 Well it looks like all the board members are here. Thank you all. Good morning and welcome. My name is Jessica Holmes and I am serving as the Interim Chair of the Green Mountain Care Board. So we have a busy agenda today and the first item on that agenda is actually the Executive Director's Report. So I'm going to pass it over to Susan Barrett. Thank you Madam Chair and good morning everyone. I'm really excited to share this morning some ways that vermontres can save money on their health insurance and we'll be publicizing some recent developments in Congress through our website and other means and Diva also has this information on their website. So let me get right down to it. In 2021 Congress passed the American Rescue Plan in response to COVID-19 in the ARPA which it's commonly referred to. There were significant subsidies for folks buying their insurance on the exchange throughout the United States. Unfortunately these subsidies are are slated to end at the end of 2022 this year. Fortunately earlier this month Congress passed the Inflation Reduction Act. Thank you Congress and in that act those subsidies were they were extended to 2025. They were also expanded. So what do what do all of you need to know and what do people who purchase their own individual or family health insurance plans need to know? They need to right now because these these are subsidies that are available in 2022 as well as in 2023 they need to look at whether they're eligible. So if anyone on this call purchases their own individual or family health insurance plan or if you know anyone who does please share this information. So first of all the income thresholds the ceilings for those who could be available for these subsidies is quite high in 2022 and it's getting even expanded and higher in 2023. So for example a single person in Vermont who makes up to 105,770 dollars is eligible for these subsidies. Next year that number is going to go up to almost 119,000 and a family this year if they make up to 297,215 dollars is eligible for subsidies and next year that's going to go up to 333,000 dollars. So there's an important caveat to this and an important action step. Folks who are buying their individual or family health insurance plans on their own need to purchase these plans directly through Vermont Health Connect. Again I'm going to say it again they can't buy these plans through either Blue Cross Blue Shield and MVP or MVP and be eligible for these subsidies. They must purchase their plans directly through Vermont Health Connect and we have all this information or we will have it on our website this afternoon and Diva also has ways to switch your plans if you're currently buying them through MVP or Blue Cross Blue Shield. To date subsidies have provided over 30 million dollars to Vermonters and they're over 23,000 Vermonters have taken advantage of these subsidies and I just want to crystallize this in an example. In today's for today for this year subsidies 2022 a single person making 60,000 dollars a year may save 324 dollars in their premiums per month. For a family making 100,000 dollars a year they may save 1,396 dollars or more in their premiums. So I'm very passionate about getting this word out. It is as as usual with health care it is complicated but the resources that are out there I want to give you my email which is susan.barrett at vermont.gov and my cell number which is 802-477-3780. If anyone has questions about this I will get you to the right person to help you and with that I will turn it back to you Madam Chair and if there is anything that you want to add or you know to help us get this word out that would be great. No I appreciate that and I really appreciate all the information especially understanding the income levels for which people would still be still still be eligible. So thank you for that. I look forward to seeing you know the link on our website for more information and I think we should continue to share this information at all of our meetings and I think until their home ends it's important. Yes. Chair Holmes, Mike Fisher here, healthcare advocate Mike Fisher here. If I could just have just say a sentence or two just to emphasize I think I think asking everyone here to help us spread the word that if and in the simplest of ways if you've been turned away if vermont has been turned away from premium tax credits from supports in the past because they were over income or other things there's new changes and it's worth taking a look again. Appreciate that Mike and if you know I know that your organization is going to be doing everything it can to get the word out as well. So we're going to do what we can you're going to do what you can and hopefully everybody on this call will do what they can because these are really important expanded subsidies that will help a lot of vermonters defray the costs of healthcare. So it's really really important and we're going to do our best and I thank you for doing your best. Okay so thank you Susan. Appreciate it. The next item is the approval of minutes from Wednesday August 3rd which feels like a long time ago but in fact we need to approve those minutes so is there a motion for approval? So moved. Okay I'm going to take Tom Pelham as a mover and I'm going to take Tom Walsh as a shaker or rather a seconder. All those in favor? Hi. Hi. Any opposed? Nope okay so let the record show that there was a unanimous approval of the minutes for August 3rd. So next up we actually have some special guests today in anticipation of this year's hospital budget season. The Green Mountain Care Board invited the state's economists to share their insights on inflationary trends, how best to measure medical inflation, and how we might incorporate information about national cost fractures into our regulatory process. So I'm actually going to turn it over to Sarah Lindbergh to introduce our esteemed guests and give us a little bit of background on the report that we received. Sarah? Good morning. So I have been in my new role since June of this year 2022 and one of my first duties in order to do that was to realize that we were going to be grappling with some completely unforeseen growth due to causes that were bigger than Vermont and so I knew I could use some expertise and so one of the first things I did was draft a letter out of the blue to blindside two of the state's economists. So for those of you that don't know the state of Vermont employs two official state economists. One works for the administration, the governor at all and the other works for the state legislature and every year they do a consensus forecast for Vermont and so they are experts in Vermont but they aren't necessarily experts in healthcare per se which they are the first to tell you but it was important to get an objective external opinion I think on some of these unprecedented things. So long story short I blindsided them with an essentially incredibly complicated question under an impossible time frame at their busiest time of year and so they were able to come through and help give us the start to some really solid guidance into in thinking about how hospital budgets grow and the things that we should consider in that analysis. So today you will have Jeff Carr who is the state economist for the administration and he'll be joined by his colleagues Bob Chase and Nathan Mass and the state economist for the legislature is Tom Cavett and he will be joined by his colleague Dr. Nicholas Rockler. So the way they're going to structure this is start with a presentation and then open it up for questions and I think that the focus here is how they can potentially extend this work to help us and our very formidable tasks ahead of us. However, I did want to take just one more moment to give a sincere shout out to our colleagues at the Joint Fiscal Office as well as the Agency of Administration who use their existing contracts and some flexibilities around this to help with the time frame. I will note that we are about five minutes ahead of our expected schedule so if anyone is tardy that will be on my shoulders but it looks like Mr. Cavett is willing to start us off here so I'll turn it over to you. Thank you very much Sarah. I take it Jeff is not on the call yet. I'm not sure. I don't see him here but I can go ahead and get started. As Sarah said this was an analysis done in a very compressed time frame and we put a lot of effort into it and I have both some findings we think are relevant and important but also some further work that we can suggest that might help future analyses like this. The report includes a whole bunch of appendices and the like but I'm going to touch on a few things and then leave time for some Q&A because I think that's probably where the most valuable exchanges occur and if there's other work that we can do to chase down some extant issues we'll certainly we're open to doing that. In the report on page four there are six takeaway points that are key takeaways from the analysis and I can share the screen and go to that or if you've got the report handy you can do that maybe I should try to share the screen here. Sharing this screen would be great thank you. Yeah let me get this here. Okay let's see if this is are you seeing anything? Not yet. Not yet. Okay hang on. Browse my computer okay. I see Jeff has arrived. Good. Hey Jeff I already started. Yeah hey I am browsing right now to get to the to get the report up background here and soon as I do we can talk to that but I was just about to go to those six points that were the takeaway and this maybe we'll see if we're getting there. I just love technology when it works. Yeah when it works yeah and Teams is different than Zoom and all the rest so apologies if well at least we're early. Do you have access to the slides I mean to the presentation? Yeah that's a good idea. Thank you Sarah. So we're going to page four of that Sarah if you can get us there. So anyway of those takeaways one of the most important things is just the really unusual nature of inflation right now where it it it's extremely high extremely volatile and highly varied by sector and it is unlike many of the other prior episodes of really high inflation this nation has experienced and that is primarily due to pandemic related causes of this both the effects on supply chains that occurred and also the enormous federal response to the pandemic which has just been an unprecedented amount of of federal deficit spending and monetary policy that have created tremendous demand. So the maximum inflationary impacts in the healthcare sector are likely yet to fully register and so that's something that we'll be developing with intensity that I know you're experiencing and leading that'll be the wage cost pressures which represent more than half of all costs for most of the hospitals that you're looking at. Jeff did you have something to add to that or you want to go to the next point? Well the only thing I'd add you know is to you know the proof is in the data so to speak if we look at the CPI which is just the urban portion of the consumers it was up 8.5% in July and it was up 9.1% in June and the personal consumption expenditure which is a broader provides broader coverage of all households doesn't just focus on urban consumers like the CPI does it was up 6.3 in July off a little bit from its peak or its current peak you know yet to yet to be determined going forward it was up 6.8% in June and if we look at the CPI for medical commodities it was up only 3.7% which is a lot lower than the general inflation rate and if we look at the CPI for medical services it was up only 5.1% on a year-over-year basis which again is a lot less than the CPI and even if we look at the PCE the personal consumption expenditures index for healthcare was up only 2.1% for the April to June quarter of 2022 over the April to June quarter for 2021 so you can see that there's a lot of inflation going on but it hasn't yet been reflected in some of the medical care and healthcare inflation indices. Yeah and you know we do see higher wage growth among workers that have unions, collective bargaining and also in occupations where there's low frictional job switching costs which characterizes a good good part of the healthcare sector and that are in exceptionally short supply. So there will be more cost pressure from wage increases in there and we have presented in this report forecasts both from Moody's analytics which is a professional forecasting firm that we've worked with for many many years actually decades and we have custom state models that we've developed but we do look at projections they do both at the state level and more importantly their national macroeconomic model so we have presented some of the forecasts from Moody's and then CMS Center for Medicare Medicaid also does projections. Their projections were from March of this year but were sort of surprisingly not current they still sort of had a kind of transitory set of assumptions to the inflation projections and we present in the appendix their methodologies and things like that but I think our take in general on both those two sets of professional forecasts is that they're overly optimistic with a significant risk for slower near-term deceleration in prices and likely more like a three to five year period of inflation exceeding pre-pandemic levels so we think there's going to be a lot more of a lot more delay in this and I think you're seeing it in the healthcare sector with some of the contracts that have been approved where they're multi-year contracts and pretty steep current year adjustments some of it catch up some of it current and and and then out year increases that are higher than pre-pandemic increases might have been so Jeff any other points on that that that data can be found on how's it going? Good. Can I ask everybody who doesn't have their who's not speaking to mute their microphones please? Thank you. That data can be found on pages 43 to 46 of our report where we where we lay it out and you know a lot of the inflation forecasts expect that the Fed is going to be successful in engineering a soft landing and actually getting inflation under control you know that's kind of a idiosyncratic aspect of economic forecasting people don't generally forecast recessions they generally don't get into a situation where they forecast either the economy to go into a downturn or for inflation to take off until it becomes the dominant theory. Looks looks like you're frozen there Jeff. Oh really okay I'm sorry you know the forecast the macro forecasting world still is kind of stuck in this transitory you know and will be successful in dealing with inflation school of thought that's evolving and that partly complicates and makes this inflationary environment exceptional and unlike anything I think that you've experienced in the roughly 10-11-12 year history of the board you know because we're talking about rates of inflation that are the highest in 40 years. Yeah and and of course if there is a recession or a deeper more pronounced slowdown than we're anticipating that would actually lower some of the out year inflation projections because that's obviously what the Fed is trying to do is slow the economy in order to slow rates of inflation. We'll talk about a couple of you know areas of inquiry that and analysis we did with some of the data but one I think that's notable was looking at some demographic data which is sort of at the core of a lot of economic analysis and and forecast in part because it's something that is more forecastable than say interest rates or things like that. We have pretty good detailed demographic analyses and projections for the state that we maintain and update twice a year. There have been a lot of changes with the 2020 census some significant ones with respect to medical care. First of all there were more people in the state in based on the 2020 census than had been estimated by the Census Bureau previously about 20,000 more people than they had thought in 2020 but notably there were fewer considerably fewer in the very oldest age cohort which is 85 plus and that age cohort also declined in 2021 which was very significant because that rarely happens and you know some of that is pandemic related obviously. We saw life expectancy drop in the United States for two years in a row and it likely dropped in Vermont as well and so those are significant demographic events. We took some of the data that Sarah and her team provided us on expenditures and looked at that by single age and then used a 10-year average of constant dollar expenditures and used then the forecast that we have for a single age population going out and yes the state is aging and yes the state has a large elderly population but even when you weight that by the expenditure amounts the rate of growth in demand so physical volume demand is less than 1% about 7 tenths of 1% which is a little more than double the total population growth but it is still not an extraordinary surge in demand so that's that's significant and that's likely to persist you know for a fairly long period of time so most of the budgetary pressure for provider expenditure growth will be due to inflation and not physical demand growth that's linked to demographic change. For those keeping score it's on page 32 33 and 34 there's a 33 and 34 there are a couple of visuals and then there's a one page description of that on page 32 of the report and you know this from my perspective was one of the more significant findings of our work obviously it's still preliminary we need to get the inter sensual years from the census for 2011 through 2019 hopefully at some point in time and we can refine this but this you know we thought that some of the demographic changes that have been happening at least during the COVID pandemic particularly with our over 85 age category which are a significant user of health care expenditures was pretty significant and I think what it does is it points to the challenge that the board has looking forward because so much of this is going to come from the price side of the equation much of which is beyond reaches areas of the economy that are beyond our media policy control. Yeah so this part of the analysis and a lot of the other work that that we did stemmed in large part from data that Sarah and her team provided and it's a you know very detailed sets of data and we spent a lot of time trying to clean and make that data consistent because we need pretty good historical data in order to do credible modeling and then forecasting of these things and even though there was a lot of good data there are a lot of problems with the data set that we were working with and so there's really considerable additional work that needs to be done to develop relevant consistent and timely state healthcare data that would support meaningful quantitative analysis and modeling for this process so that's something that you know it's a really important part of any economic analysis any quantitative analysis is to start with really good data and to understand it and to know where there are omissions or estimates or quirks in the data so that you're not building those into projections and things like that and you know we liken a lot of the modeling that's done in the economics profession to $100 saddles on $10 horses where the data is not good and you'll have some elaborate model that forecasts something but it's not based on good data it's not going anywhere and I would I would I think we all highly recommend you know work to improve that data set from which meaningful analysis could be done one area we don't really comment on that we were trying to get at was productivity because any cost increases particularly in the labor side of things will you know you'll have cost of living increases and the like but you also should have some productivity gains that occur both through technology and improve practices and various things like that and that was exceedingly difficult to try to tease out of any of the data and would be important potentially also some pandemic related productivity improvements through remote medical health communication and you know virtual healthcare and meetings that don't always require somebody to physically be at a hospital in order for there to be healthcare information and and treatment services so you know so that that is is an important developmental area the other thing we didn't talk too much about were policy implications and I think until there was a more complete analysis we didn't want to jump to that but certainly in the labor side of things with what's happening in labor markets and you know there there's not a whole lot that can be done in the short run and there's not a whole lot of the state level but to the extent that we have representation in Washington and can can push for this the reduced immigration that's occurred over the last several years has really had an impact on on labor markets particularly with labor supply being reduced as a result of pandemic effects and I think in the healthcare sector we don't have statistics on this but anecdotal experience suggests both at nursing homes and at hospitals there's a pretty large proportion of the staffs are relatively large that are either foreign-born naturalized citizens or immigrants with green cards and the like and that is something that could change labor supply in fairly short order if if there were a policy effort in that area also not included or any of the impacts from the inflation reduction act as it may affect prescription drug prices so that's further inquiry also jeff um yeah and then then on top of that you know we have some things that are already baked into the pie we have the the federal national health emergency that's obviously affecting providers reimbursements for things that we really don't know how long that's going to endure although it looks like it'll be in place for at least six more months based on some of the news articles and you know then you can talk about things like sequestration hits you know COVID reimbursement and all those types of things at some point in time are going to run their course so there are all sorts of things on the reimbursement side not the least of which are the Medicare reimbursement rules which happen based on projected data with a time lag with the most recent it looks like reimbursement rules happening during mid or in on page 17 and it's a miracle that there weren't more typos in the report considering the multiple authors in the compressed timeline so all those types of things plus you know no negotiation with insurance providers which also happen you know and then set things for a year while you know price pressures are are hitting provider budgets and those types of things is just the natural mismatch between the timing of when price increases or price declines go through the the process and you know this hasn't been an issue for 10 years because we're in a period of relative price stability which is the thing I think that you know you know caused us even to be asked to look at this issue I think the board was already and the staff were already feeling that and it just is an artifact of the way things are done and so finding your way through that and then putting all these additional unprecedented impacts that are happening you know in the general area of inflation and as they work their way through to the healthcare equation it's really been it's really been an interesting thing to see and you can see that you know area times and periods like this where we have price instability and this can also be in the downward direction you know like we experience in the mid-2000s after the after the onset of the Great Recession these are the types of things that you know require some additional planning and some additional consideration in the scheme of things going forward. One other area I just want to bring attention to is on page 33 34 and a chart on 35 where we're looking at production functions that are national versus Vermont and there's tremendous detail at the national level and we were trying to construct something with the budgetary data that we had from you folks that would allow us to get a comparable level of detail we've done this with some other industry analyses in Vermont with craft brewers you know where we look at their production function versus the national and they're dramatically different and therefore you have a whole lot of different considerations when you look at both economic impacts and in this case where you're going to get cost pressures but you can see on the chart that's I that follows page 34 you know the level of detail you get at the national level and then at the state level the table that's on page 33 we you know we could extract information that roughly aligns to these categories but that would be useful also to develop expenditure categories that map to these federal definitions of industry inputs and then we can look at cost pressures as they flow through and quantify those impacts and also do that differentially relative to national indices so the most timely national indices are all national there's there's really nothing local that's you know that that's anywhere near as timely as the national data we get but if we can crosswalk that with the national data we could basically construct state level indices that are specific to the production functions of Vermont hospitals and then use that in an analytic framework so again we started that but didn't have the data to go as far as we would have liked Nick I don't know if there's anything on that you want to comment on but that that will be another area of development we'd recommend only only that you know there are some differences between the way the Green Mountain Care Board accounting works for the expenditures and what we would use to link to other models and we'd certainly want to participate in trying to identify without developing a whole other bureaucratic burden on the accounting departments already what data are really critical for us to get to differentiate healthcare in Vermont versus what the national numbers are which are already 10 years old and which don't reflect a lot of changes in supplying industries that have occurred in 10 years and in healthcare it's fairly dynamic so we'd want to be able to get up to date data from the hospitals in order to break this out accurately yeah so I there there are lots and lots of things we can drill into here but that's kind of broad brush where we're at what we found we offer a bunch of indices to look at that may be benchmarks and indicators that that would be useful but I think this customization and focusing in on things that are timely and relevant to the state would be useful further developments and maybe with that we can just open it up to Q&A and see what things you're interested in or have further questions about and take it from there great thank you so much this is really helpful and it sounds like it's just the beginning of a long and fruitful conversation that we hope to have as we improve some of the metrics that we're using in our hospital budget process and it's impressive what you were able to accomplish in such a short period of time I want to acknowledge that as well well let me open it up to board questions is there anybody from the board that has any questions for our state economists I have a couple okay go ahead Tom first it's good to see you again Tom and Jeff and I'm still appalled that you would question the governor's recommend you know way back when you have a long memory oh yeah it's fading though very fast as we go along um so yeah I'm listening to you you talk about the context of of inflation etc and and you know and I'm look kind of looking at a much more narrow view of what's happening for example the total requested increases by hospitals for 2023 was 302 million dollars um and so of that you know 78 percent of it is through the commercial payers and I'm just wondering as the base we can have these kind of broader indices in context but at the kind of narrower tactical level of of approving budgets I'm I'm uh I would think that your work would help us understand what's going on with the people of Vermont and their abilities to pay and and afford health care as opposed to the the kind of tactical decisions that need to be made about specific hospital budgets just broadly again it's 302 million dollars total 78 percent of it comes from one payer which is the the the commercial set section for our 2023 budget process Medicaid is actually a negative you know it's down by less than one percent but it's still a negative in terms of the contribution to the problem so I'm just wondering about the the the narrow base associated with hospital budgets and the the kind of broader base of of the work that you folks are doing yeah well I I think that taking it that next step to focus it on a particular issue like that is is is what we would hope to do with better data better local data but the cost pressures that people are feeling are based in part on the broad consumer price indices in terms of that side of you know what's affordable and of course everybody's everybody has their own consumer price index you know based on what they buy and whether they're renting or owning or whether they just bought or trying to buy a place or whatever you know there's a very different mix but if you you know broad brush what's happening in consumer prices or the personal consumption expenditure price index is is a pretty good measure of sort of what the buying you know buying public is experiencing with cost increases and certainly wage increases have not been keeping pace with that on a broad at a broad level lately so um yeah that's that would be where some of the broad indicators could help but it could be focused more specifically to particular areas if we had better local data and I think the best the best way to get Tom up at what you're after is our third recommendation where we talk about trying to replicate the CMS PhD methodologies and and and try to make them more specific to Vermont and and look at the kind of the underlying expenditure series of of our hospitals and try to get them at that and then you know if we're able to get something that works statewide we know that there's one or two providers that are a lot different than the other providers throughout the state and we could try to do something and break them into two kind of two categories if we could and and the other thing is is that you know we were very specifically focused on inflation and inflationary pressures and trying to understand some of the inflationary pressures that make impact providers we didn't get into ability to pay because there's already a function that the board has for that through the advocate um and so we were very mindful of our narrow focus which was to assess some of the inflationary pressures that's that getting into ability to pay is another another whole data set and another whole set of calculations which can be done but that's a lot beyond what we were at least initially tasked to do and where there is overlap is we did look at general consumer prices because that's what I uh workers are going to be responding to in terms of wanting wage increases that will cover those costs so it's really important to be mindful of just because that's going to uh be the pressure for wage increases whether they're effective at getting to those costs covering them or or more um depends on their relative power in the market but that that's why it's important to look at but it affects both sides of the equation well I worry about the relative power in the market um you know even in this process you know all 14 hospitals that we're dealing with are not equal um and uh you have tiny ones like Grace Cottage and large enterprises like the UVM network and in this process so far the network hospitals have asked for uh 69.9 percent of all the commercial ask that there is in this process and so again it's it's this kind of narrow narrowing of the base first it's you know and you know in the hospital process uh I mean these are very different entities and scale um and uh uh and their ability to leverage given UVM networks payor mix you know they can leverage the commercial market much more readily than you know some of the other hospitals so it's it's trying to figure out where the path is through that detail and um I guess that's what what what we get paid to do but it's it's it's just difficult when when you know the the base gets very narrow um in terms of if you're trying to follow the money it's a very narrow base to work with I mean some hospitals are easy it's uh you know I definitely don't want to step into their shoes but um they're small enough that you can kind of come to grips with what's going on but um you know trying to kind of view it as an entire system of 14 hospitals uh I find very difficult thanks for your help thank you Tom is that do you have any more questions Tom Callum you're set okay good thing I can read lips Tom Walsh I think you had a question right yeah thank you chair and um thank you gentlemen for your effort um and it's nice I haven't had a chance to meet you previously so it's nice to meet you even virtually um I I read through the report and um I think some places it sees there's there's um a good match up with what I've experienced um personally and then anecdotally what you hear the hospitals and healthcare delivery systems have been under um relatively intense inflationary pressure for about a year and a half it looks like around 20 April 2021 or so in the graph such as that um Vermonters have been under um greater inflationary pressure in healthcare prices a steeper rise in those prices over a longer period of time premiums for example this is national data have risen 55 percent in the last 10 years um so the the the increase in what Vermonters are paying out to receive healthcare has been substantial um and growing rapidly over time uh that's true for small businesses and small municipalities as well right there's a great story about China main a small city in China or in Maine um that went broke after it tried to self insure um because of the the substantial gear over year increase in the premiums that need to be paid the the co-payments the deductibles and what I was trying to tease out by looking through reading through the report was how can we with data that we have in the state can we tease out inflationary pressures for healthcare services that Vermonters feel tease that out from inflationary pressures that hospitals and healthcare delivery systems encounter trying to do healthcare or produce healthcare right is I'm not sure that I phrased that correctly but I'm trying to you know we are tasked with looking at both sides of that right making sure that we do everything we can so that the healthcare delivery system is sustainable but also affordable and I'm just I'm I'm wondering um if you could share any thoughts that you've all developed um on those two issues uh as you've researched and written this report so as uh Jeff said we didn't spend as much time looking at the affordability side of it uh because we are mostly you know trying to zero in on the cost side and one of the things that's um you know this difficult you know is to say well what is the product that's delivered you know what is the uh and this comes into productivity analysis too uh what kind of physical volume product is there and I guess ultimately that would be outcomes and that's a really difficult thing to pin down also there's timing issues with outcomes uh you might have an expenditure in one year and an outcome that's several years hence uh measurable so uh you know that that's um that's difficult to do uh and part of that age you know related analysis you know shows all right you're spending this much more on you know as you as you get older and older and older uh what are you buying and what's the what is the volume of services and the quality of of services provided so you can use the the rough consumer uh uh price metrics to get an idea of you know kind of affordability because you've got income and we could do a lot more with the income versus cost side of things uh using data for the state um but uh then in terms of of what you're actually getting that that is still amorphous right now with the data that we have we don't have much that's really hard to say about that yeah not even a ten dollar horse that's right that's about a two dollar horse yeah right yes yeah well it's yeah it's it's a it's a real struggle and with um in healthcare the the data side um I appreciate the work that you've done so far and look forward to working with you further in the future that's my hope so back to you chair homes thank you tom anybody else robin do you have a question um I just really had more of a couple of comments that I found interesting from the discussion today um it was interesting to hear your comment around the immigration issues because we did hear from a couple of hospitals in their presentations that they were looking to attract uh some nurses in particular from other countries through um the immigration process so that was that was an interesting sync up with some of the hospital narratives um and uh also you know quite frankly the the data lag issues are always such a challenge in healthcare when looking at indices and metrics and so it's good to have that kind of highlighted in terms of what we have available to us in making these tough choices so um I just wanted to also say thank you very much for your report and for giving some good context for us I think um as has been said this is an extraordinarily tough year for this process and this is I think my sixth time doing it and it's definitely the hardest I would say so um having your input is extraordinarily useful thank you yeah certainly so just a just a word on that you know with with immigration uh you know the United States is really one of of a very few countries that could both attract as many workers at whatever education level you want to pick uh and also assimilate and integrate them uh pretty quickly really uh into the labor force so to the extent there's political will uh you know that that's something that could really help another thing and again it's just a policy thing but it's an immediate one I I heard uh you know the one hospital had uh was offering child care as a way to entice workers and make uh make it easier for for you know some workers to um to be there and there is money right now in a 40 million dollar approved uh disbursement from the state it's pandemic related money but it it really does child care is one of the the fosai of this whole pot of money and so any hospital that could fairly quickly you know develop a child care capacity uh they could get half a million or a million dollars um uh for doing that from the state in relative short order it's you know the application process will open up fairly soon but uh to the extent hospitals could avail themselves of it in state hospitals uh if that helps you know open up a little bit more labor uh that could also be helpful well thank you for that yeah and one other thought I just had as as I was um reflecting some more as you were speaking is and this is not really for this year I don't think but I think one of the the issues that we always struggle with in this process um is the importance of um the price setting component that we do the kind of capping of of prices for hospitals um and we've we've had a lot of conversation on both the hospital and insurer side about what is the role of competition or quite frankly lack thereof um in Vermont play in that negotiation that negotiation process and I think you know part of what I think makes this process uh important is that because of both on the insurer side and the provider side a fairly minimal amount of competition in the state in the hospital sector and in the insurance sector that those the price cap really end up dictating um you know kind of the price growth and so I think thinking about that as we move forward in this process and improving that component of it I think is really important so um that's really more food for thought for future work I think but I just wanted to throw that out there thank you Robin um and thank you so much for taking this time to do this analysis today I really appreciate that uh I'm going to open it up to public comment at this point in time Mike Fisher I see your hand raised good morning good to see everyone Mike Fisher healthcare advocate um I was curious about the chart we spent a little time on I think it's on page 33 one detail of it I know I've seen this chart before but I don't think I've ever spent so much time sort of looking at the uh the interesting drop in expenditures with the age out of Dr. Dinosaur I really mean this is a comment I don't think we should try and answer sort of the comment I'm making right now but I would be interested in discussions with people on the call about this in the future um a couple things one of them is my understanding is Dr. Dinosaur goes through the age of 18 so I would expect the drop if there is one related to the loss of Medicaid coverage to happen at age 19 not at age 18 so that's curious um the other thing is that um there a whole lot of people move from Medicaid reimbursement for their care to commercial reimbursement for their care at that age so we spent a lot of time in these circles talking about the reimbursement differential the one would presume that there would be an uptick in expenditures all other things being equal at that age so that's curious sort of pushes in the opposite direction of what is often discussed here and uh though I think also we should note that with that transition people also move from a place of zero cost sharing to cost sharing for their care so there's economic pressures families are forced to make economic pressures not healthcare economic decisions not healthcare decisions for their care more for sure when they age out of Dr. Dinosaur so there's a lot of things going on at that age and um and it's interesting to see it on the page here we could have a similar discussion about the the drop at age 65 um and and then lastly I just want to say you know I think I heard you say that you you know you did not in this analysis think about consumer affordability I might be reading into your comment a little bit in part because of the um the work that my office does and the advocacy my office does around that space but I would would welcome your assistance and analysis in that space of trying to understand how economic pressures impact people's decisions to get care yeah well thank thank you Mike um I I think actually the anomaly with the 18 to 22 uh uh age cohort there has more to do with our very large export industry of higher education so there is a population bulge that occurs actually Vermont has I don't I don't know in in many of the recent years has the very highest percentage of of its population um from the 18 to 22 year old cohort of any state in the in the nation so the size of our higher ed export industry relative to the population is higher than any other state I think Rhode Island was second or something but anyway I so you've got a whole bunch of people coming in relative to the population who may be insured out of state and that could be affecting uh uh you know what what shows up as an expenditure with the data set that we were using so that's that's another uh caveat to that uh blip in things and in addition to the things that you mentioned and um yeah the the affordability side as I said there are metrics in this that really do you know give you some sense of at at a national level of of what sort of price pressure consumers are feeling and so you know that's a start but we could certainly do more with that and uh as so directed would be happy to thank you thank you mike uh sam feich see your hand raised morning thanks so much um sam feich also with the office of the health care advocate and health policy analysts um thank you so much it's great to me at least virtually um I know it's a little bit weird to meet people on the screen um so thanks for your presentation and the accompanying report I particularly appreciate the focus on the importance of data consistency to inform policymaking um just have one comment and one question um the comment relates to sections of the report on page 17 and 18 you talk about payer reimbursement differentials causing hospitals to compensate for public payer under reimbursement by charging higher commercial rates this is the cost shift um and you know that this is a documented fact in the health care space and you cited two articles one by frat and one by wang and anderson our office recently reviewed the literature in this area studying the cost shift because it's an area focus for us and we found that frat concluded the evidence for the cost shift was actually weak and wang and anderson concluded that the cost shift was not a major force in the health care space so I just wanted to flag those citations for you and and for the board um but my question builds off of um what Mike Fisher was alluding to one thing that we I think this is a challenge for all of us in this space is assessing the relationship between price and cost which is tenuous and how that interacts with hospital costs and consumer affordability so I'm wondering if if you were given more time or asked specifically to look at consumer affordability in this space how would you approach that issue what data would you collect I'll let Jeff answer your first question because I think he wrote most of page 17 and uh then I can pick up on the second question so I'll turn it over to Jeff uh yeah well I mean I read those two studies and you know they seem to document what had been widely reported in the literature so if there are better sites we'll put that in I don't think you're necessarily questioning that the cost shift doesn't exist maybe more so that maybe those two studies weren't the best I was you know it's been documented over the years we've done some work in this space where that's been documented and I was trying to cite two widely cited in the literature sites so if the standard of those you know you know and I read them but I'm not an expert in the field if there are better sites we can update those sites because I think it exists and you also see it in certain payer categories I mean one of the things that I didn't realize until we got into this a little bit was that most of the Medicare reimbursement rates which covers about a quarter maybe a little bit higher in Vermont of the payer universe that they're based on expected and projected rates of increase for certain things and then that there's no mechanism for them to true up for the actuals which I think then pushes some of the costs onto the other payer groups probably not as much with Medicaid because Medicaid you know has maximums that are defined by Medicare reimbursement rates in many states so I wasn't necessarily just speaking specifically to Vermont on that but just it was a general site for you know some of the differentials between different payer groups which we didn't climb into but if there are better sites I will we can update that and just ask you a second question you know I think we just start ground up and I can't tell you exactly what the methodology would be but you know you'd be looking at incomes as being one metric for affordability and you know then opposing that with costs but the whole way medical economics works is then you have all these non-market things that are coming into play that can affect that and who's paying and where their cost shifts and you know who's sort of insulated in some ways from price impacts and who isn't and you know so it would be complicated by that but I you know I we'd approach it the same way just bottom up and then see what the issues are see what data are available that could inform those and then try to come up with something that says all right to the best you know with the best data we have here's kind of what it's pointing towards or maybe here's what it definitively is saying and I imagine they're going to be pockets that are way more stressed pockets of of the population the consuming population there'll be way more stress than others and hopefully we could identify them and quantify them and then there could be policy options that are pursued that could affect all of that as well. Thank you appreciate it yeah not not disputing that there's air differentials is more just speaking to the causal mechanisms I think is an area of study to be sure but thank you appreciate it. Yeah I think we would also touch base with folks like you that have worked in this space and just get input on how you see the issues and what data you have been using and then data from Sarah and her team that would also be helpful in in keeping it very local. For sure thanks so much. Sure thank you I appreciate that I think we're going to have some interesting conversations in the future about the role of competition and the differences between price discrimination and cost shifts I think there's there's fruitful dialogue that could happen there. I think I see Tom Walsh you have your hand raised. Well Jeff you beat me too. Yeah I think there's been a there's been a lot of research really in the last 12 years now since 2010 a really groundbreaking study by Stenslin looking at this payment differential that's commonly that has commonly been called cost shifting and not finding evidence for it across the country it's obvious after the after the last two weeks that in Vermont it's a common approach to examining a budget but it's not a gold standard it's not an industry standard and it's not evidence-based the better health economic term is price discrimination and I'd love to be able to keep discussing that with you all it's I think it's a fundamental misconception that is making reform efforts difficult and if we can review the evidence together and get to an evidence-based approach to regulation I think there's a path forward for reform efforts that's currently blocked with an outdated conceptual model about cost shifting. Great well we'd very much appreciate your sending articles that you think would be relevant like that and incorporating and digesting that and having conversations about it that that would be very helpful. Great I look forward to it thank you. All right am I seeing any other public comments at this time? I am not seeing any so you know I really want to thank you so very very much all of you your whole teams there for providing us this analysis and joining us today your analysis I think offers a really important lens through which the board can understand the unprecedented inflation that we're experiencing and that our hospital sector is experiencing the wage pressures that are real so we look forward to working with you you know it sounds like we have some subsequent analysis to think about some data improvements that we can do on our end to help you thinking about affordability thinking about how we measure productivity I really am curious about how we can do that and specifically how we can develop some Vermont specific indices I think that's really promising work that I'm really excited that we can move towards I guess in the meantime I would say we might have to recruit you all to teach some macro classes at Middlebury because we're always looking for great macro professors there so let me know if you ever want to do a J term I want to bring you on board so with that I think I'm gonna move us on to the next agenda item but I really do it with a sincere appreciation I think you've shined light on some really important topics for us and given us some real evidence to help us make our decisions this year just in terms of understanding the inflation that's happening so really really deep appreciation for the work that you did in a very short period of time Sarah did you want to say anything wrap up before I kick oh I guess I'm gonna kick you it over to you anyway now because the next item on the agenda is our fiscal year 23 hospital budgets so I'm going to at this point in time kick it over to Sarah Lindberg and her team and just to give a little foreshadowing of the week ahead you know as everybody knows last week we concluded our budget hearing so we're beginning the deliberation phase at this point in time this is just the beginning of that process it will continue today we have we have on the calendar Friday September 2nd all day and then next Wednesday September 7th possibly rolling into September 12th and 14th although my goal is to have it wrapped up by the 7th if we can to give our teams enough time to get the orders in place before the end of the month so at this point I am going to turn it over to Sarah Lindberg and her team to kick us off in the discussion they're going to be providing a staff analysis and a framework for decision making and this year I want to say you know a deep thanks to Sarah and our team for the hard work and the thorough analysis that they've done this is a very data driven and evidence based regulatory process that we will be embarking on as we head over to the next section of the of the board meeting today board members it's a lot of material so if you have a clarifying question while the presentation is happening I actually would encourage you to just raise your hand if it's a clarifying question while Sarah or her team is on a slide and if it needs clarification just at that point just raise your hand so we can make sure everything is clear as we go through and I will leave some time probably before our recess for lunch for some questions as well more substantive questions but if you have a clarifying question please just raise your hand and we'll take care of it as we're going through that's for board members okay Sarah kicking it over to you now okay just to kind of bookend the conversation so first for the record I apologize for the mispronunciation Mr. Cavett so that have that cleared up and then I'd also just like to say that it was our explicit direction to in the interest of time and all the constraints to focus on the inflationary pressure on providers so that was what we asked for there's a lot to unpack more broadly and I think figuring out what we want to know and why and then using expertise such as theirs is really the direction I'd like to go so I will officially excuse them and thank them greatly once more for their time and we'll be following up soon take care. Yes just before we exit I did Jessica want to commend Sarah and her team for the incredible responsiveness that we got working through this there's no way we could have done it in this time period without the really quick response really thorough responses we got from them so we appreciate that. I appreciate that but I also want to say I'm all surprised that you received that response they are they are rock stars and gurus so thank you for that. I mean it was it's unusual for us to be able to speak with people that are knowledgeable about data and statistics so it was refreshing for us but again we couldn't have advanced this very far if we had to explain to Sarah's team about the importance of a valid time series for 4K. I should get this. Squad goals let's get there thank you. Squad. Thank you again. All right so sometimes my computer freezes when I try to present but let me know if you're able to see my screen. All right so once again for the record Sarah Lindberg and as Jess was saying and what we've been saying all along is this is really a team effort and it was a big year of transition not only here but in a lot of sectors out there and so Flora, Matt, Russ and Michelle Sawyer were all you know critical to kind of helping move this along but also the board members need to be patient with us and have been you know great about trying to deal with some of our constraints. Our partners in the industry among the hospitals have all been transparent and responsive and we appreciate that as well as relationships with our partners at the hospital association the healthcare advocate and the agency of human services along with the myriad of people that I won't have time to thank directly but Jess kind of just did this work for me but just in the deliberation phase that's what we're kicking off today with those decisions due by September 15th by statute but the written orders must be completed by October 1st. So we will start just to summarize the public comments we received so today we received 45 comments I believe that was as of the close of business on Monday there's a few others that trickled in through since then but seem to be along the same themes and that is that these budgets are unsustainable for Vermonters and their businesses that the board should approve rates that fall between the all pair model 3.5 to 8.6 range hospital executive pay should be reduced some kind of pointing out that part of this pressure is due to inadequate compensation for nurses prior to the pandemic and that's really exacerbated some issues we also had comments relating to unacceptable wait times and kind of supporting ways to improve that a few comments about the bond ratings that should be allowed to fall and then a couple others that said that we need to keep our hospital strong and that the funding is needed to help provide quality care to Vermont residents we accept public comment at any time so please feel free to use the link to add to the discourse at this point the board may not officially be able to consider that but we welcome feedback at any time so there's a lot that I want to put a pin in but there's a lot of really major change ahead of us and part of the goals of the Green Mountain Care Board has to do with this seemingly complex balancing act because it's definitely a complex I would say going to say seemingly impossible but I'd like to be hopeful and that is trying to balance the needs for affordability with the needs for accessibility as well as high quality and by providing an accessible high quality and affordable system we can hopefully build us a healthier Vermont and one component of this balancing act is that our hospitals really do need financial health in order to support these goals so if they don't have adequate financial health these things are at risk and things interact as well so we know that unaffordable care may impact its accessibility and that it's more than geography and ability to get an appointment so it's a complex process that I know is not new to you but I think this year more than others it's just enhanced pausing for a moment for a little housekeeping if you have any questions comments along the way I know that might not be the way we usually do it but I'd rather we kind of clarify things as we go along so I want to do a check that we're okay so far I don't think I've done anything too all right so for our hospital budget oversight work we know we have our work cut out for us in the next few days we should have a fully executed contract to re-envision the hospital budget regulatory process and some of the elements of that scope of work include articulating the GMCB's goals for evolving this process identifying some opportunities for for increased efficiency in it working together to establish meaningful metrics consistent with the current healthcare landscape including some consensus or standardized reference values and decision points we also want to improve alignment as much as possible with our other regulatory process processes and part of our homework from act 167 of 2022 as to develop a methodology to determine the allowable rate of growth for hospital budgets and that's going to take a lot of cross team collaboration to come up with something that is feasible and meets all these other elements that we listed out we also have on the docket to develop some value-based payment and promote the long-term stability of the Vermont healthcare system that something we'll be doing in partnership with the agency of human services from act 167 and then alongside all of this great financial regulatory work we have bigger systemic changes that the Green Mountain Care Board is is collaborating to consider and that is related to the all-pair model and its next iteration that is being led by AHS extending the current agreement for the all-pair model and negotiating that subsequent agreement so the Green Mountain Care Board is involved in all of that work which is being led by AHS and then we also have a substantial amount of community engagement to do so we need to meaningfully collaborate and engage with providers, payers, accountable care organizations and other stakeholders as we evaluate the hospital budget process and these payment models and future APM agreements but we also need to build our current understanding of and a potential future states for our delivery system and look for opportunities to improve efficiency, lower costs, reduce inequity and improve health outcomes so I can guarantee that we won't get that all done in one year but I my goal is that by this time next year when we come to you we have made sufficient progress and can update you on the kind of path ahead but for today we have 28 decisions to make per statute each of our 14 community hospitals needs us to decide on the budgeted growth from fiscal year 22 to fiscal year 23 of their net patient care slash fixed perspective payment revenue as well as their request for a change in their charge so I set the table there are a few constraints that I think are really important to keep in mind as we make these decisions and one that is vexing is that if you look at the bottom x-axis it says approved change in charge by the Green Mountain Care Board so that's a range of negative 40% positive 40% because we want it on the same scale as the actual commercial net patient revenue that came in so if we expected those things to be closely related we would see a line in one direction or another where things would predict the other but we see there's very little relationship between what's approved in that charge and what actually happens to the fiscal bottom line of our hospitals that hasn't historically been true there was a time when the majority of payments were based on a proportion of the charge master but as as time changes we've realized that there might be better ways to reimburse people and so I think it's only natural that as part of that process is we evolve that we consider reflecting those more appropriately and then we have another more difficult to wrap our arms around component of these growth rates so a total budget at the end of the day has kind of two major buckets there's what is growing due to price increases and what there is related to utilization and those changes in utilization aren't necessarily as simple as number of visits but the types of visits people are taking so we know that a primary care visit you know on a per unit basis is going to be less than say an ed visit and so that utilization component is an important one and one that is just more difficult to wrap our minds around when we are considering looking into the future the past two years have proved how difficult that can really be I guess three years now so I think I think it's just really important that we are mindful of the constraints of this process so it's a very blunt and very powerful instrument but one that has limitations so we heard testimony from all the hospitals indicating some macro level on pressures that are affecting people across the United States at a minimum and some globally and so we heard things about the increasing cost of treatment the inflationary growth and expenditures labor costs exacerbated by shortages and finding employees there's transitions to technology shifting among the payers and then we also have people showing up a little bit with increasing severity of illness so some of those stays are longer because people maybe didn't get the preventative care they needed during the pandemic years we also heard some testimony that the aging in their immediate community was affecting their budgets on a you know community wide level so all I want to do is just kind of add some context where possible to some of these claims and show that they you know are supported or not and for increasing labor expenses no surprise here the the changes in the labor expenses that Vermont's system is seeing is completely in line with national trends as a smaller state we tend to bounce around a little bit more but overall these trends seem completely congruent so you know I would say that that argument is definitely supported by national benchmarks um another piece of the puzzle that we've heard is that the the Green Mountain Care Board's decisions haven't been keeping up with the costs of medical inflation and so again knowing the limitations of these measures but trying to focus in on the the crux tier we took two of the the most closely aligned inflationary measures recommended by the economists which is the personal consumption expenditures for health care and the producer provider provider producer price index for general medical and surgical hospitals so we were looking at the growth and those inflationary factors compared to the charge approved by the Green Mountain Care Board and we see some differences over time there so prior to fiscal year 17 it looked like the approved charges were in excess of medical inflation with them being pretty close to those values from fiscal year 17 to fiscal year 20 and then um rising a bit above inflation in fiscal year 21 and so because for a lot of hospitals the change you know the charge is you know 60 percent of the actual reimbursed or the reimbursed amount is 60 percent of the charge amount it's possible that you know this is distorted the actual material effect on the hospital's budgets but I would say that now that we know how to measure this it's something that we can be monitoring and that right sizing I don't think there's going to be a magic number here we just heard how complex and difficult to predict a lot of these things are but I know that it's an important data point it does look like the charge requests for fiscal year 22 have increased unfortunately we don't have that benchmark information available yet certainly can update it if it were to come in within the next day or two but might have to live without that for now and so then if we looked at that inflationary pressure we talked a little bit about this during the last presentation but there's two big buckets when I think about these inflationary pressures and how that's measured and one is how that's affected kind of the household expenditures so a lot of the indices actually exclude expenditures from businesses or governmental entities so if we look at the inflationary increases that are affecting households we see these measures which are the personal consumption expenditures overall as well as the overall consumer price index and then we see a very different trend for the personal consumption expenditure growth in for healthcare now we definitely want that's a that's a finding that we would want to unpack a little bit so one reason that might be changing is people just not getting care and that would be a really important thing for us to understand if that's what's driving it and I also think that that the other important component here is that there's been criticism of the some of these indices because it has a fixed basket of services and if you think about consumer behavior they might substitute something less expensive to a deal with rising prices but I think that that criticism is going to be less applicable for things like healthcare where there's not a lot of substitution that's really possible particularly in Vermont that might be less true in other markets so I feel like I talked a lot just want to check in anything we want to clarify or or go over before I move on to the provider inflation aspect all right hearing none so here again we're looking at those producer price indices so that's trying to measure what the commodity or service is is really being how it's changing at the actual production level so a very different indicator as you can see a lot more volatile as compared to some of the other ones and this has the same limitation in that it's a fixed bundle of goods however again this is pretty specialized equipment and stuff so there's probably less opportunity to substitute than some other commodity or service categories board member walsh I think you're muted thanks for helping me unmute and thanks so far could you just show me slide 13 again for a second I want to check out the y-axis okay thanks that's all okay easy peasy all right representative golden did you have a clarifying question no I had a spastic attack sorry um and so then uh this is just designed again at a very high level um you know it is kind of comparing that um inflationary growth for um households versus um on the providers in our case hospitals and so we'll see that you know they've tracked really close or pretty closely um you know generally although that um ppi growth rate uh tends to be slightly higher um in most years and so this is actually the healthcare um pce I apologize for not updating that uh label but that's the total healthcare um growth so that's going to be you know the broader set um than just the hospital expenses faced by that household um that component was not uh this as up to date as the healthcare component um so another sorry oh no not at all yeah it's really more translation so the my takeaway from that is um that the hospital growth tends to uh really correlate with total healthcare spending and so is it fair to interpret that as uh because hospital growth tends to be a larger part of total healthcare spending that that is a major driver yeah I think that's a fair assessment thanks yeah yeah it's all definition although of course because um you know one great thing is to unpack because they do have subcomponents like what we think is uh material for any given process uh so moving uh our attention to operating margins uh so this to start this data comes from the Medicare cost reports which is a totally different data source than our financial information in our hospital budget process so the reason I'm using that data however is that it's a chance to compare Vermont hospitals as apples to apples as possible with those outside of Vermont so I think that um really digging into the differences in how costs and expenses and on revenue are reported for cost reporting services purposes and our budget process is something we should really dig into and and you know make sure that we explore any potential opportunities for efficiency or simplification uh for some of our data so but yeah so here we have um it's a visualization called a box plot um so for those of you that haven't had your intro stats class in a while um you'll see a set of boxes um in in those boxes there's a line right in the middle of it and that is the median value and so 50 percent of the observations are going to be higher or go taller in this graph than that value and 50 percent are below it and then the um edges of the box correspond to the 25th and the 75th percentile so from the top of the box up is um the highest 25 percent of observations and uh similarly the bottom of the box to the to the bottom of the access is your lowest 25 percent of observations and then those funny looking whiskers or lines with the line uh intersecting kind of t-shape at them is um 1.5 percent of that box length so that's uh kind of what a back of the envelope outlier threshold is and so uh you'll since we have fewer hospitals we see a lot less variation so that whole length for Vermont hospitals is condensed that's not always true but in this case it makes sense just because there's a lot of hospitals in this this nation so there's just a lot of variability in that information but um I think all that to say um you know that our acute care hospitals here in Vermont so these are are you know larger pps hospitals have generally exhibited meeting operating margins below um that of the non-vermond hospitals so um they are dealing with slimmer margins and I think that that is an impressive thing to note um but I think the trade-off there in um being you know with a slim margin is that it exposes you to the volatility and can uh lead to less ability to provide stable prices so years where you have relatively large or small asks are more common when you might not have some of that cushion on your operating margin so that's just you know a factor to keep in mind in all this mess um when we look at our critical access hospitals um we see a much different picture so you know in general critical access hospitals whether they're in Vermont or out have a lower operating margin makes sense since their their payment mechanism is quite different um and we see that they're they're in Vermont the median operating margins were above or near that of non-vermond hospitals in fiscal years 12 16 and 17 and then uh some below in that those other out years and then in fiscal year 21 uh and for 22 as well I'm sorry 20 uh 21 and 20 we uh looked pretty close to the national median uh we do see in that 20 um there's a big skew to the data so there's um a lot in that bottom quadrant that bottom kind of 25 percent of the data so um that's going to mean that even though um ha the halfway point is within national there's more more hospitals below it um then then we just saw for national that looks more kind of normally distributed and then we see that both in Vermont and outside of Vermont that operating margins are relatively healthy for our critical access hospitals in fiscal year 21 I think that's also been consistent in the testimony we heard and that the um COVID stimulus funding was extremely helpful to our most vulnerable hospitals and so that's a you know a definite area to keep our eye on as those funds are no longer um as prevalent in our system kind of a risk opportunity or risk to monitor so shifting gears completely any questions before I do that um so then we look at um so if you remember back in October um of last year we had some analysis provided by health management associates the burns division they're in and what they did is they did their best to take those medicare cost reports and say okay what's the if you take the the ratio of what your cost to charge is per this medicare reporting we kind of have an apples to apples estimate of the cost of services so we're gonna not only reprice claims to see what medicare would have paid but recost them so what what kind of credit would medicare give you for the services you provided and then we compared how much um of the that cost was covered by the reimbursements they were getting and we looked at it by medicare medicare and commercial payers and uh that's been updated through fiscal year 21 so unveiling the initial results we can do a deeper dive on the full picture but just for context here is that they definitely saw that from hospital fiscal year 19 to 20 there were increases in costs that were definitely not kept up with with the payments so the average cost increased by 7.9 percent whereas the pay the reimbursement um only by 2.8 percent so that's um uh you know 5 percent loss that they looked at for inpatient care on the outpatient side it was a little more um more discrepant at a 6.9 percent that story reverses if we look at the growth from hospital fiscal year 20 to hospital fiscal year 21 so we see inpatient discharges uh right uh payments being uh growing at uh 3.9 percent percentage points more than the costs and 2.1 for those outpatient services um so that um was better than those big losses but you know it didn't make up for the loss that they experienced in the previous fiscal year and then didn't account for any additional on potential growth in cost so uh all that to say is that um this is you know more um support for the idea that the fiscal pressures on hospitals um are certainly seem to be borne out in our data um so this uh this red is bad that's uh or you know that that's it's basically bad here is the cost coverage so if the dark red means that the cost coverage is below 85 percent so I shouldn't add judgment here but that just means that that's a risk if you're if your costs are less than 85 cents on the dollar or the your the money you're getting for a service is 85 cents on the dollar or less than that um but we see you know for inpatient that the Medicaid cost coverage um tends to be quite low with um a few improvements in fiscal year 21 but you know in aggregate not a lot of movement um similar story for medicare where they tend to come in right there we have to remember here though that part of the reason there's so much gray here is because our critical access hospitals are reimbursed based on those costs so we fix that to a certain level um and then for the commercial uh bucket we're seeing a little you know growth uh or it's a little bit of contraction from fiscal year 20 to 21 but pretty stable um in that cost coverage for inpatient services now outpatient is always a very different story so we see that cost coverage in commercial um you know with a lot of green meaning that it's over um 100 percent of that medicare um allowable cost figure but we also see the dark red um in the governmental payers um which is that balancing act and whatever the causes we know it's there and like figuring out like our goals around addressing that is an important piece of our regulatory framework going forward so when it comes to that other operating revenue as you can see um that really was extremely critical to um helping the system in fiscal years 20 21 and 22 those obviously those big growth numbers are corresponding to reduction in net patient care because people were not going to see the doctor and the provider leaf and or I should say the covid stimulus and other funding um is you know all but gone in the estimates for fiscal year 23 and we do see that you know the 340b at a system-wide basis has declined from fiscal year 20 but it looks like um it's uh expected to be pretty consistent from fiscal year 22 to 23 um I know a lot of discussion happened on that and there's a lot of um activity at the federal level related to that program but that'll be um something that we will continue to monitor how about some good news we always like good news so um our colleagues at the agency of human services um did some really big deal things and I pick off all my hats I just think it's incredible what they've been able to get done and so uh they have posted a global commitment notification that they're intending to infuse over 23 million dollars uh into the hospital fiscal year 22 budgets so you know some of those major losses that people were projecting for this year um will be mitigated or hopefully at least keep the projections in line with where the actual seem to be going for our hospitals um so that that's a major big deal um and then I think that you know if you want to see more details about its bigger vision Secretary Samuelson recently um put out an op-ed letter um that detailed some of those but you know with the global commitment waiver there are big plans um to address mental health housing challenges reviewing uh renewing those health insurance subsidies that we discussed from the state side um examining any potential to um address provider rates as well as some substantial investments in health information technology so uh this is a big deal for the state of Vermont it's um just I can't say enough amazing things about this and I'm very excited to see what it comes with and how we can work together to you know kind of help maximize the effect of this very welcome um opportunity so Sarah a quick question um yes so it says uh additional dish payments for qualifying hospitals so our do we have any sense of which hospitals are qualifying which ones aren't yeah so there's a a few hospitals that um had a maximum dish payment already so they're not eligible to get any additional dish um yeah um I can follow up with the details um offline or or produce those maybe for Friday if uh we'll we'll see uh just a lot of just 23 it's only one or two it's only one or two that um are not expecting to have that payment yeah well it'll be it'll be good to know thank you yeah yeah I'll uh follow up with you I don't have that document open I'm sorry um okay uh so that's that uh and then this is more just another one of those things is that I would like to revisit but I just want to remind people that you know the all-payer model total cost of care is looking at a typical um average expenditure for healthcare for all Vermont residents and so that's going to include care delivered outside of the state of Vermont and it's going to include care delivered outside of the hospital setting so you know people who are not affiliated with hospitals and so um so we have both people in our numerator and denominator that theoretically have never touched our hospital system and I think the other thing is you know when we look at net patient revenue and fixed perspective payment you know that's going to include care that's delivered to people who don't live in Vermont or for whom we otherwise don't have claims in vcures so that would be the bad care I'm sorry the bad debt and free care um the um the uh self-insured plans that aren't in vcures uninsured people paying out of pocket uh military plans federal employees so um there you know we're we don't have a census by any means in the claims database um there's also substantial non-claims-based funding mechanisms such as DISH and GME that aren't going to be accounted for in the total cost of care so I think you know anytime we try to think about how resident and provider metrics interact that we want to be careful about those inferential relationships and so what the staff are recommending is that we explore that kind of inferential relationship to determine how to best incorporate that um but I think that doing kind of a one-to-one three five to four three um probably um could use a lot more investigation so um and I know that you've been asking for that for years so I'm sorry that we have not delivered but here I am publicly stating that we're going to get on it and make sure that we can use that responsibly all right okay actually Sarah might I just interrupt here for a quick second um please I think I'm just looking at the time and I know you have several more slides to go through and I want to give everybody a chance to just if there needs to be a vial break or anything like that so I think I'm gonna if there's no objections we're gone we've almost gone close to two hours now at this point so if there are no objections I think I'll just ask for a 10 minute recess and then we'll come back and pick up right here okay I see nodding of heads from my fellow board members I appreciate that I'll take that as a yes and we'll see everybody back here we'll just say 10 30 okay Sarah Lindbergh I think you can pick it up where you left off thanks everybody for the for the opportunity for a brief recess understandable so I'm gonna navigate back to where we left off okay so now that we've talked about all the or not all a smattering of macro issues that are very relevant to your decisions before you we'd like to pivot and talk about our staff analysis and summary of recommendations so we're going to start off by just walking you through how we're framing the recommendations and then we'll start applying them to each hospital so essentially in discussion we decided that the thing that made the most sense for us given a myriad of factors is that we would recommend a decision tree approach so the first step in that is you know is the request for the increase in net patient revenue fixed perspective payment within the guidance if not we turn to the submission to see if there is support for that so those are the hospitals that we are hoping to start looking at more in depth on Friday and if it is then our next area of inquiry has to do with the assumption so are the assumptions that are behind that budget supported in their submission if not you know there might be some areas where we consider modification or at least exploring the reasons that they might have something that's out of line with what we might expect and then if they are then we turn our attention to the charge request and now is that request supported by the submission if not is there anything that we would consider potentially modifying but if so then the staff will recommend that it's approved as submitted so just you know not necessarily the most elegant or complete tools but we thought given was before us we were going to go with this for our recommendations anyway so one important point about that growth in net patient revenue or fixed perspective payment is that you know through no fault of skill or ability budgets have been really off in recent years it's just been nearly impossible to try to predict and you know hopefully once in a lifetime pandemic and you know from what we heard this morning we know that the long lasting effects are that are extremely creating extreme volatility in our current market so for that reason we think that and when we're thinking about the growth of these budgets that it's probably more accurate and consistent for this process this year to look at what that growth is in from projections to the budget for 23 versus what it had been in the 22 budget to what it is in the 23 budget and just to distill that if we look at the difference from actual in the projections in fiscal year 20 you know the projections were minus one percent off what the actual NPR came in at whereas the budgets were minus 12 we see that distance shrinking for fiscal year 21 so the projections were one percent above the actuals but the budgets were still eight percent below and so as you'll see if we look at the change from the projection to the budget in fiscal year 20 in the fiscal year 22 projection to the 23 budget we see much different numbers than that 22 budget to 23 budget so that is you know a little bit of a deviation we believe that it's justifiable and important to keep in mind but you know I just want to flag that you know it's not necessarily been a direct kind of decision point in previous years and so our investigation of the assumptions comes down to kind of three different buckets one is the labor costs and investments and that first one is required by act 85 of 2022 the Green Mountain Care Board shall consider hospitals extraordinarily oh go ahead Robin do you want to interrupt before I say a bunch of stuff I don't I don't want to interrupt I want you to finish your your thought and then I will ask my question okay great um so yeah so three different buckets here so act 85 or 22 the Green Mountain Care Board shall consider hospitals extraordinary labor costs and investments as well as the impacts of those costs and investments on the affordability of healthcare the second component is the other inflation so are those is the inflationary growth associated with other things besides workforce or compensation within those in the economic forecast provided in the report by our experts and then see for the utilization how do the estimated changes compare with that hospital's market share like do those seem like they're relatively in line and then um you know just historically how well have kind of projections related to the actuals for that organization board member lunch thanks I'm sorry to interrupt and it's actually on slide 26 I was just a little slow and um one of the questions that and it's not actually for you Sarah it's for legal um so they can come back with this you know not right now but in terms of thinking about how we do our approvals and the motions um it would be helpful to think about whether there's some utility I know you could translate the projections back into budget to budget which is what we typically approve under the statute but we do still have the authority to do um COVID related adjustments to our processes so if it actually makes sense to do some sort of official projected to budget using that authority I just wanted to say that out loud so that legal can think about that and give give me some ideas for the motions okay I'm sure Russ has diligently marked that on his to-do list I know you will think about that so to just walk through kind of how we were thinking through these three tests and in the thresholds and where those thresholds came from so for the labor costs sorry that that slide got a little messed up but the um for the labor assumption what we're looking for is the growth from the actuals in fiscal year 21 to the projected growth to 23 budget the reason we recommend a two-year period is it does seem like due to that smaller Vermont volatility that there's just a lot more noise year over year so giving a two-year span felt um you know that we should do that to be responsive and so the threshold there that we're recommending again from the actual labor cost in um fiscal year 21 to the budgeted costs in 23 um is 13 to 13.8 percent that comes from the average hourly earnings forecast from June of calendar year 21 to 22 at 8.5 percent plus the range of forecasted overall personal income growth between the CMS and Moody's forecast so a little bit rough but I think given that the the costs seem to be rising higher in healthcare than on an average that this feels like an okay this is the best kind of evidence I could find or objective way to consider this growth in context um so that that's where we're at for for our test for other inflation we looked at um the growth from the 22 budget to the 23 budget being in within the range of 4.1 to 4.5 that that corresponds to the forecasted growth in personal consumption expenditure service growth in the general um to the GDP deflator as well as the CPIU so kind of the range of forecast that could potentially affect kind of supply and material growth um inflationary growth the reason we're doing budget to budget for this one is that's the way we asked um hospitals to report it in their appendices so it seems like we should true up to that time period uh we were trying to mess around with other ways to measure it but um there's a lot of uh challenges in getting things kind of meaningful apples to apples in that other operating expense bucket so that's definitely an opportunity for an enhancement and then again that utilization assumption um you know do do the projected growth scene in line with market share and how is the actual compared to budget um in the past and finally for the charge request um so thanks to everyone for doing their best to estimate what kind of the actual um net impact on commercial uh rates would be so we're going to kind of really weight heavily on the estimated effective commercial rate because that's what we would feel um as Vermonters and that's what's going to kind of be the component that would show up in any total cost of care analysis down the line um and then you know how does that request tie into the requested operating margin so we just want to kind of try to balance those things operating margin is only one of many measures for financial health but it felt kind of the the most uh relevant for this particular exercise so uh those that's what we're going to be applying and so to kind of walk through and summarize the test so far so we have here um if we were going to run that first test which says is it within our guidance of 8.6 growth from fiscal year 22 to fiscal year 24 um up to you how much you would take in the first year if we look at that budget to budget we see that only five hospitals would have come in within that guidance however two of them actually the reason the growth is within guidance from budget to budget is because they're below uh their projection is below the 22 budget and so that's another reason that we think it's important to think more about the projections and so when we apply that to the test we end up with nine hospitals who come in within that guidance and so these uh these range from 1.8 percent to 7.6 percent and we see there are five hospitals whose growth is higher than that on the npr and fpp growth and we'll note those three at the bottom um we see that it's uh the projection to budget growth is actually higher than the budget to budget growth because they are not meeting the current budget so i think that's also another you know important thing to consider um in these decisions so so that's kind of a summary of what would happen with that first test um and then um here are and this ones will take well the walk through it it's it'll be okay there's the three tests and then whether or not the organization met all three tests so all organizations had compensation growth within that range you'll notice a high range of variation here a lot of that has to do with the work we have to do in trying to get more consistent reporting particularly for the traveler costs depending on kind of how the hospital deals with those that led to these numbers looking very different um for some organization so um that i think it all is compensation growth um so i worry more that we're maybe not um including um all you know traveler expenses um here but i think that um it should all sugar out um in the way that we've um analyzed this but we didn't see any concerns for people that were exceeding that um 13.8 percent growth rate as far as um other inflationary growth oh yep board member pelham tournament it's the first time i've ever raised my hand it's quite quite exciting i'm glad i'm here for it right in the nick of time but it's gonna be a while to find it on the computer here um so i i just uh so the compensation growth from 21 to 23 that 13.8 percent is a two-year number yes so that's yes so that's not annualized because i because i because i thought earlier on the other inflation growth that that was a one-year number and here it's 21 to 23 at 4.5 percent is so for compensation we're doing 21 to 23 and that's because of some of that volatility in the wage growth um again compared to national yeah and it's and it's the two-year number yep it's all two year yep for that but inflation that 4.5 percent is a one-year number correct that's a budget to budget yeah so we're kind of doing the best we can with the materials before okay so yeah it's 21 to 23 but that but it's a one-year number yeah i i didn't update thank you that's a mistake that should be 22 to 23 thank you that's yeah 32 that's right the record thank you good catch you're paying attention all right there you go you think you just click it again to put it down or you can just do the rest of the presentation if you prefer i'll find back here while you're talking okay and so for the other inflationary growth um so uh there were two hospitals that stood out here gifford and mount escutney as we'll see when we dig into those hospitals those really are likely more of a function of relatively low margins in the case of gifford it was their fuel expenditures that kind of tipped them over the 4.5 and then for mount escutney they had included insurance in the inflationary factors not everyone did however the assumptions they made for that were in line with other insurance growth so um neither of these i think are necessarily a showstopper um for utilization uh so this is looking at that utilization appendix and you know what proportion of revenue is expected to grow um related to the utilization and so um we see numbers kind of uh all over the place but there were a few that stood out to us so um the porter utilization number at 3.5 we just wanted to take a little bit closer look at the rutland utilization of 8.2 feels very justified um we'll as we'll see that's largely a function of the fiscal year 22 assumptions being quite low then they turned out lower than they turned out to be so that's more kind of a budget to budget issue in my mind than anything else um and then the north eastern vermont seemed you know do you just want to unpack that that's you know a relatively high number compared to some of these other ones so we just want to make sure we take a a look at that one um and then for mount escutney that was um some stuff coming back online and seemed very um clear in the record um so we didn't think that that we needed to take a closer look at it that them for that so so there were three facilities that passed all three of these tests southwestern copley and northwestern and then when we move on to um the charge request so this is you know kind of the ordering if we look at the requested change in the overall gross charges um and how that relates to operating margins um so we see again there's you know these numbers are not necessarily close together and are different spaces apart from one another so if we try to look at that estimate of the affected commercial effective commercial rate we see um that uh you know between both the requested rate and the budgeted operating margin knowing that the gifford hospital margin is 1.5 percent of that total organization wide 11.4 that they would meet the test um and that everyone um so uh for rutland you know we see that uh commercial change request at 10.8 um much lower than the 17.8 so just want to make sure that we see evidence in the record for that um i think that it's there but um just uh was you know worth worthy of looking at for that and then porter um you know we didn't get the the official kind of adjustment to their margin for their um other facilities so that would be i'm going to try to track that down for us before friday so we can adjust that similarly that we did to gifford here um to make sure we're doing that consistently um so those are those are how the charge request kind of analysis panned out and at the end of the day that means three hospitals uh that we recommend be approved as submitted coply north western and south western there were six hospitals where we recommended a review of the assumptions and or the charge request and uh then we have those hospitals who exceeded the projected to budget guidance and so we want to just kind of make sure that we are careful about looking for evidence of why that's warranted for those uh five hospitals all right so with that that's the plan uh we're going to start here first we'll review the standard order uh the standard budget order conditions which would apply to every decision just to make sure we're all good with those and then we'll start going through the hospitals but before we do that everyone understand what we're doing and why have any questions about where stuff may be coming from or um whatnot sundry all right here we go standard budget order conditions so uh these were approved as of last year there were a few modifications then so just want to remind everyone what those are standard budget order condition a is that the hospital's fiscal year 23 npr and fpp budget is approved at a growth rate of bill in the blank over its fiscal year 22 budget with a total npr fpp approved of x and dollars for fiscal year 23 board member lunge uh wondered about uh any ideas about uh potentially looking at uh looking at that growth rate from projection to budget so we'll do some homework there just to flag one concern is that you know these budgets are vetted by the individual hospital boards and um sometimes it might not be at the cfo level discretion to necessarily implement a change that wasn't discussed ahead of time uh but we want to you know be be uh we'll add that to our homework about kind of the the operational effect it might have on our uh regulated regulated entities well and sarah what i was really asking about is whether we needed to do a motion to use that authority to do the analysis projected to budget oh i necessarily have to include it in the order or change the hospital's budget um so sorry that i wasn't clear i bet you were completely clear lawyer to lawyer um but statistician still learning some of this language um okay budget order b standard for all hospitals that the hospital's overall average charge increase is approved at not more than fill in the blank over the current approved levels um standard budget order condition c beginning on or before november 20 of 2022 and every month thereafter the hospital shall file with the board the actual um fiscal year 23 operating we might need to make a change there should be the actual oh no for the current fiscal year's operating results at the end of the prior month so that that's the monthly reporting that we require sorry i really really slow reader this morning um standard budget order condition d is the hospital shall participate in telephonic check-ins to be scheduled at the discretion of board chair in consultation with board staff based on the year-to-date operating performance probably don't hear the word telephonic every day anymore but otherwise uh we're mostly doing these via zoom but i think that stands um and by zoom i mean teams standard condition e hospital should advise the board of any material changes to its fiscal year 23 budgeted revenues and expenses or to the assumptions used to determining its budget including changes in their medicaid medicare or commercial reimbursement additions or reductions in program or services to patients and see any events that could materially change their approved budget um so that you know we there's a lot that we don't know about what might happen with potential changes to the medicaid reimbursement in state fiscal year 24 which would line up with hospital fiscal year quarter four so always that kind of delta makes it messy to consider but you know if that ends up being material um that might be a time where we uh get some of these requests so just uh putting it in context um may not be material um when you think about a whole budget but um it's there condition f honor before january 31st of 2023 the hospital shall file with us in a form or manner that we prescribe such the information that we determine necessary to review their actual operating results so definitely always want to see where things actually land for a fiscal year the hospital shall file with the board a copy of its audited financial statements and associated management letters as well as any audited kind of the parent organization's audited consolidated financial statements so those audited financial statements are the gold standard of kind of the financial health of hospitals but the tradeoff obviously is the lag um so we always want to see them but um need to think about the best way to use them i think as we evolve good condition to have in there uh condition h the hospital shall participate in the board's strategic sustainability planning process i hospital shall you know file things timely um particularly any forms or information related to provider acquisition or transferred if we need to see that information um condition j hospital shall file all requested data and other information in a timely and accurate manner condition k um after notice and an opportunity to be heard we may amend the provisions contained herein and issued an amended order consistent with its authority so um i guess that's our back seas class no i'm just getting um good one never know there's a lot of volatility right now uh condition l all material is required above shall be provided electronically unless doing so is not practicable so um i think at this point we're all able to email things and otherwise can uh do electronic filings and m uh this will not constrain the board um decisions in future hospital budget reviews future c o n reviews or other kind of decisions related to the regulatory or policy decision so so those are the the a through m standard budget order conditions so again these would carry forward um for each decision so any questions or need to discuss that before we kick it off here wonder so um i just on all these standard conditions uh and this might just be a small irrelevant corner of the world um but which we i can't talk about or we can't talk about until after september second or third but i'm just wondering is there any linkage or should there be any linkage uh between this process and these standard conditions and the conditions in our uh decisions relative to the qhp um rate review process i might um see if russ wants to weigh in first on that one day again i was wondering if russ might have a comment before i uh do um i'm not sure is there uh something specific that um you had in mind well i'll try to stay as generous as i can but we had some very detailed conversations there about what to build into the actuarial analysis relative to hospital budgets um and uh you know and that issue was addressed explicitly and um um i'm just wondering if there's any linkage between what we did in that pond and what we're doing in this pond and i and i recognize that in the scheme of the world you know the qhp population is is it's not uh de minimis but it's it doesn't drive the bus either completely and i'm just just wanted wanted to know that you know once that qhp decision comes out and people say or might say or might ask well what about this um that uh um i can say well there is no relationship or there should be no relationship or there are two different processes or or um that we tied them together and i'm um i just didn't want to let this go by and still have to kind of not talk about it until after september second or third or whenever the the hearing date um is through i think i'd have to go back and take a look and think about the that question a little bit more yeah and i think they're you know one of the hard things about this um no one would choose this time like line we would ideally have a hospital budget decision to inform an insurance rate decision and i think the tricky thing is those decisions were made with an unknown factor for the hospital budgets and then there's certainly were assumptions related to it but yeah how yeah it's like a circular reference in your excel spreadsheet like starts to break but i'll just add to that though but they were assumptions provided by our actuary based on an analysis so it wasn't just the opinion of the board it was an advised opinion to the board that we adopted yeah um yeah um you want to take that one offline russ okay all right let give us a chance to um think through um and and i think the ones we'll start with it probably won't be a major um factor for you but you know if it if it turns out to be we can certainly put a pin in in anything okay okay okay here we go um so uh we are starting with um southwestern medical center they were the first to present and uh kind of for the one of those that passed all those tests um so here is the layout that you have been familiar with just didn't want to change everything at once so um here on the left hand column you see their budget to projection variance for fiscal year 22 so they are above the the budgeted amounts which is a familiar story this year um and they're requesting um a 2.3 percent increase in their budget from the 22 projection to 23 but that's a 6.4 percent increased budget to budget again the there's a lot of underestimation for uh for utilization in those fiscal year 22 budgets um their growth rate um when we look at their actuals compared to that all pair model range you know is within there i know it's hard to see um but you know we don't see any like crazy variations off that trend um so when we look at the um charge request we'll we'll dig into what the effective commercial rate is a little bit later but if they're for the actual decision for the change in charge um it was 9.5 percent uh with a 1 percent uh change in charge corresponding to 835 thousand dollars uh the gross charges uh are budgeted to increase by 9.5 percent for both inpatient and outpatient charges uh with no uh expected changes to their professional charges professional service charges um and then we see that that uh nets out to 7.9 million in commercial rate uh in the budget uh with a express that they felt a lot of risk in their budget so want to be sensitive that these are all guesses um and then if we look at the um change in charge increase that um you know at the emperor level in total is that 7.9 um in dollars which is almost entirely is entirely commercial in this case so so then we see their history of charges in the five-year average so they're at 3.4 percent uh one of the um you know lower values we see in that market area so when we summarize all the tests for this hospital so the first test uh is their npr growth below the 8.6 it is 2.3 percent uh and then for each slide we'll see the reference range statewide so for all hospitals uh that that request has range from 1.8 to 15.7 percent with a median of 6.3 percent so below median near the minimum uh for compensation growth they're at 7.5 percent that is below the 13.8 statewide and all the submissions we see a range of negative 12.8 percent to positive 12.7 percent with the median splitting the difference at 6.7 so they're um pretty close to the median uh you know uh growth that we saw there for other inflationary growth um that's you know supplies um other kind of things subject to these inflationary pressures uh they their um weighted average growth was 1.1 percent which is below that 4.5 uh we saw ranges from negative 2.7 to positive 14.7 with a median of 2.1 so they again are below the median on that and for utilization uh their utilization assumption for gross uh revenue growth was 2.1 percent um looked to be um supported by the submission I have a very good track record of um coming in uh to their budget so that's right at the median and uh finally that effective charge rate so that's a 7.6 percent at the effective charge statewide we saw ranges of 2.9 to 19.9 with the median of 8 percent so they're pretty close to that median and their 23 budget has a 0.5 percent operating margin um with the statewide range being negative 3.7 percent up to 11.4 percent knowing that that's Gifford which may be not the best number to anchor to since they are supporting a full organization uh with the median at 1.7 so all these things being equal uh we did not have uh concerns about uh the budget as submitted and then just for each hospital we wanted to take a look at on that that uh if the charges and inflation seem like they've been keeping pace um so the pattern for southwestern is very similar to what we've seen statewide so um you know was uh above inflation they still were above inflation for um 17 but we're right there um in the past few fiscal years so uh looks like you know that that that they're pretty similar to the state trend so uh here is the uh suggested motion language for you to consider um and I think finally you get to take a break from hearing me talk thank you um Sarah so I guess I would open up to the board for questions comments discussion around southwestern's uh budget and the staff's recommendations and analysis any comments any observations any questions for Sarah and her team well I'll just jump in I think um the I'd like the maybe it would I should have said this before after the approach um because it's really a more comment on the approach than this particular hospital but I think the approach I really like the approach I think um having the metrics is super helpful as a comparison point um so I am for this hospital I'm comfortable with the staff recommendation any other comments from Tom or Tom about the approach the data that you've seen or the recommendation so are we looking to vote on this now if if board members are comfortable voting on this now we can um if you have questions you know feel free to ask them I think the plan from um Sarah Lindbergh and her team was to begin walking through some of the recommendations uh for the hospitals that have you know their recommending approval today or you know their recommending approval as submitted I think there's three hospitals and then I think there's hospitals that that need a deeper dive based on the assumption tests that have been given and so I think we'll spend a little bit more time on those but again we want to spend as much time as board members need on each of these hospitals so these are the hospitals that the the staff felt um justified potentially uh approval as submitted so you can talk about them as much as we like we can keep going if you feel like that's necessary it's really up to the board members well I'm you know southwestern in terms of kind of my own little cheat sheet here was at the top of list as well um and um and uh so I'm but I'm just need to take a few minutes to kind of think about this hospital hospital context versus a more strategic context um uh relative to um you know commercial rates and you know and fpp and other kinds of more strategic things that that we might be worried about but um so I guess I'll have to make a decision here just a question just process wise would it make sense to take an early would it make sense to go through I don't know if this works for Tom or Jess for what you've planned but either we could go through the three hospitals and then take our lunch break or we could take our lunch break now so that the board members could take a look at those three hospitals before a vote um I don't know I'm happy with either approach but just wanted to throw that out as an idea yeah I mean maybe what would be helpful is for um Sarah maybe go through the three hospitals that you're thinking you know might be right for approval as submitted and then we'll take a lunch recess and we can come back and vote on those three hospitals if the board feels ready to vote on those three hospitals and then we can continue on your trajectory of the other hospitals so how does that sound Sarah and other board members be simple yep Tom is that something Tom and Tom yeah no I'm fine with that I mean the thing I'm trying to wrap my head around is the commercial rate overall I mean that uh you know here we have you know top side 302 million dollars is the request across all hospitals you know and the commercial rate comprises 78.1 percent of all of that and that's what I worry about I mean I worry you know I just want to make sure that that there's a point in time in this process where where the commercial rate gets addressed and I don't think it's with this hospital that you know this um so um but at some point in time uh I'm yeah I'm fine with with good going hospital by hospital it just I just so why don't we do that I think what we'll Sarah will do is she'll go through these hospitals we're not going to vote before lunch I see Ham Davis your hand is raised I'll also note that we will not vote before there's public comment so I will we will offer an opportunity for that as well so why don't we'll why don't you go through Sarah the then these first three hospitals we will then have a recess and we will come back and and if the board feels comfortable with making some decisions on those three hospitals we'll do that sounds great um not necessarily super related but I just was reminded recently how great recess is um from my new kindergartener it's a great time so I should not forget that um all right so uh the second one is uh northwestern medical center um so uh I sent out some late breaking news last night but um Stephanie reached out yesterday to say that they had some favorable changes to their um projections and uh it resulted in a material change to their expected margin so they asked to um officially change their request for the change in charge from 9.4 percent to 9.0 percent I hope I got that decimal point right um but the 9.0 is is correct so that they requested um to change uh their rate request to that so uh I think we were able to update their exhibits accordingly but if there are any deltas here that's just due to a time crunch and we can uh make double check those uh on the recess to make sure that uh they're they're correct but I believe they are so uh so here yeah so the um if we uh so the other thing we need to factor in for northwest is the provider transfer so because practices were transferred out we need to make that adjustment on their previous budget year so once we do that um that you know their their request um you know is actually 8.6 percent so this has got the actual approved budget from last year which is not quite accurate so that um change would be 4.5 percent that 4.5 percent should say 8.6 which will get uh corrected in the the recess and their effective commercial change is right in front of me 5.4 percent so um and then we have that change in charge which uh sugars out to um a net uh dollar increase um of 5.2 million over their last year budget all right and so if we walk them through the tests um so again once we adjust for both the provider transfer and look at the projection to the actual we see that their growth is 5.4 percent so that is within the guidance a bit below the median uh their compensation growth 4.8 percent also below the median um other inflationary growth estimated at 1.7 percent also below the median um and uh utilization projections were negative 2.0 percent uh the record was pretty clear about how they were estimating that they are certainly facing a lot of pressure in terms of capacity but it seems like they're kind of right sizing that so that seemed pretty clear in the record uh to staff uh so the effective uh commercial rate was estimated to be a 6.0 percent increase which is again below that median of 8 percent um in a 1 percent operating margin so they already have adjusted um their commercial rate to keep that consistent so these favorable economic um changes which is the medicare ips uh change as well as that um fiscal year 22 dish payment which they were notified about so that's really what's changed it for them so here we see a pattern not like the rest of the state so uh they were pretty close to inflationary charge approvals uh and then went below for fiscal year um 16 and 17 were right near it for fiscal years 18 and 19 um in 20 a little bit above um and then kind of more in line with other state charge increases in fiscal year 21 so um that is uh their historical um comparison to that medical inflation and there's the um suggested motion language uh the 9.4 is in brackets because that's the one that uh if we honor the request would be reduced to 9.0 percent so that's why that value is in brackets any questions or discussion on the northwestern material before I move on to the third hospital okay um so coply hospital um so here we see um their uh growth um being uh 12.1 budget to budget um versus 4.2 um from projection to budget so again that's that big difference uh we do see you know their growth rate does seem to be above the all-pair model range but as I think was um pretty clearly articulated in their presentation um some of their growth um might be that they're starting at a lower base due to some uh relatively lower compensation rates historically so um I also think that they have been uh increasing capacity that explains some of this we have to remember this is more than um more than just price that's also factoring in utilization um and then that uh commercial if you look at the overall change in charge it's uh 12 percent but estimated to be 8 percent in the net commercial effect which is a 9.6 percent uh net patient increase and so if we walk coply through our tests um their growth in npr 4.2 percent is within the test below the median compensation growth is a little bit above the median they also are um working on kind of trying to evolve their facilities to address community needs so some of that is um actually shifting um to in-house labor so um that's one place where the travelers discrepancies are a little tricky for us to tease out but um felt like it was within the test boundary of 13.8 for sure uh pretty low uh other inflationary growth so um they're they estimated a 0.6 percent growth which is uh you know very pretty you know relatively low compared to what we saw from other hospitals um a little bit of a dip in utilization um that seems supported in the record i'm just trying to uh you really get it right with all this crazy pandemic stuff um and then their 8.0 percent rate is right at the median for the effective commercial change for a 1.6 operating margin which is right at the median of all the asks that we've gotten so um for these reasons so we thought that they um that they should be approved as submitted um here again um with those uh not keeping up with inflation and the kind of longer term price uh decreases that coply's experience we definitely see a few years where the charge increase has been below inflation for them from fiscal year 16 to 18 with some rebounding particularly in fiscal year 20 and right along the kind of state typical area for fiscal year 21 so that would be the suggested motion language so any discussions or questions that we want to review for coply before we break for you to digest this i will definitely open it up for some public comment ham if you can hold on but i just want to make sure that the board members have their questions uh answered of sarah i don't have any questions for sarah thank you okay comment ham don't okay so i think at this point in time i will open it up for any kind of public comment about what the information that's presented so far uh we will then take uh an hour recess um so board members can think about these three hospitals and uh we will then come back from that and potentially vote on these three hospitals and board members feel comfortable with that if they don't we will keep moving on so at this point um i see your hand is raised ham would you like to make a comment and not on the subject madam chair i i'm just i'm all the only slide i have seen is the very first one hospital budget decision schedule i'm is that just me because i've not can't see any of the subsequent uh slides by sarah am i that's is everybody else i don't i don't know what that's just me i don't know what i do i don't comment on the substance at all okay i i i'm not sure if there's anybody else having a difficult time seeing slides please um raise your hand okay ham i'm not seeing any other hands raised so maybe during the break it might be possible for somebody from our staff to give you a call and see if there's something that we can do to help you with on your end but i'm not seeing any other um concerns about not being able to see the slides oh i would thank you where the slides are posted that would be another way well i can't i mean i can't follow i i i see one slide and i it's hard to follow the discussion without seeing the slide that she's working that's not okay madam chair this is susan barrett i'll reach out to mr davis and we'll get him situated thank you sorry about that ham we'll fix that for you thank you um board member wash i see your hand raised thank you uh jess sarah could you go back just a couple slides for coplay so here it looks like the mpr growth would be 4.2 on the slide we ended on it's 12.1 and i i seem to miss that yeah so i think there's two things going on so 12.1 is the budget to budget so we're looking at the projection to budget so that's one and then um the other issue sorry can i just interrupt 12.1 uh tom is the budget to budget growth and npr the 4.2 is the fiscal year 22 projection to fiscal year 23 budget that's the 12.1 versus the 4.2 and when you flip the side the test that the staff is using is the projected to budget test so that's why the 4.2 is there does that make sense um yes i followed that but i thought on the on the prior two hospitals the final slide was suggested language use the projected so this would be 4.5 yeah so we um because the guidance says we're going to make these decisions from budget budget to budget we're kind of backing into what the associated budget to budget increases but we're deciding or recommending that the meaningful measure is projection to um actual budget right in the okay i was because i think it relates to board member lunges question about do we you know make a motion that allows us to use the projected to budget in our motions is that correct board member lunge i mean that's something that the legal team can help us think about maybe over the recess is what the the actual motion language should have in it i see russ is here maybe he has a thought on that yeah sorry this is russ if i can jump in with two things um the reason that we have budget well one reason that we have budget to budget in the motion language is that it's very clear what the approved budget npr fpv was for 22 so it's very clear what it'll be for 23 when you talk about projections that those are projections made as of a certain date and you know we're using the projections that we have that have been supplied by hospitals but they those projections may change so it's clearer in the motion language to reference the increase from the prior budget i think to board member lunges question before um i've been doing a little bit of thinking of it and uh it may be prudent for the board to explicitly recognize that um because of a lot of variation in hospital budget performance which um the board may i think reasonably determine is attributed to uh some impact from covid that the board is um expanding on its guidance a little bit to allow consideration of budgets that are within the 8.6 projection to budget not just budget to budget um under the guidance and the rule um the board is allowed to look at prior hospital performance and so it's not what we're doing is not unsupported otherwise but i do think it it may be a good idea to formally recognize that that is a consideration that the staff is making in in um you know as part of the budget analysis and presentation here but i'm happy to discuss that um or think about that a little bit more over the lunch break as well great thank you for that um but the other board member questions at this point okay one of the things susan and sarah i'm gonna ask if you would be willing to post the slides um that you have for this morning session um maybe up through what you're anticipating we'll get through this afternoon um on the on the website so for those who are having a difficult time seeing the slides they will be able to do so if for ham and for anybody else they want to deeper dive into the slides uh at this point in time ham i see your hand is raised is that from before okay i think that may have been from before so at this point in time it's 11 25 and i think what we'll do is we'll take if there's no objections from the board members i think we'll take a recess for an hour an hour and five minutes we'll come back at 12 30 and we will resume um with a discussion of these three hospitals and potentially we'll at least have a some sense of where the staff is coming in on a few more okay all right thank you very much we'll see you at 12 30