 Good afternoon everyone we're in the month of September and the month of September was the final month for one of our board members whose term expires at the end of the month and he really would wish that he was here today rather than where he is at and so I just want to give public recognition at this time to the tremendous public service that Khan Hogan has given to the state of Vermont over his lifetime dating back to his days at corrections and at AHS and his full six-year commitment to the Green Mountain Care Board and unfortunately yesterday when we had the Green Mountain Care Board staff were going to have a little reception for Khan his day started off a little bit rough and he ended up in the hospital so Khan will not be here today and hopefully we won't have any two-two decisions there's no guarantee of that but really just want to start this meeting by paying tribute to one of the most dedicated public servants I've ever met in my lifetime and all of our thoughts and prayers are with Khan for a speedy recovery and with that we'll get started with the meeting thank you Mr. Chair I do just have one scheduling announcement for next week's meeting we'll be meeting on Wednesday September 20th and instead of Thursday of next week and that's that's all I have to announce and just to echo what you said about Khan Hogan and he he was a great mentor to me and to the staff the Green Mountain Care Board staff as well so thank you okay next on the agenda is the minutes of Thursday September 7th is there a motion I'll put a motion I'll second so Maureen has moved to approve the minutes of September 7th without any additions or deletions or corrections it's been seconded by Jess is there any discussion if not all those in favor say aye aye any opposed okay so Andy if you and your team could come up it's okay for sound a little higher just stay close to the mic about that okay let's try that I'll wait until next week let's get let's get this done with and then we'll process our feelings so I wanted to give a quick overview of what we did last week and then to set kind of an agenda for what we're going to do today last week we reviewed all 14 hospitals the board voted on seven we've notified those seven that their budgets were approved on email our team is working with Judy's team on the on the orders we hope to have all of the orders for all 14 done in draft by the end of next week and then finalize them the following week and get them out mid to late week that followed that last week of September there were two hospitals of the seven that you approved last week that you asked regarding their fiscal outlook over the next three years we notified them that we expected something in writing back by the end of October we gave them a little bit of time knowing that we won't be able to review it anyway with all the work that we have ahead so those seven have been notified and they're done then there were seven remaining hospitals where we have follow-up we we followed up with all seven all seven have responded we've provided their written responses to the board posted them on the web and my plan was to walk through each of those today and then we'll have board discussion so on so forth I will say at the outset all seven have been fantastic and their response does calling us back and getting us the information we need so before we start that I wanted to quickly walk through the public comment that we got from the office of the health care advocate so I thought we I thought we'd start there we sent this they sent this to us on September 11th we posted this on our website and all the board members have received this I think you've probably reviewed it in within this there are five items I thought I'd go one by one and we can have discussion or whatnot the first is risk-based payment models we will talk about this when we get to broader boroughs budget so I'll kind of put that one to the side right now executive pay I think the board has to have a longer conversation about executive pay at some point I don't know that we'll get to that today but I think at a later date we can bring some information from the board and have a discussion on that these are suggestions so if you guys want to can I just say Andy we don't have that in our packets and I know we've all seen it but you might have to just give a little just brief statement about what each one is I think you had a nurse anyway some have that we've all seen it but just also for the attendees it made make sense to stay with each is so there there's an item on financial assistance policy the HCA recommends that within our budget orders at each hospital review its financial assistance policy and make sure that it is in compliance with the federal regulation this is to board discussion but I think this is a pretty easy item to put into the budget order worthwhile to okay energy efficiency 2015 all hospitals were required to submit a report on energy efficiency to the board the HCA has requested that we ask that we could do this in the budget order we could do it separately that we asked the hospitals to respond on those reports what was completed and the actual savings that was recognized what wasn't completed and why wasn't it completed and then what is the expected timeline for completing those the HCA goes on to say we they request the board submit an updated energy efficiency plan I don't know that we're ready to do this in the board in the order or not I we really haven't discussed it I would open it for discussion from our recommendation from the board I am interested in learning about the energy efficiency plan but I quite frankly this is the first I knew it even existed so for me personally it might be premature to do it in the order but I think we could certainly I'd be in favor of looking at it a future meeting if that makes sense to other folks on the board so I think that the last one was 2015 is that correct correct so you know it doesn't hurt to update that it might be wise for us to ask for an update on that 2015 report certainly the topic came up in the CLN hearing that we had on Brattle World Memorial Hospital and it just seems that with today's newer technologies that there ought to be ways to find cleaner cheaper power than what we're currently using so I don't think it hurts one of my questions would be what does it cost so that you know the suggestion is that each hospital complete and submit an updated energy efficiency plan these plans should be accompanied by an energy audit signed by an engineer with expertise etc etc I guess I would just like more information on what is it going to cost each hospital to do this not that I'm saying well I don't think we're going to act on this today but I think basically we're gonna Andy's gonna have to reach out and find out what those costs are and maybe it doesn't need to have a certified engineering update but basically just a report back on what progress they've made since that 2015 report which I think is what I heard in your recommendation right so we could follow up separately from the budget orders with each hospital and ask that they answer these three questions then have a board discussion and decide whether or not you want to proceed with it a new plan or otherwise I also think that maybe something we can incorporate into next year's budget process and submission so that way when the hospitals go through their budgets we can discuss it at that time rather than just getting something you know offline in the next couple months would be another option but I do want to thank the health care advocate for bringing the topic forward because at least now all the hospitals know that it is an area that will be discussed and I think that the more planning they do on this area the better and it may mean that they may still end up with the same technologies that they planned on to begin with because that's the most affordable in the long in the long haul but it's good to know that we'll gather the information and then bring it back at a later date okay and then the last is about volume based incentives I'm just going to read it because it's only five sentences we continue to be concerned about volume about volume based incentives for providers particularly for procedures provider incentives must shift to reflect shared decision-making patient experience and quality of care rather than the number of procedures performed we encourage hospitals to research provider payment best practices and value-based payment models and to implement models that incentivize shared decision-making and high quality patient-centered care we ask the board to ensure that measurements of these areas are included at every possible level and that any provider payment incentives reflect these priorities I think this is an item we can consider for next year's budget instructions that I think we have to have a more in-depth conversation about what it means and what we would ask for but I think taking this up for the 19 budget instructions is probably what I would recommend that makes sense to me I my only question would be whether this might be a research project that like the association or some central agency might take on so we don't have each hospital doing the same research 14 times which doesn't really seem efficient thank you for that update what I propose to do now is go hospital by hospital I'd like to start with UVMMC which is the end and the reason I like to do that is their their budget has submitted it was not at a compliance with our request but there are a couple of items regarding language that will likely end up in the budget order and I know their CEO is here and wanted to address the board regarding those two items and I thought maybe we let that happen first and then take up UVMMC and then just start right at the top and go down the alphabetically from the beginning okay okay so Dr. Bromstead would you like to come forward actually I may have misspoken there's an issue of pay parity but I think we have the response back from UVM so I think the only issue that we're down to is the issue of the funds flow between Vermont to New York hospitals within your network for through part of your business I think that was the one I'm sorry about that because we're happy to address the other issue as well the request you made but I would ask my more financially astute colleagues behind me to address that but you have raised some questions about funds flow between primarily the University of Vermont Medical Center and New York affiliates of the University of Vermont Health Network and it's really critically important to put that into some context we're happy to provide the board with any information that you'd like on that topic and in fact our finance staffs have worked really collaboratively and really well over the past I think four or five days to pull together what I view as a draft for you all to respond to if that isn't quite right as far as the information that you'd find most helpful we're happy to modify that I'd like to indulge you to indulge me for just a few minutes so I can set some context however we believe that people deserve to be healthy and to have access to the highest quality servant health care delivery services as close to home as possible that's the philosophy upon which our vision in our mission is based and it's the philosophy on which we make our decisions clinical administrative operational every single day and that philosophy supersedes socioeconomic status supersedes race and gender differences sexual orientation and certainly supersedes state borders that we make our decisions based on the communities we're serving and how we can help those people to be as healthy as possible and have access to high quality services that's on a backdrop of academic medical centers particularly in rural regions serve populations broad geographies referral networks that have been set up for decades and decades and not specifically states Dartmouth Hitchcock serves New Hampshire Vermont in some Massachusetts Albany Med takes care of folks from Vermont the Capital District in New York and some folks from Massachusetts and the University Vermont Health Network serves Vermonters in Central and Northwestern Vermont and folks from six counties in in Northern New York you know as we've talked over the past six years about developing the University of Vermont Health Network we've spoken in theory and also in real practical terms about the huge changes that we're trying to implement and it doesn't matter if that's how money flows into the system doesn't matter how we distribute those dollars and shift from hospital dollars to community social safety net organizations shift dollars to primary care all of those things we are evolving and changing and it demands incredible communication and constant communication and you would believe communication externally let me tell you that for all of the external communication that's required there's about a hundred times as much internal communication is required to keep everybody marching forward and understanding the why the why of these these changes for many many decades even believe it or not before I was at the University of Vermont there have been the patients coming from primarily six counties in northern New York to Vermont for tertiary quaternary services those services the community hospitals just don't have the size and scale and skilled workforce to provide and if you look at that really importantly many of the academic programs that we have could not exist just based on the patient population of Vermont alone those critically important academic programs to refresh our workforce and bring research dollars to our communities demand that we have the northern New York population added to the Vermont population and it's not just academic programs it's the clinical programs as well the neonatal intensive care units the children specialty services the level one trauma transplant those things those programs would not exist at the University of Vermont medical center based solely on Vermonters using those services they need to be have the volumes from northern New York to be efficient and high quality and a way to look at that is that for Vermonters the cost of those programs and it's largely fixed costs just because of the capacity issues for those particular programs the cost of those programs are spread over the population of northern New York and Vermonters and if they were born just by Vermonters obviously the cost per capita would go up and probably be cost prohibitive as we brought the network together one of our key tenants is to keep care local again back to the core philosophy of wanting everybody to have access to the highest quality services possible as close to home as possible and going from a situation and environment where all of the current participants in the University of Vermont health network were sole community providers getting to a place where there's coordination and we have the right programs in the right place requires investment it requires investment in time energy a lot of collaboration and it does require investments as well and if you really you I believe Andy you've shared the spreadsheet with the board if you look at that year over year when you look at how that activity is accounted for financially it's about 15 15% of the patient revenue that's generated at the University Vermont Medical Center on an annual basis that comes from covering services for New Yorkers that come to that come to the Medical Center for these services and you've seen the breakdown of how that actually gets to dollars at the end of the day but year over year it's around 30 million dollars to the plus side in Vermont based on the activities provided to New York residents and that's been going on for quite some time and in building the network and in living our philosophy that requires investment back into the services for our New York residents that are patients of ours as well and there are some really important operational issues that go along with that we all know that access is a cornerstone of quality and that access is difficult particularly in rural environments maintaining appropriate access throughout our system throughout our continuum from the most intense care down to the most basic primary care demands that we have high quality systems as close to home for people as we can and those investments whether they're Porter or center Vermont or the northern New York hospitals or practices mean we have to make investments and if we don't people will travel for that care and that can impede access inappropriately in other places of our system so I hope that gives you some context and some historical basis the board in previous constitution wanted us to keep the New York revenues and any expenses integrated into the medical center's budget and we've done that new leadership and a new view from the board and a much more further evolved University of Vermont health network we're happy to have our staffs work together come up with the final work product and give you those data at the periodicity that you find most helpful I would ask that we do have really clearly defined when these this information should be updated I'm telling you that we have a very very complex organization we deal with decisions and environmental changes all the time so we have things that we're contemplating we have sets of decisions that are laid out before us as management that we may hone down and take to our boards for final approval and in that process we want to make sure that we inform the board of what you want to be informed of when it's actually done and decision-made and not get into a miscommunication about because we were thinking of something or because we were talking about something six months ago but we didn't tell you until today that that's necessarily a problem we have to get to a place where we're fully committed and all of that internal communication that I spoke to really is happened and that we really are ready to move forward so I great work throughout the budget process with the finance staff that we have and with Andy and his team in my view and over the past week to clarify this at your request again great work so I'm sure we can get to a place where our staffs are tracking the right information and we're getting the right information at the right time so that you can make those decisions I'm happy to answer any questions about that so I share your confidence that we definitely can get there and really appreciate the quick response when we did reach out with questions and clearly there has been an historical dialogue between the past chair and the chair before him and UVM and so that it shouldn't be any surprise to the Greenmont care board about the nature of the network and just for explanation for those that are in the audience the spreadsheet that dr. Brumsted is referring to is a sheet that our financial team and his financial team put together that basically tries to track the flow to show that there is is not a net economic loss to Vermont flow of funds and in fact it shows there's an economic benefit and that's one of the things that we want to just continue to make sure and I think we're all in agreement on that at least I believe that you're in agreement on that so I think we've definitely made some progress on this issue and I'll leave it up to the other board members I know I agree as well and it seemed that some of the things that I've heard from people I think some people may be confused on what an impact is to the P&L versus to the balance sheet and that you know you guys are accurately representing your P&L to be the Vermont P&L and you have a strong balance sheet and in over the past several years you've used some of that cash to push over to New York and you know and typically in a business model that's that's how it would be done so I really wasn't surprised at all I think you know part of it is maybe opening up communication and then just making sure people I think in the public really understand it's not like we're taking that you were taking seven million dollars from a P&L and pushing it over to New York and and misrepresenting that so I just you know wanted to clarify because some of the conversations I hear it almost seems like people don't understand that so I think that's a great observation and comment the other area of related confusion is each one of the affiliate organizations in the University of Mount Health Network is still a 501c3 incorporated and has granted reserve powers significant reserve powers but reserve powers to the University of Vermont Health Network and if any of those organizations as several have have a transient loss the P&L that's absorbed on the balance sheet of that organization and so it's not that it defaults to the rest of the members of the network including the University of Vermont Medical Center to cover those losses it's only if an organization within the obligated group were to miss covenants or really be in a bankruptcy situation that there is obligation of the others to cover that and we're not there so really that's a inside of the tent our vernacular is that's the organizations floating on their own bottom it's each organization's balance sheet is expected to cover its losses and over time we expect every organization to be having a positive margin and being able to build their balance sheet and generate the capital that we need for the the good of the network so the my only thing I would add is I I think and this is actually not specific to UVMMC because we know that a lot of the other hospitals also have in and out of state migration and that is an area that I think we need to focus on for next year particularly to understand moving into the all-pair model how are we're meeting our targets both financial and population health for Vermont residents and in order to do that we need to understand Vermont versus out of state and the other only other comment I would make is that I think the other piece of this is you know for example we know that Dartmouth is keeping one of our Vermont hospitals essentially afloat as well so that's that's part of the pie as well thank you we really enjoy being special but in this instance I think if you're really going to go down this road you're really going to have to look at the ins and outs because the most of the hospitals are not confined in their patient activities to the Vermonters and you know so it's sort of a tangled web if you want to go down there but as you suggest Robin there are some reasons particularly in understanding the all pair model to do so yeah I just to build on that quickly first of all thank you for coming in and explaining and to be honest nothing in your comments or even in that spreadsheet surprised me at all I've always you know my assumption has always been that the inflow of New Yorkers has helped spread fixed costs and has helped the bottom line of UVM Medical Center in the network and Porter Medical Center yeah absolutely and one thing is we I mean we've been talking about this in the last few weeks a conversation actually started the last year about how do we treat in state now statement this has been something we've talked about for a while I think we're now at a point where we really need to address it not only with the all pair model but because it needs to be addressed how do we calculate it one of the things I think we'll need help thinking through we'll need to discuss is revenues are easier than costs and how do you allocate the cost particularly fixed costs you know and so I think that's just something that we need to think about and it's gonna have to be part of our analysis but we'll going forward it's great point going forward the cost accounting system that you've heard about us putting in will help but still you're gonna have to get down to basic assumptions particularly for these services that are essentially totally fixed cost because you know we're trying to serve a broad population we're just gonna you know need to make assumptions on proportionality and you're not going to be able to track it down to an individual level I mean you know the costs of somebody getting a transplant could be you know fifteen thousand dollars if there's complications it could be a hundred and fifty thousand dollars so it's going to be difficult on a per individual basis but again the finance team's working together if you want to do that we just need to have a common set of assumptions and how to treat that and I think to one I mean UVM Medical Center and the network has a very sophisticated cost accounting system some of the other hospitals don't have such sophisticated software and cost accounting system so I I think you know I think it's a conversation we need to have we need to figure out what we can do but I think your ability to you know calculate those costs and allocate them is going to be different than some smaller hospitals that are still on the border that have that in-state out-of-state migration so something to work on yeah so Dr. Bromstead at last Thursday's meeting mark made the statement that there's no plans in the 2018 budget to transfer any funds is that still the case that is but I would say back to you know the comment about making sure that we keep you in the loop there almost certainly will be things that come up during fiscal 18 that we decide to do as far as investments either in New York or in Vermont that would be the normal course obviously if there's something that trips a CON trigger then a new program or the size of a capital expenditure you would automatically get that as part of the CON process as we sit right now there's nothing in the budget if something comes up I think we need to have a mechanism that we clearly on the a agreed to periodicity that we bring you up to date on what we believe the investments in this realm that you're interested in that we've made okay are there any other further questions not thank you Dr. Bromstead thank you thank you so Andy it's my understanding that since we're already started on this hospital that makes sense to try to talk this through and so I have a recommendation that that works that's great given that UVM's MC's NPR is at 3.39% and their submitted rate is at 0.72% which is what we requested I would recommend that the board approve their budget then language in the budget order and I'm calling the form that they submitted and I'll ask them for a final form but I'm calling it the funds flow I would recommend we add language to the budget order that says University of Vermont Medical Center and the University of Vermont Health Network will provide the funds flow spreadsheet annually with their budget submission to the Green Mountain Care Board and update the Green Mountain Care Board with actual expenses on a semi-annual basis and then overall funds flowing between Vermont and New York will not exceed net margin funds to Vermont without prior approval of the Green Mountain Care Board so my thinking on that is when they provide this at the six month interval we'll be able to see whether or not they're going to exceed it and then the board can call in UVM and decide whether or not you want to approve it or so on so forth so that's that's the piece I would recommend on the funds flow next paragraph we haven't talked about pay parity and I don't know if Jess or Robin one of you guys wanted to lead the conversation on pay parity sure I'm happy to in that so I think that one of the things that we talked about at our last meeting was accepting the UVMMC budget with one adjustment which is to direct UVMMC to redirect the entire proposed 11.3 million dollar reduction in professional fees to the ENM codes which we've identified as site neutral services so this reduction targeted towards ENM codes will further the board's work that we have undertaken to create fair and equitable payment differential between the academic medical center and community providers in this area of site neutrality so the hope would be that we could add that to the acceptance of the proposed budget okay so is there discussion on the two conditions that have been proposed I like them so I think that clearly there's been a lot of work done here Andy and I thank you for your long hours that you put into solving these issues and a special thank you to Jessica who struggled mightily with pay parity and is still struggling as we struggled to complete that mission that we've been assigned to by statute so with that would somebody like to make a motion oh yes thank you Judy I got moved away from you so no kicking out of the table so before we do that is there any public comment from members of the public or from the healthcare advocate I don't see any oh I do see one go ahead so perhaps the UVM team could answer that I'm not sure that our financial team has the number of adults in New York that are served is that the question okay could you VM answer that do you have an approximation do you have an approximation of the total well other than the fact that it well that represents 15% of our total revenues or approximately 165 million dollars a year plus or minus I think I heard the question to be the number of people isn't it coming because there are other counties that we do take care of as far out as you know St. Lawrence so we basically should hold that information before you give me the entire population number so we'll do that off of that population that mark identifying 165 million okay great is that okay Dale thank you one of the things that just strikes me as you're hearing about this is I wonder how many of the New Yorkers that you're serving actually work in Vermont I may not that I'm asking you to collect that because I don't think that's definitely not but as I'm thinking about them we you know there is so much fluidity in the borders that there are plenty of people that that work in Vermont that live in New York that would be considered a New Yorker in your database but actually your Manhattan and come to take care of take advantage of our beautiful natural resources do we need a motion then or do you have more public comment I don't see any other hands raised okay so I can make a motion I move that we accept UVMMC's budget with one adjustment UVMMC should must direct the entire proposed 11.3 million dollar reduction in professional fees to ENM codes UVMMC shall implement this reallocation in a manner that does not result in an increase in the originally submitted 0.7 to rate increase or in the NPR growth rate of 3.39 percent submitted in the fiscal year 18 budget should not negatively impact UVMMC's participation in the ACO which was something that board member Robin requested last week so I heard the motion and I think that there's just one piece that I hope you'll add to it and Andy if you could read that language UVMM Medical Center and the UVM Health Network will provide the funds flow spreadsheet annually with their budget submission to the Green Mountain Care Board and update the Green Mountain Care Board with actual expenses on an semi-annual basis. Overall funds flowing between Vermont and New York will not exceed net margin funds to Vermont without prior approval of the Green Mountain Care Board. I will accept a friendly adjustment to the original motion. Is there a second? I'll second. Is there any discussion? Can I just mention that the language may be approximated to what we've just heard on those conditions in case it will have that substance. That sounds great. We will let you word Smith Judy. We love your word Smith. Yeah. Okay I don't hear any discussion so all those in favor signify by saying aye. Aye. Any opposed? Let the record show that the UVM budget has been approved unanimously with the two conditions. One of the things I would just like to add here is I think we should request from MVP and Blue Cross Blue Shield to quantify the impact of what we've just moved. Second didn't vote it in terms of what the pay differential will be for E&M codes. So I think that's a. So Susan if you could just send an email request to the two companies to provide that information that would be great. So which hospital would you like to go to next? So I'd like to start right at the top which is Brattleboro. So just as a reminder, Brattleboro submitted their overall budget with a 3.43 NPR growth and an 8.9% submitted rate. We had significant discussion around 3.2% of the 8.9% rate as it relates to risk in the Brattleboro's ACO. I asked the CEO of Brattleboro if they could lower their rate from the 8.9 to 5.7 and still participate in the ACO and what impact that would have. Steve Gordon responded with a memo which I provided to the board and also posted on our website and essentially said that he would be comfortable with the 5.7% rate which is a reduction of the 3.2 provided that the board is clear that if Brattleboro needs to offset more than 50% of its contracted risk or Brattleboro is not accepted in the rural community health program that they may need to revisit that when Brattleboro appeared in front of the board they commented extensively on their risk related to the rural community health program and whether or not they were accepted in that or not and as a effect of over $2 million on the Brattleboro I would say as a blanket all hospitals are re-eligible to come in front of the board and revisit their budget so that caveat that they can come back in front I would recommend that the board accept the resubmission of the submitted rate of 5.7 which then lowers their NPR to 1.69 thank you so clearly we're not going to put that in the order decision about coming back because I don't want to encourage anyone from putting risk from participation into the budgets but with the understanding that we would hear from anybody that came before us that's that goes without saying do you want at this point address anything as it relates to your earlier report from the HCA on this issue so the HCA had yes thank you in the in the HCA's comments they say the HCA does not support the inclusion of risk for reserve based models in hospital rate requests as proposed by the Brattleboro Memorial Hospital and so they actually said this verbally at the meeting I think by our our teams recommendation to lower the rate of 5.7 is consistent with the HCA's comments I believe so are the questions from the board is there any public comment or question on Brattleboro Memorial Hospital yes when it comes to passing on the risk that one has been a little more concerned in terms of how it affects the consumer because risk is passed on to the consumers and the formulas that then they're going to get around passing on of risks what they're suggesting is there a clarification around this in the sense of my reserves that are set up to counter the risk I am taking is it about if that reserve falls too low is it to keep the reserves in other words at a certain level what in this particular case they had actually included in their budget a risk assessment as it relates to their participation in the ACL which is a move towards population health if we were to start down the road where we allowed people to across the board increase their budgets based on a number that they assigned to what the risk factor would be from participating in the ACL I just believe it's a very bad and unwise path to choose do you want to add to that Andy no I think that okay is there any other public comment or question if not is there a motion on Brattleboro Memorial Hospital I would move approval of Brattleboro's budget with the change in the rate to 5.7 and the NPR to 1.69 I'll second it's been moved and seconded is there any discussion seeing none all in favor signify by saying aye aye any opposed so let the record note it was unanimous so next I'd like to move to Central Vermont Medical Center just as a reminder Central Vermont Medical Center introduced its budget with a requested rate of 0.72 so they abided by the board's rate request and they also had a NPR of 3.64 we had a discussion at the board meeting last Thursday regarding lowering Central Vermont Medical Center's NPR to 3.4 at which time Khan called on UVM MC finance staff about the impact of that UVM MC staff responded that they had a new growth trend on bed that free care which would lower their NPR they resubmitted their NPR at 3.39 and so I would make the recommendation that the board approved Central Vermont Medical Center's budget with the rate of 0.72 percent and an NPR of 3.39 percent 3.1 3.39 percent is there a motion I will move that we approve central Vermont oh do we need to do public comment before I make this motion I take that back is there anyone from the public or the HCA who wishes to comment on Central Vermont Medical Center's budget seeing none is there a motion now yes I move we approve Central Vermont Medical Center's resubmitted budget with an NPR of 3.39 and a rate of 0.72 percent is there a second second it's been moved and seconded is there any discussion seeing none all those in favor of approving see CVMC's budget with an NPR of 3.39 percent and a rate of 0.72 percent signified by saying aye aye any opposed let the record know that it was unanimous going alphabetically in the next hospital is Copley and I'll just remind the board their initial submission contained an NPR of 8.14 percent and a submitted rate of 0 we discussed last Thursday the CON for their surgical center which had a condition for a three-year period following that CON which includes this year that's Copley would abide by all budget direction and budget orders from the Green Mountain care board we corresponded with Copley and asked them to reevaluate their budget and resubmit and consider a rate cut they resubmitted a memo which I've provided to the board and is on our website they are proposing now to take a 2.1 percent rate reduction they had originally submitted with a zero to reduce their operating expenses by 775,000 included in that rate included in that reduced NPR it would give them an operating loss of 244,000 the effect of this it would take the NPR growth down to 5.9 percent 5.9 percent so that's the proposal I don't have a specific recommendation I wanted to open it to board conversation and discussion around what the resubmission looks like okay so this is a conversation that is continuing from last week clearly the board has concerns that the current conditions that were agreed to on the certificate of need have not been adhered to and the board certainly wonders whether there is non-compliance with the CON order and I'm not sure that today is the day to address that non-compliance with the CON but it certainly you know I think that there has been at least a positive step in the right direction by Copley since last Thursday and I'll open up the dialogue with that jump in I'll jump in so for me this is I know you said we'll have a further conversation about CON but for me this is as much about 2018 budget compliance as our budget guidance as it is about the integrity and credibility of the CON process we rely on the accuracy of the information we receive when we make CON decisions and we expect hospitals to comply with the conditions that we impose looking at their 2018 budget they are I believe my math is right here there are 3.3 million dollars over where they should be for both budget guidance and CON compliance to bring Copley back into full compliance with our budget guidelines and our CON conditions without any adjustments to underlying utilization to eliminate that 3.3 million dollar NPR overage would require a 6.8 percent rate reduction roughly again they initially proposed a zero percent rate increase the resubmission had a 2.1 percent rate decrease which is certainly in the right direction but it's not enough to get them back into compliance or within our budget guidance and so in part of my frustration I believe is that there's nothing in the NPR overage that's a surprise most of what is in the NPR overage comes from operating a cost associated with the surgical center for example that were in the CON application addition or requests for a larger margin in the CON application they had estimated the cost and expected a zero percent margin in 2018 so these are they correctly in in many ways anticipated where they would be in 2018 they said they were not going to ask for NPR to cover where they would be in 2018 and now they are so for me I find it quite frankly frustrating so here are some of my thoughts we can either reduce their rate by 6.8 percent now that gets them into compliance or we could take a two-year approach and we could reduce their commercial rate by say 3.4 percent for 2018 that would get them halfway towards compliance and halfway towards our budget guidelines it allows the new leadership team another year to come into full compliance get expenses under control eliminate whatever unnecessary utilization might exist we would write the order then that to expect a cumulative NPR growth over 2018 and 2019 to be within our budget guidance using 2017 as the base year so in essence letting Copley borrow against next year's NPR this year to meet a cumulative two-year target so they go over in 2018 they must come in under effectively in 2019 to be in total compliance and we can ask for a mid-year check to see where they're on so I think there's that would be one suggestion of a direction to go to is that a motion it's a sure that could be a motion then what I heard motion was was to approve their budget for 2018 with a 3.4 percent rate reduction with further language that 2017 would be used for the base but the cumulative total of 2018 and 2019 would be in compliance with yes with the board's rate proposal so where did you have 2019 going then at that point you said well cumulatively we haven't set our NPR guidance for 2019 so whatever we set the 2019 budget guidance cumulatively including 2018 and whatever we set for 2019 they would have to be an overall cumulative compliance by the end of 2019 so presumably if it's 3% for 2019 they'd have to come in under 3% for 2019 because they're borrowing against that now because we're allowing them over it but it gives them some time to make adjustments get expenses under control and maybe eliminate some unnecessary utilization to the extent that they can so that's a thought can I just said them I just wanted to comment on some some of the numbers you know I wasn't here for when the CON was done but looking at you know it seems to me where things kind of went off the rails was really in 2015 so when they put together the CON at that time we were supposed to be at 59.6 I'm going to give out a few numbers and they actually came in at 63.5 and from that point then in 2016 there at 64.2 so they basically were about flat so did not have a huge utilization increase 2017 they jumped up again to 68.5 and now in 2018 with what they've submitted they would be flat once again and cumulatively over that three-year period they actually would be within what what they had said they were going to do with the CON which was a 3% increase I agree with what you're saying just that in 2018 they were supposed to be at 65.1 and they're coming in at 68.6 I think part of the issue is where they went off on their forecast completely was in 2015 before the new surgery center was in before utilization came to play so I'm not sure really how we handle that it's just when I'm looking at the numbers we're basing a lot of this on where they said they were going to be in a submission in 2014 which at that time they said 59 million for 2015 and they came in at 63.5 and we the board pushed back and made them come in with a negative rate increase in 2016 of 4% then in 2016 and 17 they again didn't meet what were what they were supposed to because it was based off of the budget which was 59 million in 2015 budget but they already were at 63 million they came in flat in 2016 to the prior year so they really held utilization the board pushed back again and made a minus 4% rate increase in their CON they had had a 2% rate increase projected for 17 and 18 and 17 we put in a minus 4% and this year we're going to put in a minus 3 so I think you know we've we've actually you know have hit them several times it's not sustainable to necessarily have five years of a negative rate increase I just want to caution us on looking at that because they will have had you know a minus 4 in 16 a minus 4 in 17 a minus 3.4 in 18 and then potentially another negative in a future year so I I just want to lay some of those numbers out so people understand that a lot of this issue again occurred in the 2015 timeframe when they completely blew away their budget and again we push back and said you got to go back minus 4 but we're now holding them to that for a forecast four years later saying you need to be at 65 million you know I just don't think it's realistic to expect that at this point I think what's going to happen is we certainly can impose that and I think we should impose things but they're probably gonna exceed the budget again because people are going to come through the door they're going to get continue to get a lower rate than what's been charged in the past you know I just don't want to keep keep setting up proposal is there a proposal you would prefer I mean I think where they came in in 18 I think it's almost like we needed to rebase the CON based on where they were in 2015 before the surgery center came through and and then each year from there look at where their utilization is because otherwise they're going to be taking a step backward so I think starting at where they were in 2000 in their CON they had said they were going to have utilization increases I believe of 2% each year that was in the CON of as far as what the projection was for utilization so it's not like we're expecting a significant utilization I just think it's really difficult to to go back on these numbers in again based on 2015 where they blew it away which was wrong and and whether they were pushed back to have a negative 4% rate increase in 16 and negative 4% in 17 and you know negative so I would accept their their adjustments to their budget as they've put forward and you know then look into 2000 I wouldn't put a restriction on 2019 at this point would be my recommendation so Judy I'm looking to you for parliamentary procedure we have a motion on the floor is there a second to the first motion or does the original maker of the first motion wish to withdraw it or there has not been a second Robin I would actually second Jess's motion because I feel like utilization is the hard nut to crack in health care and we really have two tools to address increases or pushes in utilization one of those is encouraging hospitals to take risk and moving to a fixed budget where quite frankly then we can look at price and costs in a much more rational manner or when utilization as reflected in NPR growth is excessive the only other tool we have in a fee for service environment at this point is rate cuts so it is a blunt instrument and I I appreciate Maureen's perspective and I am very thankful to have her on the board with us now because I it's so helpful to me to have that business understanding and perspective but I also feel strongly that utilization is tough and we as a board really don't have a ton of tools other than hospitals figuring it out quite frankly how to ensure that the utilization is appropriate and maybe that is like upping their game with shared decision making with patients who come in the door so it's been moved and seconded to set the rate as a negative 3.4 for 2018 Andy can you just give us a brief update on what that means in dollars so that will mean the NPR we're running calculations up here fairly rapidly but I think it equates to after adjusted for physician transfers and acquisitions of 5.61% on the NPR can you tell us what the dollar total would be for that so the dollar total I'm sorry for which what their NPR rate would then be for the year the NPR rate for the year is 5.61 it's a total of 3.6 million dollars on the on the base of 68 024 531 so when we take the on the coupling memo second column in the middle of the three column chart they used in that patient revenue of 68 643 747 we back out an additional 1.3 percent rate reduction which comes out to about 627 thousand dollars gives them a new NPR of 68 024 531 for an NPR of 5.61 every 1% rate reduction is about 482 thousand dollars so 482 times 3.4 is about 1.4 million dollars 68 is about where they'll end up 68 0 thank you 024 531 okay are there other questions from the board or comments if not are there questions or comments from the members of the public anyone you moved on me Dale the concert how they tune the piano the base the reference point that's when tuning for how I move forward if the year is an outline year and it doesn't make sense to use that year what would be another way to do the base would I yeah I think I think part of my concern was on the base was what they put in their CO N for the for the base year that was being used for all the assumptions was the 2015 budget and at that point the number was 59.6 million and so everything kind of went off that number on their CO N and their actual performance in 2015 they came in at 63.5 so significantly higher which was not authorized and there were concerns about that and that's why they had to adjust with a 4% rate reduction the following year part of some of the concerns I have with our budget process in total which hopefully will make some changes next year is we focus a lot on the prior year budget when we look at numbers and and the percentages that we talk about so they carried it a year forward where in 2016 they were using a budget of 59 million and they were supposed to stay flat so their budget for 2016 came in I think around 59 million low and behold they came in the same as the actual for 2015 which was 63 million they came in at 64 million the board again said you were out of compliance and gave them another 4% hit and I appreciate all that it's just it is kind of a double hit you got you got hit the first year then you got to hit again because you based your budget on the prior year budget which wasn't correct anymore that's not where you ended up so we hit them twice now we're dealing with the CO N which in the CO N since it was based off of a base at 59 million and 15 was to grow to 65 million and 18 which is a six million dollar growth rate they actually were 63.5 million and 16 if we gave them that same six million dollar growth rate excluding percentages they would be at 69.5 million they're going to be lower than that now at sixty eight point six so it you know it seems now they're tracking more towards what they were supposed to because we're all talking about utilization and the base of where they started their utilization prior to the surgery center being being even built was wrong they started with the base of 59 million it was 63 million the actual growth every year on that for the four years out is is totally consistent with the growth rates that had been in the CO N if they had used that base now I can't say I wasn't here for that they made wrong assumptions at that time I'm just saying we've already pushed back now this will be the third year to give a negative rate decline typically on a business that's not very sustainable over the long haul to be able to continually do that and I think you know ultimately you could jeopardize their financial stability because we're also going to say hold back on utilization when you've got a whole bunch of fixed costs that we're putting in there so I mean they they all kind of come together and you know there certainly are a bunch of issues in there so as far as your question what's the right answer it's hard to say but I was just rebasing off of where they actually ended up in 2015 which was prior to any surgery center coming into play and then looking at the utilization there for it again they were wrong in what they did at 15 so if we want to hold them to that utilization to where they were at that point and then say you can only grow off of that they're going to end up potentially being down in utilization or flat when they did expect a marginal increase of 2% a year so you know that that's really where the issue was I do agree that the board should have pushed back should have given them rate declines now we're going to have again because Andy's number is off of the budget they're exceeding their budget again in 17 so it's going to be about a 1 if you come in at we were saying I think 69 68.6 or 69 million they're going to come in this year around 68.5 so what we're asking them to do right now is be about flat year over year and that's probably reasonable with a rate decline I'm not going to have much of a utilization increase so it's you know again hard to say exactly where you read where you say the base is one of the things I just want to comment on and I do appreciate the rebasing and we've had this rebasing conversation around different hospitals over different years it's very difficult to figure out when and for whom we should rebase but one of the things I think it's important to reiterate is that they came in at a 7.5 percent NPR if you break that down these are my notes from the hearings I hope that they're still correct but they had an inflation of 3% they had health reform investments of 0.1 they had 1.4 associated with the operating costs of the new surgery center 1.8 was increased in surgical costs as my notes here and then 1.2 was allocated for an increase in the operating margin so going back to the CON their one million dollar operating costs for this new surgery center which accounts for 1.4 percent of the NPR increase that was something that they had correctly estimated in their CON and and said that they were not going to ask for NPR for that so for me that's 1.4 right off the top because they correctly anticipated that that's not a rebasing issue that's correctly anticipated back in 2014-15 what that was going to cost and explicitly saying we're not going to ask for that in NPR now asking for that NPR the other piece is they're asking for an operating margin positive operating margin contribution of 1.2 percent towards that NPR that operating margin in their CON they had they had estimated a zero percent margin for 2018 they were not going to ask for positive margin so if I just take those two numbers right there the two 1.4 and the 1.2 that's 2.6 off the top of the 7.5 percent increase in NPR that gets us down to a 4.9 percent NPR at the very least that's a starting point for me what this rate reduction does is it gets them down to Andy what did you say 5.6 so we're already over at 5.6 just making that adjustment and I'm okay with that but I'm just so I want to sort of interpret it a little bit differently yeah and I guess a couple comments I would have on that just again reading reviewing the hearing and you know reviewing some of the comments there were what I interpreted was said when they'd had when you guys had the CON meeting was that where their operating margins were not necessarily acceptable and they were challenged to find cost savings of which they have now incorporated in you know several million of cost savings that were also not anticipated in the CON so there was a challenge I believe to say running out of 0% operating margin wasn't really where where we wanted them to where the board wanted them to be so they they went and consciously looked at some cost savings and came up with some so I think that was you know we have to look at everything that was in the CON and you know again there's lots of assumptions built on assumptions but that piece wasn't in there either so yeah it's this is a challenging one I mean you know can I just clarify that that there's 17 actual is projected to come in at 66 837 565 and there if you reduce the rate by 3.4 it gives them that 68.0 that's an MPR off their actual of 1.8 percent yeah yeah I may have missed but yeah the numbers would be like 1.8 increase is there any other discussion by the board if not is there any discussion by members of the public what's that get away from this FY base and we're still dealing with that but I first want to recognize my team the finance team here I think the savings that we put into place for our revised FY 18 budget were not conservative I actually think it's a pretty good stretch goal on what we were estimating the additional million dollars it wasn't just some savings if we go with our advice FY 18 revised budget through FY 18 our savings over two years period of time will be providing it happens I want to highlight that this is partly a projection for FY 18 would be a $3 million savings for a pretty small community critical access hospital we keep on talking about the 1.4 percent increase in our current in our initial budget submission to cover the cost of the new circle center which is 20,000 square foot of space what I can't seem to understand is if we are not asking for 2% increase each year in 2% in one year correct me if I'm wrong it's about a million dollars we're not asking for that increase it almost is a zero-sum game so is that not bending the cost curve I would argue that it is with our current budget submission if approved where we are down to 5.9% over a four-year span of time we will have increased our rates by almost 10% in a four-year period of time but actually over three years we have decreased our rates by 10% I was asked why are we different by con last week for those that were here well part of what's happening is one I believe we provide great care but now we provided at a very good economical rate and so it's almost like a vicious cycle that's occurring we're asked why are you getting patients outside of your area it's patient choice and I don't think we're gonna change that anytime soon so I do feel like we are being punished again and for really taking care of the monsters and I'm not talking primarily more care for each individual primarily our increase is more care for each human being so additional patients are getting more care by coffee hospital because they are choosing to that's all I have thank you for your time thank you are is there any other public comment or discussion seeing none the motion before us is to reduce the Copley budget to a three-point a negative 3.4 percent rate and a 5.61 percent in PR all those in favor signify by saying aye aye any opposed opposed okay so let the record note that was a three-to-one vote next we're going to go to northeast northeastern just as a reminder northeastern submitted their budget with an overall NPR of eleven point zero one percent and a submitted rate of four point two five percent the board had a stipulated order in an order stipulated in fiscal sorry dated April 28th 2017 that requested northeastern come in at a three point two percent I spoke at length of the CFO of northeastern who agreed that they need to reduce their rate so their rate that that one point zero five rate reduction equates to a reduction of their NPR of three hundred ninety six thousand seven hundred three dollars when we wrote the order in affecting fiscal year 17 or the fiscal year 17 budget orders we wrote in our order that the board recognizes the market share recapture of utilization so we've already had a conversation prior about northeastern and their ability to recapture their market share over monitors back from New Hampshire we asked at the meeting last Thursday was for northeastern to go back and use data to affect their fiscal year 17 budget to rebase it and then recalculate their NPR for 18 what northeastern did was go back to fiscal year 16 which is when the board first recognized that northeastern was making a effort to bring monitors back to their hospital they rebased 16 which then flows into 17 which then flows into 18 so they took 16 group by 3.4 and then grew 17 to 18 by 3.4 which gave them a target of 79 million 689 900 they then I'm sorry to be so numbery they resubmitted their budget with a rate reduction which gives them a total NPR below that 79 million there resubmitted NPR is 78 million 818 100 which gives them a resubmitted NPR of 2.27 so I would recommend that we approve their budget with the rebased 16 where an NPR 17 18 of 2.27 an approved rate of 3.2% sorry if that was long-winded yeah the questions of Andy my only assumption is that if we rebase now we're good we're done that's correct that's correct going forward there should be full compliance with NPR correct right okay is there any public comment or questions on northeast not seeing any is there a motion yeah put to go for the motion with an adjustment to the rate of I think 3.2 percent correct what's their NPR 2.7 no NPR would be higher so I'll redo it I would recommend that we approve an NPR of 2.27 percent off of northeastern's rebates fiscal year 16 budget and an approved rate of 3.2 percent that's my recommendation I agree with that I'll second that it's been moved and seconded is there any discussion seeing none all those in favor of the motion signify by saying aye aye any opposed signify by saying nay let the record show that that was unanimous vote northwestern's next we only have two left so is it me that you can't hear or Andy okay we're shocked so northwestern as a reminder northwestern submitted their budget with a 3.29 percent NPR growth rate so they were within our guidance so their NPR is is not an issue they had a submitted rate of 6 percent we have a budget order on northwestern that requested they come in to the fiscal year 18 budget with a negative 1.1 percent rate so that was written in April of 17 every 1 percent rate reduction for northwestern is 505 thousand dollars so if they came in at the negative 1.1 they'd be about 3.6 million dollars I asked or the budget team asked the northwestern northwestern finance team to resubmit their budget with a lower rate and they felt that that negative 1.1 would be a difficult and a challenge for their budget so they have submitted to us a recommendation that we can lower from 6 percent 4.9 percent that essentially brings their NPR down to 2.7 4 percent from 3.2 9 percent I would like to at this point open it up to board discussion so just just to clarify at 2.7 4 percent correct and the rate 4.9 percent so that still seems to be a large variance from the guidance of a minus 1.1 correct okay is there board discussion I'm looking to Jess see that or Maureen so you know again another tough one we asked for a 1.1 percent rate reduction to offset the NPR overage in 2016 in fact this is a hospital that succeeded in PR guidance every year from 2012 to 2016 2017 they were under with a slight loss in their operating margin still had a positive total margin but they did have a loss in their operating margin but they're consistently you know healthy operating margins and to some degree overages have led to a very large cash on hand projected for 2018 to be about 264 days cash on hand which is almost twice the state average of 137 I I actually believe in this leadership team and I think that they have the ability to cut expenses and be increased efficiencies I think they're you know an incredibly financially savvy leadership team so one of the things I think about is if we allowed you know if we kept to negative 1.1 for example it would be about 13 days cash on hand if they had no ability to cut expenses in any way or improve efficiencies the impact would be about 13 days cash on hand so it would go down from 264 to 251 still well above what the state average is if we allow a rate increase say to cover inflation about 2% of a you know rate increase so not the 4.9 that they asked for but again not the negative 1.1 that we guided them on the impact would be about seven days cash on hand for them assuming that they cannot make any changes in costs anywhere else in the system I appreciate that they're leading the state in population health initiatives and they're taking risk and I think that should be rewarded in this brave new world that we're entering so I personally am comfortable with at least an inflationary rate increase of 2% I'm not sure I can go all the way up to the 4.9% given our budget guidance from April they built a large nest egg that I think that could be drawn down to stay in compliance with our budget orders if so you know but that's so I would sit with about a 2% rate increase I think we should definitely look at you know what their rate increase should be and we should adjust it I guess some of the questions I would have for Northwestern would be what would that do to their operating margin and what type of covenants do they have on their debt and things like that because I appreciate what you're saying about cash on hand and that's certainly one of the things that you look at just want to make sure they're not going to be in non-compliance for covenants and things like that if this drives their operating margin down again to negative but other than that I think what you're saying is you know not go all the way down to 1.1 not not come out where they are right now and go down to a 2% you know does seem reasonable does anybody want to make that motion did you want to public comment oh yes would anyone from the public wish to comment Jill to comment on this I'm going to talk a little bit about the story I have just one page here promise I'll be brief but it's an opportunity to talk about where we're at and the impact so I wanted to know where I was how I started my day this morning you know we have Bart on campus until September 25th I walked on to my hospital today and there were two extra security guards that we're actually paying for to make sure they're safe and I actually saw it visually why we needed two extra security guards with a population that was serving on campus I also came on to campus this morning with just under 24 hours and extremely very little sleep we had a patient of loathing last evening we have a patient last yesterday afternoon that is waiting placement for an inpatient site unit for three days and unfortunately the patient was very calm and then ultimately bolted I stand here before you not knowing where that patient is right now it's very unsettling as a CEO of a hospital and having that responsibility and also just really an email as I came into this session saying that we had talked about the army tutor at Dartmouth that we had someone threatened a staff member and also was going to get a gun and shoot one of our staff members for not being able to provide pain medication and that patient did get arrested so that's how my day started today Northwestern Medical Center were guided by the Community Health Needs Assessment our number one is mental health and addiction and it's real every single minute with this we set to stabilize on our journey the necessary community services from primary care pediatrics and medical clinics yes this did increase our volumes and our revenues we have right-sized our services for our community partnering with our FQAC and partnering with UBM Medical Center to get the right care logo we've got case management in our emergency primary inpatient in our primary care and now interact community our avoidable visits are declining this morning I also had a meeting with one of my directors we're moving forward with a housing collaborative that's what we need to be doing all this with cost and perspective we're one of the best in the state very favorable to others our cost growth is below other PBS here is that 2.7% inside our budget right now we have a 3.1 million dollars expense reduction 1.5 of that we have yet to identify what we will yesterday we met with Blue Cross Blue Shield to challenge us on colonoscopies to have a reduced price structure that forces us to continue to reduce our expenses we are on this for real our cost for adjusted admission for 2018 is down 8% from 2017 we're keeping to push the rate increases that have been approved so far are averaging it is a new day for us we're now sustaining our volumes are declining in an acute setting just what we want to see in health care reform we're losing money because of it now so we've been regulated we're in compliance with the regulated NPR 3.29% our regulated rates over the past few years have overcorrected the situation resulting in a loss so we've got a loss of 1.6 million right now and we had planned on a 2.2 million dollar gain so we've got about a 3.3.6 to 2.7 dollar variance in where we cover the NB with this we believe we have covered the 1.1% for the 685,000 dollars from 2016 days on cash on hand that is the issue that we're talking about and with that getting stabilization of our services we almost made it up to 400 days and we have some projects that's an infrastructure that we need to change and we still have some our emergency department based off of the conversation I had for the very beginning to get safe rooms in our emergency department that's our next project and some privacy and additional safety we're going to be at 264 that is a huge swing of investment of the incline so we are on the right trajectory and we have more that will happen so we have a very progressive balance scorecard for cost quality and satisfaction that is the triple aim that you've charged us with we're investing in the future we're taking a lead role with risk we're taking on long-term strategy of primary prevention that is the only true way to bend the cost curve and the most daunting task that takes resilience and persistence to move a population throughout the world isn't this where we want all of our hospitals balanced leading innovating for the triple aim and funding the future we are funding the future in a really different way we are a trusted partner thank you for believing in our leadership thank you for mentioning that Jessica true to our word and leadership and transformation and true to our community in achieving optimal health I'm going to be I'm excited to be the board chair coming into the buzz I'm on the one here board and I'm on the Vermont business round table board in the right places to move an agenda if the 4.9% increases the wrong number then we're going to be at the table back with you we've had so much of this we've gone up and now we're coming down where are we actually going to be settling now we'll be at the table with you as a trusted partner to continue the transformation and to get the numbers right so I asked it let us see where our we're going to land with all the initiatives that we're pursuing and making informed decision thank you thank you Jill is there any other public comment or discussion not seeing any is there a motion from the board someone okay so I'd like to put a motion that kind of splits the difference a little bit I think of where maybe where Jess was and where you've come in so you had put in a 4.9% increase you had looked at a 2% we actually your original submission was a 6% with a negative 1.1% so I think if we put I would put forward a motion to come in a 3.5% rate increase for the year which would then also have an NPR I'm not sure exactly what would that would be but certainly below the threshold that we had requested based on the fact that you do have a significant loss in projected in 2017 compared to your budget which is helping to offset some of that increase you had in the past as you had presented is there a second I'll second can we find out where the NPR comes out I see you calculating so can I take like 30 seconds to make sure 2, 3 or 4 is actually splitting the difference 3.55 just give me 2 minutes so I would say it's approximately 2% we will clean it up when we after we adjourn and we alert alert them to what the actual amount is but I would say approximately 2% on the NPR so yes the motion would be for a 2% NPR with the 3.5% rate increase I'd throw in the approximately at strut up by Andy and at all okay the motion is an approximate 2% NPR with 3.5% rate and I believe Robin you seconded that I did is there any other discussion I would just make a comment which is I really very much appreciate Northwestern's leadership and health care reform and moving forward with taking risk and for me that does make a significant difference as well as the operating loss I think as we move into sort of this world of trying to balance rate and utilization to hit a budget in the fee for service world we have to be able to be flexible both ways on that equation so for me that that is why I'm good with where we are and I'll say I'm comfortable with that as well one of the reasons that I you know was concerned a little bit are not sticking to their budget guidance of the negative 1.1 was because as we had talked about earlier in the insurance rates we had you know held them to to what our budget guidance was but I think the fact that we've actually moved some other hospitals down below where they were making their projections when they made the actual is we're making their projections about expenditures in the state I think I'm comfortable with this so and I do appreciate Northwestern's leadership as well so so I'll just say that I appreciate Northwestern's leadership but I'm going to be voting no on the motion only because I believe that the 3.5 percent rate increase is really a 4.6 variance from the guidance and it's just a little bit too much for me to swallow so in the other discussion not all those in favor signify by saying aye aye aye all those opposed signify by saying nay nay but the record show was a three-to-one vote okay next so we're on our just one quick note the NPR for Northwestern at 3.5 percent is 2.05 percent so that's how well last we're on Southwestern just a reminder Southwestern submitted submitted their budget at 4.68 percent NPR and 2.85 percent submitted rate during their testimony to the board they talked a lot about in-state business versus out-of-state business last Thursday when we discussed their budget we talked about getting information regarding that in-state and out-of-state split and what the NPR growth would be if we isolated just the Vermont business versus the out-of-state business in the April 28th 2017 order the green-out care board row we expect the rate for 2018 to be no more than 2.85 percent which is what Southwestern Vermont provided to us we asked Southwestern Vermont to respond to the questions regarding in-state and out-of-state business they sent us a five-page memo which I provided to the board and we've posted on their internet site and basically what they've done is they have isolated the NPR for the NPR growth for 2018 they have not rebased their budget as Northeast was able to do they they recommended that they could do that for fiscal year 19 but they couldn't do it in the time frame that we allowed and when they rebased their NPR simply for the Vermont business for 2018 they came back with a 3.3 percent NPR growth for 18 it keeps their rates still at 2.85 percent but basically isolates about five million dollars of NPR that's Vermont based and 2.1 million dollars that is out-of-state based most Massachusetts in New York I don't have a recommendation because I am struggling a little bit with the fact that we don't really know what's in their base I think I'm going from I think it was a substantial amount of their base is an out-of-state zip code I think what we could do for 19 is of the hospitals that have an NPR that's driven by out-of-state so be all the border hospitals or most hospitals frankly have them break out their in-state and out-of-state base and then their in-state and out-of-state NPR so we could monitor what the Vermont economy is doing it or portion of that is and what's actually been driving our economy based on out-of-state business so I think I'd open it up to board comment at this point and I'll leave it at that comments from the board but I think one thing I'm sorry one thing I would say is in their budget they had a significant amount of health care reform investments they were way over the target I asked could you not do some of those health care reform investments they came back with a couple hundred thousand dollars the rest they have committed to moving forward on but they've almost quadrupled the amount of health care we've health reform health care reform investments and felt that they couldn't stop their commitments for those because I thought that was an easy way to kind of bend the NPR back discussion from the board the board has got quiet this is a tough one for me because I want to recognize that this is a very needy area of the state and serving needy areas of other states as well and particularly the North Adams Massachusetts area had a lot of health care providers go out of business bringing more business to Southwest so that makes it tough do you have what they're I don't have it in front of me what their operating margin is for 17 and what their projection is for 18 and the reason I bring that up is I think it's I think we should be looking at the end and out migration and I think it's fair to look at that as a measure the offset of that is as we're bringing more volume in there should be synergies that we're getting on the P&L as well that could be offset by a rate reduction so you know we kind of have it both ways which is let's rebase and let's let's allow you know to have a higher NPR than what we've seen in the past but what we should be seen from that is some efficiencies as well which would help in rate because their rate history has been pretty high at 2.85 is not significant but in the past they've come in with you know they've received 6.8 7.2 4.5 3.8 3.4 so so that their the history of their operating margin percentage 2015 actuals 3.6 2016 actuals 3.4 2017 projected as 2.9 2018 budget as 3.9 does a percentage yeah so I mean you know one one thing I think we could discuss as a board and then determine whether we want to do that is look at their rate increase allow the higher NPR but do we look at a lower rate increase specifically as we see a you know probably one of the higher operating margins of all the hospitals so one percent of their rate has the value of 1 million 22 if you drop that to say 1.85 percent it would drop their NPR down to I think they would be under the 3.4 I'm gonna take a second you guys can talk I'm gonna take a second to refigure that out you're suggesting a 1% rate reduction would get them under the target at 3.4 yeah I need to think I need to calculate it it wasn't necessarily going for under the 3.4 I was just trying to look at you know this is something we're gonna face which is you know accepting potentially higher NPR relative to in migration and if we do that one of the offsets should be you know gaining efficiencies and challenging rate I think we're in almost the problem is timing a little bit I think we've all recognized that this in migration is an important piece of hospital budgets to understand and I think we're gonna do a much better job of it hopefully under your wonderful leadership Andy next year and understanding what is the contribution to NPR that comes from out of state and importantly also what is the pair mix associated with that in migration I'm just not sure what we do about it this year for this particular hospital for consistency purposes how do we treat this hospital differently than we've treated other hospitals so that's that's my struggle so if you ran a 1% if we reduce their rate by 1% it takes a million 22 off their submitted NPR of 7 million 135 and gives them an NPR growth rate of 4% and then what is due to the operating margin well Andy's doing the calculations I just want to chime in here that I think Robin raised some excellent points about the difficulties that this particular hospital has had with the NPR threshold because of circumstances that occurred in North Adams, Massachusetts and who's it falls New York this is a hospital that truly attempted to quantify the in-state versus out-of-state and I'm struggling with trying to be consistent across all hospitals but this is one that in my mind if I was going to make an exception it would be this one I think that's where I'm landing Kevin as well I think to the extent that they're making incredible healthcare reform investments in their community looking towards the social determinants of health my understanding is that they are very likely to take on risk full risk in the all-payer model I know they have a upcoming board meeting so again this is the hospital that's taking a leadership role in trying to move in the direction that the state is in terms of population health and taken on risk hopefully so I agree with you on that point but consistency is also a concern I'm gonna give this a big approximate it's about a quarter of a percent reduction to their operating margin so it brings it down to about 2.95 a quarter of a reduction because you're basically reducing their their original net patient care revenues 159,497,504 by taking the 1% reduction on the rate you're reducing it to 158,475,398 right so it's a 1.3 million dollar reduction or a one million dollar reduction it's a net decrease so their net revenue is one million three forty two forty five right and what's their operating dollars right now 157,132,913,157,157,132,913 so they'd only end up with a $200,000 because all of that would drop to the bottom line that's correct it's a double hit right it's the margin goes on the lower base that's right okay so that's significantly lower than I think we should go so okay is there any member of the public that wishes to comment on Southwestern Vermont Medical Center yes Tom Tom can you speak up there's one of these in the back so number of comments I've been here before and I appreciate the comments I notice as I've been here before I've had a couple of presentations about a region in crisis and I wish I could say it's different but it's we're still fighting the battle there and as indicated by Kevin the providers that are closing are you know with the North Adams closure in North Adams and with the Gwyns Falls health center and music and just recently with the primary care closure in Gwyns town of their urgent care center there's a continued exes of providers that's been impacting our region and we are becoming we are the safety in the hospital people are coming to us and I will tell you that the payer mix at times doesn't help our cause in terms of driving a lot of line because we have a 75% Medicare and Medicaid pair mix so one of the more challenging pair mix is probably in the state but we've been working hard and we will continue to work hard in terms of moving towards our health reform historically since since I've been there we've worked hard to become the lowest cost provider we're not there yet actually Jill's team is a little bit ahead of us in terms of the cost per discharge but closing that gap and we strive hard if you look at the metrics that your team put together we're right there in terms of our cost per attractive our margin by the way I think it's about a high of 3.1% we haven't been we haven't been accepted in our margins we strive very hard our margin our budget margin for 2018 is higher than normal because it has to be we've had some cash flow cash issues that we're trying to address we're coming back to you all probably in January with a major modernization because we have the oldest physical plans in the state of Vermont and we've got to take some action box so we have to be able to generate to the on to the finance agencies an appropriate margin cad that can support probably an application that could be 30 to 40 million dollars so that's why our margins higher we have an action plan to go in place to reduce our expenses to hit those margins but that's not a given I wish I could say our 2018 budget margin is going to be clearly attainable it will be a stretch for our organization just a couple other points certainly another I know there was some points that you were asking that's like that Steve Jetta Garcia voted this comment very quickly on some of the points that you were asking about so when we remain committed we remain towards health reform we'd like to take risk but when Andy asked the question of what what health care reform items are can you stop doing we committed to virtually everything with the exception of the ACO participation which is a big number for us in terms of participation and we're trying to do that participation but if we have to take a major haircut in terms of our operations I mean that's where we start to you know decisions so well we thank you for your time we appreciate the team work that we get from finance and let me just add the address a couple of questions just a couple points of clarification in August 17th presentation we identified all the interstate out of state New York and Massachusetts volume and that volume has got up for us 14 percent 9 percent and in our budget picked the midpoint and remember during the presentation talked about the right number because all these things just happen and when you're doing a budget with one or two months of data how do you project that out so what we presented to Andy in the memorandum was we don't have a good base or budget last year's budget we didn't look at the states we looked at service and payor mix this year since that we saw an influx we looked at payor mix we looked at service and we looked at so we have a good baseline and our budget our out of state revenues gone from 32 million North Adams closed to 44 million years budget or increase the increase this year that they were using they'll use 17 actual projection as my proxy for the 16 budget be over $2 million the payer mix there we are fortunate when we get out of state business 59 percent of our business that comes from Massachusetts is commercial and so it adds to the bottom line so roughly 23 percent of our business is coming from out of state and growing and the margin that we have I did it quick and dirty we're trying to develop some cost models but our margin is about 30 percent of our margin comes from out of state revenues so it's favorable to us last point I just want to clarification is in our budget presentation of August 17 we showed a cash flow budget on this budget of only $800,000 positive any reduction to our bottom line would move that to a negative cash flow position to the fourth straight year in a row that our budget would have a negative cash flow why do we have a negative cash flow there's two big drivers to our negative cash flow one is our age plan we keep needing to invest as Tom said we're gonna have to make a major investment soon to get our average age plan up second is we have pension liability we don't fund that pension liability it will keep our balance sheet up right now we have a liability for $20 billion that we're keeping flat so that liability is not going up that requires over $4 million with cash a year to keep that liability flat now we're not required by the internal revenue service to fund that but if we don't fund it I'm gonna have to pay for it down the road and our strategy when we started our strategy keeping that liability flat if we didn't do it when we started our strategy liability today $45,000 so cash flows is probably the biggest driver I can't go to the financing world to secure some debt with four years of negative cash thank you thank you Walter did I see your hand up earlier Dale Dale oh Dale I understand that there's situation if you're looking at the population health there in that cross-border situation where I think he stated they do track those that come from Massachusetts or if they come from New York or if they come from Vermont and that's important because each one of those sectors I grew up in a board town so that's what I'm focusing on is when I went to Dartmouth Hitchcock for example they would ask you not just if you're Blue Cross Blue Shield are you Vermont Blue Cross Blue Shield are you New Hampshire Blue Cross Blue Shield that told them a lot but also told them a lot something where you're from while it's available for benefits other than what you were there at the hospital to receive told you about your living told them about your living conditions maybe what you were eligible for all these things that order was huge in terms of how good I would have in fact at the same time for the hospital there's no effect if you draw the boundary of the region that the hospital serves that order goes away they're serving so many people in an area even if it includes all three states and that is who they're responsible for and help I always found that to be a very interesting contradiction because it made me think of like back in great times where you had the city state they have their own little zone that's very independent they serve it and it's extremely important they serve it well I said anything that you want to go ahead so Dale I think it's an excellent point and I would take it a step further and say that sometimes the growth in the increase of out of state business is a factor of the perceived quality of an institution and so it's a healthy thing to see more growth coming in from out of state and in many respects we benefit greatly from that out of state traffic because it's truly is economic development when you're putting for monitors to work whether it's in the nursing field or what have you so even better when the pair mixes largely commercial yes it is so with that is is there any other public comment is there a motion from a member of the board I'm happy to move that we accept the budget as submitted and Andy refresh us as to what the would the that 200,000 what that comes down to so the motion would be I think to approve the budget with a rate of 2.85 percent an mpr of 4.68 percent is there a second I'll second so it's been moved and seconded is there any discussion seeing none all those in favor signify by saying aye aye aye those opposed signify by saying nay let the record know it was unanimous decision so that was the final hospital that's a wrap any closing comments I would say you know this is first year for our team and I would say without qualification that every hospital that we dealt with was fantastic in getting information to us and very patient with some of the questions that we asked so there's the questions that you ask us to ask then there's the questions that Tom and I have asked because we frankly are in all the world and it made this process a lot a lot better so I would simply say thank you to all hospital CFOs in particular so on behalf of the board I really want to thank your team for an incredible job that was put forward you've been working many hours trying to get us to a good place and I think well we didn't have unanimous decisions on everything we certainly did pretty darn well and again I think we can be very very proud of the health care providers in the state of Vermont and we may not always agree on expenditures and things like that but one thing we do agree on is that we have a group of individuals around our state who are dedicated to improving the quality of health and I would just say that I'm very very proud to be a Vermonter and I just like to comment as well that I thought your team did a great job during this process and I'd like to put you on the spot one more time which is if we did a total roll-up right now I think when you came in the room we may have been about a 3.2 percent potentially you know just because I think it's important to say that our guidance overall was to come in at you know 3.4 percent and you know we had some ups and downs within that process but if we look at it consolidated at this point and I know we'll get a final number you know where do you think we're tracking so we had asked for a 3.4 and we had we had an original submission of 3.6 NPR and a rate of 2.38 percent then when we took out the changes of the new dish allocations by diva physician transfers and acquisitions we come in with an NPR of 3.46 we've done a little bit of the back of the envelope and I think we're probably going to be right around the 3 percent range well we will put out a number within the hour probably and the only reason I'm pausing is because you've made a couple of last second changes that are going to be a little difficult so what we use as a weighted average we don't do a straight average we don't add a wall up divided by 14 we actually do a dollar weighted average UVM obviously is 50% of the weight so their number didn't change and they're right at 3.39 percent but some of the other ones did so within an hour we'll give you a new NPR and a new approved rate but I think the rate's going to come down a bit because the rate is not weighted is it yeah so we will like I say within the hour but I think we're in the right around the 3 percent range for NPR no that includes the healthcare investment because I think that's really important to come out you know and when we look at what we gave the insurance companies and things like that which if they had guided towards the 3.4 you know there's mixes in which hospitals and how it plays out but you know we're ending up you know around 3 percent one of the things I would love to do is earlier than next March but maybe at the end of October early November is have an agenda item where we talk about how we really want to do this again next year we've got new board members on here with fresh eyes about the hospital budget process obviously new fresh eyes from your team I think we can do you know an earlier assessment of how we can do this more efficiently better what information do we really need from hospitals what we really want to look at in a way that's improved efficiency and decision-making and looking back to last year and Andy was not here last year we did have that kind of discussion with some of the hospital administrators took the list of what was on the wish list with the board and brought it to them also and we may want to re-institute that sooner rather than later and come before the board by the beginning of the year with some of those suggestions yeah I would just say the sooner the better because as we look at this this may be an even tougher discussion than the process that we just went through today and I'm convinced that NPR isn't the correct mechanism that we should be using you know when you walk in off the street you think well just use rate but rate doesn't really tell the story either because what we don't have is a uniform rate being paid by each hospital well a uniform rate being paid by the payers to each hospital on the commercial market so I think that it's going to be a very long and tough discussion as to how we proceed for guidance for next year but I think that at least in my mind the focus has to be on the per capita expense for Vermonters for health care and that coincides with our move towards population health and it will not be an easy process yeah I would agree I think because I really want us to get to a place where we can crosswalk what we're doing in this process with our total cost of care target so that we can actually make informed connections between those two yeah I'll just say I'm really excited for the next year because I think we were in my mind coming in late in the process we're a bit constrained in what we were looking at and what we could you know do and I think going forward there are a lot of metrics on the budgets that we should be reviewing and getting information on you know as well as working with the hospital teams and the CFOs and coming up with what are the right metrics to be tracking so I'm excited about the next year and this budget process year from now and I'll just add to we have on our board meeting agenda for next week next Wednesday to talk about priorities for the board and while we won't have specifics yet that's only three days away we can start that discussion with all of you so I just wanted to mention that great is there any old business to come before the board seeing none is there any new business to come before the board so in closing if we could just ask everyone to put con hogan and their thoughts and prayers for a very very speedy recovery and with that is there a motion to adjourn so moved I'll second it's been moved and seconded to adjourn all those in favor signify by saying aye and you oppose thank you very much