 Health Care Advocates Office puts a decent amount of energy into soliciting, encouraging Vermonters to comment in the rave review process. We don't put that same effort into the hospital budget process for a couple of reasons. One of them being that we've just been out there doing it a month ago, and it seems hard to go back to people, and one of them is sort of the recognition of 14 hospitals in 14 different communities is more difficult to go out and say, hey, come comment. But I think everyone here knows that the comments that the board received during the hospital budget process, I'm sorry, that the board received during the rave review process apply to this process just as much. Nobody here would, everyone here, I think, recognizes that a significant factor, maybe the most significant factor in the rave review process is the provider billing, is the cost that providers, the rates that providers charge. So I want to link them and encourage you to think about all of the comments that came to you during the rave review process as applying here just as much. I think we have an opportunity today, this year, to turn the page on how we review hospital budgets. We are really encouraged by the work of Sarah Lindberg and the hospital budget team taking a deep look at Vermont's revenue and costs and compare them to national and regional benchmarks. But data is not good in and of itself. We're hoping that the collection of this data helps the board recognize the real cost to Vermonters. We encourage the board not to take a one size fits all approach to hospital budgets and carefully examine what each hospital has presented and submitted. Some hospitals have taken difficult and courageous steps on their own to cut costs and improve patient financial assistance policies. But some have not. We believe that many hospitals will not make these decisions to cut costs unless the board takes action. What we hope for and what I think Vermonters need is an evidence-based regulation that not only looks at hospitals at revenues but also at costs. The evidence that Vermont hospitals need to be required to substantially cut costs is clear to us. With that, I think I will close and say thank you again to the board and to all of the hospitals. I know this is a difficult task in front of you and we look forward to participating. Thank you. Can somebody just give me a hand up so they can hear me? My audio switched. Okay, great. Thanks. Are there any board members, questions or comments for Mr. Fisher or Mr. Del Treco? I had a couple quick ones if that's okay. First, maybe this will be actually in the substantive budget review itself. There's a couple things I struggle with as a regulator or a new regulator, I should say. And one is if a hospital is not controlling costs well but needs the money, should the board provide it the money? So, for example, there's disparity in traveler costs between some hospitals in Vermont. Some hospitals did better with that. Some didn't do as well. And some of it, not all of it, but some of it could be attributed to decisions that were made. So should the board give all situations if it's found that the hospitals didn't do as well as potentially they could have? You know what I mean? So it's a bit of a catch 22. Either we say no, in which case you don't get the money that is needed for the care, but it sort of bails out or subsidizes the decisions that had a negative consequence for Vermonters. And I was curious on both of your views on that kind of situation. We might be both waiting for each other to go first. I think that hospitals are always going to know better the details of their budgets. And I think that there's some risk if the board attempts to micromanage specific areas of spending that that would be very difficult for the board to actually do. On the other hand, the board's role in our view is to put real pressure on hospitals to say, you know, I'm sorry, the pressures on the community, the pressures on costs are too much. You're the experts in knowing how to do it. Come back to us with a corrective, with a plan on how to actually accomplish the holding the line on increased spending. I don't know if that helps, but I think that's the frame that I approach. I would approach it. So thanks, Mike. I was having a hard time clicking off my mute. And so I think there's varying reasons why organizations are successful in doing certain things. And you used the traveler example. Some organizations have different staff make up, their services are different, and they require different specialties and skills. The thing to note here is that we're in a very, we're in a national marketplace for labor now. There are many challenges. So the opportunities may look different at each organization. So I think it's a hospital by hospital discussion. In the affordability efficiency space, I think the one thing to note in your question, Chair Foster, is the simple reality of, you know, people will go and get their care, whether it's in Vermont or out of Vermont. And we would have to evaluate and recognize that people go out of the state, that expense still exists. So to keep funding within the state, to keep resources within the state would be my, that would be a priority of mine. It may not be of the boards, but I think to keep those services and funding in the state is something that would be desirable. Keeping care local is very important. As I mentioned in my opening remarks, you know, we are the most rural state in the nation. Transportation is a huge problem, whether it's public transportation or frankly, individuals not having the ability to have a reliable car or other means of transportation is clearly a challenge. So these are things that I would be thinking about as I evaluate decisions. I too think that there's some opportunity to create and move forward some understanding of measures. I do worry a little bit about measures that haven't been vetted to date and not lack of understanding about what the data looks like. But I do know, as I mentioned in my remarks, that we are at a pivotal moment. The decisions we make here today, the decisions you make, I don't make any decisions in this process, the decisions that you make will have significant effects on organizations. So thank you. I think you're really right. I read your letter that you submitted last night. I thank you for doing that because I think it helps frame some of our thinking on this from that point of view. And one of the things that stuck out was that there was a discussion of admin costs and discussion of reform costs and regulatory costs. But I presume that those aren't the only, if it is found that the hospitals have excessive admin costs compared to peer, those wouldn't be the only reasons I presume. And I guess the question is, is there any sort of calculation of how much of those costs are contributing to the admin costs? So I happen to have had the fortunate or unfortunate ability to submit many cost reports in my life. And organizations across the country submit those costs differently. There's a whole host of activities that happened within that space. So I don't want to get too geeky here, but the cost report, the first 20 somewhat lines are overhead. They include things like medical records. They include things like depreciation and investments in information technology specific to electronic medical records. They include things like direct patient care for pharmacy and lab. It's a very interesting administrative number. When you look at the only line item, I think it's line five or six. It's been a while. That is the administrative cost, the direct admin cost in those organizations. So it matters how the comparison points to those other organizations. It matters if those organizations have own and employ physicians. There are many details when we're looking at comparative points. So apples to apples, apples to oranges is important to think about. So again, I would say carefully look at those things and ask those questions. But it's not always what meets the eye. And then on the reform costs that are referenced in the letter, I think a reform is a chance for hospitals and others to do better financially, not to do worse. But it seemed to be cited as something that was a cost in the admin, which might explain higher admin costs. Was your reference to the reform costs indicating that net it cost hospitals more money than they save? So when you're looking at administrative costs directly, there are certain things that when you went that we have in the state of Vermont that other organizations around the country don't have. We have investments in one care. We have investments in your organization. We have investments in provider tax that are well above where it's 6% of our net patient service revenues. Other states are well below those amounts. So I think that was the intent of that. That was the intent of that discussion, Chair Foster. So what I was trying to get, so I think of one care and the amount of risk they take and then the amount of money they can make if they hit the total cost of care and the money can go through the participating hospitals as a benefit, right? Like additional money because the total cost of care is set fairly high. And if you're below, which I think one care generally is for Medicare, they're saving. So I didn't view reform as a cost. I thought it was an opportunity to do better financially. And when I read the letter, I thought it was indicating that it was a cost and not a net positive. And I don't know the answer to it. So I was curious if you view it as a net negative financially to the hospitals or a net positive? The math probably looks different in each organization. I don't know the specifics of that math. But the administrative piece, if you're looking at administrative comparisons, the net of what we're talking about doesn't matter. We're looking at it admin to admin. So that's how I would think about that. When you're looking at it in total, I'm sure it varies by organization if there's a benefit or a loss. I see. So if it's an admin cost, it's an admin cost and whether or not there's revenue from it that might be somewhere else and not net it out in the admin cost. Correct. Got it. Last question, which is something I struggle with, we get a lot of comment and information from patients, businesses, Vermonters about the cost of healthcare, and they have been rising pretty significantly. I think it's 45 to 80 percentish for the qualified health plans for the last five or six years, which is a lot. And we know the hospitals have financial needs. We understand that. We recognize that. We recognize they need to be financially strong. The other set of letters we get and communications we get are from all the non-hospitals, the independent primary cares, the substance abuse, the mental health, long-term care. And it might be those are very critical to helping the system, patients, and hospital finances, right? So they're very important to help the hospitals, financial burden that there's good infrastructure back around the hospitals. And some of the feedback we've been getting is that the hospitals are getting higher rates than all of those others. And so when we look at these hospital budgets, we can't look at them in a vacuum. We have to look at the whole system. And I was curious, your thoughts on how we should balance the fact that hospitals have serious financial needs right now. But then we're also hearing from patients in Mr. Fisher's point that people are getting priced out of insurance or buying down the kind of insurance they have or avoiding care altogether. And then also all these non-hospitals are providing information that they need increased rates and that when we give it to hospitals, it's impacting their ability to be solving themselves. And in your view, how should we think of that and balance that in this process? Yeah. First, I'd say, based on the household surveys, it looks like the burden on hospital debt is going down year over year. Not to say that affordability isn't a challenge, but we're moving in the right direction. Secondly, under the federal tax credit, no one should be paying more than nine ish percent of their income towards those and premiums that you've mentioned. And then there's additional subsidies if there are challenges. So clearly I and my members understand the challenge of affordability. And when these budgets are built, there's many analytical analysis that goes on about operational efficiency. It's no surprise that we all belong to organizations to drive down our supply costs. It should be of no surprise that the position control and FTE management happens daily, and that includes nursing shifts, that includes filling vacant positions, that includes evaluating and creating appropriate targets for FTEs and finance FTEs in those administrative areas. So there's many variables and components in this conversation. And I would say, again, our hospitals recognize deeply the affordability challenge. And I would go back to saying that if we drive patients out of Vermont through this process and decision making, we certainly will still bear the cost and it may even be higher. That's a little that's uncertain, but the cost will still exist. So I'll jump in. I read the health health insurance survey to say something a little bit different. From my perspective, I think that the steady trend in increased under insurance is indisputable. I don't know of anybody who thinks medical debt is less of a problem today than it was in recent years. We hear clearly from Vermonters that they choose not to follow medical advice because they have to make an economic decision, not a healthcare decision. And so all of the concerns from the hospitals of what happens if they can't provide the care already exists for Vermonters who are making the choice of who are dealing on the ground today with how do I get the care I need or my loved one needs and be able to afford the out-of-pocket costs or the costs. So I'll also add hospitals make a lot of strategic decisions. The board doesn't make strategic decisions. You know, what investments to make transfers to affiliates are major decisions that hospitals make that I think the board can evaluate. And I think that's a place where we turn to as we look at many of the hospital budgets. I don't doubt, I know that hospitals are thinking about access and therefore affordability. But they don't see it from the lens. Well, I don't think they see it from the lens that I see it from when I hear, when I'm hearing from people who can't get in to get care. So that's the crux of what I'm struggling with is, to me there's almost three constituents, right? There's Vermonters who are saying they can't afford to get care and they're telling me they can't afford to have insurance. And then that's one, can't afford care. Then there's the non-hospitals who are saying that they can't afford to provide the care. And then there's a hospital saying they can't afford to provide the care. And so the, I know it's crux of the job and my question is, I guess really both of you, is how do you see our role in should we be considering those three sets and how do you see that balance working here? Because I do not dispute or disagree that the hospitals are in financial difficulties, but then there's the other two sets. And that's what I'm trying to balance in my head as we start this process. So Chair Foster, I would say, 98% of Vermonters have insurance. It might not be the best insurance, but 98% of Vermonters have insurance. We worked with Mike Fisher and the HCA team to pass the charity care bill last year. I believe it's Act 119. And that, these are all efforts in the policy space to address this affordability challenge. In addition, we will work with any patient anywhere at any time to make sure that they get the care they need. We have charity care people. We have people that help individuals get enrolled in Medicaid. We make sure that they're on the Medicaid roles when they need to be. We help them enroll in the marketplace where appropriate. And if there is a shortfall in their care and coverage, our charity care policies are designed to make up that difference. Does it work perfectly every single time? Is it sufficient to the 100%? Probably not. But we are maximizing that opportunity every day because we understand and we care for the communities we serve. This notion that it's not great for me to hear that individuals are delaying or postponing care. That should never happen. Michael Fisher, if you have a list of those people, let's get them going and let's stop saying there's a list and let's move it forward because to say there's a list and to say that there's these challenges without addressing them at the local hospitals is a problem and we can solve that literally today. So that's how I would respond to that. And I know the challenge that you have in balancing these hospital budgets, affordability and efficiency within these organizations is a deep and challenging job. I sit here today saying that I spent a lot of time with our hospitals in this budget process. Their hospital boards reviewed these budgets and they are community members. They understand the pressures of each community and the affordability challenges. So I can sit here with a great degree of certainty and say this is needs-based stuff. And beyond that, if there are individuals that need our help today, let's get that going. I'd rather do that than this job right here today that we're talking about. And I'll just- And what about the- I'll go ahead, Mike. One final thing maybe for me at the moment is I think we're here in the public comments, the expression of people who feel like they have to make an economic decision instead of a public, a healthcare decision. But I think I also want to steer back to the chair's original question. I guess I want to say thank you for bringing another seat to the table of the healthcare providers that are not immediately in front of you here or actually not in front of you at all, because you don't regulate them. And to ask the question, what is the relationship between your decisions on commercial rates at the hospitals? What is- what is- what impact does that have on the availability of a reasonable rate for those non-regulated providers? In other words, does your regulation of hospitals assure that they will get the money that they need and therefore make it harder for the rest of the healthcare industry? It's- it's, you know, to get its appropriate funding. It's a great question and one that I don't think we have an easy- there's no easy answer to. You don't regulate them. But I think it's a- it's a key dynamic that I think we see staring in front of us and one that is important to bring to this table. Yeah, I think in the- when we reconsidered the VOS request on the hospital budget guidance, there was a really huge volume of letters suggesting or indicating that they felt that if we gave the hospitals their requested rates that they would get a fraction or zero or one or two percent and that that was having a negative impact. And so I am curious how we should be thinking of that as we head into this process from- from VOS and the hospital's perspective. I would say there are no guarantees. We aren't guaranteed a rate increase through this budget hearing process. In your- in your orders, you speak to caps and negotiations. So there are no guarantees. I- I think you've addressed that. Okay. Great. Well, I appreciate the dialogue and in your perspectives on these issues because I think they are, to me anyway, as one board member there, sort of the real rub of all this and the real challenge that we have. And I appreciate you both being respectful that that is not an easy thing to balance for us. So thank you for your thoughts and understanding that difficulty we have. Can I follow up on one question that you had asked, Chair Foster? The first question- the way I understood the question, I think, Chair Foster was asking, um, and I'll switch to a hypothetical non-Vermont situation. So I think as Mr. Deltrecco is, I think, you know, the representative of Vermont hospitals, it puts you in a bit of a challenge to answer the question without, um, sort of considering an individual case. But if- if one was to hypothetically situ- you know, say, okay, we were presented data that a particular hospital is struggling with performance in an area, say, managing expense growth, and they're asking for a substantial increase in a commercial rate increase. What are some suggestions you would have the board consider as opposed to we can discuss the validity of the data, but say hypothetically, we've come to the conclusion that the data trend is valid enough to be concerned about expense management within this organization. But the rate that they're asking for is high. How should the board consider that from your view? Should the board continue to grant high rates with a hospital that's had continued expense growth management over time, or should the board consider decreasing those rates to try to encourage the hospital to become a more sustainable organization over time, or is there a third option that you would suggest to us to consider? Sure. Sure. I'll leverage some of my experience in the financing area and going forward to ask, you know, for borrowing money. There's a set of financial metrics. Those metrics are fluid, and those rating agencies and those places where you're borrowing money from look at those metrics. And if you're underperforming in some and overperforming in others, there's a set of questions that go with that. Why? What is your performance correction? What's your corrective action plan on performance to improve some numbers? But remember that those numbers are not static. They all move for certain reasons at certain times. So I do think there's a third option. And I think that third option is having that conversation with that organization, outlining your concerns, speaking up if there is a plan in place, understanding what that plan may look like, and then moving forward and monitoring that plan. This board has done that in the past with organizations. So I do think that's an option. Okay. So and I think just from the standpoint of a board member who's new to this process, I think one of the challenges that I foresee is, and I think your suggestion here would be, okay, so you have an organization that has potentially hypothetically, non-Vermont organization, we're not a Vermont board, so we can sort of hypothetical this scenario to get you out of the bind that you're in a little bit. But an organization that has a series of underperforming expense management growths, and your suggestion would be to approve the budget but put in a corrective action plan of some kind or reporting plan to try to improve that expense management growth. But in the meantime, that then leads to a higher commercial rate, which leads to higher commercial insurance, which leads to affordability slash under insurance, having to choose a bronze plan instead of a silver plan, higher deductibles, as you say, and I will, I can refer you patients when I see them in the emergency department to say, please call Mr. Del Treco, he would like to help you with managing your challenges with deferring care because of your high co-pays or delaying till next year because you don't want to get, you know, you're trying to put it all into one year or whatnot. But it's real. So if we approve that budget, we increase that commercial rate, that translates to commercial rate insurance increases, that translates to challenges for people for affordability. But we're just suggesting is that the corrective action plan within that would be sufficient, you feel, to work to that, say, expense growth issue. That's a big hypothetical question. And I think that there are opportunities to have the conversation with those organizations evaluate and you need to make the decisions you need to make. I do think that these organizations, when you assess operational efficiency, cost growth, I think it is important to understand what those numbers are comprised of. When you look at some of our indicators on per beneficiary growth in Medicaid, excuse me, in Medicare, we're very good. Our Commonwealth report, which measures several dimensions of healthcare, we're in the top five historically. So I think we also have to step back and say and embrace and say, look at all the actually powerful things that we've done in Vermont, rather than this moment of we have this massive affordability problem, and look at that as the single deciding factor. If we hadn't done some of the things we've done historically since the inception of the Green Mountain Care Board, things probably would look a lot different. Our hospitals embrace healthcare reform from southern Vermont to northern Vermont. Our small communities, our critical access hospitals that enter into these all-payer model agreements, it wouldn't happen in any other state. They would say no, I'm not taking that risk. This is outrageous, but we don't. We actually step up. We are actually doing this work. So where are we versus where we could have been needs to be evaluated in that conversation? I appreciate that response. I think you highlighted something that I think is something that we're going to be having to try to understand, which is data and metrics. You cite certain data for high performing, and there's also data that sort of discusses high cost. And I think that almost what you're saying is that no data is perfect data, and so we're going to have to deal with the data we have. So I appreciate that response. Thank you. Yeah, and on Dr. Merman's point, it seems like there's pretty big disparity even within Vermont hospitals of operating expense growth. Presuming this data is accurate, you see, you know, comply at 5% expense growth over two years. I think UVM Medical Center 15, Porter 17, and then Northwestern just down at 3.54. There is a large disparity in the expense growth, and that is something that I think we have to grapple with as we do this. And I have, I'll email you right now, actually, I met with a patient Monday night who was having financial challenges, advised that he had a missed cancer diagnosis, and was on a payment plan, but then went to collections. So I'll email you that, that person's name and contact information. I'll ask him if it's okay with them, but I appreciate that. I think it's great. Chair Foster, before we move on, you mentioned again, expense growth and the administrative component to that and variation in administrative expenses. And earlier in the conversation, it was brought up that regulation is something that needs to be paid for, and that that would be, that's a potential cause of some of the growth in administrative expenses. But I just want to point out that federal regulations apply to all hospitals. So when we compare one hospital to another, we can't claim that one place is suffering under federal regulation more than another. It's all the same. And all 50 states regulate healthcare. It's often said that Vermont's unique, but every state can rightly say that it is unique, because they all design their own regulation. So they all have regulation expenses. And when we compare Vermont hospitals to other hospitals across the country, those are already factored in. I don't think it's correct to say that the regulation expenses in Vermont are outrageous compared to other places. Every place deals with those. I just wanted to point that out because of earlier conversation. Just to correct one thing, I don't know that they're outrageous. They exist. So, and they may be different from state to state, but I do know what the, there are 629, over 629 federal regulatory processes that happen throughout the country. But there are unique things that happen within the state. So those are the issues that I've pointed out. Mr. Chair, I think one, sorry, Member Walsh, will you still? Yeah, I agree. There are a lot of federal regulations. They apply to every hospital. And each state has regulations that hospitals within that state have to deal with. Go ahead, Mr. Fisher. And then I'm getting messages. Yeah, I think it's time to move on. To move on. But I did want to make a simple point. And that is that it's easy to see the individuals who come to us, come to my office or to Member Merman's emergency department as individuals who need to be addressed. And they do around a whole shop that addresses people's individual needs. This is a structural problem. This is not the failings of a few of some individuals. This is a predictable outcome due to the system we have. I just want to make that point. Thank you, Mr. Chair. Great. Well, thank you both very much. I'll go ahead, Mr. Draco. I just want to say thanks for the conversation. I think this is important. I think this dialogue demonstrates everyone here's commitment to what's happening. So I appreciate that. And I know we have a lot of work ahead of us. So thank you. Thank you, Draco. I agree. Great. Thank you for your time and for making opening statements today and for the dialogue. I think it's really helpful to the process. And I will excuse you both. And we will turn to Director Lindbergh. Good morning. Our slides showing up for other folks. Great. So thank you very much to Mr. Del Treco and Mr. Fisher. They had been invited for brief opening remarks. And that was a very robust conversation. But from a process standpoint, we'll make sure to build that in for a time in the future if we end up having a Q&A for our closing remarks. So Sarah Lindbergh, Director of Health Systems Finance for the Green Mountain Care Board. And I am here to just present an overview of the hospital budgets that have been submitted for Fiscal Year 24. We will be walking through the budget process. And Russ McCracken will be walking through that with you all. And then we will cover some national context, some overview of the 24 submissions and give you a preview of the budget review tool that will be guiding us through the submissions this year. So with that, I will turn it to Mr. McCracken. Great. Thank you, Sarah. I just wanted to provide a little reminder of the budget process and some of the elements of the guidance and the statute that the board has adopted in the spring and kind of what the statute sets out for this budget review process. So on an annual basis, the board has the responsibility to review and establish budgets for Vermont's 14 community hospitals. In its review, the board is going to consider factors including labor expenses, utilization, pharmaceutical expenses, cost inflation, commercial price increases, financial indicators, known pricing changes for Medicare and Medicaid, uncompensated care, and other factors. Sorry to read the list. This is all, these are the factors set out in the guidance that the board adopted back in March. As part of this, the board is also going to consider here and consider testimony from the hospitals and receive and consider comments from members of the public and the healthcare advocate. So the second bullet here is a statement that came out of our guidance, but it's a reminder that the board executes its budget review and consistent, consistent with its statutory obligations. So the review process is, as required by statute, consistent with the principles for healthcare reform that the board is obligated to follow that are set out in 18 VSA 9371. Section 9371 sets out 14 different principles as a framework for healthcare reform. Those include the principle that all Vermonters must receive affordable and appropriate healthcare at the appropriate time in the appropriate setting, and the principle that overall healthcare costs must be contained in growth and growth in healthcare spending in Vermont must balance the healthcare needs of the population with the ability to pay for such care. It's important to note here that the board's review process also must adhere to the hospital budget requirements set out in the hospital budget statute of 18 VSA 9456, which as a reminder says that individual hospital budgets established under the section by the board must be consistent with the health resource allocation plan, must take into account, take into consideration national, regional, or in-state peer group norms according to indicators, ratios, and statistics established by the board, which again is covered in the board's guidance that was adopted earlier this year. Budgets must promote efficient and economic operation of the hospital, reflect budget performance for prior years, address the hospital submission for an analysis reflecting a reduction in net revenues for non-Medicaid payers, and demonstrate that they support equal access to appropriate mental health care needs that meet the standards of quality access and affordability equivalent to other components of the health care system. There are some procedural aspects to this as well, including that the hospital, including that the board will meet with hospitals, which we're starting today. And then as a, you know, as a further note, as the board knows, decisions must be made by September 15th, and then written orders must be issued by October 1st. Those are dates set out in the statute as well. For any further questions from, and as a reference for the public, we have a link here at the bottom that gives access to all of the background guidance and hospital budget materials that have been submitted. So next slide, and I think I'm turning it back to you, Sarah. Yeah, thank you. And just for the back of your mind, for the first time, according to a statutory change, we will be engaging in a full budget review of the Brattle borough retreat. However, their fiscal year is different than the community hospital, so we'll be taking that up later this year. For the 14 hospitals before us now, we have a public comment period that's been in place for a bit. If you would like a comment to be considered officially and synthesized by staff, we would like to see those comments by noon on Friday, August 25th. However, as hopefully as well understood, we welcome comment at any point. Budget materials for each hospital may be found online, and you can see the most recent budget schedule online as well. We've had to make a few tweaks along the way. New board members didn't know they didn't get a summer apparently, so. All right, as far as national context, so we know that inflation has been increasing significantly in the past few years. Historically high inflation, there is evidence that that is cooling to more historically typical levels. But as you can see, inflation as measured for medical services and all goods and services tend to be a bit lagged. So often the prices for healthcare are very sticky, meaning that they can only be updated once a year. And so sometimes if you shift this curve, you can kind of see a more direct correlation. But for now, it looks like both are decreasing significantly in the most recent information available. We also see that we are starting to see some recovery nationally. So this is from a Kaufman Hall flash report with operating results through June. We can see that the year to date margins are starting to sugar out to be positive. However, we're also seeing growing disparities between hospitals who are recovering successfully and those who are still unable to get back to where they had been. I think there's some questions about what the new normal is going to look like and how we're going to interpret what recovery looks like in this new environment. So if you look at the national landscape, there are some very hard decisions that hospitals are having to make. I just pulled a few headlines in recent press. So Becker's currently sees 76 hospitals and health systems who are cutting jobs. The last headline is from the Valley News talking about Dartmouth Health's initiative to cut $120 million out of its budget. They're planning hiring freezes and making sure to review jobs. These are measures that I think Vermont hospitals are undertaking as well in a lot of cases. And then we see that the layoffs are hitting the healthcare sector, which is unusual. It tends to be a sector that is somewhat protected in these situations. But we see that there's an 81% increase in layoffs according to the health exec study that is being cited there. So those are jobs that are being lost. And I think that that's, as a regulator, a hard thing to understand that might be necessary right now. When we look at employment trends, I think we've covered this before. But if you look at kind of the recovery in jobs since the pandemic, jobs are not recovering anywhere near where they had been expected to be. So that labor market is extremely tight. And that is being felt here in Vermont. But we also see on the right that the consolidation effect. So more and more physicians are being employed by hospitals or other corporate entities over time. And we see that escalating as people, again, try to grapple with some of these difficult financial challenges. Probably not news to anyone that pharmaceutical expenses are a significant expense pressure being faced not only by hospitals, but by consumers as well. You can see that especially new drugs going. Sarah, this is Dave. I don't know if you're advancing your slides. I'm still on slide eight. I don't know if other people are still seeing that or if I'm on slide 10. Okay. All right. That's my issue then. It's possible you're now getting away from me. Yeah, I don't know. I can go through manually. So okay. Okay. No worries. So we see that it's these new entrants that have quite high price tags. So these often are specialty drugs. There's some being marketed right now related to all timers that are significantly expensive. There's also some new emerging trends in drugs that are designed to help with obesity that are quite expensive. And you can see that these trends are just difficult to control. The supply chain is very complex and obfuscated. So this is one that I think federally we're trying to grapple with. Another national trend is we see more and more care moving to an outpatient setting. So inpatient meaning that's when you get checked into the hospital and stay overnight. Whereas an outpatient procedure often you might think of as day surgery. So this is showing the trends as it relates to hip and knee replacement changing settings. Historically inpatient revenue is a lot easier to predict and budget for whereas outpatient tends to be a lot more mercurial and a little bit more sensitive to some of the variable costs that providers face. So also tend to see higher relative reimbursement in the outpatient setting as compared to inpatient. And I think we've seen this slide before. But as we can see that inflation since 2000 has been twice that of the overall inflation for hospitals and health services. I'm sorry that's specifically hospital services that grew at 227 percent compared to general inflation that grew at 104 percent or I'm sorry 74 percent. Whereas the hourly wages increased by just over 100 percent from 2002. This is through June of 2022. So these inflationary expenses as felt by consumers have been compounding over time. And rural hospitals are particularly vulnerable. Their revenue is based on the cost of what they provide largely to Medicare beneficiaries and that their margins are often very tight if generally trying to just break even. So they've been very vulnerable in the volatility associated with the pandemic and all the associated aftermath. So we do see some hospitals at risk of closure here according to our colleagues over at their name is escaping me. Sugar. The rural health projects shop centers. Thank you. Oh my gosh. Thank you so much. So they do really great work over there. I can't believe I forgot their name. So yeah. So that's just a reality that if hospitals close that has an effect on communities and just trying to understand that effect. All right. So the submissions that we got so I would say in my reading and in consultation with the team that we see that you know the hospitals that Vermont hospitals face do mirror most of those that we're seeing nationally. So that we see that continued reliance on non-operating revenue which can be especially vulnerable. Some of that non-operating revenue was provider relief and CARES Act payment enhancements that have expired. We also know that the revenue associated with the 340B program continues to decline federally. And I would say that one thing that's probably different about Vermont is we tend to have a greater reliance on that 340B revenue just because such a high proportion of our hospitals are critical access hospitals. The higher than average inflation is something that everyone's feeling especially when it comes to labor as we cover that is appearing to slow. The cost of pharmaceuticals difficult to control. And one thing that might make that better for a hospital is their leverage in a negotiation. And since Vermont hospitals tend to be smaller there might be an additional challenge in the negotiation leveraged there. The ability to attract and retain staff is a common theme across the submissions. I would say that in the the Bureau of Labor Statistics data is a bit lagged but just in anecdotally talking with CFO's Chief Financial Officers that they're feeling a real shift in Vermont being a more local or regional market to really being national in their competition for staff. The ability to discharge people to post-acute facilities is also something that we're seeing nationally I would say just because our supply starts off lower in Vermont that there is probably a more dramatic impact locally. And then again we just have a very high proportion of rural providers so anything that's affecting that segment is going to be felt more acutely here in the most rural state or one of the most rural states. So we are working on improving the hospital budget process. It is a process to improve. So this is a step in that direction but it will take a few years to continue to enhance that. We are folding in some new publicly available data sources so that we can better understand how Vermont hospitals expenses are growing compared to what has been seen historically and nationally. I would say that what we are have targeted to enhance in fiscal year 25 and beyond are more kind of direct applications of quality, productivity, patient access, equity, consumer affordability and per capita budgeting. So those are all ones that we may talk about this year but haven't been as formally addressed in the expense factors as we hope to evolve to. I think we've talked about this ad nauseam but the fiscal year 24 budget guidance inherits a benchmark from the fiscal year 23 budget. That 23 guidance established a two-year benchmark and so this year that means that NPR growth from the fiscal year 22 actuals to 24 budgets of no more than 8.6%. We talked quite a bit in the reconsideration about how that is an ambitious target and as a reminder from where it came from when the all-pair model was negotiated. The theory was to keep health care, total cost of care growth more in line with gross state product. So depending on the length of time and your look back when that was negotiated that historical growth was between 3.5 and 4.3%. That has not been the trend that we've experienced in recent years but it felt important to have something to compare it to that comes from a state objective or a state priority and so that is where that 8.6 comes from is two years of that maximum growth. So we do see here and it's a that by and large we see some improvement in our hospitals. So if you look in the operating margins most but not all have shown some improvement between where fiscal year 22 landed and where they are through June of this year. Again we saw that trend in the national context so that's not necessarily a surprise and we see that some in some cases that we are seeing also the rebound of the total margin. So the operating margin is just looking at the operating expense compared to operating revenue whereas the total margin is the whole enchilada. We're still seeing pretty lower levels of days cash on hand which is what DCOH stands for. So we see kind of a mixed bag there cash is something that can be helpful especially if borrowing is expecting to be more expensive in future years and as existing debt service coverage ratios have been depleted. We have more than one hospital that has violated some debt covenants and so some of the metrics that they're held to have been adjusted to make sure that they have more liquidity. So they have more cash helps reduce any risk that the borrower might feel. So when we look at the submissions we've got three columns here. We've got what the submission looks like for fiscal year 24 is compared to the 22 actuals. We have how the 22 actuals are looking for 23 projections to date and how those actuals compare to what was approved. So this is just telling us for revenue our hospital's kind of on budget or not. It is sort of so as a system the 22 actuals to the 24 submission grows by 19.1% with actuals to projected year to date expecting to grow 11 which as a system we are what you would say under budget but the system doesn't have a budget in and of itself. And you can see for some hospitals that they are more than 2% over or under the budget as submitted so we see most are over and one that is under from those projections for the year to date or I'm sorry projections for fiscal year 23. Just a reminder net patient revenue is revenue from all payers so this is going to include Medicare, Medicaid, commercial, self-pay, workers comp all that good stuff. And so I think that as we evolve and think about expenses instead of revenue these numbers in and of themselves require a little bit more investigation right. So if we look at operating expense growth you'll see a much different story where many many hospitals are over budget so they in good faith set targets for their operating expenses but those can have continued to be a challenge in the current fiscal year. So we see that while the system as a whole intended to grow by 2% the projection is more like 5.6% operating expense growth. Now operating expense growth just like operating revenue has many components so just looking at these in and of itself doesn't tell the whole story and that's part of what the budget process is designed to do is to learn more about these pressures and how hospitals are dealing with them and try to get a sense of the amount of expense that is controllable and I think that's a healthy conversation to be having but you can see that any number is going to be the smaller the number you're dealing with the more dramatic a proportion can seem so if your income goes from one to two dollars that's 100% growth if it goes from 100 to 101 dollars it's a 1% growth rate so that denominator matters so I would say that you know when you look at some of these numbers one question I always ask myself is how big is that that number to start and so then rates is probably one of the things that is of most interest in the proceedings this year so we're trying to get a better sense of how gross revenue or charge master changes have relate to what happens to commercial net revenue so the charges are that if you look at your explanation of benefits you'll often see a charge number that is a very high number and you'll see a second number that is the negotiated amount between your insurer and the hospital for those of us with insurance which I know is not everyone by any means so that charge master has gotten further and further away from the actual allowed amount so we needed I think it would benefit our regulation to have a better grasp of that net amount versus the charge so we see that the average two-year growth in that net commercial revenue varies between 5.6% and 14.0 2.8% and 14.1% so that's just taking the growth in the actual to the from the fiscal year 23 actual to the fiscal year 24 submission what it looks like the estimated commercial effective rate looks like from fiscal year 23 to 24 and averaging them with a simple compounding annual growth rate so you'll see some discrepancy between the charge and the net revenue columns in most cases we would expect to see the charge master grow more than the net revenue proportion so remember it's usually a discount over off the charge but that hasn't been the case for some hospitals so that's another topic of conversation that we'll have during hearings and want to note that the numbers here for Gifford are for just the expected growth from 23 to 24 due to the work they've been doing on their charge master and in implementing their EMR they have not had an opportunity to implement prior elite prior approved rate increases so when you look at the actual numbers they're going to look a little bit different than this because of those adjustments accounting for previous years also of note is while we did in our findings of fact last year get an estimate for commercial effective rate from all hospitals that's not been something that's been historically ordered for any hospitals but the EVM health network hospitals and just as we learn and grow one thing that I think we need to try to wrap our minds around is a rate that an insurer is thinking of is not the same rate you're seeing here and so we'll talk a lot about that in the process this year and how we can kind of try to be measuring the same thing across those processes or similar things anyway so as far as operating margins and total margins so we can see again there were only a handful of hospitals that were able to complete fiscal year 22 in the black meaning they had a positive operating margin we do see that improving in the projections for fiscal year 23 and you know all but one budget is expecting to have a pretty modest margin now this is a place where Gifford stands out again and as we'll talk about in their hearing they are in a pretty unique situation in that they are owned by an FQHC which there's maybe I could probably count on one hand how common that is in the United States so their consolidated margin looks much different than this one but other than that we the only other margin we see coming in above three percent is for Porter and total margin again there we only saw three hospitals finish profitably in the marginal sense in fiscal year 22 projections look much rosier with only looks like one two three four five hospitals finished projected to finish in the red this year and budgets you know seem to show expectations that that continues to improve from what they submitted all right so we did outline a lot of data in the guidance this year and so to try to distill all that information in one actionable place we are using a budget review tool we will be going through that in a moment might be helpful to get some questions before we move change screens here but I just want to be clear that these are new metrics they're designed to be conversations every data source is going to have its strengths and weaknesses and so you know I I mean this is just me but I think leading with curiosity and trying to understand is is really the name of the game this year as we all look to improve our processes and understanding of the budgets as submitted so if it's the chair I can take some questions now before we move on to the tool or we could just hold them till after that um while we do some now if any board members have questions uh I don't have any myself but if anyone else does please go ahead sir I just have a quick one um I think I was on slide 18 the days cash on hand for Springfield had an n a is that coming soon working on getting the rest of that information yep mm-hmm okay great thank you no worries yeah and sir I just have a quick question um on slide six you talked about medical care inflation and on slide 13 you talked about consumer inflation for medical services and I think part of what the difference is is you have a compounded versus a annualized rate but are those the same things just looked at differently or yeah yeah yeah they're both CPIU or consumer price index uh measures I didn't go to see if they're including all the same things in medical across those two I so that other chart would break out the medical care services whereas this has combined medical care services uh commodities equipment and drugs okay so on the other graph which doesn't go to 23 but this one does we might expect that line to plateau for for a year okay just thank you so much yeah okay great thank you wonderful so give me a moment to I'm gonna turn off my camera and share my browser so we can look at the budget review tool um so uh I want to first and foremost uh thank everyone for their patience uh the flood did uh postpone the launch of this more than I would have liked so here we are though uh with our tool and what I'm gonna sorry may I just interrupt is there a possibility that you could blow it up a little bit is it possible to have this this is as big as it's okay sorry just thought I would yeah no worries keep going yeah no worries uh yeah Tableau is not as responsive as one might hope at any rate so our intent here is not to look at any specific hospital but get a sense of the measures that are included here and why and give you kind of a forecast of the information that we will be discussing uh so uh this overview tab uh shows uh so the green check corresponds to the filings that were on time and complete uh so most hospitals uh were uh there were a few that we had uh some delays in getting the complete filing in and on the left hand side uh you can see how the uh change in mpr is between the fiscal year 22 actuals and the sub budgets as submitted and the right graph is summarizing it for the change in operating expenses we don't have an explicit benchmark for operating expenses however as we look to flip kind of our focus from a revenue to expense uh basis I think it's good to start thinking about that sort of thing um so you can select a specific hospital with this drop down menu you can filter for just a specific type of hospital um and you can also filter based on network so if you just wanted to see dart the Dartmouth affiliated hospitals or the UBM health network affiliated hospitals um and so in the table uh these are the values that are graphed in the left hand uh visualization uh these values in the operating expense column are graphed on the right hand biz um and then we have a summary of the charge master increases in aggregate from fiscal year 23 to 24 as well as the estimated commercial effective rate from 23 to 24 so that's a snap comparative snapshot of the submissions uh for folks to take a look at um and in the budget tab we have uh for each hospital we have uh the mpr target whether or not that is within the 8.6 over 10 years uh notes from the narrative and then some staff notes were applicable um so each expense factor is summarized uh for net patient revenue operating expenses remember we don't have a uh benchmark uh for labor uh what we're looking at is the per fte growth over time uh utilization has to do with the um change and adjusted discharges over time pharmaceutical expenses uh are what we've got in terms of historical information uh on the expenses as reported in adaptive uh cost inflation uh is meant to be non-pharmaceutical expense growth and then the commercial price is our estimate of that effective commercial rate again not an explicit benchmark on that factor um so for financial information uh we are showing the change over time uh between npr which is the orange line and operating expenses which is the blue line uh and then we also have some key financial metrics uh we've got the total margin uh which has been pretty bumpy uh in recent years as well as the operating margin we also have the operating a bit of margin uh a bit of stands for earnings before interest demort depreciation and amortization um so that's kind of a clean apples to apples look at profitability um and then the days cash on hand um so uh you know for southwest we know that um their structural relationship means that uh much of the cash is held at their parent organization so seeing them in this red zone is uh a little bit different than any other hospital and we'll talk more about that when they come in um so the labor tab is um showing uh uh that's not a good example it was showing uh so what the per fte uh compensation was in 2017 and this benchmark is showing us if we just advanced that value by the employment cost index uh which is what medicare uses for its uh expense growth on that side uh where that would be in fiscal year 22 and where the hospital is landing um and we can see also how the full-time equivalents have changed over time so notably this is just salaried employees as reported to us in adaptive there are cost accounting differences that we might be talking about in hearings and we also so as an example uh giffords done some dramatic reorganization in recent years so we'll have this probably is not a very meaningful chart for them over time uh and you know for others it probably is and so that's the the the intent of that uh tab um utilization here we're looking at how things uh change together um so how our changes in utilization changing compared to net payer revenue so we don't include any graduate medical education or dish this is the amount of money paid by payers to the hospital be it through claims or fixed perspective payments we also see how that changes with operating expenses so um you know depending on your size that might some of these lines are going to look bumpier than others and on the bottom we have the uh emergency department utilization over time sourced from our hospital discharge data set so that data is provided by hospitals and has been provided since I think the 1980s and so it's a nice kind of consistent data set and what we see here is the outpatient ED utilization proportion and those who are admitted so if we're going to talk about potentially avoidable use we would expect that to come out of this gray bucket and when it comes to migration this is again going to be a conversation as no data source is perfect but what we have here is for inpatient on the left and outpatient what those discharges have looked like so we only have anything that would touch a facility claim or a ubo4 as we call it and then what proportion of those discharges or that utilization is coming from the hospital's hsa and what is coming from outside the hsa so that's the in migration and so um you know you can see that these patterns are going to look a lot different for a border hospital versus someone that is less close to the border and then you might see people traveling for tertiary care as well so say a ubm and then on the bottom so now we're not talking about utilization we're talking about dollars these are claims based dollars as they appear in our all pair claims database which is not all the dollars by any means so first these are only people that have uh medicaid coverage through the state of ramon or medicare coverage through the federal uh traditional uh fee for service as well as um this also will include medicare advantage business uh so at that we get in vcures and then the commercial market is the one where we have the most questions uh we know that uh by we're missing out a little over half of the self-funded business at this point um which can be quite significant we also won't have anyone with military coverage called tricare we won't have federal employees in there and also anyone uh without insurance or anything paid through workers comp or other third party liability insurance so um but of the information we have in how it looks over time uh we can see for a specific service area so for folks with a mailing address in the white river junction service area we can see that most of those dollars are not staying in that service area so uh most of those dollars are leaving and you can further kind of look at it so well is it any different for just professional services on those uh cms 1500 claims versus inpatient or outpatient facility um but we'll see that that can look very different depending on the hsa so this is getting a sense of folks who are traveling for care the cost report is probably one that will have the most uh to learn uh so how these things are different but uh these are a summary of many of the gold standard metrics that mr reese presented a few meetings ago um so we have a peer group flag so you can look at um you know mid-sized rural academic members of the association of american medical colleges mid-sized rural hospitals or critical access hospitals um and uh you are able to kind of highlight the vermont hospitals when you click on the orange part um and you can see um how they're performing on these metrics as a quick reminder so adjusted discharges is our measure of size that takes the inpatient discharges and scales them by the ratio of inpatient and outpatient revenue um i'm sorry charges uh we also have the medicare case mix so as a reminder when you have inpatient care and medicare is paying you it's often what's called a drg payment or a diagnosis related group payment and each of those payments has a certain weight associated with the resources involved so open heart surgery will have a much higher weight than an outpatient visit say or you wouldn't have that inpatient part of me but for say uh colonoscopy so we're going to have much different weights and so that's giving you a sense of so here at st joseph they have a much higher patient acuity than they do here at um whoever's on the end here new port hospital so that's just a range of the um inpatient acuity of patients um the ratio of administrative and general salaries to clinical salaries um so that is taking uh just the admin and general line uh from the cost report which i i'm with mike i think that's line five um and and then comparing that to um the salaries paid for inpatient routine services outpatient services ancillary services essentially lines 30 through 100 whatever um so what that ratio looks like this is one that we have a lot to learn this is going to be really sensitive uh to the corporate structure of the hospital it's not designed uh to reflect the uh expenses associated with owned physicians that's something that we would want to look at the form 990 to get a better handle on but um i think really what we're looking for here is a uh how we can think about um creating a reasonable comparable index for this so this is kind of our first stab but i think what we'll be able to further improve this metric over time uh cash for operations uh just a note here that um you know despite the cash listed here some of that might be restricted um so sometimes you'll get a donation that can only be used for certain things um and uh so that is again a conversation that we'll be having um the EBITR so we talked about EBITA earlier this is adding also uh uh expenses associated with rent um and seeing this is going to be our closest thing to a profitability metric from cost reports um and then the CMI adjusted cost per adjusted discharge so this is taking uh from med par which is uh Medicare fee for service claims uh taking the average cost so they use the cost to charge ratio for that uh cost center and allocate the expense that way and we scale that by the case mix index so it tries to get as apples to apples as possible for that cost per discharge again we'll have a lot to talk about um notably this is only going to be Medicare fee for service claims and Vermont is relatively late to the game when it comes to Medicare advantage so some things we see here might be more related to that than anything else hey sarah all right oh yeah yeah sorry before you move on um could you explain the dark square the light square and the lines on each of these please sure that's always good i forget that not everyone loves box plots like i do so this is a box plot um it is a way that nerds like me like to look at the distribution of data so these dots are the distribution of the data points and this box is helping us summarize it so uh the line between where the light and dark box is is what we call a median which says half of the points are above this line and half of the points are below this line so it's a measure of position um which means that um we're not going to get dragged around too much by outliers um so with an average you know if there are five people in the coffee shop and one of them is bill gates um your average compensation would be way bigger than your median right so that's what we're trying to do um and then when we go down to the um end of the dark gray box that's our 25th percentile so that's where 25 percent of the observations are lower than that and 75 percent are higher than that and then we go down to the lower whisker which in this case is the uh three times what we call the interquartile range which is the value of the middle 50 percent of the data so here's our 25th percentile our 50th percentile in the middle in the upper end of the box is our 75th percentile so that's where the middle 50 percent of our data is this is what 1.5 times that range looks like anyone above that might be considered an outlier or in some cases an extreme outlier all right was that too fast you're picking up what I put down okay great all right yeah no worries thank you I'm totally meant to cover that um all right and then so cost coverage this is one that probably will take the most thinking to digest or it does for me anyway so let's just start with um inpatient care um so on the top here uh and this is hot off the presses fiscal year 22 data so um we have commercial medicare and vermont medicaid these are the primary payer so who paid first and we're seeing what the average payment was per discharge or on the outpatient side ambulatory payment classification service um so that is the average payment that was received so you can see that commercial bars are higher than the governmental payer bars so that is that difference in payment and the bar is what medicare says the average cost was so much like the last tab we um apply the cost to charge ratio for the applicable cost center and figure out what medicare thinks that cost medicare does not reimburse for all costs so this is the medicare allowable cost and then above here you can see what the payment is compared to that medicare allowable cost so we see for inpatient at dart myth 68 percent of the medicare allowable cost is covered for vermont medicaid and 60 percent is covered for uvm mc we see that uvm mc is providing a lower cost service as medicare would also say and that is true across payer types and then well these numbers notably are not adjusted for acuity because this is what it's going to look like from a budgetary standpoint unfortunately you don't get to risk adjust your payments uh well sometimes you do but that's not the norm today and then here what we see is what the cost coverage has looked like over time and so here we see declining inpatient cost coverage from medicare and medicaid over time and what that's done to the commercial inpatient rates we can also see what that looks like just for the outpatient setting and fiscal year 22 is a rough one or was a rough one and last but not least we have tried to package some information from rand in in their hospital transparency study and so what this is doing is taking standardized prices rand provides two numbers in their analysis they provide the relative reimbursement um compared to what medicare would pay and they provide the standardized price so one uh kind of important note about medicare is that they actually don't pay everyone the same they pay differently based on several adjustments and those are designed to reflect kind of the wage in the area and and other factors such as your designation so that denominator can change and kind of distort that relative comparison in some ways and we have some notable changes in medicare reimbursement due to the wage changes and some designation changes that mean I think the standardized price is probably a more valuable comparator and so this is pooling data from 2018 to 2020 so it's very old they're working on their next round but I just think that's important to note how dated this information is however you are able to you know highlight either a remont hospital or a regional hospital regional academic medical center so you'll see for instance albany medical center so for each inpatient discharge the commercial reimbursement was about 36 thousand dollars whereas their payment for per outpatient service was down at 192 so we see that they were below that 25th percentile when it comes to the outpatient reimbursement but above quite far above the 75th percentile for the inpatient care so that's uh that's what I get I can leave this open if there are any questions or more details that would be helpful um we'll have our first uh guest starting in 20 minutes so want to be mindful if folks want a little bathroom break before that starts too um sir I'm sorry to put you on the spot here but the declining cost coverage did you go to that again real quick and to what do you attribute the declining cost coverage for our hospitals from medicare and medicaid if if anything if you have any insights yeah so costs are accelerating faster than payments is kind of a short answer um and I think that even the medicare allowable costs uh have not reflected the recent inflationary increases uh as much uh as one might hope if you're a hospital okay I didn't have any other questions any other board members have anything for Director Limburg I don't have a question but I I wanted to just say thanks to Sarah and the team because this is uh an incredible tool I yeah I think we still need to try to find the forest but if we've got more trees I assume I'm gonna have questions over time as we get into individual cases so but thank you so much I mean this is a heavy lift and super helpful I think this is gonna help as you said generate a lot of conversation and and knowledge great well we'll give you ourselves a 19 minute break we'll be back at 10 um and thank you very much Sal for all the great effort see you soon thank you okay uh Sal can you hear me okay great yep all right um looks like we have everyone here um and so we are now turning to southwestern Vermont's budget presentation and I see Mr. D here welcome Mr. D nice to see you thank you and thank you for your submission um I'm going to turn it to Mr. McCracken to swear in the witnesses and then you could proceed and thanks for being here okay thank you yeah good morning so who from the southwestern team is going to be presenting and answering questions today well it will be a team approach Steve Majetic will be our facilitator of answers and will other individuals will also probably respond as requested by him okay if for anybody who's going to be presenting or answering questions I'd ask that you participate in the swearing in but we'll do everybody at once here to make it easy so if you could raise your right hands uh do you solemnly swear that the evidence you shall give relative to the cause now under consideration shall be the whole truth and nothing but the truth so help you god I do I do I do I do I do Jim Roy great yeah I do all right well thanks thanks very much and uh I believe the floor is yours okay well thank you very much chair foster Mr. McCracken um and thank you for the opportunity to um make some brief opening comments I'm Tom D I'm the um president ceo of southwestern Vermont medical center and let me just quickly introduce our our other representatives here who are who'll be making comments say we have Kathy Fisher who's our who is the sbmc chair board board chair we have a Steven Majetic who is our retiring cfo but has has stayed on to help us on this process here and we have Dr. Trey Dobson who is our chief medical officer of of the hospital and also we have Jim Roy who is our is our interim cfo and controller so um that's that's a team who will be um talking today and um just um again I just want to let you know certainly I've been in health care management for now for over 43 years 33 of those years as a hospital ceo and I must state and I think the um the panel members have been indicated too this is one of the most difficult times of my career sbmc has been adversely impacted by many of the similar forces that you will be hearing about during these upcoming budget hearings over the next few weeks the workforce shortages um inflationary fractures on all our expense items um you know drug costs and supply shortages um insurance company denials third party reimbursement reductions especially in the areas of 340b um skyrocketing and construction costs and our inability to refer patients to the appropriate level of care outside of our of our hospital all are impacting our day to day operations in a very significant way sbmc has been experienced has been fortunate we've experienced 12 straight years of positive operating performance but unfortunately for for us in our community that's three will end in 2023 with our first operating deficits um but as we look toward the future we continue to work on on transformation and reforming how we how we operate we are starting a new era as a member of the Dartmouth health system and as we enter into that new arrangements you know we're looking forward to four to focusing on the following we're going to um are certainly one of our top short-term objectives is a transition back to a positive financial performance as you know in our budgets um albeit it's a small operating gain but our hope is a transition in 2024 to a back to a 1% margin and in in 2025 is is our plan is to work on getting back to where we have been historically which is in a range of 3% which is a range which we feel is for non-for-profits that is a spot that we need to be in we're also looking to improve on patient access with a particular focus on primary care and we'll talk more about that and um and we're looking to continue to pursue opportunities to reduce healthcare costs and at the same time improve patient outcomes and and we will will continue to pursue our initiatives that has allowed us to just recently become a a CMS five-star hospital we are striving for our our six consecutive nursing magnet designation that will be coming up in the near future um we're trying to continue our designation as a leapfrog a rated hospital for patient safety which we are we are right now and um and trying to build on our american hospital association national recognition for for um leadership and community collaboration all very important initiatives for us to be um um a successful sustainable healthcare hospital um our strategy is to reduce patient out make out migration and to facilitate for monitors to receive more healthcare locally um as our experience and our data shows us as people leave our region and go outside our region for healthcare especially to other states they typically across the the system and for monitors more money and and we think we can provide care at a more cost-effective level and at a high quality locally our our vision is a transform um SVMC into a regional referral hospital in the DH system and um as we as we take on that that planning task we're going to focus initially on the following services over the next few years looking to expand our regional oncology services as a as a as a key strategy we're looking to develop continue to develop our cardiology services and transform them into cardiovascular program which will which will be a more extensive program for our community we're looking to strengthen and diversify our surgical services um we certainly provide I think solid services but we don't have a depth to allow people to stay local and that's our our goal and and clearly our probably our top priority is to expand and promote primary care um I would like to ask Kathy Fisher who I thought was important for the for the board to hear from our our volunteer leader from the community to take a moment to talk about the board's rationale as for us to become part of the Dartmouth Health System so Kathy could you join in yeah thank you Tom and thank you chair Foster for this opportunity for discussion um you know as I said we've had a lot to be proud over the past well 50 years we've had competitive awards for our quality of care I'm sorry miss Fisher I missed all the first half of that um I have no hard time hearing you maybe if you're not speaking could you mute your uh microphone uh thank you miss Fisher apologies can you hear me now much better okay great I'll lean forward a bit so I was saying thank you for the opportunity for this discussion um and as Tom said we at SVMC have had a long track record of success we've been recognized for the quality of our care we've had a strong balance sheet stable margins until um the recent period um but as our board looked ahead during the 20 teams all the issues that we've been discussing today were clearly visible our aging demographics population that needed more more services um and also the drug addiction problems and mental health problems that have affected families so significantly at the same time um the problem the northeast has had of out attracting the northeast new england has had an attracting doctors has really become a national problem we could see that we were competing nationally for doctors much more than in the past and of course after covid the staffing shortages have been quite stunning across up and down our organizations so we thought about all the ways we could improve uh how we provide extra care increased services without increasing costs and we have been working with partners um in the local area for things on mental health for example but the opportunity to merge with an academic medical center in our view really would be the best way to provide the breadth and depth of services we want for our community without substantially increasing costs and dartmouth to us turned to be the we think the very best partner we knew dartmouth well our doctors had worked with them for 10 12 years in an affiliation relationship um and we spend a lot of time looking at their system how they run their health system and what we could see was that um their interests are very aligned with ours they understand rural health care obviously but they have increasing demand for critical care services and therefore it behooves them to preserve their dead capacity for critical care and as tom said have sdmc provide more primary and secondary services to our community so that we're not sending people there as much but rather doing things in the local community to to provide things um right there with oncology having huge demand from our base um and cardiology services as well those are the first things we're focusing on but others as well and the idea of providing local care is has been very much embraced in our community because people have been traveling outside and the more we can do the better the outcomes will be for our community we also want to lever the expertise that dh has in areas that we don't for example um psychiatry uh again a very significant need in our community now and we are actually working with the state uh to assess the feasibility of providing an inpatient adolescent mental health care facility where dh psychiatry would be the provider um at score and but we would be actually having a facility at our hospital but there's no magic bullet to any of this um we we we know Dartmouth knows that there's just a ton of blocking and tackling that has to be done but an advantage of the system is that sharing best practices is a real opportunity um and I'll have to say on our side one of the things that we've talked about a great deal with Dartmouth and others is um how we have retained our nursing staff through the pandemic um which as you all know is a very incredible challenge um and it's not just money um it's it's a lot of cultural um management um through our our really terrific team headed by Pam Duchain where we've really empowered our nursing staff to um to lead and take on roles and and to make sure they're getting the career development and the input that gives them I think much better job satisfaction than they might get elsewhere and and and as you all know working in a hospital now is a very challenging endeavor um workplace violence is not something most people ever signed up for so we really take it very seriously that we have to hear our employees and what what we can do to help them to get through a much more challenging time than they ever would have expected and I think that's been a really important um contribution to how we've kept our high quality staff and maintained high quality services uh in a cost-controlled way um so I'll I'll leave it at that but say as Tom said we're looking forward to an ongoing evolution um and we fully appreciate that um for the system to do well all the members need to do well and vice versa so it's a it's a it'll be a very integrated effort going forward and the one that we think will really help us to provide more and better services locally without um taking on significant additional costs so thank you very much thank you Kathy and um as Kathy indicated I think we believe our integration with Dartmouth Health will create additional operating efficiencies and over time will assist us to better control health care costs it's going to help us in an area that we all struggle with in rural Vermont and other rural areas of scale which is oftentimes the missing elements in the operations of rural health care institutions through joint purchasing and and supply chain opportunities implementation of shared services and in a in a great example which is going to help us is the implementation of a shared IT system um with Dartmouth Health um they will allow us to expand um and make more sophisticated our physician practice support which is certainly a bedrock tour to our future operation and it will create additional administrative savings and I think this is a strategy that will help us to become more cost-effective costs of insurance the cost of financing and executive overhead um you know as you as you look at these organizations our organization um you know we have an overhead which over time is is expensive and we think moving into a system creates an ability for us to do a couple of things one is to certain positions now will be handled at a corporate level not at our level and and that will allow us to reduce um certain executive positions um and in a type of individuals that we need to recruit from my position on down over time when you're part of a larger system you can um you look for a different skill set you look for people who maybe who can be earlier on in career have up and coming high potential but don't have the the you know 20 25 years of experience that oftentimes you have oftentimes you pay for so so we think it's a it's a it's a exciting opportunity for us to recalibrate and to become more effective uh with the strength of a system behind this that has a great deal of intellectual capital as well as on resources so um these are not easy decisions to make I mean this is you know we've had 100 years of I think you know pretty pretty good success at SVMC on our own but we think working together in this environment for us in every in every community is different but for us makes the most sense and with our continued mission to provide exceptional and accessible care and Kathy talked about the two examples which is driven both by our board's commitment and in the relationship at Dartmouth Hitchcock Medical Centers as Kathy said one is on the mental health side which is a service that most hospitals would not be looking to jump into during a time of fiscal challenges but uh but the provision of both inpatient and outpatient adolescent services is a huge community need that our board has indicated is a commitment we need to go after and we are focusing on that working closely with the state as a partner to try to make that happen and the other area I just want to quickly mention is the strategy to expand primary care which is another huge issue that's facing us as well as the rest of the states and maybe I can ask Dr. Trey Dobson who's our Chief Medical Officer just to comment about our strategy in the primary care market so Trey? Sure well the first that you would have noticed in in the write-up is to try to increase access now in our own in our own system without the time it will take to build out primary care so we're doing that you know we're doing it with things you've heard about using scribes to help make the efficiency of the physicians and advanced practice providers better we're doing things like having staff prepare the charts ahead of time which you may think doesn't add much but it adds tremendous amount it means that the doctor or the nurse practitioner doesn't have to gather a bunch of information before or after they see the patient that it's all categorized into one container and we believe we can increase the access through primary care but around 15 percent between 12 and 17 percent just with those initiatives alone we started those in April and we're over 5 percent now so I think we're well in our way to increase in that but the long term is different so we have two main things we're looking at one is to really open an additional practice and bring in new advanced practice providers who are right out of training and have physicians and experienced advanced practice providers mentor them you know not take on a full patient population almost like additional training why that's important is we actually receive lots I mean a significant amount of CVs from an interest from new nurse practitioners and physicians assistants but they have very little experience and that has been worsened by the pandemic because their clinical experience is really less they've done a lot of online training but they don't have that patient they don't have that patient encounter background and they say it right off the bat they say who's going to support me and when we don't give good support it's just it's not good for the patient but it's certainly not good for them and you see a high turnover rate so we're starting that now in 2023 2024 and then also the planning for the family medicine residency this would be will be a very big lift it's going to be a large initiative it's going to take hands on deck we think it's the right thing to do we've got a lot of support from the public and from our physicians and nurses to get this going it's not as easy as just setting up an office and recruiting in residents it's much much more difficult than that and I think many of you probably know that there's a lot of competition between residencies and you have to do it right so we're either going to do it right we won't do it and the answer is we'll do it right I'm happy to take questions on that now or throughout the session and just to add to that we could not do either these two services on our own I mean the need for an academic partner to be successful in the mental health area especially with with physician coverage and physician direction and in the fact that the training program would come under a Dartmouth sponsorship which would make it critical for us to be able to recruit for presidents so um we again we thank you for the opportunity to be here today and we welcome your questions regarding our 2024 budget submission and and I'd also pass it on to Steve Majetic who will help facilitate the the Q&A session so thank you very much well on Tom I think I'm going to hand it off to Sarah correct yeah I have no additional comments on the on the overview but so I'll hand it off to Sarah and then after your presentation Sarah will take questions yeah yeah I think we'll kind of be having a dialogue as we go along here so just just restricting to kind of PPS hospitals we see that your budget comes in just above that benchmark which was impressive given given the expenses associated with increasing the access as you just detailed for us and noticing that the expense growth despite those enhancements is below you know the and the revenue growth expectation so I think that's just notably impressive so want to flag that for folks and let's just let's get into it so I think you highlighted this some of the plans for increasing access include the primary care and the oncology and cardiology services uh and wondering um you know you highlighted how AHA has historically or you've gotten accolades for your community um collaboration I'm just curious how you approach that process and how that affects kind of the decisions um for the infrastructure you do invest in is that a question yeah that's a good okay go ahead Tom yeah maybe initially I mean you know Sarah and in the board we um we very seriously take community collaboration as an institutional priority and actually it was one of our one of our strategic initiatives is creating critical partnerships and um and we have formed in a large group of organizations that we meet with every month and there's up to I think up to 25 organizations that are in this group that we sit down and we talk about health care issues social determinants of health and we don't just talk about hospitals we talk about the health care needs of the community and how we can all work together and um we've hired individuals who help facilitate that process and um and I think we we have a philosophy that's the hospital should not dominate these discussions the hospital has to help facilitate and be part of it but to work with the with the community organizations and non-for-profits uh physician groups to try to solve these issues together and uh it's it's uh I mean it's a challenging process to go through but it's one which we think it's um it serves a basis for a very I think fruitful relationships in building one at rest in collaboration which for us seems to work wonderful thank you um and could you uh help us understand which uh ACO programs you're planning to participate in uh in fiscal year 24 so uh Sarah and the ACO will be um in the Medicare Medicaid uh we saw our drop um one of the questions we got was why did our uh fixed perspective payment um numbers go down it's because the elimination of Blue Cross because we were in the Blue Cross model and Blue Cross is overdrawn but we were one of the first to be in the Blue Cross and now the Blue Cross is withdrawn so it's the Medicare Medicaid and I believe it is a small piece of MVP but MVP is is not a substantial driver for us in uh in our region wonderful um and sorry I had the wrong hospital up there so and uh we are rounding till to it is 8.96 I know that that eight is nice to see so uh and then uh so no I think conversation with you would be complete without understanding how you've been so successful in navigating the traveler expenses and you know if you could just share some things that you find have been particularly effective in managing that very challenging expense so I'll refer to Tom on that one yeah okay thanks Steve and let me just um you know this is this is a challenging issue and it does vary by community so each community is different on this I mean let me just talk about our philosophy here and our philosophy and and we were challenged we said let's try to figure out ways of how we can incentivize our existing staff to stay and and to stay with us and to meet the needs of our of our patients I mean we had we have a a tremendously talented clinical staff here we're blessed by that and so we came up with through our human resources our nursing department our physician groups we came up with different structures of how we create incentive arrangements especially in our high areas of vulnerability to keep staff here um and I think we were successful and we said let's try not to hire travelers um again and we also you know we have we are in a non-unionized environment so that gives us some additional flexibility to do creative things and we were able to create a number of creative pay arrangements but I have to say Sarah the most important initiative is a leadership that was provided by our nursing executive management team which led by Pam Duchain Dr. Duchain and and she took the philosophy of all nurses on their their scrubs and they come to work including yourself every day in scrubs and they work the floors wherever the need is and we you know and Pam as an example she would she would work night shift she would work evening shift she would help fill in and I'm not saying that's a sustainable model for the future but for us it sent a strong message to our team that management is there with you we have your back and we're going to work with you and and her entire team took on that philosophy working side by side by our other clinicians and that had a tremendous impact and an influence on our on our nursing team and um so we were you know we we were very successful I think the majority of the pandemic we had zero travelers we had to bring a couple of on the insular areas that were very very small departments one and two people when we lost the one we were we had to you know bring a specialist to help cover but I think that was the approach the philosophy of working together and to kind of create a a magnet moment with our team to say you know we're all in this and um everyone worked hard we were all very they were all very tired but we tried to support them in every way we could Sarah I'm just going to throw one more thing into um we also very very early in in 2020 focused on staff safety and transparency and um very frequent messaging to staff and I do think that provided some assurance that they that their colleagues at other locations weren't seeing that came all from leadership and then all through middle management and down to staff themselves and you know most organizations eventually adopted that but I think doing it early you know gave some confidence to the staff thank you that's very helpful the other question I had uh is you are projecting a reduction in FTE slight from 820 down to 811 just curious um if you could give us a little more context about kind of the thinking in those positions so most of those positions Sarah are in administrative areas not patient care areas um we we looked at you know every year when we go through the budget we look at all 800 plus FTEs okay we have a workforce steering committee and we look at them all and we say what can we do without without jeopardizing patient safety patient throughput uh and and so um we went through uh and like I said our workforce steering committee is very active uh and we settled in on the 811 um and um you know I don't know what else to say is that you know we just keep looking for ways of of reducing FTEs because they're you know they are first of all they're our biggest cost from uh you know when you look at the the people cost in in the hospital um but we gotta remember that we're serving people we're treating people and uh we um um you know we looked at every every position and um we didn't want to jeopardize any any costs um any patient safety issues any throughput issues um and so we settled in on the 811 uh it's a small decline of nine on 800 but um it didn't go up and you know I'm the CF no um that's um and I always try you know we we we gotta squeeze that and the team works really well together and they they monitor the FTEs and we should a year over year we usually don't have too many variances but every once in a while we do but um this was a concerted effort by all parties and and so I just added that just one quick example and it's also it relates to system this too is that we we lost the talented um chief compliance officer and who wants another institution and we and we made a decision that we would not replace that position we would move an existing person up our risk manager into that role and we would use the Dartmouth Hitchcock compliance service to help provide the oversight in in in direction that we we feel we we would need so that's the system helped us in terms of saving an FTE position in terms of our operation a higher price FTE position too in our system that's a really helpful example and um just looking at this kind of you've almost exactly kind of managed to the employment cost index which I think is a testament to how the effort that you put into managing and right sizing your staff and I think I'm just curious what if anything might be changing in terms of the local control with the changes in your relationship with Dartmouth as it goes to compensation or other factors that affect labor so Tom I'll let you touch on that yeah I think you know the the philosophy of of the operations on the DH system is that the system the DH parent court board helps us set strategic direction on the on the bigger issues the clinical side the running of the operations is is really vested with each hospital and that was very attractive for us so we have to we have to manage to our to our our budget we have to make those decisions and so DH does not get involved in that day-to-day operations unless we ask them for assistance in terms of some consultative work on a you know particularly a vaccine issue but by and large we have to manage it and and we have to you know kind of live with our budget projections and and and again we we find that as an attractive feature not a not a detriment thank you I think that covers the questions that are coming from staff at this point if the board has any questions specifically related to the labor expenses in the budget so it would be a good time to fold those in. Sorry Sal do you want to do just labor or do you have do you want to do all board questions at the end or by topic? Let's try and stay within the topic so we hopefully can reduce the cross referencing. Great. Any board member questions? This is Robin hi all I just had a follow-up on the discussion that we just had around the FTEs would you expect I know you talked Tom about how the DH affiliation will help and you gave us a good example are you expecting additional changes in the FTEs in the future as that affiliation comes to fruition? You know Robin I we will have changes because for instance I believe we'll start some some new service lines that we've never had in the past you know the examples is mental health that that is something that we we have not we have we're not licensed for mental health services I know we had to go through a whole green mountain care review so that's I'm not taking that for granted but if that's approved that would be a new service line. The development of the primary care teaching program would be a new service line too in terms of a teaching program but I think there's other opportunity that would also create up areas of potential shared services both from you know I mentioned information technology I think there's opportunities in in billing in the future that's something that we'll be talking about I think there's certainly in our supply side of I think there's opportunities to share there so I mean what one of the initiatives is that we come up with a shared services task force group that's being kind of run through DHC where can we work together to create best practices and share our overhead and try to centralize that that makes sense. Thank you and I just one clarification question from your narrative related to labor expenses it's on page six so on the top of page six you have a paragraph about physician costs and fiscal year 24 budgeted to go up a small amount in the scheme of things increasing access and throughput in the medical group is a significant driver in the two-year increase of costs and maybe and I just was trying to reconcile this with the reduction in FTEs and I think what I heard you say is that most of the reduction in FTEs were in admin so I just want to make sure I got that right and if I was missing something give you an opportunity to explain it. Yeah Robin the FTEs are all administrative FTEs and in the physician cost there is an increase in providers so we can improve the access which which accounts for a portion of the increase as well as additional compensation for that increased workload that the physicians are doing but your question they're all they're non-physician and they're all administrative type personnel. Thank you that those were my questions about labor. Any other I have yeah I have one or two on the your approach to the nursing situation when did you start taking steps to to end up where you are now which is a pretty successful position. Tom. Okay I'm sorry are you relating to the trailers I'm not sure I understand the question to be honest. Yeah you described how there were some efforts to provide incentives to retain the nursing staff and then there are some efforts to have some leadership working hand and glove with your nursing staff and I'm wondering when that when did you recognize that you needed to take steps to to shore up the nursing staff. Yeah very early on and and actually what was there what was a driver was we had concerns hearing from our staff members about a particular service in the hospital one of the departments a very critical department for us that there was some discussions about nurses going into take prouder positions and that was the impetus for us to say okay we really need to think outside the box here I mean we've had a lot we've had years of different type of you know arrangements and different type of strategies to keep nurses and recruit nurses but this was something that was very significant so it was it was early on in the pandemic where we said we we've got to you know change the model especially in from a standpoint of compensation and and I you know I think we we tried you know we were small organizations so we were able to react pretty quickly on that. Have any other Vermont hospitals you know reached out to you to learn from the efforts you took to be so successful in this realm? Yeah we we actually had had a number of discussions with with different Vermont hospital and actually other hospitals outside of Vermont who had heard about it so we we had we've had a fair number of discussions by institutions and again each each each region and hospital is different and but so we've we've had those discussions and and certainly I can't you know speak more about the the nursing leadership to help to drive this. I have no other questions but I you know recognize and want to commend you for keeping those costs down it's it's great to hear that you were able to control FTEs without actually impacting patient care that's important and you know great job on the nursing front you should be commended for that so thank you I have nothing else. Thank you. Are there board questions related to the labor component of the submission that would help in your decision making? All right any questions from the healthcare advocate about labor expense? No questions at this time thank you. Okay great all right so moving on to utilization in my judgment a bit of a humdinger for budgeting purposes between your efforts to reduce inpatient utilization while also expanding some of these service lines so I wondered if you could just at a fairly high level just explain how you went about budgeting related to utilization changes for 24. So so Sarah what we did is we we looked at our recent trends and we believe that as we improve access and pull patients back to our service area who are now leaving you know hopefully we can keep the patients healthy and reduce over time because this is not something that you could just happen over one year okay this is something that will happen over time so what we did in in 2020 in the 24 budget we kept our inpatient utilization flat because we do believe we'll start feeling some of the efforts of improving access improving the health status of our population through through the access and pulling back out migration but you know it I know people would want us to see that inpatient utilization go down because of that but it's going to take time so as we get more data we'll be able to look at that and possibly on our core business as we have today maybe it will go down but as Tom said we're also looking to improve services because if we improve services we may actually see that decline negated because we're keeping patients local so we decided to take what I consider a conservative approach and be flat because there's a lot of moving parts there that can drive it either way and we'll see if we're right a year from now and if we improve the access and we treat patients in the office and reduce but as we're working with Dartmouth we'll then see some improved services which will probably bring it up so from a budgeting perspective we felt flat was a logical way to do it and we'll evaluate it over time just like we've done in the past and and see where we end up. Thank you that's very helpful um apparently my filter is broken so I don't see your ED utilization here it was old anyway so we'll get that fixed. Well our our ED utilization is also flat um because um you know ED utilization you know one of the things that we didn't put into our narrative we're on the well we did put it that we're in the middle of this ED modernization project but there is some thought that people may want to come just to see it okay and not for a visit you know you know just to go through it a couple other hospitals that did new EDs saw our up click in the first year or so in it so we didn't factor that into our budget but we kept it flat and and over time um hopefully we can reduce that but again it's one of those balancing acts as we improve access because access is not going to not going to drive those decisions people make like that it's going to be as Trey pointed out we're at five percent we're moving to the 10 percent then the 15 percent it's going to be a gradual I think 2025 we'll we'll be able to we'll have a year's worth of data underneath that will see the impact and we'll be able to measure it much better Trey I don't know if you'd like to add anything yeah yeah it's um the little bit of rolling the dice uh I don't know making some protection projections with a blindfold because as we increase access in primary care the hope is that you keep people healthier they don't go into heart failure uh and they don't therefore need to be admitted to the hospital but at the same time you know we transfer a lot of people out for things that can be done in a community hospital um ERCP for example which is you know helping uh to help with a gallbladder attack um uh mild heart attacks things that can stay in a community hospital if you have the resources and services to do so and we know that we have those patients we know we transfer them out they go to Albany and we just saw uh an hour ago how expensive it is to be an inpatient in in Albany and we that shouldn't happen we should keep people here and and we need those services you know cutting those services doesn't decrease costs at all for Vermonters in fact it it increases and I can now argue that over and over then lastly um there is a distribution need in in the state as well as in in in our Dartmouth health system and that distribution needs to make sure that beds are being utilized appropriately and we're available to have patients that can't get into other facilities you know that is a problem so balancing all of those variables we came up with a a flat zero percent change and we'll see how it goes yeah thank you for that um and I'm just curious uh if you uh formally track what we think of in the policy world as potentially avoidable uh ED utilization and uh if so uh or if not why not and if so how you kind of approach that tray you want to take a shot at that in the ED yeah we do we don't have that you also you also um work in our ED when you're an ED physician by training and you work at you currently continue to work as an ED physician um so go ahead right so I work half time here and half time at the academic center at DHMC so I do get a little bit of a perspective there we do Sarah I think Sarah asked the question um we do we use a couple of standard um metrics that probably you know David's aware of I can't even remember the names of them right now they come basically from claims data insurance data I have to tell you I want to follow them I want to give them the worth I don't believe in them very much they they just use um diagnosis codes for example sore throat is listed as something that's an avoidable emergency department visit most of the sore throats that I see and this is true because I work in an ED not in urgent care and we do have an urgent care that sees minor sore throats sore throats I see need to be in the emergency department so excluding them as as a you know avoidable it just doesn't make sense another one is headache you know often headache is listed so I don't want to go back and forth from that but we try to follow those metrics I will say our throughput in our ED and our numbers the reason they have slowed a bit or leveled is because we have an urgent care that now has higher volumes and sees much less sick people so most people that come into the ED and SCMC are now are now much higher medical need than they were when I started here in 2005 yeah and I would just say the data certainly bears that out that drg severity has been creeping up across the country so not not just in folks heads I don't think the other question that I had and you know now that you're a short time or maybe you can share some of your secrets here Mr. Majetic but it's clear that you do are in have some initiatives to increase productivity you talked about kind of getting charts set up for providers and whatnot what sort of tools do you use when measuring that and how do you kind of assess relative success so we're going to we just instituted a new set of dashboards by you know and and we kind of like take a pyramid approach at the top is the whole practice and then we go down and we you know I'll use I'll use our Northshire site as an example and then we look at Northshire as a practice that's in Manchester and then we go down to the individual provider so we look at all those dashboards and on the dashboard it'll have panel size it has visits it has what else does it have tray I'm coming up blank it has it has rvu data rvu's data yep yep and then and then we've got separate not right on the dashboard but right behind it patient experience data yes so you know we'll be looking and we have benchmark set that that the all the providers have agreed to and you know while we will be looking at them as we're you know and Trace said we're at the five percent you know increase mark so we're seeing successes the the quarter from July to October we're looking to get to that 10 percent and then in the 24 budget year we're going to be in that 15 percent so those dashboards and they'll be they'll be I'll say we'll have some successes and we'll probably have some people underperforming or practices underperforming we'll have to take corrective action and find and find the the cause and effect if they're not performing and and hopefully if one practice is doing better we can learn from that practice that's practices so we have a lot of data flying around but but we are using sort of like I could call the pyramid effect we stop you know you either work from your top down or you can go from the bottom up depending on how you want to look at it thank you uh and I was also curious if you don't mind sharing uh as you look at you know do you have like benchmarks can sit like for visits for day or is it you know is that like okay absolutely visits for day visits per week you know you know remember you know physicians do take vacations so you know sometimes you got you know you see one physician he's doing well and then also he drops off well you gotta look he's on vacation he took a day off or whatever but we have a visit per day target we have a visit per month target you know so so we'll be looking at it you know and and you know when you start looking at an individual day it's so that's too micro you gotta look at the long haul okay and then we look at the weekly we look at the months and then ultimately you know we'll be looking at quarters and then year and the success will be the success will really be um you know we'll really start getting a feel uh when we get our first quarter under our belt uh and then our second quarter and we hit that we hit that uh 15 increase over the long haul yeah and how are the benchmarks derived for those targets how are they derived well we're using national national benchmarks um and we're using um trey i think three three standards uh right um it kind of depends on what measurement you're talking about because some of the you know some of the resources are good with certain measurements and not others and you know it's actually a little complex area you have to make sure you're looking at like institutions so having uh an academic center compared to a community hospital is not correct because of residents involvement and all that but we use a blended survey for every single one of those and for panel size for the primary care you know the goal i just have to point out since it's a public forum the goal is not to see who's who's performing poorly the goal is to see where the opportunities to have everyone performing at a comfortable level that is good for their well-being and improves access and that's the approach we've taken and we have much better buy-in than if we you know did it in some other way i know that that goes without saying but i think it's important to point out and it actually is really good to compare office sites because if you have four primary care office sites that you know maybe you've um uh adjusted a little bit for the type of patients they're seeing but you know they should be pretty similar and when they're not one can learn from the other we can learn from the other so that that type of learning and i think that's what steve's talking about with the pyramid measurements absolutely and i guess to be clear like are you looking for median generally are you how do you kind of set your relative performance targets that i can answer that as well um so utilize it so it depends what you're talking about from my rvu we have less than median because vermont is a lower utilization state so we don't want to be florida um that's over utilization uh but we also want to make sure that that utilization is at a certain level because that reflects access and reflects uh volume so that's why it's not just one measurement we follow we follow the panel size you know typically follow a lot of things but what's really out there on that on that dashboard that steve was talking about is panel size if we're talking about primary care here panel size um visits per day uh total visit volume per month adjusted for fte and then rvu productivity as well as patient experience thank you uh very clear very uh obvious how you attend to that uh and then i was also curious um you know you mentioned all the efforts to you know review uh inpatient admissions make sure they're appropriate it's the right answer for that case uh efforts to shift more care to patients homes and alternate settings um and just uh as you like work through this i think broader transformation process um just curious like where you're kind of finding some pain points and um what you think you're already kind of paying off in terms of uh the results so tray i'll let you um take that and then i can follow up sure that'd be great well first off just on admissions um you know we have uh the physician's decision which actually does trump all depending on the medical assessment then we follow what are called interqual criteria most people are probably familiar with that there are some other benchmarks but um uh you know allowing whether or not a patient uh can be admitted the hospital on observation or inpatient um and then you know we also work with dhmc to make sure we're aligned uh with metrics throughout the entire Dartmouth health system but you have to have pain points and and i'm going to say the same pain points that i think you're going to hear from all you know the community hospitals here and that is it's it's not really admissions it's discharges um it's so difficult right now um getting patients to psychiatric facilities so they end up tell you the truth they end up often going to a sub optimal environment and that is really hard on the well-being of the nursing and physician staff uh because they know they are not doing the patient uh in you know doing what's really in their best interest they they're doing what it's not the path of least resistance by any means but it's the path of best resistance at that i mean uh best uh path for that particular you know moment in time because the other options aren't there and it's the same with the um you know patients going to skilled nursing facilities i'll say it i know that you've heard it it's real um we have patients waiting for so long uh they really should not be in the hospital and it's not good for them it's not good for staff that's one of the biggest pain points we have transportation as well um getting patients to uh tertiary care centers and to skilled nursing facilities is is a real problem so another pain point um on the administrative side is that as tre said the physician believes the patient needs to be admitted um the patient meets qualcare um in a qual criteria sorry in a qual criteria uh and then a month later after we bill it uh we get a denial um and those denial uh have increased which is increasing uh an administrative burden um and you know it's it's it's a difficult time and we understand what the insurance companies you know what they need to do but um as tre said the it starts with the physician making the decision on the front line and then if it's validated um you know we have some difficult times and we spend a lot of money and time uh working and sometimes we take the physician away from the patients because they got to get on the phone with the insurance companies to justify their decision and and so so there's a lot uh and we've seen a significant increase in in the workload related to retrospective denials um so another pain point uh thank you very much and then um always interested in uh the validity of our information so uh was curious uh how well our migration information uh might tie to what you see in your data probably easier to um look at it from the in migration than the out that's a little harder for you uh but uh just like do these kind of magnitudes uh feel reasonable are we totally missing the mark on some of these measures or i don't know how close he had a chance to review yeah i um sarah i didn't have a um that much we haven't reviewed this chart much but uh let me just give you a perspective about 22 percent of our net patient service revenues comes from the state of new york uh that's based upon cash collections that's internal data um and about um almost nine percent of our cash collections comes from the state of massachusetts um and and then two percent comes from every place else uh and then the remaining are from monitors this is based upon the address that the patient gives us um when we register them and the payer mix um the interesting thing is when we look at the payer mix for both new york state and massachusetts the payer mix is much more favorable towards commercial patients and and why is that that's because massachusetts medicaid and new york medicaid don't want their medicaid patients crossing the border okay uh in massachusetts in particular they have an aco in in berkshire county um and those patients um you know less it's emerging care uh have to stay in berkshire county or or massachusetts so um and and we continue to work on that you know we are to a good um to half of berkshire county we're the closest hospital um so we have challenges um with that and in new york it's the same thing um you know new york um this is my second hospital working um you know on the border of new york state and and new york medicaid is clear stay in inside new york state if you can so that's what drives when you look at the payer mix from out of state it's it's much more favorable that's because we have a lower medicaid and when you start using percentages you have to be careful um but um that that is um uh clear okay so um so we can if if if there's a need we can go through and and look at this data more closely but um uh we've been tracking this um for almost as long as i've been at svmc based upon cash collections uh you know uh inpatient outpatient and um um you know we we saw an increase uh many years ago off from massachusetts went to local hospital closed a small regional hospital and we've seen um in increasing the other thing that we look at is our inpatient um outpatient and physician practice mix and when you when you look at our hospital we are a much different hospital than than when i arrived uh 12 13 years ago um we were we were about 30 percent inpatient volume uh from a cash collections perspective uh let's let's call it 2010 uh we are now 81 of our business uh and that's cash collections is um is from the outpatient or physician practice so you can see the change in in um in the organization and i think that's a credit to our physicians and i think uh some of the things we're talking about well improve and access um uh we may see um some increases in outpatient but as we get more services we'll then see some increase in inpatient and along that's smashed together and our percentages may change slightly okay thank you um yeah always happy to get better uh feedback on the our blind spot so we can take that offline uh but if the board has any other questions related to utilization uh we'll ask those now please i have a couple but i'm not sure if others want to go first cheer foster what's your pleasure no go ahead okay great thank you um so thank you all you know your presentations were always really helpful and this utilization question is one that um uh director limber mentioned already but i i just want to probe a little bit deeper into the you know this idea that you're trying you're you're trying to reduce some of the out migration um you're increasing your scope of services you're adding cardio you're adding uh ortho capacity surgery capacity and you're keeping your inpatient assumption um flat and your ed assumption flat even though you're you're extending access to primary care so i just guess my first question is did you do any type of uh sensitivity analysis on these utilization assumptions modeling ranges of you know likely ranges of inpatient and ed as you're trying to increase access and increase scope just to get a ballpark figure of what npr could potentially look like if your assumptions here are off so just uh Jessica we uh um one of the things that um i was really uh i wanted to be cautious of is i i didn't want to um over project because you know as as we start increasing these services they're not going to start overnight okay and and so i didn't want to over project those um and then improving access also should decrease hopefully our ed visits and our admissions as we get people into the practices and as trey said you know we we see them we could prevent so we need to get some better data okay and we had we had a study done over a year ago uh that uh working with art myth when we were evaluating affiliation with an outside firm that shows that there is opportunity for us but we don't have those services and those things in place yet the one place that we do have probably some um opportunity sooner is an oncology as we saw in the narrative that we're going to be fully staffed um and in oncology we're going to have two physicians one associate provider we haven't had that since way before the pandemic okay so we will probably pull some of that outpatient back and then there may be some surgeries and some other inpatient services but it takes time and the and the study that we did with darman shows it out in 25 26 and 27 so um you know and and we have some projections that that and we're going to be refining them after after this whole budget presentation um you know and and time um when we submit some c o n's uh related to our um adolescent psych um that that you'll probably see some of that but we still um we need to be cautious for 24 because things are just at its infancy and again i didn't want to um overshoot um or undershoot okay so let me i i totally understand that there's a lot of moving parts here and predicting utilization is always a challenge but certainly when you're adding different services and trying to do uh increasing access in primary care while the same time adding more surgical and other specialty capacity the net effect is hard to predict i understand that um so let me ask you this then if your utilization assumptions turn out to be underestimates particularly on the inpatient side would svmc consider a mid-year downward adjustment in commercial rate uh you know in other words to keep the npr whole if your utilization turns out to be higher than you anticipated that would keep the budget whole but give uh commercial rate payers some relief is that something that's in your consideration for this year we we've always um um tom and i have always discussed um as we start going through the year the impact on that on the on the commercial rate a couple years ago we were we were a little behind uh and we were thinking about coming in we discussed it we modeled some things and uh and it and it came in so we're constantly um at least in the past years constantly looking at we got a rate increase of acts okay what's happening okay one of the things that that has happened in the past just using the past as an example jessica is that um we have seen also a greater increase in our medicare uh patients which takes away from from um the the npr as sarah just uh distributed but we always evaluate what we got what we need where we are and what we think is going to happen in the future uh and and i think 24 uh and the beginning of 25 there's going to be a lot of there's a lot of moving parts so we're always evaluating it got it all right um and actually this is just unrelated to the utilization this has to do with the avoidable utilization and dr dobson i completely appreciate your concerns about how do you measure it appropriately you know there are certainly people that commend that it might appear as if it's a avoidable visit but in fact it wasn't um and but i excel you know as i look at this you know emergency department utilization 11 percent of the ed admits were admitted does that seem like a high number low number is that a number that you would target is that a is that a proxy for um anything related to avoidable utilization avoidable visits as you look at that chart yeah we well we typically um and jessica i can't quote where this comes from but you look at um rule versus inner city and then you look at academic versus um community hospital so 15 percent 16 percent is what it was when i started here um and we want to keep it you know around that and slightly less would be would be good for an academic center inner city hospital you know those numbers are in the 30s 30 35 percent um but that's not the situation we have here and unfortunately you know some of that doesn't include some of the transfer situations we have where patients get transferred to uh tertiary care that is actually slightly increased um and as we go through the numbers just to head off another question why did it increase uh it's not just this year it actually increased for available reasons one is standards of care so multi-organ trauma no longer stays at a church at a community hospital it hasn't for about five to ten years the literature supports it needs to be in an academic center um minor heart attacks which i mentioned earlier there was a big push in the mid uh 2000s that those all need to go to uh academic centers or cath cath capable centers we're hoping that'll that seems to be a waste and i think that the literature is turning that around but to back to your question um you know 11 of 15 percent seems to be a number where we're feel certain that the patients that coming in first off need to be there and that the patients that come to the emergency department likely needed an emergency department visit you know our our urgent care is so close patients can self-select um and during the pandemic we actually weren't able to uh select for them which we cannot do anymore of course great okay well thank you what others ask questions about utilization and we'll take up too much time but thank you for that i'll just hop in one of the questions that i had in follow-up to the migration discussion and the reducing out of migration it i didn't get this from your narrative but from the discussion today it sounds like a lot of that focus is uh connected to the dh affiliation um so it am i getting that right so the idea is right now you're transferring folks to albany or to another hospital and what you're hoping is that with the dh affiliation you'll be able to keep more folks in house is that really when you're talking in your narrative about the reducing the out migration is that really the bulk of it or what am i missing tom you want to take that yeah um robin um albany will continue to be our our major source of where we refer patients for i mean the proximities is much closer than dh i think we're going to see more and more of elective work over time going to the dartmouth for admission but i would continue to say that that albany will be the will be the majority of that um you know i think the more we can keep locally again as you as the numbers that sarah show the the cost outside of um svmc are substantially higher and we think what the services at dartmouth help helps us create here with their support we can you know that out migration number and in the numbers old but i think the number was about 50 million dollars of care leaves our region leaves our area per year um we think that you know certainly a portion of that maybe you know up up to maybe over time one third could stay locally here and it can be treated at a lower cost so um but the strategy with dartmouth is to is to provide as much care locally and uh and hopefully we don't have to um you know send um as patients out and also send up to dartmouth and they they really want to have the quaternary care tertiary care patients they don't want to have lower level patients and and we want to keep the lower level patients here in terms of the acuity so that's kind of the strategy yeah and robin and robin robin simply also if we improve access and patients that live in our service area that currently have a primary care patient physician outside of our service area if they can get into our practices they probably will use our services um more so um so that's all tied together kathy yeah the one um already apparent example we referenced is oncology we have many many many patients who've had to go outside because they couldn't get appointments for their treatments they've gone to new york or boss in our dartmouth and now they can get those services here and it's a huge deal i cannot tell you how many obviously cancer is very prevalent so many people have been so disheartening to go outside because they couldn't get appointments and now they can so that's a very big deal yeah to follow up on kathy it's um unfortunately we've had two people in the finance department um uh diagnosed with cancer that couldn't get into c r doctors and they had to receive treatment outside of uh there where they work so uh so now being staffed up we'll be able to um they'll be able to see receive the treatment of the future at our facility thank you um robin can i go ahead yeah of course i'm just gonna sorry i'm going to jump in real quick granular answer to your question i'll just use oncology since kathy gave the beautiful example you asked about d8 so first off back to your original question we're talking mostly about outpatient here not not inpatient that that's the to answer that first thing then the second is if we'll go with oncology what we're saying is without that relationship with dh our ability to be fully staffed is is really not there anymore oncologists do not want to practice in a one and two practice anymore they want to be in a larger practice where they can continue to do academic research and they have the support you know and that's unfortunately due to specialization um they're even further specialized so an example of this is in the past first off we can recruit more now in the past someone may need a particular type of chemotherapy for a short duration for a complicated cancer they would go elsewhere and they would stay elsewhere you know that they wouldn't come back here because what would be the motivation from that other place to send them back we now already have patients that we do 90 of it they need to go up for one or two special things uh but then they they just get referred right back here into the system where they where they belong um the head and neck is a great example uh they used to all go elsewhere now uh head and neck cancers can stay here for the most part they may need to get a little bit of debulking procedure at dhfc and then they return thank you and then just one more quick i hope what i hope will be a quick one is um steve you mentioned increased insurance denials is could you give us a sense of is that self-insured uh ma plans just any trends you've seen in terms of where that's coming from or is it just across the board i i would classify it across the board um united healthcare has been difficult um but we don't have that much volume but when you look at the proportion of of what we're seeing and um you know i i think the real the real answer is across the board thank you i think that's all i have thanks thank you other board questions dr merman i just thanks for the presentation so far i haven't had a chance to comment or question um uh actually i think i might venture just a quick comment which is um you know dr dobs and i are both emergency physicians and we think about the admissions numbers and over time this has been used a lot through research as a marker of acuity but it also seems to be a marker of that availability i don't think these numbers include transfers and there's also an argument that that you know a low admissions number is an incredible amount of work that the emergency provider team has done to try to come up with a solution other than admitting the patient so this it's kind of a complicated number that speaks to a lot of things but i think it's an interesting number to view over time but i think it's it's uh it's it's a very it's a very multifactorial heterogeneous group um the questions i was going to ask the two view or the three four of you is um when you are talking about utilization um one thing that's come up in the primary care advisory group and other situations is other information that we get is on um available visits in a primary care provider schedule for urgent visits and sort of the complexities of trying to fill a schedule to make sure they get their visit numbers versus having availability so that you can get urgent visits in so that they're not having to go to an urgent care or an emergency department that can be seen by a person who knows them is how do you approach uh open slots for uh pcp visits for urgent visits try you want to take that sure well i can say um you know not great uh we've been working at it really hard and that's what we've been doing over the past you know many years but the last year we've started to make some head roads really when i say the last year this this year uh january on and it's by using data that we've um verified and we know to be right on on an individual's uh the primary care physician or provider's schedule so we can actually say do we block off additional time here or do we just double book and then not double book in certain times so right now we're sort of in an experimental phase uh day where where we've looked at which practice is doing it the best which practice out of our six actual primary care including peds has the most availability in slots and so we're mirroring that and i can tell you in about a couple of months how it's going um right now it looks like that's part of the five percent increase we've seen over the past three months is by uh getting urgent visits in they do send people to our own urgent care which is better than some other urgent care because at least it's you know they know each other and it's in the same computer system but it's certainly as you point out not near as ideal as getting them into their own practice so some practices have availability in the morning or afternoon extra slots that sounds great it might not be the best approach it may be a better approach to lighten up the double booking and and go with that so i'll let you know lots of lots of work on it though yeah i i guess thank you for for the attention to the problem and i i wouldn't venture to think that i could understand how to solve it but i i really appreciate your discussion of it and your attention to it um the other question i had for you you mentioned in your narrative some local independent primary care providers retiring some people leaving practice um and i was just wanted to see if i could get an idea of what the landscape is for independent providers in your area if there are independent primary care providers or other if there are any independent specialty providers in your area and if they work with southwest on you know admission privileges or those sorts of things right yeah so they've um they just continue to dwindle i would say that we now have about um less than four fte's of independent primary care maybe maybe five um fte's when i say that because some of them are part time left in the area and that that's compared to probably 15 when i started one of those is the fqhc that is up in it's in our health service area but it's in our link and that makes up the bulk the rest are you know point five practices where people are retiring uh in 2023 and 2024 and one just sort of prematurely retired unfortunately due to some health reasons uh this month so um as far as specialty it's the same it's very few we have some oral maxillofacial surgery which will probably continue to be private for you know many more years in the entire state i think most of them are except probably around uvm and then ophthalmology continues to be independent practices of course they're on medical staff everyone's very close most people don't know the difference from that standpoint it is part of the reason though that we need to get this new practice off the ground pretty quickly where we're training advanced practice providers and then of course the residency program over time okay thanks for that detail any other questions from the board um i just have a follow-up from member homes a question on the potential to come with a with a rate reduction um i wasn't really sure what the answer was and i was looking at the wait times uh report from 2022 and certainly fbmc was pretty high so in terms of member homes's questions obtaining some of the npr through utilization as opposed to rate increase would be beneficial i think um and i guess i wanted to see what your position was on whether you would come before the board for a reduction if the utilization is higher than anticipated because i think it makes it more palatable to accept the rate you requested tom i'll let you answer that well i i think our position is um there shouldn't be surprises and we should come to the board based on if our volume goes up quite a bit more or if our volume goes down i mean i i have to admit i i i see next the next 12 months has been very transitional and every program we're talking about really doesn't doesn't come into place in 2024 it's more 2025 and 26 but um you know hypothetically i i think you know we're open to those type of discussions um but um so but i think it has to be on both sides of the equation in terms of significant increases or significant decreases and how we have to deal with that great understood thank you i i have no other questions any questions from the health care advocate related to utilization or the conversation so far hi director limburg uh there i just have one question but before i do that uh so a sampaish health policy analyst with the office of the health care advocate um just is the plan Sarah still to have questions that don't fit into these tabs come at the end great um so my question i'm not sure if this neatly fits in but um in the narrative on page seven you noted that outpatient revenues combined the medical group represents around 81 percent of net patient service revenue and i'm wondering if the partnership that you talked about with dartmouth do you expect to grow that percentage at all well as as i as i reported earlier um as we improve access and improve outpatient utilization we will probably see outpatient revenues go up but there's also a chance that inpatient revenues as we start bringing people back and and into the hospital into the inpatient area that may go up so the percentages may when you start using percentages while the absolute dollar may go up the percentages may fluctuate a little bit i do i do believe that overall um you know we're getting to you know we're at 81 percent on the outpatient side um it it probably will ultimately long term you know if i had a crystal wall probably be between that 80 and 85 percent but if we start getting some of those uh services that out migrate to abany and we keep them home um it may push that outpatient percentage down because inpatient utilization may go up as tom just talked about but most of those increases in inpatient i believe we're going to be in 25 and 26 as we get the services up um and running and working more collaboratively with dartmouth now that we're at an affiliation of dartmouth so we got to be careful about percentages is my is my gosh i agree um and you talked about becoming a regional referral center i'm wondering if you expect as that comes online do you expect patients from you know states like massachusetts to be referred like it's part of the goal to grow out of state patients or is it more really reducing the out migration within vermont the first step is to improve the out migration or decrease that out migration um if we can if we can get our tentacles out into new york state and bring back patients uh and improve um our our volumes that will that will help the hospital that will help vermonters because it will reduce the cost of care um in in our facility uh because we'll be able to spread that cost over a wider base because part of it part of one of one of our challenges is is our size uh and if we can get some more throughput uh we can reduce the cost per episode here tom yeah and just to add what steve says sam i i think um you know you have to realize as we build services and programs i think organically you're going to see more people traveling to our institution for care because you know the areas of new york areas of the berkshires i mean they there's a good relationship in terms of people not wanting to travel down the pits field or are down to you know base state hospital for their care they'd rather come somewhere closer by so i think you'll see some of that happening but clearly the the biggest piece we're going to focus on is other vermont or is living in vermont here trying to have them stay close to home for care and that's a that's that's a that's the huge amount of the 50 million dollars i talked about earlier that's out my brain try yeah sam i just i've put some granular um examples here you know in the past community hospitals haven't received patients often they don't typically have a good process to receive a patient from a lower level of acuity or frankly from another community hospital it just doesn't happen to have a service so let me just give an example you know having four or five general surgeons at every community hospital is is hard on each hospital they may not quite have that business but what happens is you have patients that present to nbrh or to grace cottage or to some other hospital they don't happen to have that surgeon on so in the past those would go to tertiary care centers and that's just really not the best you know way for us to all collaborate and work together so smc is trying to like some other community hospitals say here's what we have here's the phone number to call let's make this easy if you have a patient they don't happen to have that service that day or you don't ever have that service and we do let's take care of the patient here rather than in albany or bay state you know that's where these patients go if they can't get into uvm or or dhmc plus there are call centers now with uvm and dhmc who are trying to do this by phone they're trying to say where can this patient go who happens to be at you know at brow borough or some hospital that just for some reason doesn't have that service this day let's do it in a coordinated way we believe smc is has the size and capacity to be able to take on these patients and provide that service again rather than transferring them out of state which we have just seen is more expensive thank you that's all from us for now wonderful so in the interest of time i think if you could just give us a high level kind of the cost inflation spread that you use for your budgetary purposes and what proportion of that kind of is driven by the pharmaceutical growth so you know we used in the budget four to five percent depending on the commodity depending on what we're seeing in in some of the contracts now some of the periodicals said you should probably use a higher number some of the periodicals said you probably should use a lower number we feel that the four to five percent is a good range we also we also historically have always tried to be a little tight on that to create thought process with our managers so they can find efficiencies and create and you know one of the things that i've used over the past 12 years at southwestern i've used it over 25 years is and is a software product that is off the medicare cost report and gives a lot of information the cleverly associates they calculate a cost index and we've always strived to be better than one on their cost index because below one on their cost index it's that means you're efficient so we also look at that and we've tracked that now for all the years i've been in southwestern and we've made improvements each and every year so using the philosophy of challenging our managers not always putting full boat inflation into the into the budget has worked to create some efficiencies but we got to always remember safety patient safety comes first employee safety comes for you know they're 1a and 1a a so we can't jeopardize that but we got to you know we create a lot of creative thought process with our managers so overall that's our philosophy and that's what we put in the budget as for the pharmaceuticals we put a you know there's a 6.4 percent increase in overall costs you know 340 b savings and a 4 price increase now that this is one area where we believe and we've had a lot of discussions collaboratively with the Dartmouth pharmacy team that will be able to save some money just not in 340 b but with purchasing other pharmaceuticals through through some of the integration and also looking at our formulary and looking at other types of you know going from name brand to generic and I know Trey has been actively involved with some of our physicians in our pharmacy department and he can talk a little bit about that just in general terms if you don't mind Trey on the the differences between name name brand drugs and non-name brand drugs and well mostly some the opportunity there is on the monoclonal antibodies you know the infusions like the remicade and the cost that is paid for those medicines you know it's very complicated depends on the payer and sometimes it's the generic and sometimes there's a better deal with the you know with the name brand but what we have found out is that there's a fourth category there and it allows for remicade that's unlabeled as remicade but is made in the same plant under the same conditions not generic because it's made under the same conditions as the brand that's much cheaper and so that in itself is a significant cost savings there's also opportunity of course similarly in oncology drugs and that's probably the biggest opportunity we won't be able to realize that this year I think this is more of a you know nationwide approach but also working with DHMC to figure out ways to get better prices on oncology drugs we I think everybody can agree on that particular aspect. Wonderful and how do these inflationary pressures translate to your budgeted charge increases and the realized commercial revenue off of those? So Sarah you know what we do is you know we put our assumptions together on the expenses and we look at everything and then we go back and we look at our revenue models looking at inpatient outpatient you know all the services and that's how we you know we build it and we build our target of you know this year we built a target making it a transitional year from a year where we lost money to a one percent operating margin and that's how we you know we build it we look at the governmental payers we look at all the payers and all the things we're doing to improve revenues without putting in on the charge increase and this year you know we settled in on the charge increase that we requested you know and and we all you know in the narrative we talk about that we don't we didn't increase all our charges by that amount we we're increasing approximately 70 percent because there are some charges that and taking the physician practices all all of our payments are pretty much off of a fee schedule so why increase our charges are already higher than that fee schedule so there's no need to increase those charges anymore because there's a delta already and the fee schedule is only going up and and why keep increasing the charges so so we look at the sensitivity of our charges we look at i download again from cleverly associates i'm able to get charges off of publicly data and and we compare ourselves more than once a year to what people in Vermont are paying what people in massachusetts are paying what people in new york are paying on the charge level uh and we try to position our charges accordingly and and there are some things that um you know we every once in a while have to do onesy two z adjustments but for every time we adjust one up we bring one down when we find that we're high uh and i think three four years ago uh we explained this at length that and our budget presentation so we're very sensitive to um how we build our our our charge increase to commercial payers um and and you know tom also talked about earlier in his presentation our community groups well one of the things that we hear in the community groups cost of health care going up okay and that and that's driven off you know off of the commercial rate increase we get from the employers so so we hear that loud and clear any interview questions sir as a long-winded answer yeah no that i think that's good um and i do want to leave plenty of time for board uh questions uh related and hca questions related to um the inflationary assumptions and uh price increases uh but before i open it up to them just two things we're asking all pps hospital or one thing we're asking all pps hospitals is if uh between when you built your budget and now we know that the medicare final um inpatient rate did go up a smidge from 3.8 to 3.1 um can you help us understand uh how that affects uh your budget so so it went up a smidge as you to use your word uh which is less than 150 thousand dollars on our budget um and however we have another assumption in our budget uh related to the medicaid rate increase which uh did not get approved in the budget um so they kind of the from governmental payers perspective i see that as a push i also see some risk possibly in the outpatient uh area because the final rule for outpatient starting in january has not been finalized yet so um you know there's always then the medicare inpatient the ipps which you just talked about but we always we sit around this august timeframe uh and that usually gets approved later on uh and it's not always the same as the ipps um the inpatient perspective payment increase so it's it you know and i don't want to sound um it's it's almost a rounding error in our budget um so um but you know it's another risk and maybe it's an opportunity 150 000 but we have a risk for medicaid of 100 i believe it's 140 000 um so you know they kind of negate each other and and you know again it's not a significant number and um you know i i'm actually go ahead steve just to jump in and sarah yeah what is not a rounding error in which has us greatly concerned is the fact that we may lose our eligibility for 340 b um if we don't hit the the numbers there so that that is a and that's something that we did not budget for and it's a it's a five million dollar impact so that is one that we are losing sleep over and um and it's still yet to be seen as to how that plays out for us yeah yeah understandable um all right well in the interest of time we want to turn to our public comment in about 10 minutes i would say this is a good time for board and hca to ask other questions that you would like to clear up remembering that our decision will be to establish a net patient revenue number in the order for fiscal year 24 um and think about how that relates to the commercial price to get there so um board questions oh i'm sure you have questions maybe okay i have nothing else i have one more um which is around um just understanding the medicaid redetermination assumptions i i think i saw in your submission that you are assuming some increase in bad debt related to the medicaid redeterminations which makes sense if people are shifting from medicaid either to uninsured or um commercial did you have any assumptions around commercial since if people do manage to shift from medicaid to commercial the reimbursement rate will increasingly will significantly increase so robin we discussed with our you know we've been uh with our charity care financial counselors whatever we want to call them um uh staff and um when we were talking about how do we you know account for this and how do we budget for this and susan um the person who has most contact with the patients uh didn't believe that there would be a movement from medicaid to commercial um she didn't think the people that she deals with and works with um she's not she she didn't get a sense that many of these patients would be moving that way and i got to go with her she interviews these people she actually goes to their houses and uh um so she she was not really she said steve a big chunk of these people may end up in my office sort of bad debt you know may end up bad debt financial counseling discounted services but she didn't see um a a large percentage of those patients moving up to commercial um and the assistant director jennifer helfrich she she she had the same feeling and she's my data guru um and she says she can't recall um now granted during the pandemic and the health emergency there was no incentive uh but she says i i don't recall too many even before that uh that people went off from medicaid and became commercial um that is that you know sorry steve is that because she thinks people just get lost in the paperwork because certainly if they're losing medicaid because their income has increased they should be eligible to potentially move into the exchange with a subsidy she um she she said um um if i recall her conversation she says you know yeah there's a couple robin but um she she wouldn't you know she their feedback to me was don't do it okay uh and they're the lying people don't put any more money into commercial because you think a lot of medicaid uh people are gonna move to commercial you know robin there's going to be a couple okay there's going to be some uh but i don't think it's a material amount uh based upon what they say um and i got to go with them and they've been right they've been right uh more times than than i can i can tell you um in my career that's all for me okay sal this is tom walsh um maybe i missed it will you be um covering the cost report tap yep we can look at that now um so southwest uh is a larger small rural hospital um and they may their case mix index is 1.4 so between the 25th and 50th percentile uh this i suspect is uh distorted by the corporate relationship um so i don't know uh how to interpret that without some more information but 36 percent would be on the whisker there uh as far as cash uh from fiscal year 22 it was 11 million uh they are moving some money around for that ed modernization project yeah can i just interject uh on cash cash for operations um keep in mind uh as we outlined in our narrative our days cash on hand and the days and the cash that gets reported on the medicare cost report is scmc's cash okay we uh um the way we have our corporate structure set up we have cash um in the parent organizations our investments are in the parent organization so uh we sit um at about um 100 call it 100 our goal was 190 days it's probably not going to get there um but um so so on the using the cost report um i just want everybody to know that there's other cash available and yes we are also we have a foundation that um has cash and that is contributing to our our um our ed modernization project um and of that 30 million dollars for the ed modernization project uh about more than half of it is coming from donor money um so um you know we have we have that and i think that's in a couple of the other measurements when you look at the total margin of the organization um you'll see that the money coming in for that construction project the accounting rules say you got to transfer it in and it ends up uh in the total margin um so just just be aware of that and that's all cash coming in from the foundation yeah all completely yeah important uh caveats uh profitability uh for ibadar per discharge right at the median so that number more fiscal year 22 lower than people would ideally like to see um and this cost per discharge is quite striking at 8 000 uh which is below the 25th percentile so that again is a cost uh calculated by cost center uh ccrs so and and and this data on the cost uh i paid special attention to this compared to our cleverly um benchmarks and uh it it it's consistent uh with what we've been using over the years that's great thank you sarah and um i just wanted to take a moment to have to really a couple comments right this is um thank you for your your presentation to us and what you've described as your community focus and your addition of primary care service lines and mental health focus and substance use disorder focus is is really outstanding and thank you so much for that similarly the nursing team story is outstanding um and the what the cost per aggressive discharge data shown here is also outstanding but i did want to ask about the ratio of administrative and general salaries because that doesn't quite fit the picture of the rest of your organization um but this suggests that this um portion of of salaries going forward administrative and general expenses is is um on the very high end um compared to the um money being spent on clinical care and i was just hoping you'd help us try to understand yeah tom i i have not been able to to i believe that's um that's cost reporting um techniques and um we can get back to you on that i i believe um i i was a little perplexed on that one as well uh because we do spend more on the cleverly information we spend more on on clinical this is an opposite of of what i saw on on cleverly so i think this is a work in process and we can dive into that and get sarah a response so she can forward to you because i i think this is just a cost report thing um right because i know from all the other benchmarks i look at that's that's not the case yeah it is one for you okay go ahead tom um for your organization it's the piece that doesn't fit yeah it's um so i'm just helping us with it would be great um and just one more bit of kudos um your your um staffing decisions right what we see across um you know socially responsible hospitals across the country faced with difficult times um they don't fill open positions they reduce administration they avoid cuts to service lines all the things that you were describing earlier and um so just uh it's really been the flood we're hearing you and i'm thankful you've started us off thank you other questions from the board uh that you want to have before we say goodbye for this year i just have two questions i'd love to ask one is in the capital expenditures you have a seven million dollar IT infrastructure upgrade is is that to switch to epic to align with Dartmouth or what's what is that so so our seven million dollars is our capital budget for 2024 that's our routine that's the total capital budget for the organization on routine capital that does not include the emergency room the completion of the emergency room project um and of that two million upwards to two million dollars will be spent on IT infrastructure and i would classify that in in in two ways every year you have to for cyber security and for just IT we need to spend money and the second piece of that is going to be to build our infrastructure to be able to receive um and and and utilize Dartmouth's Hitchcock to move to epic uh but that's a three year at least a three year journey so just to repeat the seven million dollars is our total capital budget routine capital budget which about two million is IT and you know let's call it a million million two will be for that infrastructure to move towards Dartmouth and do you do you have an estimated expense of that transition to epic the that's what that's going to cost southwest that the the estimate that we had the last estimate we have could be as high as 20 million dollars but part of our relationship with Dartmouth is that we'll find for funding a range is for that outside of the hospital interesting great but the other question I have is a little bit more conceptual which often when we look at hospital consolidations around the country increases costs of delivering care increases insurance costs um you talked a lot about the decreases in costs through affiliation with Dartmouth do you other than IT upgrades do you suspect increase in costs and how do you think you can manage avoiding that trap of so many other organizations well it comes down to you know uh paying attention to details as Tom spoke earlier the Dartmouth model is is a little different and some of the um I worked for two huge um systems one's a nationwide system and one was a system in New Jersey before it came up to Vermont um and I can tell you that um um Dartmouth does not um utilize the same models that um those systems um did increase costs to the member hospitals um and you know there there are tons of examples of what how costs are increased but I think Dartmouth is very cautious on not adding cost on to the smaller hospitals and we are focused on in our budget you know we are focused on um supply chain reducing our supply chain um costs um by we're the ability for us to purchase under there you know they buy they buy a hundred thousand of a widget uh and we buy a thousand of it well now you know at a hundred and one thousand we can get a price a better price um so we're focused on that um cost of borrowing will be less fees um around certain things that we do we can reduce because there's there's more mass um and uh we're committed to making sure that and so and and I don't want to speak for Dartmouth management but they're committed not to burden us with uh high administrative costs um as other systems have done and and we're going to manage that uh Tom you want to say something yeah just you know um yeah um David I think um two things is Steve touched upon I think Dartmouth has a true focus on not building corporate overhead actually in um I mean most assistants Steve's talking about has very very large corporate overhead and also to reduce administrative costs is another area of a focus that that Dartmouth is talking about and we're talking about too and the other thing is that in a lot of the system wide um managed care negotiations are centralized and that is not the case each hospital negotiates separately um it's not centralized um negotiations and I think that's you know when you start having this a single single signature on managed care contracts that's where you can start seeing costs going on too so that's not the that's not the philosophy that Dartmouth has in their system and their in our integration was approved without having that in place so that's that's another thing so and also the fact that we know we are you know two hours away and so in a sense it's you know we have to be able to to run our operations and and I think that's going to allow us to to you know focus very closely on the the costs that we incur locally here well thank you well I I wish the best of luck for all of us that that continues and we'll see it unfold all right questions from the advocate good morning still barely um Mike Fisher healthcare advocate first off I 100 caveats about the data we have so far about redeterminations May and June numbers were not typical groups July's numbers we don't even have yet but they were greatly infected impacted by the flood but we have I just wanted to in response to member lunges question about movement of people to um possibly to commercial um I guess I hope you're wrong Steve because we have a sizable number of people who are losing you know again 100 caveats about the first couple months but you know 40 of those being reviewed and remember we're doing 200 000 through the year so it's a lot of people who are moving off of medicaid and um so I wanted to make that point first um many of them may move back and you know I shouldn't go down this rabbit hole but I want to make that point and then ask a question I noticed that your your bad debt your uncompensated care generally has increased um 22 it was in the 7 million dollar range and objective for 24 it's in the 10 million dollar range is that the answer to that question the same answer you gave Robin about increased number of people of moving off of medicaid to not being able to pay correct you know and and you know the other you know of course price increase over the two years has a factor in that number um but uh we believe that that that number you know we've you know I've looked historically you know when we have our meetings done on what the budget for bad debt and charity care with the with the staff around the front lines um you know we look at our historical trends what we said um what we and what we actually came in at um all but uh 2020 we were pretty much on target um so um you know I'm pretty confident that uh we'll we shouldn't go over but you know the world's changing quickly uh with this redetermination and it's a wild card but um um part of the team's thought process was um we are going to see see that increase a it's in price and b it's in some volume but not a lot okay your your ratio of bad debt to free care is in the three to one range um and um we've held out a uh an aspirational goal of asking hospitals to attempt to achieve a one-to-one basis um you have a concept of what it would take to um to change that ratio take um you know I kind of and some people like this and some people don't but there are there are patients that will cooperate and work with us okay and um uh then there's patients that won't um so you know improving and adding adding staff uh to go out and um try to convince people um you know it's going to take it's going to take some work uh and and right now we don't see the return on our investment there um because at the end of the day the people that will work with us will work with us and you can't force them so the people who end up in charity care I I wish everybody from bad debt would work with us because we can move them into charity care or some sliding scale okay as as as the you know as our policy calls for but um it um it it's a difficult thing you know I I you know I've been in the business you know and as Sarah said I'm sunsetting um um and um you know I've been a CFO over 32 years and I still haven't found the secret sauce to get everybody to to work with us um and and turn that number from the bad debt to into charity care maybe the the you know maybe my secret sauce wasn't any good I don't know but we're working diligently to qualify as many people as we as who who want to qualify and I think that's the difference um and and and you know there are people though that if they cooperate we usually can find them something sliding scale Medicaid you know you we can get them into a program but the ones that don't cooperate that totally ignore us that is the real frustrating part of it so I think I won't respond to what's going on in people's lives that lead them to not respond or what impacts that has on their ability to get care you've heard me say that a hundred times so I won't go down that road but um we treat everybody like but I will say I think I think the question for me becomes you know what is different what is happening different at different hospitals to lead to different outcomes here some hospitals are landing at a better ratio from our perspective a better ratio of bad debt to free care and so I'll persist in asking that question at other hospitals but that's it yeah um and then my last question is um I think we may have asked this question in the past and I don't know if you can help give us any uh insights to it in your bad debt category um it would be good for us to have a better understanding of what pay you know to what extent those people are from the you know uninsured versus uh commercially insured versus medic care um and unable to pay them so um I think what you're what you're asking and we can dive down you're looking for you know how much of it is is true um bad debt true charity care free care then how much comes from patients that have a high deductible plan where they can't pay their deductible portion and how much is coinsurance and deductibles is that is that what you're asking uh no not exactly I would call all of it true okay all of it yeah yeah but but but I am particularly interested in at this moment in the amount of medic care bad debt um you know that's an area where I think we have some public policy options that I think you and the hospitals and the health care advocates office will agree on um but it would help us to have some uh insight as to the amount of bad debt that you bad debt and free care that you have for people on medic care okay we can follow up later we don't follow up like yeah yep uh thank you thank you board thank you uh I think this would be a good time to offer a chance for a public comment I remember what number I'm supposed to count to 11 20 okay so hearing none uh we'll just give southwest if you could keep your remarks brief sorry to go over time but just uh any last uh comments you want to leave the board with before we let you off the hook for this year so Tom before before you make your final comments can I make a final comment um I'd like to thank the Greenmount Care Board you know as Sarah pointed out I am retiring and I'd like to especially thank Sarah for you know this I'll call it this tool I think the tool has been a help we haven't totally dissected it but and I just want to thank the Greenmount Care Board staff and the board members for the years you know sometimes it's been challenging but it is it's an evolution and thank you Sarah thank you board and keep this tool up Sarah I think it will be helpful you need to tweak it a little bit but thank you everybody thank you Steve for your service and actually Steve stole my my closing comment I wanted to thank him officially too I think he's sort of tremendous job and and thank the board this is a this is a tough year for all of us and and we're entering into some uncharted waters with our new relationship but our commitment is to continue to focus on our mission our community um and um and we'll certainly be as transparent as you know as possible and certainly um try to reduce surprises and make ourselves available to sit down at any point in time to talk to the board and update them update you on where we are and and what the what the concerns are and what the future direction is so thank you for your time today all right I think that concludes this hearing uh I don't probably want to take it from here chair Foster sure um yeah thank you all and you know congratulations on the forthcoming retirement um and we appreciate the presentation we'll take a break we're going to take a full hour break there's a couple things board members have to do in between so we'll come back at 107 and have a good day