helpful for us. And hopefully with a number of areas, if we can, the original platform that we currently have, we have enough volume to run 100 to 150 COVID tests per day. However, the supply chain interruptions have restricted our ability to run only about 20 to 30 tests per day. So we're trying to prioritize that testing for clinical needs, for people that we need immediate results for, are getting in-house testing and the rest we're sending out through the UVM, state of Vermont, and outside reference lab, Mayo, et cetera, network. So real important piece of our ability over the next, the fall and winter to manage this is our ability to be able to provide access to testing. Claudio, we've heard that from other hospitals as well. By diversifying the machinery that you have, is it easier to get certain rapid-sepient media kits than others, or what's the theory there? Well, we think that's the key. Diversifying our supply chain. So if vendor A, we have supply interruptions, hopefully vendor B, we can get it from vendor B and vice versa. Vendor B, just having more diversified portfolio and more avenues of getting that so that we can continually have those test kits that we need to run those tests. In preparation for receipt of those machines, have you already ordered the media and has it come in? They won't send us, Chairman Mullen, they won't send us the test kits until we have the machine up and running and validated. We have to kind of, the lab folks have to kind of build the test and validate the testing. And once we get that online and validated, they did that, but one of the vendors that we have, this machinery that we hope to get in by the end of, and operational by the end of September into October, they have pledged to us that we should be able to get about 300 test kits per week from them. So let's hope that holds out. The challenge has been, again, as the rest of the country has, they've diverted that and the supply, it's been a real challenge. The testing issue continues to be one of our major challenges in managing this on the ground. Thank you. So, Judy and I are gonna try to tag team in this a little bit. We've identified in our budget, what are the areas of risk? What are the biggest uncertainties and assumptions that could, that are unpredictable and we have no way of knowing how they will bear out. So, the first one is, will our volumes differ? Well, first and foremost, will we get another wave of COVID causing us to have to shut down elective procedures and so forth? Or that will make patients less confidence to come out and seek care that they need. Even during the COVID crisis phase from February through mid-February through mid-May, we saw an unprecedented decline in ER volumes, even in acute care things like strokes and cardiac conditions and so forth, which made us wonder, were patients more scared of coming to the hospital and contracting COVID than they were of having the chest pain and waiting it out at home? We're still trying to figure out what really precipitated that, but we don't know how that's gonna happen, especially if Vermont gets hit with another wave. Judy, I'll let you take the payor mix one. Sure. So, as I stated earlier, we have not projected a significant change in our payor mix and that provides some risk for a couple of reasons. We do see unemployment rising and with that is the loss of commercial insurance. That is a risk to our organization if we lose that commercial insurance base, which at this point is about 30% of our volume and those patients transition to either Medicaid or just have no insurance coverage at all. We see shift in federal and state payor programs. This is somewhat mitigated if we can get into the ACO, but absent that there are a whole host of changes in particularly the Medicare program that would serve to take reimbursement off the table for us. And so we will continue to watch those. And then even within the commercial coverage as the community and Vermont residents are forced with changes in healthcare participation rates, we see and there could be a risk of a continued migration to high deductible plans. And again, if you remember of our free care program, about 40% of that is provided to patients who have insurance coverage. They are the underinsured and so that is a risk. In terms of pressures in commercial contracting, we basically have a status quo budget with our commercial payers, MVP, Blue Cross, Cigna. We have not contemplated any deeper discounts with any of those providers or significant changes in their payment programs and payment policies. However, we're under ongoing and continuous and I would say increasing pressure from the payers to reopen the contracts and give them deeper discounts. How many people approached you over the past year, Judy? How many to reopen our contracts? So right now we have eight active contract negotiations in place across the whole host of vendors with different asks. And our message to them, and I understand, we need strong insurers in Vermont and also, well, I get it and they have their own pressures, but our message to them when they've come to our door is folks, we gave at the Green Mountain Care Board and it's not hyperbole. We have, you can see, we've been very conservative and restrictive and we've done a lot of operational things to try to keep our costs down and keep our rate increases to unprecedented levels. If you look over the past five years, I think if you looked over the past 20 years, you would never see a period like the past five years what hospitals have done in Vermont and our work and the impact of the Green Mountain Care Board on keeping costs down and rates and growth of healthcare down to the point of we had several of us had significant rate decreases. Never before has that happened yet, however, they still are coming to our door looking for more discounts. And that's when I hide in my office and let Judy take the wheel on that. Next item we have, this is maybe the most concerning item that we have is the stability of our workforce. Will we have to go back to the contract labor market? We have not been able to because our volumes have gone down but as we get back to and try to get back to pre-COVID levels and hopefully have some stability, are we gonna do this? I have tremendous sympathy and empathy for everybody who has school age children. The challenges and the stresses on those families are incredible. A lot of our staff here have school age children are feeling those pressures. A lot of our staff here are single parents who are trying to manage keeping their job and coming here and also taking care of their kids and very tremendous for all the teachers and for all those students are challenging. The other piece about our workforce is we've been at a pretty high level of change and uncertainty, fatigue, the stress of this and the mental health impact to our employees cannot be overstated. This is a big concern. We've tried to do some things and taken some of our behavioral health counselors to provide additional support and resources for our staff but this is an ongoing challenge and an ongoing worry. And then what about our employee health? Are we gonna see, we've been very fortunate in protecting our staff that we have not had any widespread transmission in-house among our staff but what's gonna happen with a COVID resurgence perhaps and a combination of a, hopefully we don't have a bad flu season. That is a big concern. Judy? Sure. So investment in performance, we've talked about this. We are anticipating a return of about 4.2% $8 million. We have had a history of using investment performance to support operations. That history is a $13 million transfer. It's not that we don't want to use investments. We want to use them wisely, imprudently and things like securing our infrastructure whether it be testing or negative pressure rooms or what investments are there for, they shouldn't be there to subsidize operating losses year after year. So we have that risk of just remaining volatility in the market and then our cost structure. And so when we cut costs as significantly as we did, there's a worry of scope creep. So we're all looking at that and making sure that we're very disciplined in our approach. But we also have this shifting and we see more emphasis on our fixed costs as your revenue basis comes down. So your fixed costs as a percentage of total become a bit higher, makes it less agile for us. We see increased carrying costs due to inventory power levels, testing supplies and PPE, pharmaceuticals, pharmaceutical spend, we have backed off on inflation a bit because of our transition to McKesson and the new wholesaler. Think that's okay, but you just never know. So that's a risk there. Employee health insurance, we're assuming the basis that we have after the reduction of FTEs. What we have not assumed is that we would become, we would have to support additional employees and their dependents and spouse should that spouse become unemployed and need to come in under our employee health insurance. Labor market competition, first and foremost, when we forego that salary increase program, wanna make sure that we don't get too far behind there and don't want to have to use that expensive temporary staffing labor that we've alluded to. Any change in building infrastructure to support COVID care, we think we've got a handle on testing and the negative pressure, but is there something else out there? And then additional roles just to promote patient and staff safety, temperature checking at doors, door access. The whole change in patient visitor policies, I can't tell you how difficult that is to manage, how emotional that is to manage and how much resource we have to put in place to help both our staff and our patients with those changing regulations. So what you see here admittedly is a list of risks that are more short-term focused. And it will be one of these risks that should we have not gotten our assumption right, that could mandate that we come back before you for an interim budget change. We think that we've got a solid approach, but there's just too much unknown. We're happy to say that in the fall, September, October, we are going to reengage in our strategic planning process so that we can look at a full host of strengths and weaknesses, threats and opportunities, risks, and begin to more long-term range plan. But honestly, where we are today is very short-term focused and just trying to mitigate the next six to nine months. So does that complete the presentation? It does. Great. Let me start before I pass it off to the first board member for questions. Just by thanking you, the board certainly recognizes how difficult it has been to prepare a budget in such uncertain times. And we're always appreciative of the work. And let me just start off by saying your presentation was very thorough and where you appreciate the candor and really the long hours that went into it. So with that, I'm gonna start an alphabetical order with member Holmes. Jessica. Great. Okay, thank you. Can everybody hear me okay? Yes. Okay, great. I actually also wanted to start my thanking Claudio, you and your team, Judy, for all the work that you all did during this public health crisis. I know we're only hearing about Timothy Eisberg of what had to be done to ensure that services were delivered in your community and that PPE and other essential materials were available to protect your staff. As we approach the fall, as you mentioned earlier, Claudio, there's so much uncertainty. So I just appreciate the courage and all the hard work that you're still doing as we're still in this pandemic. Thank you. And an appreciation too, actually for all the cost containment efforts that were undertaken as well and preserving service lines. Particularly preventative care and all that. So a huge thank you, a genuine thank you. All right, so my first question is really, there is so much uncertainty and particularly around volume. We have just come out of QHP hearings where insurers are trying to predict what's gonna happen to volume in 2021 and all of the hospital budgets have had some predictions about what's gonna happen to volume in 2021. And some are flat, some are over, some are under. Insurance companies are predicting pent-up demand. I mean, we really are in a very uncertain time. So I'm really trying to understand in particular your assumptions. And okay, so on page one of the narrative, and I think this is also the number that was in the slide. If I'm right, I think maybe this is a question for Judy. The loss in volume was about $28.7 million on net revenue. The chart though, in the back of an appendix one of the narrative, looks to me and I might be reading this wrong that the utilization reduction is $26.8 million. So that was a difference I didn't quite understand. And then the percentage over under in that column, do you see me on appendix one or shall I make sure you're with me? Probably do. Okay, so the reduction there has a 10% reduction in utilization from the 20 budget. But then in the risks and opportunities section of the narrative, it talks about the under volume, it talks about the 2021 budget assumes you'll achieve 95% of the volume. So I'm seeing different absolute numbers and even different percentages of the assumption of what you are predicting for volume and a 90 to 95% difference is like $13 million. It looks like to me. So I'm just trying to get a sense of what, what, first of all, what absolute number we should be thinking about and then are you assuming 95% or are you assuming 90%? Maybe we can start there and then we'll have a follow up question. So I'll let Judy answer this, but I think I'd preface it by just not all volume obviously is created equal, right? Okay. So Judy. Yeah, and so what you are talking about at the 95% is an average. And so when we look at those mix of services, what I will tell you is that from an outpatient perspective, our assumption was to get back to the 2020 budget. And so we have budgeted fairly consistently with our 2020 budget on outpatient services. Inpatient services are another deal. And that is where our social distancing requirements have really come into play most notably in our OR where we have really had to kind of curb some of that volume. On the inpatient side, we are looking at somewhere between an 88 and a 90% if we use the 2020 budget as a base volume. And I will tell you in terms of looking at how far can we go in terms of ramping back up and in acceleration of services, social distancing limits our ability. We have limited capacity. And that certainly is true within our clinic spaces. And it's definitely true within our OR theaters and space there. Okay. And so one of the areas where you were talking in your presentation were about reduction in surgical volume, but also reduction in medical oncology, right? So I'm just curious about that surgical volume reduction driven by lack of patient confidence and sort of postponement of care or is it social distancing? But medical oncology is seems less easy to postpone. So I'm curious about, is that social distancing that's driving that or what? So the surgical volume is being driven by capacity in the OR. Okay. And patients through the OR and into our surgical suites for aftercare. The medical oncology is more geared toward patient confidence line and patients returning to us. Us, we have a three bed suite that we don't anticipate using as a three bed suite. So we have a bit of a restriction on capacity. And then the other piece is managing those long-term patients. We actually have a new contract in place with a nursing home to help us in patient placement with some of those which were nearly residents here. So we backed off on what we call that level two or subacute, but primarily it's just understanding patients and where they are in seeking services. Okay. And so the 95% is the one I should think about. That's the average overall, not the 90% that was in the appendix one. Correct. Okay. So does that mean that we would adjust that 90% and we would adjust that upward, that utilization upward to reflect the 5% reduction instead of 10 or we can hope, maybe you can get back to us on this because the second column has a 10% reduction in utilization. So I'm still a little bit confused, but I don't want to labor everybody's points of that. So maybe in a follow-up, perhaps we can chat. Because that utilization column, it's not just volume utilization, it's service mix utilization. It's more than just counting widgets, if you will. It's a video's point. It's the type of service we're providing because that is a net revenue schedule. It is not a gross revenue schedule. Okay. And so on the page six, that would have been maybe gross revenue at 95. Yes. Yeah. Okay. Just trying to get my math ordered there. Okay. My second question is around inflation assumptions. I'm really trying to understand what hospitals assumptions are about healthcare inflation. And here I'm really talking about price effects alone. So not volume effects, but just literally the price effects. And so assumed in the 2021 budgets. So in terms of the big buckets of expenses, I would think wages, salaries and benefits would be a big bucket, right? And so you're assuming flat there. You're assuming no salary increases. Another bucket is supplies and equipment, just in general. So what is the assumption that you're making about the inflation rate? Again, not volume, not accounting for the fact that there might be a reduction in volume, but just literally the price effect of supplies and equipment. Sure. I'm gonna leave equipment to the side because equipment really is more related to our capital budget. Yeah, fair enough. Yep. Pharmaceuticals and our medical supplies, we actually base on acquisition cost. And so we look at the acquisition cost in the early spring of the year and we apply our pricing tiers to that. Okay, so pharmaceuticals, you said 6%, right? Was the assumption being made there? So on pharmaceuticals, what we have done is look at those acquisition costs and add a 6% inflation for the next year. On the supply costs, we look at those and it depends based on what type of supply cost, but the inflation was well under 2%. Less than two. Okay, that's just what I needed to know. And in terms of the makeup of your operating expenses, what would you say wages and benefits is a percentage of your total expense? If I were to do a weighted average of inflation, right? In some sense, what I'm trying to do a back of the envelope calculation on just to try and understand this. I'm assuming that the compensation part of the bucket is a pretty big part of that bucket, right? That's correct. What would that percentage be? So it's probably roughly 60%. Okay, and then pharma? Okay. I don't know, 8%, 10%. I'd have to calculate these numbers. Fair enough. I know I'm really just asking, I'm trying to get a sense of this. And so supplies maybe is about 30%, something like that, roughly. That's probably a little high, but somewhere in there, yeah. Okay, perfect. I'm just trying to get a sense of inflation as assumed. Okay, I guess my next question would be, is it possible for you to identify COVID related expenses that you think you're gonna carry into 2021? In the presentation and in the materials, there was reference to screeners and PPE and disinfectant and temperature checking and air handling, that's a million, maybe a million dollars. Have you estimated, just carved out what the COVID related and had there been without COVID, these would be expenses you would not incur as a part of the 2021 budget. Yeah, so I can tell you that our FEMA application which we will be submitting by September 1st and includes COVID related expenses, we will be submitting about $1.4 million of COVID related expense. Okay, perfect, that's very helpful. And so then you had mentioned earlier that the combined FEMA and Vermont state funding that you were looking for was about $2 million, is that right? So that suggests that the application to the state funding is not very much at all. And I'm wondering if given the revenue losses that have occurred and the costs that you've incurred, why that application for money isn't higher? So FEMA will only reimburse 75%, so that 1.4, we're estimating about a million dollars. And then we look to the state cares funding for the rest. If we look at what we've submitted, so this was actually a question that came from the healthcare advocates. Unlike most grant programs, we did not request an absolute amount out of the cares funding, you can't. So we submitted well over 1,000 pages of documentation that looked at revenue loss, changes in cost structure, changes in salary structure. When we look at what we think and how we think the state should look at that, we think that it would be somewhere around $2 million that we could get out of state cares with potentially another million out of FEMA. But the state has also layered on their own protocols around necessity and looking at financial performance. We have received $20 million thus far in cares funding at the federal level, which helps us set that $38 million in revenue loss. My guess, I mean, I have lots of questions, but I wanna be respectful of others' time and I'm sure some of the other questions will be answered by asked by others. But let me guess, I guess one final one. And this is about, Claudio, you mentioned the transition to value-based care and the possibility of adding Medicare, ACO to the program. I'm just, I'm trying to get a sense of how we've been in this all-parent model for a few years. Payment reform came first and delivery reform supposed to kind of run in parallel with that payment reform. So I'm actually just wondering, again, I think I asked this every year, but I'm always curious as to how the answers are evolving over time. What kind of steps is Rutland doing to eliminate low-value care, really shift towards high-value care? If I asked a random provider at Rutland, how his or her practice has changed since, say for example, joining the ACO or since, you know, what would that provider say? Like how is it affecting folks on the ground? If we want this payment reform to work, we have to have the delivery reform that goes with it. So I'm wondering what systemic changes are happening at the top level that are trickling down? Well, I think, yeah, that's certainly a fair question. I think obviously payment reform, as challenging as that is, is much harder than delivery reform. When you take such a complex system that was developed over decades of how we deliver care and you have to take, these two are not mutually exclusive, right? Delivery follows payment and we've created our systems of delivery to be able to make sure we can keep the lights on and the door is open and deliver the care. Now, when we start trying to change that, you start changing payment and now we start trying to move that ocean liner of delivery reform and all the intricate systems that we have put in place. Now we try to change that. It is a herculean task. And depending upon your market and where you are, you know, we've done a lot of work to try to get there. I don't know as if you could say that you could go to a random provider and say, hey, tell me, you know, what's your average cost of care for what's your average cost of care for your heart failure panel and how effective are your outcomes? But we are putting in place the infrastructure to be able to try to give those frontline providers those answers. And when Judy's not providing hazard pay programs and thousand page state care act relief things, she is trying to work and build the data infrastructure. And so we've created some new positions. We've, you know, so we are trying to build that infrastructure so that we can give people that information that they need to know so that they can change that. The other thing that we've been building here really closely is, you know, most of the specialists in Rutland Count in our service area are employed by the hospital. None of the primary care providers are employed by the hospital. And obviously, as you know, probably better than I do folks is this is really dependent upon how well we integrate with primary care. So we are doing work to integrate our data with primary care, but also to integrate our operations and our care management structure with primary care. And, you know, we have reached out and worked and are building more collaborative relationships with our primary care partners than ever before because it is crucial. And so how do we build the care management infrastructure jointly to do that? And I think also the ACO, one care is transitioning to, okay, we've put in place the payment structures now and we've figured that out, which has been very complex. And how do we now move to performance? You know, their focus has been building scale and getting that because of the drives from our contract with CMMI to achieve certain scale. So we've been trying to do that. But now I think we're seeing a more of a move to, okay, guys, how is your performance and how are we doing on that? So, you know, we are far from there yet, but we are actively working. A large part of what we're doing every day is trying to build that infrastructure to change the delivery of care and be able to measure how effective that changes, those changes are. Thank you, I appreciate that. And I was gonna say, I really appreciate the presentation, very thorough. Obviously you've thought a lot about this budget and how we move forward. So I appreciate that. Thank you. Thank you, Jessica. We're gonna move to member lunch, Robin. Thank you. And thank, again, I'll echo Justin, Kevin's thanks. But I'll jump right into my questions to ensure we keep moving time-wise. So I was curious about your Medicare reimbursement assumptions of 1.6% and how you took into consideration if it was possible, the changes to the Medicare sequestration, which was eliminated through the end of 2020 and which was, of course, the bigger impact on this budget, but also into your first quarter of next budget. Sure, so we do not assume sequestration as a long-term budget cut in waiver. And so that was something we brought back into our budget effective in a calendar 21. We have assumed on average a 1.6% increase in Medicare rates. That's on the facility side and not the pro-fee side where it's about a 1.5%. Okay, great. I don't write this down, I won't remember. So excuse my pause. I also wanted to ask you a little bit more about telehealth on page six of your presentation. You had some information about expanding telehealth in the specialty practices. So I was wondering if you could provide a little more description or color commentary about how telehealth has changed your operations and what impact you've assumed around telehealth, both in terms of impact on volumes, but also on your budget reimbursement level. Sure, so telehealth was something that we had to quickly transition to. We did not have and still don't have the mature infrastructures to support telehealth. We did use the Doxy platform to quickly onboard. Where we saw the most impact in telehealth was in our cardiology services and our behavioral health services, where those physicians and those patients were able to align together and use that platform to provide care. Honestly, within our women's health services and orthopedic services, those have not really caught on all that well. And so we are looking long-term to mature our systems more on the medicals, the cardiology and behavioral health side. That said, we're actually more outward focusing in Rutland than we are inward in telehealth. And we've banded together with, you remember, Tom Huebner, who is helping our community really look to mature telehealth services outside of the four walls of the hospital and including primary care. In terms of our budget impact, it really is not a significant change. We're being paid as if it is a face-to-face visit at this point. But honestly, in terms of those clinic visits, for the most part, we've resumed face-to-face volume and that outpatient volume is at about 100% of what our base was. Okay, great, thank you. And from your presentation, you mentioned that you were able to reduce some of your costs for travelers. And that you've really focused on trying to keep those travelers contracts just for hard to find skill sets, including potentially OR. Are you thinking that that's an expense that you can continue to keep down? How are you seeing that transition into the future? Because as we've talked about in the past, travelers are incredibly expensive compared to normal staffing and finding a way to shift from travelers to normal staffing for these functions would obviously be a way to both keep people employed but also keep costs down. Yeah, so this is really led by our chief nursing officer, Betsy Hassan, who's done some great work with our community colleges and education systems. Where we saw an increase in travelers to begin with is when Castleton moved from a two year to a four year nursing program. So there were a couple of years but we just didn't have graduates. We're past that now. So Castleton can provide 25 to 30 graduates a year for us. We have a very close relationship with them to make sure that their programs support our needs and that we're both supportive of their graduates, pre and post graduation. We've also have a relationship with VTC and their nursing program as well. Where we have done a bit of work is in growing our own where we have taken LNAs and we are supporting their educational needs monetarily and then their scheduling needs to bring them back through an education cycle so that they can attain their nursing degree. And that has been particularly helpful. We see new nurses coming out of colleges really liking our nurse residency program, which provides them kind of a year full coaching and mentorship that has been helpful. And then of late, we have invested in an OR training where we are taking four OR nurses or nurse candidates and putting them through our own training program to be able to expedite hiring those nurses into that practice, which is extremely difficult and competitive. So the short answer is yes, with these programs in place, we feel that we can keep pace with our needs. That coupled with the fact that we do see a slight decline in our inpatient volume does help us with that. Let me just expand on one thing that Judy mentioned, the OR training program. This was a novel way of trying to train people for the highly specialized area of OR nursing. It is one of the more challenging lifestyle areas for nurses because of the call responsibility in our size hospital, they have to be generalists and they take a higher degree of call than you would in a larger medical center. So typically it takes us one year of on-the-job training in the OR to get to train a nurse to be independent and to function in the operating room. And with this novel program, we've taken one of our senior nurse educators. We created an OR simulation laboratory and in nine months, we can train because of the work and the cooperation of our surgeons and so forth, we can train, we're training four nurses in a period of nine months, whereas it typically took one year to train one in a live OR environment. So they're getting the simulation environment and then they're bringing them into the OR and it's really, so far it's working out really, really well. So we're very excited about that. That's great. Thank you. I just had a couple more questions. One is about your dish assumptions. So it looks like your dish assumptions are pretty much driven by your reduction in volume. I know another federal change was pushing off the dish cuts that were scheduled to happen in 2020 and 2021. So I just wanted to check about whether there were any other assumptions related to that federal change. It's volume drawn. And lastly, you mentioned on the slide related to your ACO performance in 2019 that you would have received more fee for service than you did in fixed payments. Do you have any sense of what was driving that variant? So our feeling is looking at those care management practices and allowing patients to engage with care providers before they need emergent ER services. We do see heightened use of ED in our cohort of patients. That is one of our front running strategies as we work with primary care, both the FQHC and our private physicians here. We also do offer services that other communities don't offer our opiate service and our behavioral health services do have an impact to our cost of care here. Great. Okay, thank you very much. Thank you, Robin. Next we're gonna move to member Pelham. Tom. Thank you. And I wanna add my applause to those that have come before me about the job that you're doing. As I listened to you, I can viscerally feel the connection between the leadership at the hospital and the numbers that they're presenting and the stories behind the numbers that in all their nuances. So congratulations. That, your reduction in NPR 2021 over 2020 is the second most severe of the 14 hospitals at 7.6%. And, you know, it's, you know, your Medicaid, Medicare is down 8% despite the charging increase, Medicaid down 1.6%, commercial down 9.2%. So you've got some headwinds in front of you. And I'm just, and Judy mentioned, areas that are near and dear to me to try to find a path that helps solve the cost shift impairments. I'll leave volume aside for a minute, but, you know, there are those issues, the net to gross dropping from 45.8% down to 42.8%. And I'm just wondering when you foresee if you can lift your heads up just a little bit, when do we hit the breaking point where these structural forces and funding healthcare in Vermont just don't work anymore? So, you know, I'll let Claudio comment too, but I would say we're there that we have put our best foot forward in this budget. We have cut discretionary spend into the extent that we can. We've taken out FTEs and have really demanded that staff take on more responsibility and change some workflows unless we see some type of relief. If we are held to living on rate increases through the commercial insurance, we will have to look at programs. And it is as simple as that. We tried, you know, and put together a budget that I believe we can live with, but this is our third year and really looking at our cost structures and it will not be attainable in future years. Again, I mean, to me, it's most disappointing because you look at your track record over the last five years and you've done great on very small charge increases, but, you know, you've been positive on operating budget, you know, five of the last five years. And, you know, the seven tenths of 1% that you're looking at for 2021 is quite meager. Quick question. Can I just add to that, Tom? That is, and I just want to throw this into the conversation, wherever I can, 340B is critical to Vermont hospitals. It is critical. And that's non-operating money. So you're, you know, you referenced that you're 2021 B cost structures down 12.7 million. And I'm just wondering quickly about what efficiencies that you have developed in those savings and which of those might carry forward into 2022. One of them I heard referenced were the travelers and a question I wouldn't ask is how are things going with Castleton because you've already answered it. But I'm just wondering if there are other areas where you've made changes in terms of cost savings that you view as permanent. Sure. So travelers by far is one of the most significant changes. Then I'll speak to our revenue cycle where we are really trying to leverage IT systems to move through those processes a bit more electronically and more efficiently. We were able to cut a number of staff out of the revenue cycle. And when I say revenue cycle, you know, that's the front end of scheduling prior off registration and then the back end coding billing. And so really leveraging systems for that. We were able to look at services provided in our clinics and streamlining some efficiencies there. Again, with patient intake, outtake those types of things within our clinical services. We've looked at merging some responsibilities within imaging and oncology with some of that administrative support. On the inpatient nursing side, we really have not cut staff to too much there. We did, there are a handful of nurses that we were, did eliminate, but they weren't necessarily patient facing. So we've tried to really make sure that we didn't step back on our care to our patients there. And so my final question is just per chance, per chance that you're wrong on the Medicaid number. And, you know, they give you a 2% rate increase, which my rough number says probably worth about a million dollars in NPR to you. It's my rough numbers to be off by quite a bit. But I'm just wondering if you had an extra million dollars, where would that fall in your income statement? Or would you let it, you know, in terms of an expense item line, or would you let it fall to the bottom line and to increase your margin? We try to bring it to the bottom line. At a 0.7% bottom line, given our performance over the past several years, you probably know better than I do from with your finance background, Tom, that's unsustainable. And we don't know if we pushed it too much. I mean, we were very concerned, we have been very concerned about the cost shift. And the fact that the only people who are paying this are the private businesses and the folks that are providing health insurance for their folks. The government payers are not participating. And that is unsustainable, unless we, that's why one of the reasons why we're interested in value-based payment delivery reform, that is unsustainable and it's getting, every year it's getting worse. And one of the questions is, we are very cognizant and very concerned about the local business community and their ability to withstand this next six months of very challenging times. The service economy, especially here in Rutland County, we don't wanna make it any harder for our local businesses to be able to employ people and keep their doors open. But the fact of the matter is, we maybe have been too conservative because whether Rutland Regional passes on a 6% rate increase, charge increase, or a 12% charge increase, I don't know if at the end of the day, if our local businesses are gonna get any relief out of that. So that's the challenge and all we might be doing is impacting our healthcare infrastructure, which is gonna be also critical for our community to recover. And also the economic impact that we get by bringing federal funds into Vermont and making sure that those patients can get their care here in Vermont and we're not exporting it to New Hampshire or Massachusetts or New York. So I think your point is we're at the tipping point as Judy said today. Well, I'll just put a fine point on that by saying that if you look at across all hospitals in this exercise, the fact is that the Medicaid NPR is down across all hospitals. So it's not just you, the sum total of Medicaid NPR is a negative and I think a systematic structural problems. But thank you again very much and I'll toss this back to Kevin. So Tom, I would just add that we've probably already spent the million. After we put our budget together, we were presented with the cost for the negative pressure in our ICU and then expanding our laboratory testing from curbside to a permanent testing with additional equipment. And if you remember those costs, we have not borne into our budget at this point. So. One final quick question. Have you been in touch with your local delegation about the cost shift and how critical the cost shift issue is to your survival? We have a legislative meeting with them this afternoon and we'll make sure we bring it up, Tom, before they go back into session again. We just want to give them an update on what's going on at the hospital. Well, thank you both again very much. It's a wonderful presentation. Thank you, Tom. Member Yusfer, Maureen. Thanks. To talk about the discipline and hard work that in the thoughtful approach to your presentation, you particularly focus on the financial statements that you walked us through, which I think was very helpful and your focus on expense management really comes through your financials. I've got a couple. The first is one of the options that we had for the commercial rating crisis was to look at a piece of it potentially being as we're going to COVID. It's that maybe we're going to impact 2021 but could possibly come back in 2022. And just want to understand why you didn't parse out some of the 6% increase that you asked for into this COVID because you specifically did talk about that some of the inpatient issues were related to social distancing requirements that would curb the volume. And hopefully we're going to get through this and when we get to 2022, some of those things may come back. And you also talked about whether it was between 90 to 95% of volume tracking that you're looking at right now. So just want to get a little bit of understanding about that, because it also could give us time to all look at, we'll know at the end of the year what really happened and whether or not things are coming back and whether some of that rate increase could potentially be a temporary. So Maureen, Judy can give you the technical specific answer, but I also just want to say respectfully, we can parse this budget out any way that we think is more helpful for you as a regulator or for the politics of this or so forth. However, I just want to stress how incredibly taxed our finance, our whole operational team, our executive team and our finance team has been. So in addition over this past six months to making sure that we had the liquidity position, accessing lines of credit, making sure we had cash flow, making sure we were accessing Medicare advanced payments, state cares funding with a thousand page application, federal cares funding, several tranches of that, making sure that our frontline employees could benefit from the state cares fund hazard relief program, putting together a budget in an unprecedented time of uncertainty, just trying to find where the bottom was back in February and March and April when the whole financial floor was falling out of the hospital and getting us back and then working on some strategic planning as we look at recovery and looking at of those 40 FTEs, of those 40 employees that we laid off, a number of them came from the revenue cycles there. So I just want to just make sure that you understand the picture of as an independent community hospital, we just have some limited bandwidth on some of these areas and we've, I think we've really been stretched to just try to make sure we're still in the game. So I don't mean to push back by any points, but I just want to respond that we've been under a considerable burden on where we've been in finance. So Judy, I'll let you answer the actual question. And so the short answer is that, we think this may be the new norm and the impact in COVID is so intrusive through the organization at all levels. I don't know how we would have parsed out a portion of ongoing operating expense and request versus what's just COVID related because within each, if you look at our lab volume, our lab volume is growing at extraordinary paces, OR surgery is down. So it would have been extremely difficult to break out and in the end, I don't think it would have gotten us to any different place or result. And to be truthful, we are trying to understand what the new normal is. The vaccine is, we're talking about it, it's a ways off. And then we've got to understand who would even accept a vaccine and how long that process is going to take. So I think this is the new norm for at least the next couple of years. And I really appreciate all the backups back up to support where your NPR is. But I also just question whether or not it's still a little bit conservative of all the 14 hospitals, you're the only hospital that's requesting lower NPR than 2019. When I kind of do a lot of back of the envelope and I know you're building it from the bottom up clearly, but if you look at the budget you had for 2020, which was 268, it multiplied that by 0.95, which is what you're saying the utilization will go to at 8 million 52. When you look at the fund rates that you're projecting at 62 million, multiply that out by four and then add your wealth. I'll stop a second Maureen. I think Kim's trying to, we've been having some difficulty each time you begin to speak hearing you. And Kim, is that what you were trying to say? It is, yes. I was just interrupting. It's a great connection I get up here in Colchester. So I'll try to project a little bit more. But, you know, why is it a lot of different? So if I take billion hot in the fourth quarter projected times four plus eight, that's 256 million. If I look at your order a second quarter with the second quarter hits that you had multiply by two at eight, you know, you get to 260. So I just, you know, kind of on the lines where Jess was looking at as well, it just appears that you may have some more upside in the volume in your NPR. And so Kim, I already talked about that, but this is really short. So it is really risky for you to take high level performance and apply, you know, volume trend percentages. You said it best when you said this budget is built from the ground up and that is true. And we have to look at the services that are growing and the services that we think are shrinking. And when we look at orthopedic primarily, not all, but when we look at inpatient surgical procedures, they provide more contribution to margin than an increase in lab volume. And you have to understand your business like that to be able to bring all of these assumptions together. I will tell you that I'm worried that we're gonna attain our volume. As we sit here today, we had 77 patients in house on average in July. Our budget gets us to what, 80, 84. I don't know where we're gonna get that growth. We're still volatile. The last 17 months or 17 days in July, our revenue was three and a half million dollars more than the first 17 days in August. So we are still in a very volatile state that is really predicated on patients feeling safe coming in and our capacity with social distancing to care for these patients. I would love to share with you at a deeper level our assumptions on service related, but to take very high level percentages and apply them to past year that it is not, it's not reality and it would not give you numbers that are valid just because of the change in services. No, and I appreciate that you're doing it from the bottom up, obviously. It is interesting to note that you are the only hospital forecasting below 2019 levels with the four highest increase in commercial ask. So just from a relative position and you may be right and everybody else maybe it's gonna be tracking differently as well. So just one other question on, when you look at the detailed charts of the possible data entry, and I'm not sure if you, on the budget section, there's a line with other reform payments in 2021 of negative 15 million, and that's impacting your NPR to bring it down to 247. I don't know if you have that chart or if that was generated by the Green Mount care board staff. I do not have that chart and I never like to assume I know what you're looking at but it sounds like that that is the shadow payment related to the ACO volume in the fact that we're receiving fixed payments. But again, I can work through that with you a few. It may be related to that. And I guess how does that work? Are you recording it? Cause you have 15 million in fixed perspective payments and then you have a negative 15 million which may be the shadow payment reduction. But the combination of those two is negative. And so are you also including that up above in a different place in the gross patient revenue as well and then you're adding it back in fixed? Yeah, so if you recall our slide on the ACO, we are assuming that we are still gonna be running behind fixed payments to fee for service by about $300,000 for the Medicaid population. I guess maybe we could go through where you put it cause typically everybody puts their NPR and then they traditional fee for service and then add in the fixed payment to that. And you guys do that and then you take out the entire fixed payment amount of 15 million or above that even which would then get you up to 262. And I just wanted to make sure you look at that as well cause it almost seems like you're taking out the shadow payments. So I can assure you our net revenue numbers all include any transactions with the ACO. Okay, but maybe we can follow back up on maybe it's being tracked up above as well as taking below. And let's see. And on your pension plan, the elimination of the two million this year, I guess, what is your status of your funding for that? Will that return next year? And I just wanna make sure I guess you did say it's not obligated to do that but it's been something you do each year. Yeah, so another proud moment for Rutland is the management of our pension program. We have really held up the fiduciary responsibility through our investment advisory committee through our actual varies. And so we didn't lose any ground in COVID because we have an asset liability matching policy. And if you look at our pension program, we are consistent at about 95% funded. We're considered a model program. So for us, it was riskier to funnel that two million dollars to pension and away from capital or our great needs. And that was the consideration. This will be a decision we make each year based on the economics and based on where we are in terms of needing available cash flow. I just also did wanna compliment when I looked at the 2019, you know, on the NPR, you're one of the very few hospitals that are below on the expense from 2019 as well. So I really appreciate the effort you put into all the cost savings that you put into your plan to align with where you think the NPR is gonna be. So that's all I have. Thank you. Yeah, thank you. If I could just add, just to be clear, we've always tried to play it straight with an appropriate level of conservatism but follow the guidelines and so forth. So I just wanna be absolutely clear. We're not trying to sandbag our budget this year on NPR. We wouldn't have, I wouldn't have let go laid off permanently 40 of our associates and done all those other very painful cost cutting things if we did not believe that this was a game changer and we needed to take some of those matters into our own hands and just rely on rates to save the day for us. So I just, you know, I hope you hear that that I hope you're right Maureen. I hope maybe we do better than we project. That would be a great, very helpful for us in our recovery. But yeah, no, absolutely. I mean, I know you're obviously putting in the best that you can for NPR and no, if anything, people go the other way, you know, put higher numbers into NPR. So I know you've put a lot of discipline into that. I think, you know, from what Jess had expressed when I did, and I know we're doing it very simplistically, it may need another, you know, just a little more reconciliation from the bottom up looking at that. But I don't think you're trying to misrepresent where your NPR is at all. Thanks. Thank you, Maureen. And we're really falling way behind, but I do have a couple of questions to ask before I turn it over to the healthcare advocate. Is your self-insured program for your employees participating in the model? Yes, it is. Great, thank you. And do you feel strongly that all the different community partners are working together to drive down your total cost of care, specifically the FQHC, VNA, DA, et cetera? Yes, as a matter of fact, we are seeing more cooperation and collaboration with those other key partners than we have in, you know, I think we're at an unprecedented level of that. I think everybody is committed to working together and putting the interest of the community ahead of the interest of any one of our organizations, Kevin. I think there's a real spirit there. Good. And you'd mentioned a decline in psych reimbursement and one of the key factors in Rutland making that initial move to have inpatient beds was to make sure that over time, the state adequately reimbursed them for care that was given in that unit. Was this an expected decline in psych reimbursement or talk to us about that? It was not. And so in terms of the unit, they are keeping us whole. This decline was for holding patients in our ED awaiting care. And we were reimbursed regardless of where that patient ultimately was placed in care. At this point, we're only reimbursed for patients that are awaiting care in our own facility, which is a smaller part of the ED population. Okay. You mentioned that, you know, you were looking at 82 inpatient occupancy in that July was only at 77. Is that in line with traditional seasonality or is it still below where you would like it to be? It's below. Okay. And who are the members of your investment advisory committee and are they both, is it the same committee on your pension and your other investments? Yes, it is. So who are the members? So former CFO at Orgazolic. So he has sat on the committee since retirement. Margo Jones, who is an investment advisor here in town. We have Dr. Tim Daly, who is an anesthesiologist here in town. We have Brian Nolan, who is an HR professional and VP in the community. Who am I missing? Mike Salamano, the president of Killington Resorts. Great. And that committee is partnered with very solid relationship with our actuaries and our investment advisor, Vanguard. You know, it's refreshing to hear after we just went through a rate review process where we saw what happened to 58.5% of the assets in the one of the insurers pension. So hopefully you keep up doing that good work. And hopefully at some point there's some type of year where that would give you the type of ability just to fund it higher and take it right off your books completely. But those are just hopes. So that was absolutely a strategy, Kevin. And we backed off on that because of the need to fund at about 110%. But that is definitely within our five-year plan. Well, as Annie would say, there's always tomorrow. Talked about operating margin. And again, we really appreciate the 0.7%. But Claudia, you talked about a goal being 2.5%. We've seen others that have argued for a higher normal operating margin. What's your basis on falling on that 2.5 for being where you would regularly want to be? Well, we feel that's where we need to be to get back to replacing our facilities and plant and equipment at 1.2 times depreciation. We feel that's where we need to be to back, try to provide additional not required funding for our pension so that we can hopefully exit from that and make sure we're meeting our debt service and other obligations and not have to go into our investments and preserve our balance sheet. So that's kind of where the minimum we need. I mean, to be healthy, 3, 3.5% is probably where we'd like to be. But for this coming year, for the immediate future, if we can get back to 2.5%, we would be happy and feel like that's a fiscally prudent level to be at. Okay, let me ask a couple of quick questions on workforce and we'll turn it over to the healthcare advocate. With Castleton not going back to in-class sessions, are you fearful that some of the clinical training may go elsewhere for some of the nurse students there? No, I don't think so. Our chief nurse executive, Betsy Hassan, has been meeting with their leadership in the nursing program. And that is one of the few things that they're gonna be doing in-person is the nurse training program. So those nurses and we've made arrangements for them to do their clinical experience here. So I think we're pretty confident that that program for nurses will remain strong at Castleton. So the last question I have is really focusing on the physicians and over the last few years, you've seen some retirements, you've got some more coming up. You seem to be confident that you'd be okay without having to go with traveling docs. And I'm just curious if you're seeing anything as far as physicians from other areas that are more urban in nature, trying to find an escape route to a better place to live, namely Vermont. Yeah, we have been seeing a little bit of that. As a matter of fact, some unsolicited have showed up and said, hey, do you have any other opportunities here? So now whether that was a crisis, that was back in April, and this one physician in particular had a vacation home up here and was downtown in New York City practicing and was on kind of a furlough type of a thing. But yeah, I think there's some opportunity. I think there are some people who after going through this crisis in an urban area are looking for a safe place to relocate and be with their families and still be able to practice and have a full service practice. So we've tried to use this as a matter of fact to recruit some hard to recruit specialists and target that towards some of the more urban areas. So. Great. So at this point, I'm gonna turn to the healthcare advocate. Mike Fisher, who's gonna be conducting the questioning for your team this year? I think it's me today. Okay. Or me with Rutland anyway. Good morning still. Thank you, thank you everyone. I guess let me just start with a little bit of a higher level statement about the overall hospital budget process and how we're approaching it this year. Maybe I should have said this up front, but here I am. We appreciate that this is a year like no other and that our hospitals and other providers, let a truck go by, hospitals and other providers are under extraordinary pressure. The healthcare advocate's office is going to take a little bit of a bigger picture approach this year. We won't be challenging hospitals on details so much and we may not even have questions for every hospital. A year ago, we had planned to come with a stronger tact about hospitals' free care and free care policies, both about the details of their policies and about their approaches to making sure their patients knew about their policies. Then COVID happened and a lot of plans changed and that's still on my list of something that I think is ripe for some focus, but not today. So let me focus on Rutland now. First, thank you like everyone else. Thank you for your presentation and thank you for the work you've done and in the COVID crisis. And also I wanna thank you for the work you've engaged in with my office, particularly around your free care policy and your readability of your plain language summary. You are one of the leaders in that effort. Similarly, I wanna give you an opportunity to speak a little bit about your work on implicit bias training. All I know is what I've read in the press, but we are well aware of racial disparities in healthcare and I think it's interesting that you guys are approaching that and attempting to address it. And I'd love to give you an opportunity to speak a little bit about how it came to be. Yeah, thank you, Mike. As a hospital executive in spending most of their career in Maine and Vermont, I always thought that issues of diversity and inclusion, we don't have to worry about that because we don't have any diversity and it's not an issue. But that's from the seat of a white middle-aged cisgender Christian dude. And if I was African-American or if I was transgender or if I was a Muslim, would I feel as comfortable coming to work every day? Would I feel as comfortable going to get care and knowing that the people taking care of me respect and understand my background and those cultural differences won't impede how I'm cared for or how included I feel as a member of the workplace. And so this organization started down this road a couple of years ago, actually, and really proud of doing that. And as a matter of fact, I've just never been in an environment where there's been much diversity. So I haven't been that attuned to some of these issues. And so my first implicit bias training was here two years ago, the first year when I was CEO, we started that for all managers. And certainly the events of this past year and the challenges of this past year have really brought a lot of awareness to these issues and these longstanding issues of bias and systemic racism. And we were approached by a group of interested employees about doing more and we recognize that we need to do more, not just fly the flag, but what are the backgrounds more importantly, I think, is what are we actually doing to try to identify areas of equity in how we deliver care? You know, our people of color getting less access to pain medication when they come in with fractures in the ER, some of those type of things. So we've challenged our, not just doing training for staff to understand these issues better and to appreciate the impact of implicit bias on how we interact with each other, but also to try to start when we do our community health needs assessment this coming year. We're taking a lot of cuts on those issues, but can we now get the data and can we take some cuts on this on how does homelessness and how does housing affect people from minority populations, not just the whole population? And how are we delivering care? And I've challenged our quality department to start looking at disparities in care and see if we can have some data and start looking at, hey, what is happening out there and how is our ability to deliver equity of care? So we're doing, we have diversity and inclusion steering committee that's guiding us in this work and we are starting to do training for all staff and then also try to do some more objective quality looks at how we're delivering care. Well, thank you. Thank you for that. And thank you for your description of that. This is maybe yet another place where there's an opportunity for some cross pollination to the whole hospital network. Let me turn to testing, COVID testing for a moment and thank you again for talking about your process and what Rutland is doing. I guess I have maybe a policy question. Should we be purchasing tests, test kits and lab fees on a statewide basis bulk purchasing? Is there an opportunity to have maybe much the same way we purchase vaccines today? Is there an opportunity for savings in the system? And is there an opportunity to make sure that we have adequate tests for all of our monitors who feel they need a test to be able to get a test? Yeah, we have been working with the department, the Vermont Department of Health. I know a commissioner Levine has been working at coordinating testing. We've been in contact with the UVM lab, which is our biggest lab capability for the organization on how we could do that. I reached out to commissioner Levine a while ago to see if there's anything that the state could do to help expedite our ability to access testing materials. The challenge is that the states are kind of on their own on some of this stuff, right? It's the state doesn't have much more ability to influence the accessibility of testing and testing supplies, you know, than a small state like Vermont does. So I think there are some challenges. Theoretically, there would be some and I think we are trying to collaborate with the other hospitals in Vermont and the health department in coordinating how we're delivering testing. But I think that might be realistically as good as we can get at this point. Okay. So I appreciate how clear you were about how important 340B revenue is for the hospital. I can see it in your budget documents and I don't disagree. But I did want to say out loud that 340B revenue is a price spread between what people have to pay rate payers or people out of pocket have to pay and the 340B price. And it puts pressure on other parts of the healthcare system. I just felt the need to say that out loud. It's more of a comment. I'm happy to have you respond. I don't mean to diminish in any way how important the revenue is to you, but it's not free is my main point. No, but it's not coming from taxpayer dollars. It's coming. It's built into how kind of the drug company has to supply us those medications that reduce costs. And right now, I agree with you, Mike. I mean, I think if we could provide some more of those discounts to the end users, that would be tremendous. But right now with the pressures that we have on, the trade-off might be reduced access to services. So, you know, that's the challenge. I'm not arguing that you should lose the revenue. I'm just recognizing that it's not, that somebody's still paying. Now, this is a little bit more of a curiosity for me. I've always been a little bit, it is interesting to me that for your employee healthcare expenses, you are both a purchaser and a seller. And so, you know, when you say that you had a loss of $2.2 million in discounts, I guess I wanted to poke you a little bit about that. Is it a loss or is it a savings? Is it, it's kind of on both sides, isn't it? Drew, do you want to take that? Yeah, so the 2.2 million isn't all entirely our employee health plan. There are some programmatic and structural changes with payment policy changes at Blue Cross. But we have seen an uptick in employees, our own employees using our own services here, which we basically cover our costs for. And so that is a lower reimbursement than if we were covering Blue Cross on the exchange. Okay, understood. And that's back to zero. Yeah. Yeah. Lastly, I appreciate, want to recognize your statement about how rate increases are more and more ineffective. And the prospects of where we're going, that's going to be more and more true from my perspective. I think that we are predictable here at the HCA. It will not surprise you that you'll hear us say some version of Vermontres can't afford it. And, but I did want to say out loud to you that because I don't think Vermontres can afford a 6% or an 8% or a 20% rate in commercial rate increase, doesn't mean that I don't think Rotland or any other hospital needs the revenue. And so I wanted to make that distinction clearly directly to you, but also very much in line. I think the discussion you had in response to some of Member Pelham's questions is very much in line with some of the same point is sort of structurally, what are we doing here and how do we get ourselves out of it? We don't need to repeat that. I just wanted to appreciate and recognize it. And thank you. That's mine. That's all the questions I have today. Thank you, Mike. At this point, we're going to open it up to the public for comments on the RRMC budget. Kevin, it's Sam Davis. Yes, Sam, go ahead. I just want to, I've got a comment and it's a serious question on the end of it. I've seen, I've been since early 1980s, I've seen something like 150 of these hearings and I'm struck both this year and last year by how rock solid the Rutland presentation was. So this is a gratuitous piece of advice to Claudio Fort. Some is going to try and steal Judy Fox, but other than that, see, when you listen to the whole of the Rutland testimony, it contained, it talked about the Rutland budget of course, but it also contains some of the most interesting commentary on healthcare reform that I have heard from any quarter over the last say year. And one of the, so what I hear Claudio saying is that they understand that how important the all payer model is, that value-based financing, which I really call capitation, is, the thing that I'm curious about though is whether he implied by saying how complicated it was that it's going to take a very long time to get there. I mean, he didn't actually say that, but that was implied I think. My question is, given the difficulties in the system now, given the whole warning about 340B, which if it went away would drown half the system in red ink, it seems to me, I would just ask him, why doesn't it make sense to move towards, value towards capitation as rapidly as possible? And so my question, because one of the things that I think Judy Fox said was, look, we need to increase our volume. Well, the need for an increase in volume is based on a fee for service financing. So given all of that risk, do you believe, tell me my question I guess is too full. Why don't you believe that you should move there faster? And number two is, how fast do you think it would be possible to be in sort of a third question? If you could your business model change if you've got not to 70% of fixed price contracts, but that's my question. I'm sorry, but what was the last number, 50 or 60? 50, 50. Thank you. Better answer before him asks the fourth one, Claudio. So thanks, Ham. I will tell you, if Judy Fox leaves here, you will see the quality of Rutland's budget presentation go on a precipitous decline. She is the backbone and put all this together for us. And she puts me in front of the screen to be a little bit of a window dressing and just nod my head and agree. But I will tell you on, it's tough because the old one foot on the dock and one foot on the canoe analogy, as we are progressing towards healthcare reform, if we could flip a switch and be fully on a full value, that would be great in some respects, but in other respects, it is gonna take us time to change how we practice medicine and how we take care of people. And fundamental to everything that we are doing, the doctors tell us and our medical directors is first do no harm. And if we have to be careful, I think we need a diligent progression and I think we're on the right path towards a value-based payment. But if we, it's a very narrow line to walk. If we do it too precipitously and too quickly and don't give our systems and our care delivery systems the ability to react and change so that we don't harm patients in doing that, we're not gonna be successful and we're gonna violate our first principle. On the other hand, if we drag our feet and we don't continue to progress and move and keep one foot in the canoe and so forth, it is tremendously inefficient because we are trying to manage under two very different systems of care. So I don't have the answers for that. I'm certainly, you know, I'm just trying to keep the lights on here and try to run a small hospital here. But I think we're on the right track and I think, you know, I think if we stay the course and continue to try to work with this, other than that, what do we have left for healthcare reform coming every year and fighting whether five or 6% is the right number and so forth? I mean, if we don't fundamentally do something different, I think we're stuck in this paradigm which there doesn't seem to be any answers to. Other members of the public. Yeah. Thank you. Thank you. Other members of the public. May I ask your question? Go ahead, Dale. I have, I just tuned in. So if this question has been answered, my apologies. One question I've had immediately for hospitals is what do they see as the trends, as COVID continues and after COVID, how much is it going to change what the healthcare needs are within the community they are serving? In my mind, that's a good baseline, something I wanna get a handle on in terms of what healthcare looks like after COVID and as COVID continues. So they did address it. Of course, they don't have a crystal ball, Dale, but Claudio, maybe a quick response. Yeah, I think part of it is how does society change after COVID? How do our businesses change? How many of our businesses are gonna be able to have health insurance? How is our state and federal government gonna be able to fund Medicare and Medicaid programs post that? That's gonna dictate on how healthcare is gonna look probably more than we can do anything in our small hospitals to try to affect that. We're just trying to be here to make sure we are providing care and taking care of people through this and trying to help our community and our business community stay in business and get through this unprecedented time and be conservative in doing so and try it. So that's all I can probably predict on that. Okay, other members of the public? Nope, one more, sorry. Go quickly. Hi, it's Mort Wasserman, quickly. Mr. Ford, I'm a retired primary care physician. I was delighted to hear you mention primary care in this hospital budget hearing and you're talking about your partnership with what must be the FQHC, which cares for, looks like 75% of the patients in your county. How is that a partnership working to improve your situation and what are the risks of partnership in your situation? Thank you. Dr. Wasserman, what was your first name? I go by Mort, M as in Mary, O-R-T, but it's not my real name. Thank you. Yeah, so it's all about Dr. Wasserman. It's all about primary care and how effective they can be on the front lines and how they manage that and how we work with them to give them the data and so forth. So the partnership is going well. I think we have worked more closely with our primary care partners than ever before. I think the OneCare Accountable Care Organization gives us some financial skin in the game to also some incentive there to work more closely and collaboratively together. I don't think there's any risks from aligning more closely with primary care. I think the risk is on the other end of things. If you're working in silos and you're not coordinating the specialty care or the acute care with primary care and for that matter, other social services in the community like housing and the V&A's and all those other agencies, I don't think we're gonna increase costs and we're gonna decrease quality and certainly coordination of care if we don't do those things. So I don't think there's any risks by partnering more closely with those organizations. I can't stress enough data that data to build programs that match patient needs is vital. We are early in the adoption of, you know, what some would consider big data and sharing that with our care providers in the community. But certainly there needs to be significant investment of time and resources and money to get data in the hands of the right individuals. And they're not finance individuals, by the way, they're clinicians to help us develop those programs that are valuable and needed in the community. Okay, other members of the public? At this point, I wanna thank Claudio and Judy for an excellent presentation.