 Good morning everyone, the first item on the agenda will not have any executive director's report minutes of Wednesday, September 4th. Is there a motion? Second. It's been moved and seconded to approve the minutes of Wednesday, September 4th without any additions, deletions, or corrections. Is there any discussion? Seeing none, I'll as a favor signify by saying aye. Aye. Any opposed? Before we get started I'm going to call on our general counsel to discuss an issue that a member Holmes brought up at the last meeting and that is the treatment of the green network hospitals as one. And he asked, might do some legal research into the statutes of whether or not that was possible, might you give us an update? So, I don't think under our current statutes that we can establish, basically what I understand is that we're as in particular establishing a budget for the network and allowing the network to set the immediate possible budget. Our possible budget statute 18 GSA 9456 requires the board to establish the budget for each hospital and requires each hospital to live within the budget established by the board. And I think effectively it would be delegating some of that authority to the network. Agencies can delegate authority, but there has to be an authorization from the legislature and either express or imply that we have that here. We do have a delegation statute that allows the board to delegate powers to staff or individual board members but it expressly prohibits delegation of the authority to make final decisions and regular toward that. So, I think this is because the statute prevents the board to, like I said, establish the budget for as little as possible. So, I think if the board wanted to go down this route, I think it would be able to get expressed authorization from the legislature in terms of the statute and put it in that respect. And I would say the board might wish to go down that route but we certainly would go down that route unless UVM wanted that route to be taken. So, that's something for UVM to think about and there's time. So, thank you. So, with that I'm going to turn it over to the hospital budget team and we'll proceed with trying to make some more decisions. Patrick. Thank you, Mr. Chair. Good morning everyone. My name is Patrick Rooney. I'm the director of Health Systems Finance of the state of Vermont. To my right is Agatha Kessler. To my far left is Kelly Thoreau and to my near left is Lori Perry, all of which have been integral in creating this process as it has moved forward. So, today to give you a brief overview, this is our agenda. We're going to continue with Northeastern from Monday's hearing. Move on to Mount Scutney and then we will work into a discussion on Central Vermont which came in on Monday. Lori and Agatha will be discussing that with the audience. Porter Medical Center has a projection update that when we walk through along with provider transfers and then from there with all that information we're moving to the network's various hospitals for deliberation and for approval. So, with that, we move on to Northeastern. Staff really had nothing further to say on this matter. There were some additional items that were requested from Northeastern which were provided by yesterday's staff and then forwarded to the board. So, with that, we will turn it over to the board for discussion. So, I just want to make sure that all the board members saw the follow-up that we received including the chair. Do you want to receive that and saw it last night? Okay. Discussion from the board. One thing I want to talk about is the NPR and I know you have a recommendation potentially reduced to four and a half to five percent. But just wanted to make sure everyone was aware that most of the change from their forecast is occurring in 2019. So, they're up 7.7 percent from their forecast in 18 to their 19 projection. And the 19 projection to the 20 budget is three and a half percent. So, if we were to go to four and a half percent, for instance, that would be one percent over the prior year. And five percent would be one and a half percent. So, I just want to make sure we're aware that bringing that number down because it's against budget. When we look at where they're trying to implement the prior year would be a relatively low change. And considering the fact that they've talked about movement from New Hampshire and other things. I know we said some things about ED and stuff, but I wouldn't imagine that that would create just a year of year of one percent in this. So, just wanted to put that out as we're going through. So, as I thought about this one, this is one that has troubled me because it has seen growth in NPR. I think I acknowledge that they are getting more people through the doors. The same token I'd like to see us send at least a token message. My suggestion, which may not have any merit, is just to reduce the charge to three. And that would result in a .2 percent reduction in NPR. Is that right? Correct. So, that would bring the NPR down to seven. So, I have a slightly different suggestion. I think it will actually help you to actually hear going. So, I am cautious about reducing charges if they're within reasonable inflation. So, three point five percent is within reasonable inflation. They themselves have already submitted a way for us to get them to 6.85 if my calculation is right, which could be wrong. They have already commended and said that they can do some work in their ED avoidable utilization that saves 310,000 off NPR. They've reduced their budgeted ED visits from 15,000 to 14,000 roughly. And they've increased what they hope to see in their convenience care from 1,000 to 1,500 to have their questions from the board about avoidable ED visits and what they could do. So, that impact seems to be at least roughly around .35 percent or something that we already know we're chatting this morning. So, I think that hits them under 7 percent at about 6.85 that we can have the actual calculations made. But that would reflect at least the recognition that they are seeing through those issues in New Hampshire. And their case mix index is growing, as we've seen from the video from BASC. And this is real body. And I don't think they're going to be closing their doors for real body. But I do appreciate the attempt to reduce avoidable ED visits, which they do have some control over. And they're going to put some programs and things to do that. And that does affect NPR. As long as it actually happens. I mean, we've seen NPR above budget this year. I'm just saying that's the way to get the NPR down. Other thoughts? I can support having either half percent or even percent reduction in commercial based on the fact that they are exceeding their 2019 projections and are leveraging some of that to improve their margin. And I still would have a hard time thinking that they would only, even if they went down to the 6.8, that would be less than the 3.5 percent in their hospital that has been up 9 percent, 7 percent, then 2 percent, then 8 percent. They consistently exceed the numbers. And, you know, it's an opportunity to look at what levers they should be getting from exceeding significantly those numbers. So a couple things. One is that Northeastern has, over the last five years, the highest NPR growth rate of all 14 hospitals. And it's a very high number. It's a 6.4 percent compounded average growth rate over that period of time. So I think that's significant. I also worry a little bit about the shifting from budget to budget to projections of budget because there's a little creep in there that we are kind of forgiving what happens from budget to projection and then looking at the population off of the projected budget. That's one way to get to a 6 percent growth rate. But I think if that is their approach to what they need to meet utilization increases, traffic coming from the hamper, et cetera, on an NPR side, that's fine. But I could support the reduction in the rate just to give a practical message. This long-term growth rate is difficult. And as Maureen has often said, if hospitals, when they get in trouble, all of a sudden, you know, they can address their expenses. And so having a message from the board that addressing the expense growth at Northeastern is something that could be on the front burner. I think I also am on board with a strong reduction in charge, which for me will mean that when we come to enforcement time that I will be more likely to, I will definitely want to take that into consideration for enforcement. So it's not like a double whammy kind of thing. But I do think that we are, what we're asking in the all-parent model is for hospitals to move towards what is essentially a global budget. And our only tool right now to really effectuate that MSP for service system is to kind of trade volume for charge. So I think I've been fairly consistent over the last couple years in my thinking around that. So that's why I am supportive of that approach. I hear what you're saying as well, Jess, because I do appreciate that ED utilization is high. I do want to see them address that. And I do worry that that may take longer to implement. But what I'm seeing on the fence right now is trying to think through is whether I might support both approaches, which would be a higher decrease. That's quite high. If we reduce the hospital's rates, affects the gross revenue, then usually it flows through to NPR. But if you don't want to have the NPR affected, you should give direction that they should reduce their rate, but also take corresponding adjustments to contract the allowances of NPR. I would want to, personally, I would want to affect the NPR. Yeah, I would want to affect the NPR. I think also it's to talk about the process a little bit. I mean, we've brought up a few times during this course that people can come in for a mid-year adjustment. And, you know, when you're only up by a percent or half a percent, you know, but this is, they're up significantly from where they were supposed to come in. They're up, you know, 7.7 percent. They're up 3 or 4 percent over where they were projected to be. And that doesn't just happen at the end of the year, you know, and this could be addressed earlier rather than wait until at this time and then come in. We're just getting higher, you know, higher people coming in and we have a higher NPR. So half a percent reduction is about $185,000, which also should be targeted to additional cost-saving efficiencies. And I would say it would reduce, should reduce the NPR, but I also would put out to this hospital, if this continues in 20, which it very well could because for the past several years, your average has been 8 percent. So if you really, this number would be, again, from where you're coming out right now would be a 3.4 percent probably change from your current estimate assuming that's where you end the year at. And every year, for the past several years, it's been on average significantly higher than that, 7 percent, 8 percent, 9 percent. And then when we come in, we're getting more volume, we're getting more people from out of state, et cetera. So I would just say, you know, for this one, let's watch it during the course of the year and see where you're coming in. And if in fact you're higher, come in for a mid-year adjustment and address it at home. Would anybody like to make a motion? I can move. I knew that we approved Northeastern's budget with a 3 percent overall change in charge and a corresponding decrease in NPR, which I think would bring them to 7 percent. Would it bring it just under 7? I could also, we could just say bring it with a corresponding decrease to NPR and allow staff time to calculate that. What do you call it though? Okay, so I think the motion would be move to decrease, move to approve Northeastern's budget with an overall change in charge of 3 percent and a corresponding decrease in NPR to be calculated by the staff. And with quarterly reporting on cost savings initiatives. So let me just understand, we could lower NPR more by having them do the program having changes to reduce ED elimination as they are in the fourth. I guess just what we're saying is that each year we've set an NPR limit and they've exceeded it. So what faith would we have if we just did the 6.85 and the ED changes that would actually come to fruition? I think they're going to need to do the ED utilization and they should do that for efficiencies to get to where they need to be because this number we're giving now would be a 3.3 percent year over year change to where their actuals are coming. If their actuals come in where they say and they still could exceed that number, so it could even be a lower number by the time we get to the end of the year. And to think that this hospital will be one of the lower hospitals year over year is challenged to think that that would be lower than most of the other hospitals. So in order to get to 3.3 and also budgeting is not a perfect sign. So we know there's going to be swings in budgets and that happens from day one. So I think they would be trying to make those effective changes. So I guess I can support this motion to the extent that I look back on their charges. I concur to them on the other roof, but looking at their charges, they've been a five year average is actually at 4 percent. So it's not like we've been over-correcting and we've been having charges that are below multiplication of low inflation in the past five years or so. It's not the way we prefer it, but. Is there a second for the motion? I'll second. Is there further discussion? Before we vote, is there a comment from the public? Yes. Hi, Bob. I'm sorry. Can I hear you again? Sure. Bob. You're going to both reduce the $310,000 and 0.5 percent or just 0.5 percent? It's the 0.5 percent with a corresponding reduction in the NPR. Thank you. Is there other public comment? Dale. I picked up on the idea of they know if they're going to be over, not under, but they can figure out happily through their year if they need to come in and ask for an adjustment in theory to make it simple. If you realize six months into the year, you're 7 percent over. How do you really know that you are going to keep that rate though for the rest of the year? What if you trend closer to zero? We've seen some possible budgets come in that have some really profound changes over six months compared to the previous six months. I'm not saying it would be that drastic, but then when you average it out, no matter what you saw in the monthly, you might get 3.5. You might get 4. You might be lower. It all depends on what happens. What if you lose a practice? What if you lose things can really shift very fast? I'm a little hesitant to say they can come in and ask for an adjustment without a better definition of what that really means. Only a hospital really knows their personality, therefore. If they do have things on the horizon like a provider leaving or something, that makes a difference. Or a doctor leaving, so very simple terms. I'm a little hesitant in hearing the conversation. I get it, but does that really deal with it when they come in? Or is there more to it than just do they come in? The other one is if they're over in their revenues, is it just about changing all the things we talk about to get them to bounce out? I begin to ask myself the question, as the revenue is over, is it really a distribution issue as far as take the revenue and put it where as far as resource and investment? We've actually asked that question before. Is that still on the table? Is that something to be considered at times? If you accumulate all of these over, is that a way of building reserves? Not really, or is it? Because we know there's going to be fluctuations from year to year. Is that part of the problem? We're trying to take away when we're over, which really hurts us when they're under. And they're coming. So I guess my response would be, Dale, that in this particular case, it's not a long-time event. It's a trip. And even with the reduction that's being considered, it's double what the guidance was for in that role. Other members of the public? Seeing none, I'll pose a prayer for the motion, signified by saying aye. Aye. Any opposed? Patrick. New business we have today is Mount Scudden. Their request is 7.4% over their fiscal 19 budget, 6.5% over their fiscal 19 projection. Insighting the two reasons for the proposed increase. One was trickled down from Springfield, and the other was growth in primary care due to the restoration of FTEs in their primary care business. Other hospitals have also cited the trickle down effect from Springfield since December. As staff, because there's other hospitals saying if you believe that patient growth is probably finite to some degree. However, when citing their physician growth through the restoration of FTEs, they did acknowledge that. It will take some time for them to bring those FTEs online so they are slowly orienting them, which will cause some slowdown in growth in that area. However, they do plan to bring on 1,500 patients that they've lost prior to having those physicians on staff. Our recommendation here would be to reduce the NPR 4.5%. Their five-year cater is 4.3% on NPR, so we feel that this is appropriate. Probably towards a higher range of five to absorb the business from Springfield and to get those physicians acclimated to their new practices. Leaving the change in charge in place. This is a hospital that is currently running in the red. Our recommendation would be to maintain that bottom line and rebuild cash reserves as well. A continued ongoing discussion that we would also recommend is the ACO Reserve matter, which can be discussed today or continued in the future as we move forward. That is all on that discussion for now. We've gone back a couple of times and we've asked them to clarify how they're getting to their NPR. I understand some of the challenges that they have with a lot of uncertainty around what's happened with ACO, with medical payments, etc. But I just want to be clear that for about 1.2 million of their growth, they're saying is greater than volume slash intensity. And it's due to the annual dish loss, the reduction of other operating revenue and ACO related expenses. So they've increased their NPR to be able to offset this for what they told us in order to get to a correct operating margin. But they haven't displayed how they're going to get that increase. They've already showed us what's coming from Springfield, where it's coming from everywhere else. This is what we struggled for when we had a meeting with them. They were plugging the number up top, not just by changing charge, which is not that significant at 3.2%, but they were getting to that number in order to get to the operating margin that they wanted at the bottom line. But they didn't show how they're going to get that increased volume. So that's the challenge with this one. I think it's again a bit aspirational at the top. And they said the reason we're putting this number in is because we've had all these things that are impacting us, and therefore we need to add it to the top line. So I support what you're saying with the reduction. And this is another one where it just looks like that's where they're trending and that's where they're going to come in. And we're not trying to say cut your services. And there was some discussion about what do we mean when we say cut expenses towards this. We're trying to not have a Springfield again to be really blunt. I'm not worried about that so much with Matt and Scott maybe because of their backing with Dartmouth. But when people put these top line numbers up there because they have expensive loans they need to carry and they don't get the top line number, they lose a lot more money. And this as well as some of the other hospitals where we reduced the top line to for Grace and for Bralover, those were the reasons. It's saying we haven't seen how this trend is supported. So that's what we've been struggling with this and we got a response again last night. And if I'm reading it correctly they're saying, you know, the rest of the NPR growth, this million two, is really just related to these factors which put it on the top line. But didn't give a support of we have higher utilization, we've got more people coming from Springfield. That was already all factored in. And they understand their struggle, but just to put a number up top and expect it's going to happen and have all the corresponding expenses, that's a real challenge. So, you know, I'm okay with the charge rate, I'm okay. You know, for right now, I'm part of that. I do think there's some conservatism in what they're doing with the ACL reserve risk and what's happening with the Medicaid double payment and how they're booking that through, you know, all things that they cited. And so I think there's just a lot of uncertainty in their numbers. But I don't see how they'll get the top line. I'm just going to concur completely with Maureen and I can say anything else when I'm not. So my thought is they've actually backed out with that other NPSR growth is 2.33%. So I would say a trim from the 7.4 minus the 2.3 would get you to about 5.1. So that's where I'm landing. And I also am comfortable with the charge I've submitted, 2.2. Other thoughts? I'm comfortable with 5 to 5.1 as well and the charge has submitted. In terms of the ACL reserve discussion, I think that makes more sense to do kind of broadly and not necessarily tie it to this one hospital's budget order. So I agree that we should have that, but I wouldn't necessarily include it specifically in this budget order. Just because we haven't been including it in other budget orders. And I tend to agree with you on that, Robin. I think that as hard as we've tried in the past year to try to get some uniformity and not treat the ACL reserves, it's been a loser. Yeah, and it's ongoing work that we'll need to continue to do broadly with all the hospitals. So I'm looking at their, again, five year trend and they're one of the better hospitals in the system with a 2019 projection over the 2014 growth rate at 2.4%. And I, like Maureen and others, I have not gotten clarity on how they're going to get to the top line. And it's, I mean, there's two courses to take is to give them what they ask and then have them come in mid-year or after the first quarter and take a look at how they're actually doing. Once some of the dust settles around this Medicare bill back issue in Springfield and all the issues that they kind of laid out as moving parts that haven't resolved yet, in order to take a more conservative approach. And if things do shake out in a way that's capable to them, then respond to it then. So, you know, I can get to the 5% growth rate. Would somebody like to make a motion? I know that we've pushed Donna Stetney's budget with a 5% NPR. It's been moved and seconded to approve Donna Stetney. We have a 5% NPR and a 3.2% change in charge. Is there further discussion? Do you have any comment about this? I think to be consistent we would want to include the same language that we include with the other NPR reductions around the concern that the expense reflect NPR change. But just on that point, we did get a letter from Vaz asking for clarification around that. And just for myself, I thought I would say what I was thinking, which is I see it that as an intent kind of statement. But I personally don't want to micromanage how the hospital, what exactly they do. So I don't see it necessarily as, for me, I would require that it be one-to-one. I would leave that to their discretion and with their board of directors to figure out the right way to address the NPR change. But I think it's important to Maureen's point that she's made throughout the hearing process that expense reduction is a concern to us. So I would maybe express it in the order in that fashion. And I think it was right for Jeff King to call us out on that because I could have interpreted it in so many ways. Absolutely. Whether it's a dollar reduction or one-to-one reduction or what have you. And so I actually agree with you. I think it should be more of an intent portion and not trying to hold people steadfast to reaching that one-to-one reduction. Obviously it moves in to try to reduce expenses as much as possible so that they can try to keep up an operating margin and without a margin there's no emissions. So does any number of the board object to it being strictly an intent? No. I'm blinded at being an intent. And I just want to, you know, refer now also to the letter we got from Voss. The three hospitals that have re-overduced their top line have not supported how they're going to get to their top line numbers. And all of these hospitals, two of the three, if not, might have spent me as well, have missed their top line objectives the past several years and then missed their bottom line objectives. And, you know, we did this with Springfield for the past two years. We said you're not going to hit these numbers, what's going on. And these hospitals are showing the same characteristics. And I would actually put out there and hope that Voss would be helping these hospitals. These boards would be looking at with these hospitals and aligning their top line and bottom line to where they can realistically, what they can realistically achieve. It's not trying to say cut your services, cut what's going on. It's really saying you haven't shown that you're going to get these numbers. And we're looking, you know, at the trends, at the history of hospitals that have repeatedly missed their top line. And then those same hospitals repeatedly missed their bottom line because at that point they can't react to changes in expenses. So it's really trying to say, I think it needs to go back to their boards. And again, if they can really come back and say, oh no, we're really going to be at 7%, when we've missed the past several years, we're 12% per hospital that's done that. Three times in a row come in with numbers at double digits and miss them significantly and then miss their bottom line. That's what we're trying to prevent and just want to make that part really clear. So yeah, it needs to, we're not going to micromanage it or I don't feel we should. It needs to be up to those hospitals to go back and reflect what those expense loads need to be in order to make a margin that is sustainable for them. And that big part here is sustainability and making sure that they get to profits each year. So just to make sure that I have the protocol and the parliamentary procedure correct, I believe that what I've heard is that the maker of the motion in the second year have agreed to a friendly amendment or a reduction in expenses within 10 language only. Yeah. Who's seconded that? Right. Are you agree with all of that? Yes, sir. Yes, sir. Okay, further discussion from the board? If not, I would open it up to the public for discussion. Yes, John. I promise myself I won't say your name. John Bromstead. I promised myself I wasn't going to comment today, but more mean what you just said cut to the absolute heart of the matter. Yesterday or two days ago, Kaiser Family News put out another article about the struggle of rural hospitals. You had an excellent symposium in April. I would riff off your comments that the way to address that issue, that adjusting the expense base to be in sync with the reality of the net patient revenue coming in. You've heard it from the gentleman from Stroudwater. The only way to do that is to be willing to adjust the bouquet of services that you're providing in your community. And the only way to do that with conscience is to be part of a system. And, you know, I would ask, as you deliberate or as staff brings forward your budget orders for standalone hospitals, that you emphasize the fact that there is a pathway to success here. It's hard. It takes time. It gives us time. The CET, Vermont's story or the Porter story. But it's accomplishable and we have to do... We have to pay attention to the financial realities and learn our lessons from where there have been successes in rural America. Thanks. The good news in this particular case is books asked to the ASAP have really done a turn around. There is a work report. Is there a public comment? I'm just a question, Mr. Chairman, is, does the motion take out the aspirational piece that Maureen is talking about? I'm just trying to see if I'm interpreting the motion correctly. You're asking me to define the aspirational. What Maureen is saying is that some of the increase in net patient revenue is supported by X, Y, and Z facts and some isn't, and what I'm asking is, does the motion take out the aspirational piece? It takes out what they specifically said was driven from non-volume or intensity related increase to their NPSR, so it takes that million one out. Whether a 5% is still aspirational, their history has been 17, they're up 4%, and 18, they're up 5.3%. This year they're only up 1.6% to their projection, and next year they would be up 5%. So history of 5%, I think it takes out the aspirational, but we never know for sure. I only know it, but that's the intent of the motion. I actually think you could go up to 5.1 and take another discussion from the public. Seeing none, all those in favor of the motion signify by saying aye. Aye. Any opposed? An after. Thank you, Mr. Chairman. With that, we're going to transition here to some reviewing updates on two of the UVM Health Network's hospitals in central Vermont in order. In addition to that, we are going to discuss some of the provider transfers and how many changes that they have requested, and you'll be able to vote on those as you go, or you can push them back and vote on them with the budget. And with that, in return of the Lord, you can discuss the updated central Vermont Medical Center budget. Central Vermont came to us on Monday with a revised projection and budget. As of that date, we are seeing their budget projection variance 19 to 19 is a negative 2.2%. Their 19 budget is still at 211, 387, 021. And the budget request now is 218,247. This is a 3.1% increase over their 19 budget. And it is a 5.4% increase over their 19 projection. Their 19 projection over the 18 actual to 6.3%. This possible variance triggers the 5% cap that was in our hospital budget guidance. The request does not comply with budget guidance. But the growth rate impacted by requested, with the growth rate impacted by requested adjustments. This hospital is asking for 3% overall change in charge and a 5.9% commercial change in charge. The hospital gives their justification for this increase in the MPR due to case mix conducts, unique patients. They're also adjusting their MPR because provided transfers. They have an accounting adjustment due to reclassification of bad debt collection fees. They're also an accounting adjustment for reclassification of payment reform investments to and pair of deductions. They're saying the change in charge to cover annual inflation on commercial business and support long term operating margins. The hospital's original projection for 19 is shown here when they submitted in July 1st. Then we ask them questions on August 9th. They changed their projection from 209 million to 205 million. And then as of this last week is 206 million. So they increased a little bit. The operating margin on July 1st was 678,000. Then on August 9th they went to a negative 4.3 million. And then that increased it a little bit or improved a little bit of a negative 4 million. The budget for 20 until July 1st was 222 million. We didn't have an update on August 9th and now we've come in for a $218 million budget. The growth for their budget on July 1st was the 5%. And then as of the other day it's 3.1. Then the applicant could really provide a transfers. This is a summary of the transfers and accounting adjustments that's centered on medical centers proposing. And the next few slides will break that into more detail. But in summary you can see that there's three practices we're going to review. Oncology, Hormonology and Dermatology. And the effect on MPR is detailed below. So oncology would have an overall effect bringing MPR down by 0.9. Hormonology down by 0.3 and dermatology down by 0.3. The combined effect of all three would be 1.6. We can MPR down by minus 1.6%. And then for the accounting adjustments, there are two accounting adjustments. One is to reclassify bad debt collection fees through expenses. That brings effectively money out of MPR. So it brings their MPR down by minus 0.4%. And then the accounting adjustment works the other way. It's money coming into MPR and that would affect increased MPR by 0.8%. The accounting changes, the way that we're looking at this is this is creating the effective rate. This is the apples to apples accounting of what happened in FY19. If you slide that same accounting practice at FY20. Those are the impacts that you would see. Whereas the provider transfers, those are justifications for the growth. So the details of this will start with the practices, the provider transfers, pulmonology. In 2018, the Remount and Care Board approved the acquisition of a pulmonology practice. It was an independent pulmonologist who was practicing in the community. And he was brought into Central Vermont Medical Center. It was a 0.4 FTE at the time. The inpatient pulmonology practice was brought in at that time. This request for FY20 is to bring on the outpatient component of that. This independent provider is retiring at Central Vermont, replacing them with a full-time FTE. So this is staff who sort of look at this as a follow up volume. The full scope of the volume is now being brought to Central Vermont Medical Center. The hospital presented that their wait time to see a pulmonologist is three to four months. So this would alleviate that access to care ratio. So this is, you'll see that staff recommended approving this. This would be a 692,000 impact on MPR. And we recommended approving this to reflect the full scope of the volume that was already approved in 2018. Is it the board's pleasure to look at these one at a time and make a motion or look at them from the entirety of the way? I think it actually might be easiest to do it one at a time. I think so too, but I just wanted to make sure that I'm not, is everybody okay with that? So would someone like to make a motion on the pulmonology practice? I would move a result of the provider transfer request for the pulmonology practice which results in a negative concrete impact on it. I've been moved and seconded to approve the request. And I just want to say that these three practices under the initial budget submission, I thought were highly questionable. And I thought that President Newman did a really good job of coming in and explaining why it was off base. And I appreciate it. And we're setting it right there straight. Is there other discussion? Is there any member of the public that wishes to say anything? Seeing none, all those in favor of approving the provider transfer practice request for pulmonology. All those in favor, signify by saying aye. Aye. Any opposed? Great, and I just wanted to point out that their minus 2.2% triggers the 5% which would essentially give them an allowable impaired growth rate of 2.8. And the approval of the pulmonology practice basically brings them into the planet. So I wanted to just point that out and move forward. So next is dermatology. This is very similar to pulmonology in that it's representing the full scope of the practice. So in 2018, the Green Mountain Care Board approved central pulmonological center to acquire dermatology patients. This was not a case where the independent provider was now hospital employed. This was a case where independent provider, providers ceased to operate. And so the hospital brought those patients on at the time it was a 0.4 FTE. So it was not the full scope of the practice. Now they are requesting to add another 0.8 FTE to alleviate the wait times that they're seeing as a 35-day wait time to see a dermatologist right now. So staff, we see this similar to the pulmonology practice that this request is a follow-up to reflect the full scope of the volume from that initial transfer that was approved in 2018. The MPR impact is 731,000, and it affects MPR. It would effectively bring MPR down by 0.3%. And as you can see here, we recommend approving this. Okay, have questions from the board? Before we need to make a point, let me just clarify that what the board is approving is an impact on the budget, not the actual answer to this. Correct. Thank you. Yeah, we don't have that authority. Yes, that's on the board. Yeah. Any further discussion? Anyone like to make a motion? I move we approve CBNC's request to adjust their facility to reflect the full scope of volume associated with the previously approved dermatology acquisition. Is there a second? Second. It's been moved and seconded. Is there further discussion? Seeing none, is there any number of public that wishes to say anything on this motion? Yeah. Could you ask whether any of these dermatologists are Mohs surgeons? So I think I need you to repeat it because I don't think I heard what you said. If you ask, do you know whether any of these dermatologists and new dermatologists are Mohs surgeons? Hey, John? No, they're not. There's Mohs is only done in the Academic Medical Center. It's tertiary and quadratic care service. Thank you. Then there's a training program there to wrestle and get in some stunts and stuff. Anyone else from the public? Distraction impact? All right then. Moving on to oncology. Oh, wait a second. You actually have to go. Sorry. All those in favor of the motion signify by saying aye. Aye. Any opposed? Okay. Now after that. I just assumed you would take our recommendation. Okay. Oncology. So in this case, I'll just jump right to the recommendation is that we don't feel that this one is eligible for the provider transfer adjustment. However, we do feel there is a strong case here for access to care. Specifically, their oncology practice justifies their MPR growth. So the details of this are that Central Vermont Medical Center is expanding their oncology coverage due to the increased need in the community for this service, not just in the Central Vermont Medical Center area, but also to get differing complications. So the combination of Central Vermont sending dots to those other hospitals and also patients traveling from those areas to Central Vermont Medical Center. So this is clearly an access to care issue. Their impact on MPR is $2 million and FY $22 million. The current wait time for a new patient to see an oncologist is 19 days and this expansion of the services is 1 FTE. $2 million is a lot. That would be a minus 0.9% impact on their MPR FPP. Just a reminder that now they are in compliance due to the transfers that you just approved. But again, we would say that this is not eligible for the provider transfer adjustment just given the way that mechanism works of bringing independent providers or patients into the hospital, but that we do think that this is a very legitimate justification for their overall MPR growth. Do you have any questions from the board? Anyone? Does anyone want to make a motion? I think we denied the provider transfer of requests to psychology in terms of its impact on it. Is there a second? Second. Is there further discussion? I would just say you guys expressed it elicitly. You know, what why we wouldn't put it in there and I think this is consistency for what we've done, you know, when services increase, but certainly help support their requests and their requests because they're able to go up 5% from where they're currently trending, you know, they don't need this to get there, which makes it a little bit easier in some ways, but I mean, you know, to be consistent, this is how we handle these types of transactions. I just want to second that. I think it's a good investment and I'm happy to see them make the investment given the wait times and the obvious need for this in the community. So I wholeheartedly agree with what you eloquently said. Yeah, I think it's really important that we say it's not that we're not supporting this investment. It doesn't fall under the rules that we have for provider transfers. Any other discussion from the board? Now we'll open it up to public comment. I may not be relevant, but I'm curious whether in dealing with this, that it backs out any services either properly or differently. I mean, in other words, it's obviously increasing oncology care at a larger area than just the hospital service area or central Vermont. I just, but I don't know whether there's oncology services available now and either different or, you know, whether in fact you're getting, that you're changing the mix overall attribution. Yeah, I think my understanding from the hearing was that CVMC is currently providing the oncology services at those two hospitals. So there are some services at the hospital, whether it's CVMC or CVM Network or something. That was my understanding at least from that. Other comment from the public? Seeing none, all those in favor of the motion? Signify by saying aye. Aye. Any opposed? Okay. Team. Excellent. Okay, this last page shows the accounting adjustment. So first column is, I would have a minus 0.4% impact on the NPR. This is reclassifying bad debt collection fees to expenses. The second request is ACL accounting, which would increase NPR by 0.8%. And this is reclassifying payment performance investments to NPR deductions. And these two represent house keeping adjustments. These are changes. They're counting from FY 19 to FY 20. So when we incorporate this into their overall NPR request, again, you're seeing an apples to apples comparison of their actual growth. So in this case, the motion would be more of a recognition of this accounting adjustment as opposed to an approval of the accounting adjustment. Yeah, the question is important. Seeing none, does anyone wish to make a motion? I know we recognize CVMC's accounting adjustments to reclassify bad debt collection fees and to reclassify payment performance investments as NPR deduction. Is there a second? Okay. Further discussion from the board? I think this discussion on the concept of whether or not we're making accounting adjustments, we should be approving accounting adjustments. I mean, I think you need to recognize them. But if that's what their accountants are telling them, we want to make sure we're looking at apples to apples, I would just put out there whether or not we officially need to approve these adjustments. And that being said, precedent would be set in for the future. Last year, we made some adjustments into where they were going to put some ACL fees. And we just wanted to make sure we fully understood where they were and that we were looking at things if in one year it was in one place and the next year it was in another place that we could kind of manually make those adjustments in our mind to adjust the NPR. But just the concept of approving accounting adjustments. Well, I think the language is actually recognized. Yeah. So I think the question is do we need to even know when we'll vote and hear it recognized? I don't know what you mean. Right. But the language is specifically recognized, not approved. Yeah. And I think we already did vote on one of the accounting adjustments in earlier hearings. So for consistency's sake, I would say we vote on it. But I... Yeah, that's just something. Let's put that out for next year. President Petz, we need to address whether we need to recognize that. Okay, that's fine. I just wanted to bring it up. Yeah, yeah. Yeah. And we'll think further from the board. Any comments from the public? Seeing none, all those in favor of the motion signify by saying aye. Aye. Any opposed? I just want to follow up to that, which is that. We do, in our year-to-date reporting, ask the hospitals in the narrative section for updates. And we would expect that. So something like this that's happening mid-year would be brought to our attention. So we'll look at the language of how we're asking that specifically to make it crystal clear that we would need to be notified about such accounting adjustments. Going forward, this is central Vermont's operating performance for fiscal year 19. And as we said, they are expecting to end the year at $206 million. And the budget is $218 million. Your operating margin has been pretty much in the negative or break even since the beginning of the year. And this slide is showing you what is their history for their operating performance. And they have been pretty consistent through the years. We are showing in 2014, $161 million in 2017, $195 million. And now for the projection, like we just mentioned for 19, is $207 million. And the budget is $218 million for NPR. Their operating margin has dropped basically as of fiscal year 17. And they're trying to at least break even $420 million. And we were not able to calculate the days cash on hand for the projection 19 or the budget 20 because of these new numbers. But their age of plant is growing. So they're going to be needing some cash. What was the difficulty in calculating that? We don't have the full budget. We didn't have a balance sheet. And we just had new P&L information. And I'm pretty sure that they committed to working with staff to fill in the blanks. So it will be calculated. The change in charge for such Vermont is 3% overall change in charge and 5.9% for commercial. Again, because of the budget change, we don't have what the NPR change in charge is comparison and the value of 1% change in charge. But their change request from 19 budget to 20 is $656,226 million. This hospital has had an average approved change in charge of 3.2% for the last five years. And this is their ACO information as we've been kind of cruising through these slides in the back and the other hearings. In quarter minutes. Well, we're going to take one at a time. So hopefully you have staff recommendations. Those will be coming up. We have a slide that has the table matrix of deliberation that we're going to get to. But we first want to, you haven't even seen those slides yet for Central and Vermont Medical Center. They were omitted from last Wednesday's presentation. So if you'd like, you can discuss or wait until we get to the recommendation portion. I just assumed focus on one at a time. I don't have a lot of work. Should we put up the recommendations slide? Yes, please. Okay. So with the two appointments this morning, they are now within compliance on MBR and under that 5% cap. This is a hospital as you know that is going through some financial stresses. And even though they're facing their third consecutive year of negative margins, the projected year in figure does represent improvement of almost 50% over a fiscal year in prior year. The updated fiscal year budget, we consider it to be much more reasonable than the initial budget that was presented. And it's certainly attainable if things continue the way they're going there even though they're losing every $4 million at the end of this year as projected that is a significant improvement over prior year in. So there is hope that this will continue. That said, the key factor to the 19 improvement are expected to continue. Consolidation and cost savings measures that they cited in their presentation. The hospital is requesting the 5.9% change in charge to aid with margin recovery, which we hope to see. The request is higher than their five-year average. The 3.2%, which is historically placed them in the bottom median of all the hospitals kind of on the threshold of being in that lower. Quartile. That said, we do want to know if we could be pressed on this in our initial presentations that watching a hospital under financial duress as they are and on the doorstep of EMR implementation, we just want to make it noted that that is a concern of ours. That said, we don't understand that CBMC and UPN helping with leadership are probably going to be monitoring this hospital's rollout of that implementation very closely. But we want to keep it on everyone's mind that those types of implementations have shown in the past with other hospitals that there are revenue cycle issues that need to be ironed out, as well as other data migration factors that go into EMR implementation. So that's something we want to point out because as you can see, we have added an additional recommendation there that if those types of factors begin to impact CBMC's financial recovery, that we would like to have those conversations with CBMC and health network staff should those occur. Overall, we do recommend that you approve the NPR as submitted, the change in charge as submitted, and with the ongoing caveat that there should be bi-monthly monitoring for maintenance of other hospitals under financial duress. The only comment I would make is that I do think that another point that was in the letter of applause was that we burned some of these requests, especially the door bi-monthly meetings and things like this. And this is a hospital that is part of the network. It's not one that I'm worried about being closing the doors on immediately. So I could really wonder if it's necessary to do it bi-monthly. I would hope we could extend that out to at least a full relief. I'm just going to say, I support the NPR request as revised. I think it's kind of the aspiration. I think it's much more realistic. I also support the charge request, although it's high. 5.9, if you look historically, the last three years have been 2.5, 0.7, 2.3. That's not kept pace with medical inflation. So in some sense it's the catch-up that they need to get to the bottom line. One of the things, though, in consistency with the other hospitals, I'll note that they've reduced their NPR, but they didn't reduce their expenses. And so I think the spirit and the intent should be also added to that. We hope that to the extent that they can reduce the variable costs that would have been associated with that volume that's now no longer in their budget until these expenses would come down. I would also like to add this hospital to the list of hospitals that I'd like to see some sort of sustainability plan from. And I have some thoughts about what, I think at the end of our budget conversation, I wanted to share some thoughts. I noticed that we got in the letter from Boss who was sort of, can you put some more framework on a little bit of sustainability plan? So I have some thoughts. I think that we can have a little conversation about that. Obviously incorporate the hospitals in that conversation and see what sustainability plan might look like. So this would be another hospital, given their declining operating margin, the financial health concern, I would add this to the list. Well I think time-wise we're doing pretty darn well, so I think we will have ample opportunity to take that up during the new business. So this is definitely a hospital that's struggling. If not for the backing and support of the network, there would definitely be more concern. I think we should have them in for bi-monthly monitoring. And the reason why is if we look at the past, their expense controls have not been managed well, or there's just a lot going on. If we look at the past two years, their NPR forecast for 2018 was 198, they came in at 195. Their expenses were forecasted to be at 208, they came in at 216, went from what was to be a $4 million operating gain to an $8 million operating loss. When we look at 2019, and I don't know all of the updated numbers, I can kind of adjust, their budget was $211 million, they're coming in at 207 million, their expenses were to be $221 million, making $3 million, their expenses are now $225 million, $226 million, losing $4 million. And now for 2020, they brought down their numbers from what the original submission was to 222 to 218, which I think is prudent to do that. But as Jess said, they've kept their expenses at $234 million and making a break even. And the confidence that they will actually come in at only $234 million and that will be a break even based on the past two-year trends of swings of $10 million and $9 million on the bottom line. I think we've kind of been setting the precedent that we're having these hospitals come back in every couple of months to go through that. And I understand that they're supported by the network, but it hasn't yet been showing that they're able to manage their expenses to their income levels and the changes have been significant. If this were not a hospital that had the backing of the network, we probably would very well be saying this could be one that would be facing much more challenges with their bank covenants, with their sustainability. I mean, it's not sustainable to run that way. Maybe in the future, if we did look at this as a total network and there were some changes, that would help that. But I would be uncomfortable almost giving them a pass of not coming back every two months because they're supported by the network because I don't think that they've been managed well from the expense base to their revenue. And without seeing a different plan as to that's what we want to do, we're trying to run this out of loss each year and we're getting these significant swings. And we had surprises in this process. We got a budget and then that budget changed. We got a forecast and that forecast changed. So it seems that their controls need to be in better place here and with the fact that they're switching to being impacted with Epic and some of that that could additionally create some changes. I don't look at it necessarily as an administrative burden if in fact they actually need to have additional oversight and review in order to get them to be managing more because we don't want to end up with a surprise later on as well. So I just look at adding these things is not necessarily an administrative burden if people were hitting their forecast and coming in where they were planning to be we wouldn't have this. But this is a hospital that's had significant probably some of the most significant swings with losses of 8 million and 4 million. We don't even know if the 4 million loss is realistically where they're going to end up for 2019. And to come in with a break even for next year on 218 million of top line that's not a sustainable long term plan. So I support although the commercial charges is high I think that they need it to get back on track, exploit the NPR. I would just say I do think having them come in two months versus three months it's an additional two times a year versus quarterly I think it's worth it. I couldn't have said it any better I certainly couldn't have said it any better that it is just kind of glaring in a way that you see the revenue drop from 222 the NPR drop from 222 the cost of 234 million that makes my side untouched and I think that has been consistent across all hospitals. There is an expense issue here the mental well of operating expense in 2018 actual was 216 million and now we're jumping to 234 million and that has yet to be part of the discussion in terms of all of these adjustments on the NPR side so I would support having them come in. So I would just say that we require monthly reporting and staff analyzes that monthly report and we all see that there's nothing that would ever prohibit us from calling somebody in quicker for a discussion in this particular case in and see the five minutes down the road so it's probably not a big deal but I do have empathy and it's empathy for all hospitals just don't want to waste anyone's time that's the bottom line for me. By monthly or quarterly which one makes more sense but I do think it probably doesn't make sense to have different improvements so quarterly, by monthly meetings but quarterly reports whatever we decide on the increment I would have if you're going to do a meeting you might as well just do a meeting with all the topics that require necessarily a separate written report that could be handled in the meeting because quite frankly that seems like to me that's what it seems like especially burdensome is having multiple requirements that basically means they're doing something different over different increments. I think that would be report monthly all the hospitals report monthly but they don't really update their forecast monthly so monthly is typically looking at their actuals and not I'm thinking more of the quarterly cost savings report like it would make more sense if we're doing whatever we're doing in terms of monitoring and the epic implementation be rolled out together because presumably when you're talking with them you would talk with them about the cost savings as well. Yep, it's all done at once. The other thing I would say is I also support the commercial charge because while I agree it's high and I had said earlier in this process that 4.7 is kind of where I was comfortable given the financial concerns and the historic birth rate I'm comfortable in this instance but I don't feel like I know where where we're going to land on the I'm actually with Kevin in the sense that we get report every month from them and I recognize that we also do need to be on top of those reports and ensuring that information are receiving if there are triggers, if there are red flags we pick up the phone and call and have those conversations so I would be in the camp and get them on the reports I think quarterly. I'm concerned about administrative burden and I read that letter from Boston I think there's some merits to the administrative burden we're posting on hospitals they have a lot of work to do we need to be monitoring them but we can do that in a monthly reporting column my concern is that some of these hospitals are not exclusively monitoring their expenses and NPR each month so when they just get their system report they'll approve it they're not necessarily doing a new forecast because a lot of these surprises have happened at the end of the year so I'm concerned that a lot of these hospitals are not on top of looking at where their expenses are trending and they're not as focused on that during the course of the year and that may have these big changes and the reports that they give us monthly do not go through that level of detail on the forecast of where they're going to end up on the expenses so is one solution then to change address that in the monthly report and add the forecast one for the forecast and asking them to do that because the sense that we would be doing in the meeting is asking them to look at the forecast so if they actually just put that in the monthly report we could be keeping tabs on it to make sure that they're actually doing it and get the data that they need and when we reach out to those hospitals who's forecasts are going to be changing would that be a solution? so the forecast is part of the submission but I think the concern is that hospitals may not be putting the methodology behind their forecast when they're reporting month after month after month that's more of your concern we do require the information is submitted to us and you start to see it in your monthly reports no I guess what I'm saying is if they're not changing and these are not actually changing their methodology or truly updating so I guess what I'm saying is could we change the language that we use and what we're asking them to submit so that we ensure that they are making those adjusted updates on a more regular basis well it gets back to a reconnaissance of the year it is one month a trend and I think that's a huge part of that problem I agree I would just say I can support going to the quarter but I just want to be out there saying this is a hospital that probably has one of the worst performances on bottom line and to give them a different pass versus the other hospitals that we told bi-monthly to you know I don't buy because they're supported by the network that's okay to do that because that hasn't shown in their financial performance and corrections have not happened and that's why I was trying to be consistent with where we've gone other hospitals who are in similar situations and this is for the last two years I think we could look at it and say it's the worst there's swings from a positive to a 7 million negative a 3 million positive forecast to a 4 million negative is pretty significant okay consistent things that I didn't know about consistent in other hospitals yeah I think I'm there too you want to make a motion? before we make a motion could I have three minutes to consult the staff on the appropriate NPR percentage where a recess to a 1030 give everybody a bio break and then we'll be able to be able to do much after this we're going to resume I've been informed that I no longer have to ask if anyone wishes to make a motion I should just call on Robin Robin are you prepared? I think we approved some of the law medical centers budget with a 2.9 percent NPR which reflects their request adjusted by the tables that we voted on today and a change in charge of 3 percent overall and 5.9 percent for commercial with the conditions that they 5 monthly monitoring financial performance cost savings and a report on the epic implementation and also that they was a discussion by the board from the public that wishes to comment on the summit of the law medical center budget seeing none all those in favor signify by saying aye any opposed? okay so we redone their slide a little bit to reflect their updates to their FY19 protection so we saw a burden of these slides last week and this is the update and this update is a result of quarter receiving information about their 2018 Medicare cost report which is going to hit in the fourth quarter and it's a positive it's almost a million dollars they were not expecting to receive which is why their projection is going up so their budget projection variance has improved now it's 0.6 percent their FY19 FY20 request has not changed as a result of this because this was essentially one time back in their FY19 budget so these slides have been updated we've seen all this information before so there's no need to go over in great detail but to emphasize oh I'm sorry I have their operating performance slides later on I'll get to those it is interesting that the board never seems to care for it yes we'll pick in a different color next time so I guess we'll go into their ACO accounting adjustments and their provider transfers quarter is requesting adjustments from two provider transfers one is for general surgery in the amount of $361,000 and the other is for radiology in the amount of $749,000 they are also requesting accounting adjustment for ACO accounting a little over a million dollars the impact on those adjustments their general surgery is minus 0.4 radiology is minus 0.9 and the ACO accounting adjustment would be a positive 1.2 and we have details for each of those adjustments in the following slides it's worth noting here that the combined effect of all of these they offset each other so essentially their 3.5 request is not affected if all of these were approved they would still be at 3.5% so just kind of pointing that out for you does the board wish to treat these as separate motions or combined motions I would combine them oh two of them are you okay with that one great so the general surgery and you did see these last Wednesday the only thing that we updated to this the financial information that we had on the screen was we slept with them and sorted it out it was not the graph it was the financial information so now this is the correct financial information so for general surgery it's a 361,000 impact on their NPR we do feel that this is an eligible candidate for the provider of transfer opposition there were two independent general surgeons that unexpectedly left the community and Porter supporting the need by bringing they brought one of them on board the future retirement of the second independent general surgeon Porter will be employing him and interim to ensure continuity of care so this represents a 0.75% FTE increase and the impact on their NPR is minus 0.4% and we recommend approving did the board want to vote on this decision to do a wallow next is radiology so again as you heard last week Porter has had a long standing relationship with Middlebury radiologists they've provided interpretation of imaging but with the transfer of this independent practice Porter is able to offer fully integrated service line as of June 2019 this integration will streamline the patient experience with regard to the billing process on board, they brought them on board effective June 1st it's an FTE equivalent of 1.8 FTEs and the impact on NPR essentially bring it down by 0.9% and again we feel this is a eligible for the provider transfer opposition mechanism we recommend approving it so those are the two provider transfers the next slide is the accounting adjustment so Porter proposes an accounting adjustment, this is very similar to what you just saw with Central Vermont Medical Center every their adjustment is just for the ACO accounting which would it's for ACO payment reform investments we're classifying them as NPR so we would see essentially an increase in their NPR by 1.2 and this is again you'll get tired of me saying this but this is to ensure that the board is looking at apples to apples actual growth rate and it's 20 and so we would recommend recognizing this accounting adjustment so Laura you can bear with me I am I move we approve Porter Medical Center for two requests to adjust their 520 budget to reflect the provider acquisitions and that we recognize the accounting adjustment it's been moved and seconded is there a board discussion on this seeing none is there any discussion for the board seeing none all those in favor of the motion signify by saying aye and you're closed okay excellent so again the combined effect of those still needs Porter 3.5 this is just an update to the charts to reflect their recent information on the projections so the projection now reflects the new number for NPR and also for operating margin bringing 0.5% operating margin for the end of the year and then this chart has an update again to reflect the update in their projection we saw this last week so no need to go into detail but Porter's changing chart asking for a 0% overall change in charge 2.6% commercial change in charge and their 5-year blended average of their commercial and their overall is a 4.3% approved average questions from the board is there a motion I'm not going to make a motion but I don't know if staff wants to go over their recommendations first thank you Robin as you would so with the approved provider transfers and accounting changes as you've heard Porter is within budget their commercial charge request of 2.6% would consider appropriate as it is well under their 5-year historical average this is a hospital that is a success story in rural health care having come back from some significant financial struggles several years ago they are operating very stable and things are improving there and we support the MPR growth as well as the change in charge to continue that growth on the bottom line and build cash reserves to make better improvements to their city I do have one question on the epic implementation impacts do we have a frequency that we would want to request that or is it just are you staff thinking that's just generally that we put in the order that should there be any impact that they let us notify us correct should there be any impact we want to be notified of or if we begin to see struggles at hospitals that's performing well like Porter we want to reach out and make sure things are going well with the limitation or if not give us a little background on what's happening I'm ready to make a motion to approve Porter's budget with an MPR of 3.5% 0% overall change in charge which commercial change in charge and also that the order include a requirement to be notified of any impacts from the epic implementation is there a second the moved and seconded is there further discussion on board I just want to make another bit I think two or three times during the hearing before the folks came in and talked to you about the needs for capital improvements at this site and I mean for facilities I could agree and I'm just happy to see that and thinking about the fund of capital investments and noting that of the 529 million that the board has included the certificates of needs since the 2014 when we began that and so my guess is the function can be the way I would just add I want to compliment this hospital on meeting their forecast for expenses and top arm for the hospital years so last year they slightly beat their NPR going from 78 million to 80.3 million for 2018 and they kept their expenses of a 1.1 budget to 81.2 this year their expenses were forecast to be 86.2 they're coming in at 86.4 with an increase in NPR and quite a significant improvement in their operating margin partially due to this adjustment they're getting back and all of a sudden we've had a big change so I think this is the hospital that's showing for a quick process hospital that they're able to meet their forecast and not see the wave swings when they change the top line I can support the 2.6% commercial charge but I would hope in the future for this hospital since they're gaining a lot of synergies from being part of the network that we really look at a 0% potentially one year or even lower and I know you have been bringing your numbers down and I know there's an impact of inflation and things like that but you're more than offsetting those impacts with the synergies that you have been getting from the network and I know in 2020 you're actually carrying a bunch of one-time costs for the epic system and things like that that she pulled away in 2021 so just I think you're managing your P&L well and we don't have that many opportunities where maybe costs don't get passed on to consumers and this is a possible future and maybe if you were looking at a network that some of those adjustments could be in but I can support where you are right now and I appreciate it as a possible that you're meeting your expenses and you're maintaining and monitoring them anything else from the board? would any member of the public wish to make a comment? John? I would just comment that you're respected of the size of being in a system that you're looking at the individual components and not that some of the whole does not have growth in charge that it's at medical inflation has negative compounding notifications that they will be closed really quickly I would just point out that orders essentially have to do a four-year average they're right at medical inflation so again individually I think we certainly pay attention to that if the board was able through legislation to look at the holding to look at inflation but I go back again to 412 when I made the pledge that with that increase in charge of that year that we could run this network at the rate of medical inflation and we've had somewhat of a hold because of not being at that and that's also the pledge that I made to not pass the cost of the bill or bill or effect on to the consumers that obviously would require charges on average that are much greater than the cost of inflation so just letting you know how I've thought of this in the financial management committee and the network other comments from the public seeing none, all those in favor of the motion signify by saying aye aye, any opposed we're making great time thank you board and with our final deliberation of the day we have the University of Vermont Medical Center their request is 6.1% over their 19 budget projection projected MPR is 1.9% over budget year to date the 19 operating margin projection would represent the fourth consecutive year of margin decline and looking at this we have a little bit of concern with that type of precipitous decline because from fiscal year in 2015 should this projection come to fruition that would margin 48% production in an operating margin coming up to the plate to make investments in health care in this state were needed psychiatric center, the mill building epic efficiencies, etc those margins need to be rebuilt cash reserves need to be replenished there was also a discussion around the potential for a reduction in their bond rating which would impact cost of care because that is eventually going to be passed on as we would anticipate so with that said we would recommend that the commercial charge of 4% be retained and a combination of options here with MPR the 6.1% could be submitted or reduced slightly to reflect 2019 operating performance that said that would be around 4.1% so we feel the happy zone would probably be in the middle of 5.1% so if you bring that down 1% to 5.1% that would be equivalent of about $12.7 million in MPR additional recommendations we have are to review that change in charge common enforcement time and as with the other hospitals in the network report on any epic implementation impacts that may occur Questions from the board I just want to talk a little bit about what their history has been as far as looking at 19 significant change from their budget projections so this is a hospital that as their top line increases their expenses increase more than their top lines so in 2018 they had a medication revenue budget of $12.09 to $12.54 but their expenses went from $12.65 with the billions for $2.65 to $1.317 so they went down and operated income with a significant increase in the top line in 2019 they were running the same same way going from $12.73 for MPR to $12.97 and we factor in other revenues going from $1.38 to $143.2 just going up again more $13.39 to $13.93 maintaining the operated margin with a top line increase of over $50 million so it's just challenging to see with these increases how in fact the expenses are continuing to extend higher and that will be increased again and part of the reason one of the reasons they brought up the meetings were when they beat the top line then we need higher temps and locos and things like that but I think in 2019 it was an under forecast to begin with and now that they're exceeding it nothing's dropping to the bottom line so I don't know what to do with that I'm just saying I understand what you're saying and there are Miller and Fort Epic not saying that they're increasing rate by that but depreciation it is going up significantly year over year for the Miller Building there's a lot of one-time costs for Epic so the expectation was that the margin would go down a little bit during these first couple years as that was coming on and there were duplicate costs so just challenge with that I just want to put out that this is another one we need to see why their expenses are going up that high whether or not the full 4% is warranted or not when there's such an increase on NPR year over year in 2019 in their budget and it's 2% off so it will be something we could be addressing in enforcement down the road but I just wanted to this one is difficult for me because there's such a big efficiency here and kind of looking at it at a macro scale there's some things that do strike one is there's four or five things that strike one is that the medical center is since 2014 has been the fourth highest growth rate in NPR at 4.2% and given their size that's significant to the the legal system in terms of the network central Vermont our neighbors in that regard the top one is our central four is northeastern so we have a hospital and a network of hospitals growing at a rate that exceeds our working number of people in 5% the in 2019 the budget was missed by about 24 million dollars so it was a 19 million dollar increase of growth which is out of call with the press of the university and that has exceeded by 24 million and I you know I understand the low means logic in regard to where that takes that takes us and I'll get there in a minute the operating margins of the medical center have been very big both the last 5 years between 3.4% with an average of 5.1% since 2014 and in dollars what that means is that of 393 million dollars in operating margins across all 14 hospitals 316 million that has gone to the bottom line at the medical center and for 2019 it's projected that about 35 million insist to wire operating margin and UVM is projected to consume 39.4% of that and that is possible because there are 7 hospitals in 2019 which are not operating margins in terms of certificates of need looking at the history there since 2014 the medical center have been operating for over 285 million dollars in certificates of need at the total 529 million and that's a 72% rate and I'm not saying it's in a critical sense but I'm saying that there's something in the system that doesn't seem to be allocating the scarce care at under 1.5% cap to hospitals some that are doing quite well and I think some of that falls to the issue of the payer mix and UVM center is a very favorable payer mix and some of it falls to cost shift because the UVM medical center I think is like 11% on Medicaid clients out and so as Medicaid underpays they have the commercial side of their revenue stream to solve that problem so I have to kind of think where would we be after revenge marking UVM medical center in 2018 and that was a 39 million dollar revenge marking of 2017 where would we be if we would be in the center of the max in terms of our guidelines which would be 2018 and a 3.5% 2020 of the base of a million 252 million 252 million dollars and that would take us to a billion and 231 million and this request is 20 million dollars over that and if that were taken off the top it would still be a 33 million dollar increase for UVM I don't quite I don't quite know what to do with this and I'm not faulting the medical center but I think that there are some inequities in the distribution system mostly having to do with payor mix and having to do with the cost shift and that did not only be a force in the medical infrastructure in Vermont but a force in terms of finding a way to balance the cost and with the legislature to fix this for example in Raferview we have this risk adjustment system where you can see where money flow from then to MDP to across the shield based on some utility issues to kind of balance out the system and I don't see that here in Vermont basically sets a rate for everybody that you can probably add if you don't look at Springfield you might have liked Springfield so I don't know where to go that my basic number is the billion 331 million which is taking the rebased amount off from between most of the time by the top end of our for 2019 and 2020 and that's the number of billion 331 million which is the requested billion other comments from the board sure this one was a tough one obviously for a whole list of reasons the size of the institution and the degree to which it's over the guidance I hear you're saying it's tough but I think I look at things some of what's happening here is a definite population shift some of what you're seeing moving through the system is people literally moving through the system in other areas there are more people seeking care from other areas if they haven't used their residences some of that may be a function of being in the population and that the academic medical center is aware of the specialty care as the water to be delivered and I think we saw data on many patients and it wasn't part of the way we thought about our budget guidance but the data is there and more people are going to the medical center I don't think they want you again to turn away patients I don't think they will and I think the patients are coming I think if we break it down fiscal year 19 they were 3.5% over fiscal year 18 actuals so it's about the maximum guidance would have been the budget was less than that because they came in at 1.1 they were allowed 3.2 they came in a little over what our guidance would have been have they gone for 3.2 but they didn't been a conservative budget growth from fiscal year 19 projected to fiscal year 20 budget is 4.1% a little bit high over our budget guidance but again if you think about where they're projected to where they're going what our guidance actually is so I think the question is do we think that the growth in patient volume would account for that extra percentage and for me I do think it's true that that's a justified idea and some of the other hospitals did not provide compelling evidence that there was actually no volume changes to me the VM did we offer guidance but we always ask each hospital to provide their unique circumstances and I think the volume here was justified because people are aging they're moving from all parts of the state and the volume of their feet and going back into the Medical Center and that's real we've heard in the hearings that they're in surge compared to Northeaster that they couldn't get placement at UVM Medical Center because there's no beds available there and therefore people are going and sending their patients to Boston and other places and we consistently hear about long waits their commercial rate of requests is 4% again as I've been trying to be consistent with every hospital that's in line with medical inflation in fiscal year 2017 we gave them 2.5% in 2018 we gave them 0.7% and last year we gave them 2.5% all of those were below medical inflation so to me this is a those are unsustainable this is a bit of a catch up and they're asking for medical inflation if we're wondering to some degree why their operating margin is falling and we're wondering why their expenses are growing faster than their revenue part of that has to do with their expense growth is happening at medical inflation revenue is we've kept it so Medicare and Medicaid don't keep up with medical inflation we kept them below medical inflation on a commercial rate so it's not surprising to some degree that their operating margins are shrinking it's how the system works so to me their operating margin this year is decent but it's relatively low when you think about the academic medical center in general it's in the 25% half so that's relatively low operating margin compared to other like hospitals and the fact that it's shrinking is more than me so to the degree that their operating margin is one of the factors that affects bond ratings we know they'll have some investments on the forefront but only the academic medical center can do we know at a hospital that is stepping in and saying hey we're going to add medication mental health capacity the academic medical center is the one that through some intervention to some degree whether we're not in care board but is doing it and they're going to require more than what was set aside in their overage from two years ago so I'm worried about reducing their operating margin I don't want to compromise their ability to hire staff during this more poor shortage I don't want to compromise their ability to get the lowest possible borrowing rates and the other thing is I think we have to recognize that you in the medical center is the backstop for these other two small hospitals quarter doing really well that's fantastic Epic is about to come along I've been through that hospital in Epic the previous EMR came online there were practically losses I know they've been factored into the budget but we don't know how that implementation is going to go at CPMC we don't quite know how that's going to go who's going to backstop that EVM is going to be backstopping that to the extent that EVM is the backstop in the healthcare model and there are problems with risk preserves that's going to be the backstop there so to the extent that we're asking this hospital to make a lot of investments and we're asking this hospital to give the backstop for a lot of the care and their operating margins are declining and the rate request is the line of medical inflation in fact is catching up to the over perhaps adjustments we made in the past I'm comfortable with this budget to the extent that I think this is what the hospital needs to deliver the care that we want for our homeowners I think affordability is really important don't get me wrong, approving this budget is hard to swallow because we have to consider affordability and this makes it harder but we also have to consider quality of access and in addition to that much of this is volume driven and that means it's access and quality driven and so more patients are voting with their feet they're seeking the care at the medical center but in my mind this is a budget that we need to approve and we need to figure out a way to get more hospitals and more patients in the operating model I think changing some of the costs but these costs are real because they've been provided those are my thoughts I just want to add one perspective too on the top line as far as just correlating some of the change to some of the commercial increase as well I mean from where their rejection is I think their 2019 forecast their budget was too low to begin with I expressed that last year and they should have been at the 3.2% and they came in at around 1% so I think where they're coming in this year is about what would the expectation would have been this year compared to their forecast they're up 4.1% and that additional increase if you will that 0.6% is about 7.7 million dollars just throwing out as comparison I'm not saying we should take it there but the commercial increase rate is adding about $20 million to the top line so that is certainly a contributing factor into what's driving them over the guidance that we have put forward I appreciate the comments that Jess put out there I do believe though to where they said they were going to be up in the miller that they are about where they were supposed to be at their operating margins we're supposed to come down we've seen a $13 million increase and they said depreciation going from 53 to 65 from 19 to 20 which is really driven by the epic epic has a lot of duplicate costs this year and efficiencies run into the system so it's not a surprise that we would be lower this year and getting back up there in the future but part of what is driving this over is the commercial ask as a variable and one option is if we went to 3.5% or something that's $3 million that would be consistent with what we did with Eastern as well and that would be consistent with medical inflation for the year some of the adjustments for the prior years have been relative to their over performance year over year on the top line so well there will be consistent or not in saying if hospitals over deliver that there will be some type of enforcement or not but that is part of what's driving this it's over it's 4.1% on a reasonable year over year and we expect that to happen I think that's probably what you're going to see from the year and again a portion of that $20 plus million is related to this charge Do you have a comment from the board? I'm reflecting on everyone's comments I think on this ad marine I hear you on the 3.5 that would be consistent with Northeastern but I think it would be consistent it would be consistent if the charges would be consistent over the 5-year period so most of these can have relatively added to the medical inflation charging cases over a 5-year average medical funding is not so it would be consistent but the medical center is also they need to own what their forecasts have been and I interpreted that part of the reason they're not making more on the bottom line in 2019 is because they needed to hire more attempts like that because they didn't have the right top line forecast in there and when you're catching up one option is you have the right forecast if you don't then they're saying we're getting higher expenses rather than getting some synergies over fixed costs so part of what I'm saying is they're 2% over for 2019 and do we just let that slide and say they're coming in a lot higher they're not gaining any support on the bottom line any other comment from the board if not is anyone prepared to make a motion? I'll make a motion but I will make a motion that we accept the budget as submitted in the 6.1% and 4% commercial charge and that we were asked for any epic implementation impacts should they affect their operating performance to be reported to the board? Is there a second seeing none of that motion and we fail? Does anybody else wish to make a potential motion? I'm happy to, but I just need another minute to think. Would you like a 5 minute recess? Yes, that would actually probably be better than everybody sitting here quietly while I think. We'll resume again at 11.15. Thank you. You're going to resume? Obviously I've been, since I asked for a recess struggling with what to do in this particular case and I kind of agree with all the pros and cons of people that's thrown out there in terms of the different considerations which is partially what makes it challenging. For me, I do think that it's important to recognize that the 2019 budget had at least for me at medium comment asking for 3.2 I would have gone with the guidance amount so to recognize that basically the forecast in 2019 was off and the actuals are coming in a little bit over the guidance of what would have been the guidance had we approved it. So that's a factor that's important to me and so I'm going to throw another idea out there and I'll do it in a motion so that if people don't like it we can go down and move on but what I would I would move that we include UVM Medical Centers budget with a 5.5% increase which to me reflects a 3.5% increase over the forecast so if we use the forecast to the projected 19 projected to 20 and to the guidance amount of 3.5 consulting with staff I think that's a 5.5% in PR and a 3% overall change in charge and a 4% commercial charge with I don't think we actually need in the motion that we review the change in charge and enforcement but I would indicate that UVM should notify us if the application has impacted the complicated motion because I included my explanation but the summary is 5.5% in PR is the discussion on the motion yes I don't I understand what you're doing and that puts it at 3.5% here over year but I don't see how they're going to get there they come in saying that they want a 4.1 if we did it by commercial change I could see a way of half to get there just saying that the 5.5 which gets us down to the 3.5 may make us feel good that we have a 3.5% in PR but I would imagine that we would be here next year and they would be exceeding that number by 1.5% 2% so I'm not sure what we've really done with that would just be my comment there if we're going to accept the charge as it is at 4% then I would accept the 6.1 if we were going to make a motion where we would reduce the charge to 3.5% then I would say we would reduce the NPR and I'm not saying what that should be but that's just my if we all are saying on a commercial charge I would keep the 6.1 if there was a move on a commercial charge to a reduction of the 3.5 that would be like a $3 million decline which would be pretty insignificant as far as on a NPR chain but I would suggest it to drop so I understand I think it presents like okay we approved this but what actually happens what we put out there is always different you know so we certainly we could do that and is it going to be a wide margin of change maybe not but without having a path to say get there by reducing because of that .6 reduction I believe is about $10 million I'm not sure what it is you might have said or staffs that set the graph 7 I'm not sure how we get there that's the thing that I was going to ask staff to clarify because I thought when staff made the presentation Robin said that it would have brought it down to 5.5 I thought that what the math was when staff presented it to us was that we had given them the 3.2 last year and we went with the amount this year that would bring it to 5.1 did I misunderstand that's correct so where does the 5.5 come from Robin that's where I was confused so I don't know this is kind of the math we're looking at on the quick break which is Robin is looking at their FY19 projection which is about $1.3 million she's adding 3.5% to that which brings you to about 1. $1,342,000 so the difference between FY19 I think the correct way to do the math would have been to take the previous year's budget at the 3.2 then from there at the 3.5 am I wrong in that I think that's a board member perspective I think that's one way to look at it and say what would they have gotten at 3.2% over 2018 to 19 and then what would you get at 3.5 that puts it about 1% above I believe roughly which would be more like $12 or $13 million higher then I think this discussion becomes with everything that we've talked about with the change in CMI and then as just as more Eastern did do we then say that more it's a higher increase so I think from a pure math yeah from a pure math if you look at from a roll forward from where we were from 18 to now it's about .91% over is that correct and then what Robin was doing was kind of saying if we're at where we are for 19 and we approve 3.5% we put them up at 5.5% but we can pick a number to reduce the top line too but if we don't have a path to get there that's a challenge as well yep I hear you, I totally hear you on the path to get there I guess for me when we approve and we said this last year and it obviously wasn't completely heard by all the hospitals but when we approve the commercial change in charge was maximum and so my assumption is that there would be a number of ways that the hospital could get to a new top line and that I would leave it to their discretion to figure that out which could include a smaller negotiating something less than 4% change in charge because we do allow for people to come under our temporary change in charge and I would just add that I think the path to get to the potentially the lower NPR the way I think that while they've estimated no significant reductions productivity reduction in EMR at the medical center because they're pativic perhaps that's going to be overly conservative the ambulatory surgical center had some hits and know that in their answers to our responses they think they've adjusted and also heard that is what's at their margin so that's potential reduction that they may see involving I would also just add that we know there's unnecessary utilization in every system so to the extent that there can be a management of getting rid of waste low value care that does not need to be ordered to the extent that there is going to be effect that's going to reduce the duplicate X-rays and duplicate CAT scans as we go from the affiliate hospitals up I think there's opportunity for the hospital to reduce unnecessary waste I'm more concerned about cutting the commercial rate even though I know it's tough and it affects affordability, it affects market for every service that they do provide I'd rather see costs reduced by getting rid of unnecessary services, low value services, waste in the system which I think is an important all care model and there's incentive to do that I would just say that we haven't seen any evidence of carriers ability to negotiate better rates that's a problematic benefit for me to lay that out there it's almost unfair for them I wasn't saying the carrier would do with that I was suggesting that EVM themselves could come in with less than 4 because I hear you Kevin just for clarification go through the math I can tell you a little bit so if we start at a twenty fifteen budget level that was one million two hundred and twenty two million dollars you said twenty eighteen twenty eighteen we'll have to we'll do our best to answer this on the fly but we'll need to look at our workbooks but yes please proceed so multiplying that by the three point two percent diet one billion two hundred and ninety two million dollars lower the slope of your head and then as I talked to you about this past we have to subtract some howling adjustments from that per action that we've taken that are six point three six point four million dollars and that brings us to one billion two hundred and eighty six million and that times three and a half percent is to one million three hundred and thirty one million I'm just trying to get as well I'm not stuck on that number I'm just trying to follow the math and when we went through this hypothetical discussions there was this reduction from revenue in twenty twenty in order to make it apples to apples of six point four million dollars yeah Tom I'll just put it in there you don't need to make that adjustment because that was from the 2018 budget I know what you're saying but that was in the 2018 actuals they had the deductions for the ACL coming out of their reduction for 2019 budget they moved it out and they moved it to the standard for 2019 actual they actually did it the way they did in 2018 so the adjustment they made was when you look at the 2019 budget to 2020 budget but they actually implemented in 2019 in a projection the way they had done it in 2018 does that make sense? so you don't need to reduce that six million do you guys agree with that? I mean the ACL they basically when they came last year they said we're going to move it from here we're going to put it down to expenses and then we went through all the meetings discussions on ACL and then now they said okay we're putting it back actually they never took it out but when you look at budget for 2019 it was reduced there's a level of adjustment that wouldn't be in what we're talking about there's a lot of little things I know it's confusing but in the budget they've had it in the budget and then when we look to 2020 it's not there so you have to adjust for that to make it up so that's what that's what you're talking about so we take that out and we have the 6.4 million to the window I think you actually it's pretty clean to take the 12.52 times the 1.032 times the 1.035 to get to I know what you're going to say but there was a lot of confusion I mean my this is a very difficult decision because when you go through a great review and you look at these 10 and 11 and 12% increases you know and then you look at the actuarial presentations by our actuararies and the insurers actuararies and they do the review mirror analysis and these expenditures get built into that and so and I fully appreciate what has done in his deal you know starting the ACO I think is the right path and there's a medical center right now that has about 10% of its NPR in the ACO and looking to climb that to about 17% in 2020 and that's all good I'm just trying to think on the affordability side there's another constituency here that isn't here today with those 600 comments that we got through the review process I'll just speak to you about trying to find that balance here and that having dealt with very large and complicated budgets in my life I have looked at this even the 20 million dollars it did 1.5% change and that to me is a difficult lift but I've been there and done that by the state budget this year very rough comparison but they've got their general fund transportation fund growth to 103% for 2020 so I don't know what the right number is as I said at the beginning this isn't this is trying to find the best balance and I do know that every dollar that you put in here will show up in rate review and come down to some small business or individual pocket unless you begin to address the cost shifts and get a more level playing field across all quarters so now I have a number compared to what we're able to develop to $1.9 I don't do math in public so I'm just going to throw out there this is a I appreciate and I fully appreciate that whatever we do here in the commercial charge is going through the role in rate review and that's what's really painful about this but I know that what we do here is going to be really painful so there is a consequence of a commercial change but there are other consequences if we don't allow that we can think through that as well so the commercial rate charge is reflective of medical inflation what underlies medical inflation medical inflation is caused by equipment and services pharmacy, drugs a lot of these expenses are beyond the control of one hospital or one state we saw that the other piece that is the largest component of the hospital budget the budget of staffing is the people the service industry so this is really larger here than by region we're going to work for a shortage and it's very difficult for these hospitals all across the state to compete with a national market that's experiencing shortages and it's probably a wage factor so I will just say that my concern is access as well as it is affordability and my concern would be restricting this hospital from keeping, retaining and hiring their workforce in a workforce shortage it's going to be a larger fraction of their budget so I want to say that's another consequence that we have to think about and I don't know the exact answer to I don't know what to say the one thing that I would remind us is we did have Eleni look at the difference between we went with what we they applied a historical look at what we typically had approved in budgets to rate review but the difference between that and the hospital budget as filed was 0.2 so because of the difference between the rate review population and the budgets in general it's not a one to one so I would just throw that out there as a reminder not that necessarily discounts anything that anyone has said about affordability but we did quantify that so I thought it was worthwhile saying the quantity if I wanted to throw out a different motion do we have to receive your motion or how do we do that? you could make an offer to have it be a friendly motion if it's not accepted you could also offer something to be a substitute or we could just both mine down and move on there's a number of different options if I were to amend the motion and make a friendly change I would amend it to put a 3.5% commercial charge in there which is a $3.2 million change to their total number which would bring it down to about 5.9% to 6% depending on the rounding on the NPR and part of that is because I understand that miller in effort are not supposed to be increased in a commercial rate and things are not a one for one so it's not saying we can always say okay I've got all these cost savings and that's upsetting that the miller and these other changes but in 2020 there are significant increases again it's a $12 million just in the depreciation for the miller building is being absorbed now on top of that there's millions of dollars of one time cost for ethic that is also in the number so we would expect that that's not being absorbed at all by any commercial rate that would all be dropping to the bottom line and that's part of the reason I'm not going to go through debate because we can say okay now that is in there some of that those are things factoring in there I think putting a small change that could have gone down as low as 3 but I think putting a 3.5% in there which is about $3 million at least recognizes the fact that we're coming in $26 million over an NPR from 19 budget to 19 projection and I know we can address that in enforcement but by the time we do enforcement that is in March and 6 months is required during the year and I'm not saying we won't do anything in enforcement but I'm just saying it's I think to also not acknowledge that there's significant overages in the budget from last year and to make some type of adjustment which I think a $3 million adjustment on a budget that has $1.4 billion in expenses and we have not pushed we're saying the hospital looks at all these hospitals but I just think it would be consistent with some of the things we've done so that's what I would put out there as either an amendment or something to just get people's feedback so I just want to clarify you're moving to Kevin why don't I just draw my motion and then we can talk about Maureen's motion and then we can always okay so does the second order withdraw as well yes so Maureen I need some clarification because throughout I think two different numbers I don't PR I just want to make sure so my motion would be that we put a change in charge instead of 4% commercial to the 3.5% commercial change in charge which if the calculation of the 1% equals 6.2 that would be about a little over $3 million reduction to the NPR which we bring the NPR down to I think it's like 5.93 but it could end up around whether that rounds to 6 or to 5.9 so that we would prove a 5.9% NPR change with 3.5% commercial change with the additional recommendations to report on the implementation and whether we say take out review charge change in charge or we still have to review 2019 enforcement so is there a second to the motion? it could be a long day I'll second for purpose I guess one of the challenges that I'm having is we're not hearing from everybody on where they want to be and we've thrown out a 4% commercial charge we've thrown out a 3.5% commercial charge we've thrown out keeping the 6.1 so we're just trying to get a guess where everybody's at to understand you know what the other options would be okay it's been a motion and a second to approve an NPR increase of 5.9% commercial rate change of 3.5 we will report on impacts of epic implementation is there further discussion? so my perfect would be just to move forward from that to 18 days by 3.2% 3.5% that's my perfect world so that's 1 billion which is I think the difference so that would be on the commercial rate the goal is to take the pressure off the commercial rates and I just know that 14.5 million dollars of budget are relatively achievable and that rolls into the rate review process it's a relatively big number a 3 million dollar type and it's actually kind of a type that we can move to a new increase over the years this is also about the quarter rate this is also the lowest commercial rate increased that we have in corporate these improvements happen in small measure I think we can do that it's not going to be 4 to 2 unless you add another number of the board it won't be a 4 to 2 vote unless you add another number of the board I'm sorry I guess I would just say to that I guess I would just say to your logic you take the the math that you're doing 3.2 and 3.5 that's okay take your time I'm amazed that you're able to do what you're able to do didn't lose everything today we're in good shape just to your to your math the logic will have to follow that you take the 2,018 and you say I would pay it a lot and then we would allow them 3.5 we would be able to win the budget guidance and I guess I would say to you then that all of the other extenuating circumstances that they presented appearing we're not compelling to you but you just want to stick with the box that we gave you and I would just argue that I think we'd be excited but I think we also, at hearing expect the individual hospital that we have individual circumstances to deviate from guidance if we find that evidence compelling so I would ask you what evidence that they provided that you're not compelling such that you could say or just stick to the guidance so do you make patient ideas that came in that suggest that more patients are seeing seeking care so that must not have been compelling to you or the case mixing that's changed evidence that suggests that there is more volume, there's more aging of the population there's more people moving to treatment there's more people using the services there to stick to the guidance and say we don't think that those extenuating circumstances are compelling so I guess I would ask you that is that evidence not compelling or what else can we stay within the guidance and not see the individual circumstances here well I mean we've established that guidance and we all pair a model I mean it goes back to that and we all pair a model is based not on a measure of healthcare insurance but it's based on a economic metric in the state economy and that's more the type of affordability and in recognition that healthcare costs inflation is higher so I'm aware of that affordability and think that in institution the science and media medical center who are trying to do great things in terms of population health and bring people together to become more efficient you know are positioning themselves to beat the national kind of medical inflation metric but I also realize that there's a lot of noise in the system and last year it was a 19 million dollar and they missed that by 23 million bucks so it's I just feel that the leadership of UDM medical center said we can find 14 million dollars in the system I believe that they do that that is not a big leap and I then see that 14 million dollars will come back to the ratio view system and being a direct or immeasurable but direct benefit to people that have to purchase insurance through a small individual that's how the system works so I mean there's a lot of noise in the system 2019 it's not that we imposed that 19 million dollar increase on them that was their proposal and they accepted it and we find that that was a miss that's 23 million which is a huge percentage so I know that they had 514 million bucks that they built and it's a small percentage of what we're asking basically they had the great commercial rate and it would still be an increase it would still be a 30-40 million dollar increase so we are talking about how much it grows thank you for your responses one is your reference to the outpair model in the 3.5 that's exactly why we need to move to the total cost of care for capital metric because yes it's 3.5 percent but that's for the entire system and if people are moving and the ratio of their feet to one hospital service area then they are going to exceed that cap and we should see the client elsewhere and to some degree I think it's important for us to move to the total cost of care for capital metric because we're seeing more volume and so that's going to drive up in VR and that's not a misaligned of the outpair model it's in fact with the actual cost of care for capital it's still in line between the cost I'm thinking this comment I said that a little bit earlier I thought what you've been putting on the table in terms of case mixing with patients is it was the right thing to do at the wrong time in the middle of the process and I think it is kind of a zero-sum game until you have all the hospitals at the table and this is something Bosch I think should do have them all at the table to address case mixing to address patients also to address the cost shift and the payor mix those are problems that need to be solved on a system-wide basis and we're not going to solve them if they're at the right time I would just like to know what are the consequences you said they can cut it I'd like to know what are the consequences what does that mean for access and quality how are they going to cut that and we need to we like to care about affordability we also care about access and quality so what would the consequences of that be well I'm not the budget director you'd be a medical scientist so I can't tell you I just want to be as a regulator the magnitude of that reduction in terms of their budget it's not that much the magnitude in terms of the request for Bosch for example MPP in terms of their increases on this significant number so I'll go back to what I said at the beginning of this process I think this is a year with some very tough decisions to make I'm fortunate that the largesies last I do worry when I continue to worry even though I voted for the decisions that have been made that at times we are rewarding smallness and inefficiency at the expense of trying to create a system that is rank sized and affordable models with that being said Tom there's just no way I could go down to 2.5 I worry about a lot of the testimony that we received UVM thought tenaciously to improve their quality I don't want to jeopardize that they have been incredible leaders for moving away from fee for service for their success I don't want to get in the way of creating an access problem for the largesies I do think though that a slight reduction in the commercial charge could be an order basically that reduction is only going to lower the end of the hour whether it's 5.93 or 5.9 I think that it's going to be hard for UVM to even meet that it got tremendous pressures on them and their trends no the real trick is going to be to try to figure out not just unique patients but being able to get to that total cost of care for a patient whether it's done at UVM or a combination of UVM in two of them are hospitals or one of them are hospitals the total cost of care for this hospital service area is at the low end even though I do recognize the fact that they have better demographics than the rest of the city so we really do have to look at a risk-adjusted total cost of care but I don't think that the motion that's on the table is out of line I probably would have gotten 3.75% on the commercial just to send a message but I don't think the difference between 5.75 and 3.75 would be insurmountable I'm sure that people from UVM would tell me that I'm off-paced there but that's where I'm at so can I move the question please because we could talk about this all day long I think that you know we still haven't gotten to the public yet I'm not sure how much more is left to be said but you could make that motion I would hate to hinge upon the base from the board but if that's the motion you wish to make I just want to know something I don't have anything more to say I know how I'm going to roll but we do have to do it in the public and this is all a process I'm wasting people's time maybe I think it's important time for us Is there further discussion from the board if not I'll open it up to the public yes, Dale this is really complicated to understand to set up the board and to go straight to the board times I get concerned with this one I'm going to try to use an example because it's the easiest way to explain it I got us in Fort Vermont that's a small hospital that's a small hospital and I use federal health care up there that's where my primary care is I needed a surgical procedure and at that point I was referring to the doctor within central Vermont hospital practice nine months later we still can't get it scheduled and accomplished it was rescheduled three times utilizing central Vermont hospitals, surgical facilities I finally called up and I said okay not happening is there another option they send me to Fletcher Island six weeks later it's done what I've never been able to figure out is what was happening behind the scenes that made it happen with Fletcher Island in six weeks it's only done in nine months through central Vermont hospital this is where I'm going to is it doctors retiring that weren't carrying a full utilization case load is it is it a reimbursement rate does universe does Fletcher University of Vermont I can say in Fletcher Island pay a better reimbursement rate they have more time at the surgical units than central Vermont medical hospital doctors do these are the things that when you're making these decisions how are you affecting that kind of distribution of care both practice in that surgical unit I ended up at Fletcher Island how does that relate to net patient revenue did it subtract from central Vermont net patient revenue to add to University of Vermont net patient revenue what was my cost what did University of Vermont pay for the use of the surgical unit and on Medicaid so what was the reimbursement rate there these are the things that when you're making all these decisions I start asking myself what that looks like for the patient and I don't know how to get them connected is there other comment from the public yes Hi Lee, hi, we're off to help your advocate I just wanted to say I really appreciate all of your good discussion by the board and the time that you're taking to carefully goes through all of this so it's with respect that I say which is no surprise but our office supports a reduction in the commercial rate a lot of these points have been made by the board but we've heard over 600 comments in the review process about the crisis of in affordability in Vermont with commercial rates I understand the points about comparing the commercial rate to medical inflation but that's a national benchmark and we know that medical inflation is an affordable nation wide and I believe that the goals of our of our healthcare system should be to be better than that to try to make things as affordable as possible for Vermonters especially when our income is not necessarily keeping up with the nation wide numbers as was said my understanding is that the CONs for Miller and Epic were on the basis of them not affecting the commercial rate and so those being given as reasons to keep a higher commercial rate seem in line with what we're trying to do I also believe that the investments in mental health capacity came from from correcting for UVM overreaching their budget in the past and I agree with what's been said that they have a history of overshooting their budgets and so allowing them the forward set commercial increase is likely to perpetuate that and then finally although I appreciate what they've been saying about their increase in patient quality leading to higher NPRs I think that can be seen as an opportunity to increase to leverage that to increase efficiencies and a reason why that plus their positive air mixed why they don't need as high of a commercial increases as what maybe some other hospitals reasonably need and finally I agree with what was said that we have no evidence that there are strong negotiations that happen between the hospitals and the commercial payers and instead what we've seen gotten over and over again from the hospitals statements that they believe their commercial rate is what's been given to them it's the board saying that it's reasonable thank you Just a couple John? Can you say anything? John Bromsted the potential probable investment in patient psychiatry is going to be four times what though and to look at the growth of cost even if you don't want to change the metric the truth the cost of care for UBM Medical Center it's in the budget here if you look at the number of patients and you do just very modest risk adjustment based on CMI and age it's two and a half percent it's way below what medical inflation is nationally we're already performing at that level and we want to make it the point on the record that to pull just a percentage to member home's point and have it on a percentage basis and not look at it in a per capita basis it just doesn't make sense and it is contrary to what we're trying to do with the old people Any other comments from the public? Seeing none as I understand the motion you approve University of Vermont Medical Center's budget with an NPR of 5.9 percent a commercial rate charge of 3.5 percent and a request to report on any implementation impacts to an effort That might suggest a friendly amendment on the reporting to be consistent with the other hospitals we indicated they should notify us of any impact I don't know if that's friendly or not I think it's friendly I can't speak for more and who is the second I was you or I I'm okay I agree with myself Does everybody understand the motion All those in favor of the motion signify by saying aye Any opposed? No Oh yes Yes I am Glad to be in on that So with that we've got all the hospitals and because it is new time I normally would say let's break for a while but I know that we probably could get finished in a fairly reasonable amount of time rather than call up and run back I think it would be good if we just moved to the old business and new business Is there any old business to come before the board saying not is there any new business not the halls So I just wanted to have some conversation around the sustainability plan as we all know I've added this language to some of the motions for some of the hospitals that was something from financial strain asking those hospitals to have sustainability plans and Robin had mentioned the idea of also having a working group that green mountain care board would facilitate with those hospitals to figure out what framework might be in that sustainability plan what would be reasonable for them to be able to do and the time limit they could do and have them be a part of the process of designing those sustainability plans So I thought I would just throw out some ideas that I'm going to have here today that you might look like for some of these small struggling hospitals the questions that I'm hoping that they can answer to get some feedback from the board and then obviously that would then plant the seeds for the working group to start to do that So again this was kind of drawing this together yesterday so these are my initial thoughts and I'll probably add initial thoughts but again what we're thinking about here is how many of those hospitals largely and many of them having had operating margins that are negative so really helping us to understand what is their plan to move out of the red and into the black so one bucket is let's think about asking them to think about how they can move from red to black in the future thinking about their charge requests if they've exceeded medical inflation for at least three of the past five years making sure that sustainability added a little medical inflation so asking them to think about shared services shared workforce, standardizing supplies group purchasing, centralized control, supply ordering what are the obstacles and opportunities that these hospitals face in trying to keep their costs at linear medical inflation and getting those margins into the black also asking them specifically to think about what are their ways to reduce their reliance on other revenues so you know 340B is what picking many of these hospitals from red to black but 340B goes away tomorrow which given you know, federal changes all the time is possible how will the hospital achieve a positive operating margin and what is their plan B with the positive allowance investment income or donations declined again what is their plan B what is the way in which they're going to sustain a positive operating margin in areas that would like the hospitals to come off with some solutions to a path forward for that also as I've mentioned in many of these hearings in our conversation I also want hospitals to look at their service lines and identifying cost centers and again I would bucket that into three areas, cost quality and access the goal is for the hospitals to start to do the hard work of ensuring that care is being delivered at the hospital and their outpatient that it's appropriate and cost is up in high quality so let me just share their topics if I think about costs I would want the hospitals to be asking are we as a hospital able to offer the service at an affordable price so there's a couple of approaches I think that could be taken here all hospitals have to post their charge master's on the Department of Health website so if it's gross charges I recognize that's not the same thing as reimbursements but Act 23 requires the Department of Health to collect some services so one approach would be for hospitals to identify the services for which they're charging more than a standard deviation above the state median and justify that high cost what is driving that high cost of care could it be lowered or should that care be delivered somewhere else more cost effectively another approach would be to look at all services whose commercial reimbursement is greater than something but I don't have the number right here but let's say it's more than 175% of Medicare amount that we could agree on perhaps look at again those services are being offered at some significant percentage above Medicare again are those high cost justified or should that care be delivered somewhere else at a lower cost and then again if I service my department I would like to see hospitals examine and report on areas where the marginal revenues are taking in for those services is less than the marginal cost that doesn't require fixed cost allocation it's looking at the margins so where are they losing money on the margin in which departments and again assess that that's the cost bucket I think they also have to start thinking about the quality bucket is the volume high enough to support their service lines at a high quality level we know and I talked about this from hearings that volume and health outcomes are related literature is pretty clear that for certain procedures patients in low volume hospitals experience more adverse events so not only do the hospitals need to practice but the support meetings need to practice so I would ask hospitals to look at lines and you know it was interesting if you look at the Act 53 data that's posted also on the department of health website we have hospitals performing low volume procedures there are a few of our struggling hospitals that are performing a combined 30 to 60 PIP or knee replacements a year combined 30 to 60 it suggests it is split in half a half of 15 to 30 PIP and knee replacements a year Germany does not want a hospital to do a knee replacement if their surgical volume is less than 50 so we need to be thinking about that hospitals need to be thinking about that we need to be looking at their low volume services I suspect that areas where they have low volume they may not always cover those fixed costs which may be related so I think we need to be thinking about that or hospitals need to be thinking about that and then I would ask them to reflect on access that last bucket what services are critical to delivery close to home services given what that announced to say just done could be more cost effectively delivered or higher quality so again looking at the services that they find a relatively high cost and or services that are relatively low volume are those services that need to be done close to home or could they be done somewhere else either a lower cost or a higher quality you know could they be considering transportation to get the care that they need for the patients in their community could bans be bought and could transportation help that could they be increasing the line on the lines from power medicine these are the types of questions that I would hope the hospitals would be doing many of them already are we've heard that in the hearings we've heard them talking about service line assessment I know they're doing strategic planning so much of this work is probably already being done but I think for the sake of the sustainability of the hospital and system we need to have we need more information about that so that's what I was thinking about would be sustainability planning I throw that out there again this is my thoughts from last night it's just a plan to seek for conversation I know this is a pretty tough day to have a real world conversation because the hospital is for the most part I believe are out of need today I don't know if there might be a truck but do you have any thoughts on the sustainability plan some will do that so Michael trucker from the hospital first of all really tough deliberations awful process appreciated not easy stuff I think related to long term sustainability plan consistency a consistent way to approach both of these things that would be a foundation that we should work for many other things that were discussed could be part of that foundation there might be additional things to add plans for partnerships partnerships look like so certainly my thoughts my immediate thoughts is consistency and something we should talk more about with our membership and come up with some discussion points okay thoughts on the board yeah I'm going to chime in that what just said and what Michael said makes sense to me I think there will also be some recommendations that eventually come out of the rural health services task force around specifically telemedicine and workforce that could be helpful additions to the conversation so I like the idea of working having the working group kind of come up with a consistent approach and being able to make sure those prophecies are consistent as well I do want to know that in the law's letter the specific question that was asked was whether we clarify the relationship between the one range planning and how we relate to the monthly reports that we've been talking about and to me they're related in the sense that the monthly or bi-monthly reports are monitoring particularly on hospitals where we're worried about their short term financial as well as their long term but really that's a short term looking process to make sure that we're doing our due diligence as the regulator to comply on the hospitals that we know are having trouble whereas the sustainability planning is really meant to ensure that we're looking longer term and that there would be an understanding that it would take some time for hospitals to pivot and start to move towards a different operational structure if you will, it's asked where it leads whether that's affiliations or sort of a sign of defense or whatever but that would may or may not address some of the more immediate short term that's how I've been thinking about that but I thought it might be helpful to just throw that out there Mike so I couldn't, I agree with what you discussed one of the things that I think you know Mike in this letter so as our concern around the administrative components not that it's new work but added work and I would really ask the board to consider what goes the way in the guidance are questions eliminated that this that by adding this work to the process are questions eliminated what does the guidance turn you to is this more part of a budget requirement is it an offline requirement but I really want to present on the board that many of our members are probably most all of our members are thoroughly strapped with the ongoing budget process through the year so it's important to understand the context and why it happens it's just very difficult for some of our members to manage this on a day-to-day basis so I hear everything that you've said and I don't think that you know this is something that can be turned around quickly as far as the federal plan on the close side of that though I do think that every hospital is working on this so the board isn't discussing their sustainability there's a problem with that so any thoughts on the board members just one degree that I think this is a good plan that just has been bringing forward this is more strategic about where are we going with these hospitals in the future and I think it was in your discussion about the efficiencies and cost savings we need to be a big focus we keep kind of leaning on medical inflation but we can't keep raising rates to offset medical inflation without gaining those efficiencies and the other thing though to hospitals what their payer mix is is a factor to the some of the hospitals that have a really low commercial payer mix it's really hard for them to get Medicaid and Medicare so they may end up having a higher request but some of the hospitals that have a much higher reliance on commercial that's a way to get some of these down so that might be a factor for a hospital that's over the amount every year on a commercial ask sometimes it's a small contributor to their bottom line because of the payer mix but I think just the whole plan as I think it will feed into all of the source allocation plans that are being done and road task orders and that all of these come together with the input from the hospitals themselves and where they're going and they should be driving up all of this really their board should be looking at this and trying to say how are you going to be sustainable particularly with the hospitals that are financially challenged with one under bankruptcy and that could happen to others in the structure of that So speaking of sustainability I just want to put this out there that I'm not looking at medical inflation I'm looking at economic inflation and we weren't part of the negotiations but I think that we've not kind of promised more than just medical inflation in the agreement that they signed with the federal government I'd at least try to see us adhere to promises made by our predecessors If I could just one of the ways in which I think we hope that we're going to adhere to a 3.5% growth rate is by actually changing the underlying volume medical inflation is largely determined by a lot of forces in the marketplace that may be beyond providers control but what is in their control which is what the author in law does is volume and getting their ways to look at the services that don't actually improve people's health So that's the volume piece that I really want to see brought down because that is what we're trying to control and we need to validate things I just, I don't want to I don't want to cut short the discussion but I did want to just have a brief announcement that you are ready to move on to related but I just want to feedback on this idea because I knew I'd do it out there as a condition on these budgets and I wanted to see if people thought that this direction was the right one to start having this conversation to talk to this man and since we can't top off one So the announcement that I wanted to just make which I have done once before and we'll do again as it gets closer but November 21st is National Rural Health Day we're planning a celebration in St. John'sbury which will be held at the Northeastern Vermont Regional Hospital and we're still locking down the time of when the celebration piece will be but we will also have a Rural Health Services Task Force meeting from 1 to 3 at the hospital and that will be designed as more a listening session so that's also a great opportunity for other hospitals around the state to participate in or at Knoxville Hospital for other providers as well to talk about some of the challenges and opportunities and good work that they're doing Any other business to come and go for if not I want to thank everyone for Are you going to entertain comment on the hospital sustainability discussion that we just had Sure Can you say your name? I'm sorry, yeah, Susan Ernaugh from the Vermont Developmental Disabilities Tunzel I think it would be an interesting section to have the hospitals comment sustainability and the relationship to their participation in the all-payer model whether in general or by each payer and program and get a flavor of what the challenges and opportunities are because as I read the narratives seem like a number of the hospitals were commenting on what a stretch it is and hearing the test you know there's a snap into the Medicare et cetera but you guys kind of are acting as if there's going to be a renewal in three years we're halfway through the first chunk of the agreement so I think hearing from the hospitals now in terms of sustainability some section going forward is this an added stressor or a great thinking Okay, is there any other public comment at this time? Seeing none, is there a motion to adjourn? And before I call the question I did want to publicly thank our team we've been outstanding in this process and really made us proud of all the hard work and good outputs that you have to make so thank you