 Welcome everyone to the Green Mountain Care Board. The first item on the agenda is the Executive Director's Report. Thank you, Mr. Chair. Just a reminder on our schedule next week, we have some additional meeting schedule to discuss hospital budgets and potential votes. So on Monday, September 9th, we have a board meeting in this room. Let me back up. Monday, September 9th in the morning from 9 to 12. I'm sorry, I'm lost. That's right. So Monday, September 9th, we're going to hear that we'll have a potential vote on the Green Mountain Care Board General Advisory Committee Charter. I was confused because today we're hearing a presentation on the General Advisory Charter. So I was off the day there. And then in the afternoon on Monday, September 9th, we will have our General Advisory Committee meeting. And that is located in room 10 over at the State House. Then on Wednesday, September 11th, from 9 until 4. And we'll break for lunch, correct, Mr. Chair? We will be discussing FY 2020 hospital budgets and have potential votes. And then we also have a potential meeting on Friday, September 13th, starting at 9 AM, again, FY 2020 hospital budgets and potential votes. And that is scheduled, if needed. So Monday, Monday morning. Did I say Monday morning? Maybe I missed that. Monday morning will also be hospital budgets and potential votes. On September 9th. Thank you. Yes. On Monday morning, we'll vote on potentially vote on the GMCB General Advisory Charter. And then we also have hospital budgets. So if that's clear as mine. I'm not sure which one's the worst, getting your hospital deliberated on 9-11 or 9-13. I know. I don't know which one's the worst. Thank you very much. That's all I have to announce. The next item is the minutes of Wednesday, August 7th. Is there a motion? So moved. Second. It's been moved to approve the minutes of Wednesday, August 7th, without any additions, deletions, or corrections. Is there any discussion? Seeing none, all those in favor signify by saying aye. Aye. Any opposed? OK. So the next item on the agenda is the Charter for the General Advisory Committee. Christina? Hey, Kevin. For the record, my name's Christina Blockman. And we do have a little toss in this. So as you know, that Susan, the board, plans to go down this potentially on September 9th, before that, we want to outline the charter briefly for the public. I think he's the one who would like to submit a public comment. So that's very good. So I will go over the process of how we ended up at this draft version of the GMCB General Advisory Committee Charter. The board had launched back in December 2018 a redesign of the committee. And during that redesign, we decided to have an application that included a questionnaire. And within that questionnaire, so that people knew what they were sending out for, we had a draft charter information. So when people applied and submitted their CV or resume, they knew what they were getting into. So the draft committee charter was first shared during the application process, as noted. And between February until now, it's been revised with committee member suggestions. As noted, the committee discussed the charter in February and May. These meetings are open to the public. So I do know there were some members of the public there. And I can recall there were some comments and questions about it. And really at the end, the committee members asked to do the health insurance review as a general topic, if they may teach or advise the board on. So we, as the board, do not need to have a charter for this group. But we felt that it was important for people to know the purpose and what the scope of the GMCB advisory committee is and why it exists. So in Act 48 of 2011, the board was deemed that the board shall establish a consumer patient, business and health care professional advisory group to provide input and recommendations to the board. Within the charter, we decided that the board needs the input, advice, and recommendations from one or more participants relating to regulation matters within the participant expertise to help inform the student's outline in ETBSA subsection 9375 or to advise the board on the report by the general assembly or other matter of interest. More specifically, we decided to list some topics, which may include workforce education, price transparency, population health, the all-pair model, the count of the care organization, and health insurance review. But of course, we are not limited to those topics, so if one or more members decide to submit comment or advise the board on another topic, they may do so at any time. So also out of mind of the charter is some committee chairs and officers. We felt that the executive director of the Remount Care Board would be a great committee chair for this group. And in order to comply with the meeting law, the committee will consist of subgroups, mainly so that when they decide to correspond over email or outside of the set meeting times, they can do so without violating the meeting law. So right now, we have 21 active members in our committee, so we decide to have three subgroups of seven people. So when we released the application process we did at one outline what the membership requirements were, just so people knew again what they were originally signing out for. So as I noted, there was an application process for the questionnaire. People were asked to submit a resume or a CD to the Remount Care Board to accompany that questionnaire. And the questionnaire really outlined background information and why they felt it was important for them to be a part of this advisory committee. We wanted to be sure that the group represented people from various categories and types of perspectives, affiliations, expertise in geographical patients. We really wanted to have a broad group that could be did really anyone and everyone. Of course, we couldn't have a kind of people in this group. It is hard to even with 21 members to make sure that people feel heard. And so we thought we ended up with a decent number and yeah, I think we ended up with a great group. And the meetings are to be quarterly. Right now they're held on Mondays from 2 to 4 p.m. Mostly they are held on the fourth floor of this building. Every now and then we do change it. It's a tight run with 21 members plus the full board at these meetings and members of the public or other interested people. The room can get kind of tight. So we do sometimes change around where that information is on our website. We do expect the committee members to participate in at least three of the four meetings. That's really doing to ensure that group members are consistently learning and advising and we do offer call in for the group members and so if travel is a burden, we do offer those. And members were told that they may be asked to do some outside work. They could be estimated about five to 10 hours but they also could do more work if they feel they need to do so. So I included this slide to be sure that members of the public and anyone else can find our general advisory committee site page very easily. That green wording and underlined words are links right to our general advisory committee page. And on that page you'll find all the meeting information and a committee membership list and those get updated as often as needed. And we will post the charter once it is approved potentially on one day or at a later date. Right now the draft committee charter is posted on that site page as well. So finally we recommend that the board approve the latest version of the draft general advisory committee charter. This version is dated August from the 19th. It is the version that was posted and is printed out for all of you today. There will be a potential board vote held on Monday, September 9th. I believe that board meeting starts at 9 a.m. And any public comments can be submitted to our gmcd.board email through our web form which is on our website and by phone to our general board. And that is it. Does anyone have any questions for Christina? Is there any public comment? Yes. Susan Ehrmacht in the Vermont developmental disabilities council. You will be following up with written comments. So first of all, great thanks and appreciation to the staff for developing these materials and for posting them. It's a great improvement from the time when the agreement and care board ceased to have its advisory council meet at all or maybe it met once a year for a couple of years. Despite the fact that at its start it was a robust body in its met quarterly. I don't think that the charter as presented meets the goals of the legislation much at all, little bit. But the legislation is really clear. The board shall establish a consumer patient business and healthcare professional advisor group to do one thing, to provide input and recommendations to the board. The body that the advisor group provides the input and recommendations to the board. The way this is structured, the board may at any time ask members of this body that it is handpicked for their opinion on this. But the way the charter is structured does not accomplish the goal of the law, which is to have a body, an ongoing body give you recommendations. And today, despite this having been created in 2011, the consumer patient advisory group has never given the Green Mountain Care Board a single recommendation on a single topic. So I think that for that to change, the charter needs to be changed and it needs to be clear that before the Green Mountain Care Board does something big, like send a letter to the governor and the agency of human services saying it was more Medicaid money for the project term. Maybe they get input from their advisory board on that topic like that. So anyway, we'll put that in writing. The other thing, and I think this is just critical, is every other body like this in state law, the Medicaid advisory board, which we have the esteemed coach here up right here, the Dale Department of Disabilities, Aging and Independent Living has an advisory board. All of these advisory boards have independent leaders. The leaders are not staff of the organization. The leaders are elected independently by the other members of the advisory board. And then that group sets the agenda independently. So I think that this is a step forward, but it needs to go further. The Green Mountain Care Board clearly needs an independent advisory board. So I will put those in writing. Thank you, and thank you for moving this forward as you've been moving it forward. Having four meetings this year is a great change in how business has been for that. Good progress. Well, we had four meetings last year too. I believe the meetings that you had last year were markedly different in that they were presentations by Green Mountain Care Board staff to a hot fond of people who ever showed up. It wasn't a committee that was selected. It was a mailing list of over 40 or 50 people at its height that just came. If you want to claim those as Green Mountain Care Board Advisory Board meetings, okay, you had four meetings last year. And if I may add, thank you, Susan. We have found that people, for them to advise the board, they struggle to do so because they ask to know more information about what the board's duties are, such a poorly. And I think you're right to a certain extent, last year it was a lot of presentations, but that was asked by the committee members were to provide information so they could advise us on it. And I think right now we're trying to find a happy medium of them feeling comfortable enough to advise us because it is a very broad scope of individuals who are on this group. And we want to make sure that everyone feels comfortable bringing their suggestions and recommendations to the board. And I do know that just the other day someone asked, how can I provide recommendations? And we've said this at both of the recent meetings and we'll continue to say it. People can really provide information on anything at any time. And I'm on the other side of this correspondence when people ask me and I follow up with the information I need. So this is an ongoing learning informational process. And we are, thank you for your comment because we'll definitely take that consideration. I think if we decide to change this we will post a newer version and we can decide to go from there. Until then, thank you. Other comments from the public? Seeing none, thank you, Christina. Thank you. So at this time we're gonna call down the hospital budget team. And while they're getting organized I just want to say a few words that this will be my third year of deliberating on hospital budgets. And one of the things that has struck me for the last two years is how messy it can look at the beginning of these discussions. And that is because of the open meeting law we cannot have discussions between board members in advance. And so as messy as it may look this is the way the process was designed and it's designed to have full transparency. And with that full transparency at times things could look a little bit sloppy but I think you have to really wait till the board has a chance to start to coalesce after getting feedback from each and every one of the members and starts moving towards the decision making process. And so I know, Jeff, if you had more here on your head you'd have less after today but hopefully in a couple weeks everything will be good. Thanks for the warning. And with that I'll turn it over to Patrick. Mr. Chair, we are going to be set up at the one second here while I slide it. We're not care board and members of the public but today one of the deliberations. My name is Patrick Marie. I'm the Director of Health Systems Finances to my left is Lorde Perry which I might just have at the Kessler who have helped compose all the information you see today. We are on a very tight schedule to get through this overview of everything that's occurred through the Pledge of Process so far. Our plan is to end this around two o'clock with through this process or before so we can give time for the board to have questions and discuss what it is we've gone over this afternoon. Just to order to note that as we go to each hospital there is a slide on the accountable care organization as it applies to the hospital. This is more of an FYI for everyone as to where they stand, what their future plans are for participation if it applies to that hospital. So we'll say that this one time and if you see us moving past it, that's why. So again, today's number fourth we'll be reviewing hospitals with those four bullet points right there in that order. Beginning with the flying hospitals moving to provider transfers and accounting adjustments. Hospitals that were not compliant with budget orders and then the network itself based on its size. Next week we will continue discussion and voting and at the bottom here we have the public comment that was posted last week to our website and with that we'll move into just be your budget resubmissions and updates with more. Oh, and I did want to make one other statement is that you will not see central Vermont here today. There is some discussion about whether or not in light of additional information that they have if there will be a possible budget resubmission and so rather than waste everyone's time going through that I just want to make it clear that I asked the team to skip over that one for today because clearly we are not making any decisions at this point and it would just require to be gone over completely again. So. Show you based on when we were there and we gave you information from hospitals there were some resubmissions and updates. So North country's original submission is 1.8% NPR FPP increase. So every submission now is saying a 3.4% increase. They identified some accounting errors for their 19 and those have to do with double counting some swing bed revenues. And then they also noticed that they didn't include some capitation and incentive income in their FY20 NPR FPP. So their FY20 changed from 82,900,000 to 179,049 to 83,623,249. Northwestern when we asked the question if their projections change or are they still valid they said they needed to update their FY19 projections and operating margins and also they needed to update their FY20 operating margins. And a lot of this had to do with their electronic health records projects. So they had reductions in NPR and days cash on hand also due to utilization problems with the EHR. They had more expenses dealing with the EHR. So their projections changed from 110,438,452 to 108,246,154 for NPR and a loss of 4,738,84 to a loss of 6,765,758 in operating margins. These projections also have affected the FY20 operating margins. So they had originally budgeted a gain of 1,274,415. Now they're budgeting a loss of 248,0287 and then not changing the NPR. Other changes were we did have something with Center Vermont they had a reduction in their projections and operating margins for 19 due to the NPR collection rates and FPP increased expenses and high inpatient census travelers pharmaceuticals and bed debt. So their projections changed from 209,649,672 to 205,689,804 for NPR and FPP and went from a gain of 678,046,4 to a loss of 4,281,324 in operating margins. But this, like Kevin said, was probably updated with the resubmission from Center Vermont. We also had updates from the health network on their accounting adjustments that they said affected the 19 budgets due to ACO accounting. So Center Vermont's accounting adjustment went from 2,325,600 to 1,806,998. UVM's changed from 8,423,327 to 6,369,722 important to not having changes. So as we've moved through this process these are some of the considerations that we wanted to point out to the Green Mountain Care Board as far as items that we feel need to be considered as you look at each one of these hospitals. And I won't run through every one of them but I'll put a pin point on something like the electronic health record conversion. We are seeing with hospitals that as they convert from EHRs, move their prior one to the legacy system that we are seeing some financial repercussions with them. It's not just overall cost of the health record itself but the process of getting implemented, running a solid analysis on it and really ironing out the system itself. Even as far as the system when it's up and running there often are updates that are constantly being pushed out by EHR companies themselves and even these will have pickups in them sometimes. And hospitals are having to deal with that intensive on staff. It impacts their revenue collection and we're seeing that something like this which encompasses an entire hospital system and everything in the hospital touches the EHR that we need to begin to consider the impact these things can have especially within the first 12 to 18 months. Additional considerations that came along were cost savings initiative being put forth by the hospitals, delivery system reform, leadership turnover, we've seen quite a bit of that in the state and top tier leadership which can certainly impact hospitals performance, workforce, travelers, local tenants, utilization, rising and falling, other revenue and Medicare costs for the incentives. This is a chart that looks familiar in terms of the format and showing the MPRPP dollar value as submitted but again to Lori's previous statement there was resubmitted information. So this chart I just flipped the screens and I think this time the blue cells are appearing on the screen. The blue cells are indicate when a hospital budget's resubmission affected their projection or their budget. And this next slide is a slide again kind of our standard format of which hospitals are compliant and which are not. It's showing the original submission, the resubmission in budget to projection variance. This is important for compliance with the first term of the budget guidance which is for those hospitals that are underperforming that you met with a 5% cap. And then this section over here is the budget to budget percentage change. Showing the resubmission and any hospitals like North Country that it was affected by the resubmission. The last column is if the board approved every provider transfer and accounting adjustment that came across your table in the deliberation process that's the number you would see. So this last column is subject to board approval and we have recommendations for those. This is just a summary slide of the hospitals that have requested an adjustment. You've seen this in the preliminary report. But what I wanted to call out on here is that we are making reference to what we call the FY19 effective budget in a couple spots in this report. This is when a hospital identified an issue or a change in their FY19 budget. But as you know, at this time we don't go back and amend FY19 budget orders. But in order to have an apples to apples comparison of how the hospital is accounting in FY19 and have it be the same as as they're accounting in FY20 we've created an effective FY19 budget so that you can see that. North Country's a great example because that's $620,000 of double swing debt revenue affected FY19. So we'll show you an effective 19 budget. You've seen this slide also from our preliminary that we wanted to show you five years of change and what the average is. We also are showing you how the hospital submitted a 2020 budget. This is all one chart, so you have the pre-earth records. And then the next slide is we were impressed by Northwestern showing that the budget average was grassy. So I'm excited to give you a look bottom to top of where the five year average for approved change in charges for each of the hospitals and where they are going to move. And with that, we'll begin to move into our first category of hospitals compliant with the budget request. That means the budget request does not exceed the 5% cash for those hospitals whose budget's rejected variance exceeds negative 2% and the request is within the 3% 25% part of the pre-earth. So I've got Gifford and I'm gonna take a little extra time with this and we're gonna go through these pretty quickly, but this is the first time that we're using the same format for every hospital. So we'll spend a little more time with Gifford so you get familiar with the format of the graphs that we have. So for Gifford, we've heard and we know based on operating performance that FY18 was a rough year for Gifford. And they have budgeted their FY20 budget largely on their FY19 projection. So for Gifford, you'll see in blue text, FY20, do I think it's a pointer? I'm a big fan of the pointer. FY20 over the FY19 projection is 2.2%. So that's their actual operating performance and that's a reasonable growth rate. They have certain utilization assumptions that get them to their growth rate. They're getting over an EMR implementation. It's one to two years in progress and so the providers are getting more and more up to speed. They're seeing a slight increase in their utilization due to that. But however, their general surgery is not quite up to where they had originally expected. So overall utilization is going down. There a hospital that has put a lot into cost savings initiatives. We've heard all the way up, it's part of their culture is how they describe it. And ultimately what they're asking for is a change in charge to support their positive operating margin. So you'll see this format throughout where we give the highlights of the budget, their change in charge. And then this area is what we heard as staff the hospital using as justification. These first hospitals that you hear us talk about are compliant, so their justification is important. But it becomes even more important to get to hospitals that were not compliant. Because the budget guide specifically states that they must justify their request. So this next chart shows, and every hospital has this, how the hospital was doing in FY19. So for Gifford, they have pretty consistent growth in each quarter, 27% in the fourth quarter was something we asked about. That seems like a lot for fourth quarter growth. Gifford stands by their projections and are confident that they can achieve this in the fourth quarter. And it's important for us to be confident in their projection because we base our FY20 analysis in part on their projections. So Gifford did not update their projections and this lower graph is just tracking their operating margin on a quarterly basis as well. Next chart looks very similar, except this is looking over a span of five years. NPR actual, urine projection and their budget and operating margin actuals all the way up to 18, their FY19 year end and then their budget. So as you can see, FY2018 last year was a hard year for Gifford and they've been working very hard to, I guess turn that ship around so to speak. And then down here we have some, these are some of the financial indicators that we look at a stack and the board looks at as the days cash on hand and age of plan. Just wanna make sure there was nothing else I wanted to add there. Yeah, so Gifford says that their days cash on hand has been stable, but they need that in order to invest in their infrastructure, plans to invest in their infrastructure. So this chart showed the change in charge. Gifford is asking overall for 5% change in charge. We've calculated for each hospital the NPR that's attributable to the change in charge. So in Gifford's case it's 2.2 million. And we've also calculated and asked the hospital to confirm what 1% change in charge is. And so for Gifford it's 457,000. Sometimes there was a discrepancy between what we calculated as a 1% change in charge and what the hospital calculated. And in those cases we've posted what the hospital stated was the change in charge. And it usually had to do with dish or some other way that we differ in our calculation but we defer to the hospital's calculation. Service category, this should look familiar as an excerpt from the staff analysis which shows how the hospital plans to distribute the change in charge over the service lines. Gifford is doing 5% across the board. Not all hospitals did that. But in Gifford's case it's 5% across the board. This next piece shows how the 2.8 million dollars is distributed among the payers. The next part shows, this one's a little strange because Gifford's actually having a negative NPR request. They're going down 3.5 million dollars from FY 19 to FY 20. So that's the negative 3.5. The change in charge, the dollar value that's coming from the change in charge again is the 2.2 million. What we'll do for most of the hospitals is give you a ratio of what percentage of their change in NPR is attributable to their change in charge. That calculation did not make sense in this case because it was a negative NPR request. And then lastly is a short history or recent history of the change in charge approved and submitted by the hospital with the five-year average at the end. And we'll note, this is a pet peeve for staff. There aren't five, we calculate five actual years. FY 15's not here, but it is included in the chart that Lori went over previously. So one number on Gifford is that in FY 19, they came in the year for the amendment to their budget order that increased their change in charge. So this is, as a reference, the ACO information. And if you have any specific questions about this, we can take those either at the time of the deliberation or just follow up after this meeting. So Gifford is on the mend, so to speak, but we still have concerns to staff about their financial health. It's too soon to say whether or not the hospital is prepared to take a cut to their budget. And so, since we consider them one that is still at financial risk, we would be hesitant to recommend any cuts to their budget, and they were compliant with the budget guidance. Thank you. Reckless Regional Medical Center is up next. As we know, it's the second largest hospital in the state of Vermont. Their request does fall within budget at 3.5%. Their budget projection is 0.1%, so we have a lot of confidence in their management to manage two budget guidance as they bring them into the green amount of care work. As you can see here, their fiscal quarters that are completed and their projection is feasible. That just adds to our confidence. They are seeing a projected rebound in 2019 by their operating margin. But overall, we're seeing operating margins dipping from them over the past seven years, which is a concern of East Brooklyn Hospital. They are citing cost pressures related to staffing and pharmaceutical inflation, which are causing a compression, despite their efforts to reduce costs. The compounding issue is deterioration and reimbursement from their commercial payers. They are taking an active role in mental health and substance abuse care in the region to meet the ongoing need. As a result of that, relevant is the need of renovating their emergency department that will come and estimate the cost of $4 million. Their thinking behind that is that they need to provide a safe and compliant ED environment for all patients, including those of mental health and substance abuse complexities. In addition to that, they do want to expand their region to the ACO programs, but they need to build appropriate reserves to do that. They've cited that at about $8 million. So in order to meet these needs, expand that access. They are requesting an increase so that they can have appropriate net operating income for the hospital and begin to reserve those monies. They are a solid financial operator. As you can see at the bottom, where these cash on hand continue to remain steady, it is above the state average. Their age of plant is slightly above the average around 12 years. So they continue to operate well, but they do need this increase this year to explore with some of the plants that they have. It is important to note that the five year will change the charge of approval percentage is 2.9. There are only three other hospitals that fall under that and all of them, in very recent times of their current, are suffering financial duress. As you can see there at the bottom, they do agree it's 2.9%. Patrick, I know that we're supposed to hold all questions to the end, but I just wanted to point out one thing that things are rounded to the nearest 10th of a percent, and their actual request was 2.65, even though it says 2.7, so. Okay, thank you for the clarification. And as I've pointed out, here is their reference to their CFO presentation. I feel it came to see you last week and they are showing a budget projection variance of a negative 19.7%. And their request from their 19 budget is a 19.2% negative. They are in financial straits as everybody seems to know. They have a file chapter 11 as of June 26th, and this process can take them six to 12 months to get through, if not longer. And they're planning to, they would like to restructure with other partners. And they're saying that their projections and budget may and will change because of this process. This particular hospital has been having, as everybody knows, a dip in their 19 performance that's been going from, it's 29% growth down to 19% growth quarterly. Now they're at 23% for the last quarter for 19 operating performance. They have a decline in the operating margin because of that also. They have said that they have no change in their projections. We ask that question to all hospitals. Lori, can you just make one comment on going across that? The 29 just represents that's how much they've done of their full year in the quarter. Cause I know a couple of times we've said it's growth, but it's 29, 29, 25, 23, that represents their 19, 23 represents their 100%. It's just clarification for people. Yeah, it's not a growth. It's just showing. And so if we see, particularly for hospitals that might have 27 or 28% in the fourth quarter, is that a realistic number? I mean, this one, obviously we know what's going on. So they, you know, lost a lot of traction. So their first half was greater. I just wanted to clarify. Cause we've said a couple of times growth and we're close to it. So we know what it is, but everyone else may not. I didn't do a great job when I walked by Gifford, but those, the blue bars show cumulative growth. So like in the first quarter, Springfield brought in 13.8 million. The second quarter they brought in 14.3 million. The third quarter they brought in 9.3 million. And in the fourth quarter, they're expecting to bring in 11 million. And then the numbers on top, some sizes opposite numbers on top are the cumulative. So throughout the year, that's how they're building. And then to Maureen's point, those percentages are, the first quarter is if you take their year in projection of 48 million and divide it by four, basically, they're getting 29% of their year in projection in the quarter one, 29% quarter two, and so on. So thanks about Maureen. That's helpful, thank you. And this hospital for the last few years they've been struggling also. And if you notice, their head of the yard has been down and then operating margin definitely has been down since 2017. The, and then as of their presentation last week, they said they have 10 days cash on hand. So we're very concerned about this particular. In the past, I think that sometimes we corrected this hospital based on their utilization. So at the time of immediate overcorrection. In this instance here, as Brent's incident FY17, they asked for a 0% and they approve them. 0% better wonder if that would help them at all if they had asked for an increase in the change in charge. So as of this presentation, this spring they asked for an increase in the change in charge to the 19 budget of an increase of 55% from up to 10%. So that's part of the reason why they're asking for a 0 change in charge as they figure they can't get any more from their commercial payers. So they're still, they're planning on being medicated and requested. The next category of hospitals deals with provider transfer and accounting and adjustment requests. Hospitals requesting adjustment should provide a transfer to the accounting and ACO account for adjustments. And we touched on a little bit of that stuff. So North Country Hospital, they originally came to us that they're submitting 1.8% from the previous budget. They reviewed that after we sent them some questions and they said, oh, we should be a 3.4% change budget to budget. They had changes to, accounting changes to their 19 revenue because they double counted. And then they asked about to account for some revenues in 20. So if you agree, we will hopefully approve them for a 3.4% change. This hospital is recovering from their EHR conversion with a team help. They noted that they had many awards. One of them is Most Wired. And then also they say they're one of the top 100 critical access hospitals for 2018. This hospital states that they are collaborating with others, they had quite a list in their presentations that they're collaborating. So we really approve or want to see that in all of these hospitals, especially ones that are struggling. So this one is showing the changes for their accounting adjustment. Like I mentioned, they had an approved 19 of 81.5. They want to change it to 80.9. And then also their 19, I mean the 20 budget was 82, almost 83 million and now it's 83.6. So then that would change their budget to 3.4% change. They also in their submission are expecting 2.3% change in their expenses. So kind of like take a look at that. They're trying very hard. In this particular slide we're showing that for fiscal year 19, they seem to be steady growth in their NPR. And then they've had that slow dip in operating margin and then they have improved through the year for the operating margin. And they have said that there was no change to their projections for fiscal year 19. When we ask that question. In the last few years, they've been like a few of the other hospitals struggling. This particular hospital has operating margins back in 19, in 2017 of a negative 1.9 million. And then in 18, another 1.9 million negative operating margins and they're slowly recovering and expecting to recover in 19 and into 20. This hospital also has a good days cash on hand. We've been noting they've been paying their bills on time and everything like that. We would recommend monitoring them though because of we've been looking at them all year if you would like to continue to monitor them. At least that's what that's thinking. This particular slide is also showing where they wanted 4.2% change in charge. They're applying 5% of that to their hospital inpatient and outpatient and nothing to their physician and outpatient. The change in charge is 97% of their change in NPR. What we found is there's 5.3 million of that is positive for utilization. But then they have a negative 2.8 million in reimbursement and then they're also adding another negative, 2.5 million to the bad debt for care. So it sounds kind of weird that it's 97% of their increase is the change in charge but they have other things going on under the hood and this hospital's five-year change in charge average is 5%. I've worked with Western medicine. Their budget progression variance is 5% of the challenge. As you can see it falls below the negative 2% and the cost also exceeds the 3.5% target growth that we set earlier this year. Their change in charge is 5.9%. This is a hospital that suffered some pretty lean years in recent memory and with the update that Lori provided earlier, the rejected operating losses are gonna push almost $7 million for this year. They've cited several items that are impacting other hospitals but this one primarily is struggling with their EMR or EHR rollout and there's added costs throughout this year, moving the next year that they've counted for and they've had to adjust both their projections and their budget. They also were cited by CMS to make compliance improvements to the ED which is gonna come to substantial cost to the hospital pushing an excess of $7.6 million. They are an early leader in the ACO model being involved in Medicare, Medicaid and Blue Cross Blue Shield and they intend to keep that going. They're also undertaking several other prevention efforts up in Franklin County. So they are on board with that and they made that abundantly clear to us in their message to the board a couple of weeks back. They're on this list because they are seeking a provider transfer for these two entities here, Coal Hollow Family Practice and Northwestern Dermatology with Coal Hollow coming into their system and the dermatology coming out. Here is the impact of the Coal Hollow Family Practice that will become into the Dermatology Network and their operating loss that they project to incur and the dermatology practice which is leaving them out. As you can see, it's a recap here. They are having a rough year and up until about a month ago they were anticipating on hitting several income markers but due to recent events at the EHR rule and as I discussed, they don't plan to obtain any of those marks moving forward through the rest of this year and have readjusted their budget to actually budget for a loss moving to facility 20. Here's a recap on the past several years as we discussed, margins have been on a decline and their budget only brings that up slightly. But a major concern for the staff is the fact that even though they've adjusted this and they're going to work through this EHR matter that they're dealing with, their cash on hand has fallen over 100 days in the past couple of years. That is not a trend that we can see continue and because of some of the financial duress that they're undergoing, we can't see a reason to cut their charge this year because they can rebuild that bottom line operating market. As Lori stated that we built the average, five year average shagging charge built off the graph they had put up and they have come in at 0.8% of the five year average of shagging charge over the last 70 years and the only cost that falls underneath them at the lower end of that scale is company. So a lot of this is making up for corrective measures that have been in place seven years ago. Southwestern, so Southwestern out of the gate, it looks like they are not compliant with the 4.3%. However, when you factor in their request for provider transfer, they fall into the 3.5%. I'll have more information on that in the next slide. So they're really saying that this increase is coming from utilization and from the anesthesia practice that they're bringing in. They affiliated with Dartmouth five years ago and they have an eye towards developing a more legal corporate structure with them. Dartmouth has been helping them run their cancer center and their orthopedic program and one of the most impressive things in their presentation is their investment in telemedicine and Dartmouth has been really helping them roll that out. In terms of utilization, they're bringing on two new orthopedic practitioners. They came on board in 2019. This is driving up outpatient surgical services. Their oncology services are increasing and that's one of the services that their partner in Dartmouth. Dartmouth has helped them identify lots of opportunities in their oncology department and as the CEO and who's here was talking about keeping patients close to home. As many oncology patients as they have they can keep close to home. That's a good thing for the patient. That's a good thing for the community and for the hospital. They cited their endoscopy levels are up. Their staffing levels are where they want them to be so they're expecting the volume increases this year and they have a neurologist who's coming on board and is expecting this will increase utilization and they reference the neurologist would impact MRI and CAT scan volumes. So they're really counting on these being, everyone doesn't wanna say fully staff but having their staffing levels up at a place where they can start to see the increase in utilization. They're asking for a 2.8% change in charge. So this is their provider transfer request. They are bringing on an anesthesia practice starting January 1st. So this anesthesia practice was independent in the community and the hospital had the agreement with them. This practice is dissolving. From the presentations our understanding is that the anesthesiologists, the MDs themselves are leaving and this group is gonna be put back together with the assistance and be employed by the hospital with a PSA agreement with Dartmouth. So the MPR impact of that is $1.3 million. We do have a question out to the CFO right now because we didn't get a follow-up to Chairman Mullen's questions about the overall impact of bringing this practice on board. We did hear that the hospital was giving the independent practice a $1.2 million subsidy to run their business. We did hear that now as a hospital-owned practice they're gonna receive $1.3 million in revenue but what Chairman Mullen's question was, is this a more efficient service line? And what is the total amount of money that was made before it was a hospital-owned practice? And so we are waiting for the follow-up to that. Apart from that, this qualifies for the provider transfer acquisition policy. This wasn't independent practices being absorbed by the hospital. So subject to the reply from the CFO, this is one that we've been moving. We're clicking issues. So we've seen this. Their quarterly growth looks steady. Their operating margin is steady throughout the year. They did not update their projection. They're sticking by their projection. And then over the years, you can see that they had pretty consistent operating margins. And I kind of joke to staff that like you see an operating margin looks like that and you think that's a high operating margin compared to the operating margins we've been seeing but they need this operating margin. This is part of how they invest that in their infrastructure. Today's cash on hand, this is one of those hospitals that does not reflect their parent company. So when you factor in their parent company, their FY20 budget is 161 days. Change in charge is coming in at 2.8%, which is below average, the 3.2 system-wide average. And their five-year change in charge is 3.5, and the reference here is their ACO slide. All right, and then on to hospitals that are not compliant. I think like halfway through, maybe a little bit more than halfway through, this is where it gets more tricky. So Brattleboro. Brattleboro, their projection variance is minus 0.7%, so they don't trigger the 5% cap. However, they're coming in 7.2% over budget. When we see a request like this, in fact, any time we look at we're assessing a hospital, we look at the FY20 budget over projection. And, because projection is the closest thing we have to actuals, so their budgeting, their FY20 budget is 7.9% over projection, which is very high. The hospital is citing, they say that their story is utilization. They're really gonna pull this money from increase of utilization. They, in their presentation, were saying that there's a renewed confidence in BMH in Brattleboro that patients that had left are now coming back, now that they have staffing levels that are closer to where they need to be, that the patients are returning, specifically in orthopedics, primary care, OBGYN, general surgery, hospitalists, dentists, and urology. Let's see. In the last round of questions that we sent to the hospital, we've asked Brattleboro again to justify their approach. So they say they're experiencing it. We would expect to see it a little bit more in their FY19 numbers. We don't see it in their FY19 numbers. So this is the hospital that we challenged to further justify their request. Their operating performance in FY19 has been very stable, growing quarterly consistently. And if you look at their multi-year trends, you can see that they're taking a dip in their operating margin over the last few years and they're projecting to come back up and budgeting a positive $1.1 million in operating margin. This is their change in charge slide. They're asking for 3.4% change in charge, which is slightly above the average. However, their 2.9% five-year average is at the very bottom. That's one of the smallest ones of all the hospitals. So again, this is a hospital that we really need to come to us and justify their request. They have, we sent a question out on Friday, they're due back today, and we're hoping for more evidence of the utilization. And this direction is flat on the AGO participation. Cochle is another hospital that we are concerned about. They're finding help and they've had a change over in leadership this last year. They are budget projection, they have a variance of 2.6% needed. They have for their FY20 request to their FY19 budget, they're 3.5%. So they're right at the target, but it triggers the 5% cap. And Cochle does ask us in their presentation to us to have them as an exception to this, a guidance for a rule. Cochle is 6.3% budget to projection, that's their percentage growth, and they're from 18, they're expecting 3.2% from 19 to fiscal year, 18. This hospital also is asking for, has it had had an overcorrection in NPR and I believe for utilization. They're expanding in their sleep medicine, telemedicine and breast care. They are also losing their primary care though. This hospital also is saying that their NPR growth has averaged 2.8% for the last five years. So they're asking for a 9.8% change in charge. Cochle has had some, they're trying to recover in 19. It's not huge swings in their quarters for 19, but the operating margins have done a lot of dips due to their expenses and everything. So for their projection, they're a loss of $1.3 million for 19 and the budget of $1 million gain for the operating margin for 20. They said there was no change in their FY19 projection. We asked that question a step back. This hospital as you're seeing has been seeing some different swings in their operating margin. They have been negative since fiscal year 16 and so as we mentioned before, we're concerned about their financial health. The days passed on hand, they're struggling, but they say that the current ratio is okay and they're not too high 11% yet, but they're concerned about their aging plan. Cochle's change in charge, like I mentioned, is 9.8% and this is 148% of their increase that they're asking for in NPR. This hospital has submitted a five year average of 1% and they're saying there's 3.2% average, including fiscal year 20. This hospital is just struggling right there. Not sure what we wanna recommend. Northeastern hospital has been a financial stable hospital in one of the most impoverished geographic regions in the state of Vermont and they continue to put up solid margins of operating margins at the end of each year. They're kind of in the opposite scenario as Rattle Burrows, which I already just discussed, they're budget rejection variance, they're budget rejection variance as opposed to Rattle Burrows is up. They're requesting the same amount of Rattle Burrows at 7.2%, which triggers the, exceeds the 3.5% cap that was set, but utilization volume is driving their numbers here and their budget requests and they have a trend of that. They're citing improved confidence in the region with their services. They're also citing flow from the capture of patients and so their numbers are moving and their average daily census has increased as well. They're having to increase their staffing levels to meet up with some of these new demands on them and the long-term goal is to expand their urgency of farming which they've cited as being too small for the current patient load that they're dealing with and other health care needs. So they aren't requesting a high change, but we're also seeing over time with the revenue growth going up and up and up that their operating margins stays relatively flat which leads us to conclude that there are potentially more cost-containment measures that could be undertaken by the hospital. So we're leading in the direction of a quarterly report to show us what cost-containment efforts they're putting forth, what the result of that is, and potentially reducing the requests. So overall, however, their age of plant is right in line and their base cash on hand ever made and relatively stable. They are actually in the ACO under the Medicaid model and they are actively exploring other community health initiatives in the northeastern part of the state. Their average change in charge over the last five years is 4% which puts them right around the middle of the pack and this year it's coming in at three, 10 o'clock. Shana Skutney. So Shana Skutney is located in the southern part of the state and it has two critical access hospitals very close by. They are requesting a 7.4% increase over their FY19 budget. When we look at that request compared to projection at 6.5, so high, this is high. Their support is they're expecting increases in utilization. They identify kind of two specific areas where that utilization is coming from which is Springfield and New Hampshire. We can see it in what they've submitted to us but they're also hostile, we've sent the follow up question to because we need further justification. They've been experiencing the Springfield volume and the New Hampshire for a shorter period of time but they've been experiencing that New Hampshire volume for a longer period of time and we would expect to see that more in their FY19 operating performance. They're saying that their staffing levels are up and they credit partially this to the instability in the region that they are a stable employer and so they're able to attract employees that way. They plan to bring on even more primary care patients into the hospital and they said, I believe it was in their budget presentation that there's at least 1,000 patients out there that don't yet have a primary care and that's actually a primary care physician so they are planning to bring those patients in. So one of the things we heard at the, this is related to their reserves is, because again, this number here, the 7.4% is partially masking a reserve, an ACO reserve that they've made. What we heard at the hearing, I believe, is that there was some interest in the board for their discussing reserves in general and maybe with some specificity to non-Espetny. Not here right now, but at some point during the deliberation process, I just want to flag that too as something staffer and I believe we might have some staff resources, outside resources that can help with that conversation. I really wanted Kevin to hear that and he wasn't in the meeting. So, maybe you should rewind the tape. Okay, rewind the tape. So at the hearings, we heard that non-Espetny's reserves for the ACO were something that the board wanted to further discuss during the deliberation. Not right now at this meeting, but at some point during the deliberation process and I was sharing that. We think that we have access to some resources that could help with that discussion. The board is interested in that. So, their change in charge is 3.2% and they're stating that they need that change in charge to support their operating margin, which is pretty typical. It's a pretty consistent question throughout the hearings. What was the methodology for you to get to your change in charge and they start with looking at each department and what their utilization expectations are, how much it's going to cost to run the department for that year and they pretty much back into their change to what their operating margin target is and then they pretty much back into their change in charge based on that methodology. So, quarterly, they're looking at a big fourth quarter here at 27%. When we asked about that, they stood by that. They're not changing their projection. They feel confident that they can achieve that as a year-end member and their operating margin is, you know, dipping in Q3, but expected to get back up by the end of FY19, but still at a negative 400,000. This is their historical look. So, again, a swing in their operating margin. Now, they became affiliated with Dartmouth a few years ago. I don't have it written down in front of me, but that has impacted their MPR and their operating margin in a positive way. Their change in charge, the savings is 3.2%. Their five-year average is 4.3, which is about the middle of the pack. And again, this is a reference slide for their ACO participation. And then, see Grace. Grace was with you last week with the strength of the mouse bet me and Grace's 19 budget projection variance is a negative 3.3%. They're requesting 8.7% for the 20 budget over the 19 budget and their 20% is 12.3% over the 19 budget. This hospital, two years, the 5% cap, but their request is, and their request exceeds the 3.5% growth. This hospital is asking for a 3.2% change in charge. They are stating that they're having fully staffed permanent care, doctors and staff, and that that is part of the reason why they have increases in utilization. And as Agatha mentioned, they're changing charges to support their operating margin. This hospital is expanding their rehab and their budgeting utilization in medical for about a million dollars. This hospital does no surgery for elected procedures. This is what was happening this year for each quarter for Grace. It's been pretty consistent. They're expecting 20% percent of their revenue in this last quarter. And they want to budget over 20 million for fiscal year 20. And then the operating margin for 19 has been a little bit up and down but it's still been negative throughout the year. They're also expecting a negative operating margin for 20. They said that there was no change in their projections for 19 and we asked the best staff. In the past years, this hospital has seen a lot of up and down with their broken NPR. And then they've also seen all across the board a negative operating margin. But this hospital has community foundation funds that's available to them. So their total margins are positive. So as reflected in their days cash on hand, these are positive and have been pretty steady but their age of plant is pretty old and they haven't been able to put very much money into their plans. Grace is asking for 3.2% in their changing charge and they have a 5-year average of 4.6% that we've approved in the last five years. They're planning on applying their change in charge across their service categories to see them up 3.2% plus all the categories. And they are not participating in the needs of the others. Quarter was presented with the rest of the path. It would have been presented with the Provider Grants for Acquisition Group. They're requesting, they're bringing on a general surgeon and radiologist and we have a slide on that. So their budget to projection variance is minus 0.8%. So they're coming in pretty close to their FY19 budget. They're asking for a 3.5% and I'm sorry, a 3.5% increase over FY19. And when compared to projection, that's 4.4. I stumbled a little because I think there's a typo on here. Budget to projection variance triggers the 5% cap which it does not. So we will take care of that when this is over. And the 3.5% target growth rate does not, it is within budget guidance. So you can ignore the red language right there. We've proof read this about a million times. But so their justification is they're citing the case mix index as a reason for the increase in the NPR. So the complexity of care, the patients that are coming to their hospital are more difficult to care for than they used to be. They're also asking for provider transfers in the amount of 1.1 million dollars, which we'll talk about, an accounting adjustment of 1 million dollars. So this is reclassifying bad debt collection fees as an expense. So it's money moving from NPR to expenses. And the network is stating that the HACA board or the reporter is stating that their change in charge, their 2.6% commercial change in charge is necessary to cover annual inflation on their commercial business and to support their long-term operating margin. So the network presents it that they like to have their goals to have a 3.5% operating margin for a UDM medical center and a 2.5% for the critical app for the reporter and some sort of medical center. So here is their general surgery transfer. So what happened in their community is that last year, one of the two independent general surgeons left, and that the second general surgeon is retiring. So these were independent surgeons in the community. So the hospital, in order to fill that need, is going to hire that second independent general surgeon on a 0.75, almost a full time, but still part-time basis. So this does qualify for, and staff's opinion qualifies for the provider transfer acquisition because these were services that were previously provided by an independent provider. And that independent provider is coming to the hospital to be employed by the hospital. So the impact of that, let me just go back one slide. Nope, move forward one slide. So the impact of that would bring them down in their MPR request. And then for the radiology, this already took place June 1st, 2019. Quarters had a long-standing relationship with an independent radiologist practice in the community. And that's no longer going to be the agreement. They're going to bring this practice on board and have it be hospital-owned. And their reason, they wanna do this so that they can offer a fully integrated service line. This will streamline the patient experience and the billing process. So this would be the equivalent of 1.8 FTEs, and if approved, would bring down their MPR request. So here they are on a quarterly performance, pretty consistent throughout the year, and they did not update their projection, they're standing by their projection. And on a historical look, the CEO, when he testified, used the word tumultuous, that quarterfist had a tumultuous history, and that the campus is in need of upgrades. He said that they've been making lots of investments in their communities, specifically the new urgent care facility that opened, and this takes a lot of pressure off the ER. Patients who need palliative care, cardiac rehab, surgical services, they can now get some of those services at the urgent care facility. They're integrating surgeons and radiologists into the work that they provide at the hospital to keep more people at home, so they can provide a full range of services in the Middlebury area, and part of that is the acquisition of the radiology practice. So one of the things that we wanted to note with Porter is that they are going live with Epic later this year, and although they've done a lot of training and a lot of buying from the staff, they have concerns about, as anybody would when they're about to implement a manager, they're cautiously optimistic, and so are we, so we'd like to keep an eye on that and see what impact it has on their revenues and expenses moving forward. This is their change in charge. They're asking for it, the network does things a little different with their change in charge. They submit the overall change in charge, which is 0%, and then they submit a commercial rate, which is 2.6%. So down below, we've submitted, or we've calculated the five-year average that blends both their overall change in charge and their commercial charge, and their five-year average is 4.3%, and this is the ACL summary slide. Our last hospital today is the Medical Center at UMU-TBM. Currently, their budget provision variance is nearly 2% over. Their request is 6.1%, which exceeds that 3.5% growth rate target. As Agath pointed out, they do do things a little bit differently. Overall change in charge and commercial charges are listed here. They are setting case mix index in unique patients as a new way of looking at the need for the revenue growth. They are stating that they're seeing more patients, utilization volume, and also sicker patients, and therefore requiring for resources to provide that care. They are in this last batch, and they are asking for an accounting adjustment related to their ACO. We'll have Agath talk about that in just a second, but I'm gonna continue on with the operating performance. Revenues are projected in the year around 1.3 billion, and bottom line will come in around $39.4 million, which is a lot of money, but when you look at the historical trend of operating variance, it's a business that's seeing reductions in that bottom line revenue. They have and are making some pretty major investments up at the Medical Center and with network hospitals, as I have spoken, rapid implementation, which pushes the $150 million milestone for outright costs. And they stated their confidence in that system, but when go live date comes, there's gonna be a lot of work to make sure that the information that is being passed through that system is accurate, and that includes financial information. And so they're seeing a reduction in the bottom line revenues, yet top line revenues, dollar-to-dollar, are on the increase. They still maintain a healthy balance sheet and a healthy age of plant, but we are noting these bottom line revenues are in decline. So this slide has the same exact format as you saw in North Country, who was also requesting an accounting or adjustment to their FY19 budget. This is where that FY19 effective budget comes in. So in their initial submission, the UVM requested an $8.4 million adjustment for ACO payments for reform investments to raise the ACO. On August 9th, they resubmitted that, they dropped it from $8.4 million to $6.4 million. And what this chart is trying to accomplish is, again, that apples-to-apples accounting. If you took the accounting that was in place in FY19 and applied it to the accounting to the budget that was submitted in FY20, what would you see? So on paper, in all the documentation you see and all of our analysis, you see the 6.1%. And that is the true FY19 compared to FY20. But when you do the apples-to-apples analysis, the effective budget drops a little, which increases with the 6.6. Now, before they resubmitted on August 9th, you might have a 6.8 member in your memory, and that's what that used to say, 6.8, and now it's 6.6. Do you, Patrick? You? So summarizing, they're overall change in charge. That 3% commercial charge is 4%. Their service categories, they hire one to reduce their professional services and ship the cost up to invasions and allocation. Their brood average around 3.9% falls just below the median and just come in slightly under what they've submitted in years past. And then this second to last slide on museum is something that when we walked away from the budget hearing at Middlebury and we debriefed as staff, we walked away from kind of three different ways of looking at the UMM budget. And so we developed a slide to mock up those three different ways. Before I even get into this, though, because it's going to, I'm going to talk about three different ways of looking at FY19. Whatever decision the board makes in this deliberation, the growth will be based on FY19 that was approved and the FY20 that's approved. So just kind of pointing that out as a level set. So what we heard was that there's the sort of standard way of looking at the growth, which would be the 6.1% that we're seeing, which is looking at their FY19, oops, I meant to blaze a point, their FY19 submitted an approved budget. And at that time they asked for a 1.1% increased over their FY18 budget. So this is what happened, this is history. So FY19 was approved at the 1.2 billion dollars. That's one way that we've heard board members looking at it. We heard another way, which is that UMM came in at 1.1 in FY19, the maximum target growth rate that year was 3.2. So we heard that that was a perspective that a board member or board members had. So we did the math on that. And this right here is had, if it had a 3.2% increase over their FY18 budget, they'd be looking at a $1.3 billion budget in FY19. And then kind of a third way of looking at it is, and this is similar to how we looked at Gifford, is to look at their FY19 projection as the basis for analysis. Because that is what most closely represents actual operating performance. So we heard this as staff and we took it kind of a step further because we knew the question would be asked, what is the percentage growth using those three different looks? And that's what this lower chart represents. So if you look at just kind of the basic, it's the 6.1, that's if you use the FY19 budget that was approved. If you use the FY19 budget using that maximum 3.2% growth rate, you would see a 4.6% growth rate. And if you use the FY19 projection as the basis, you would see a 4.1% growth rate. So these are just different ways of looking at the same data. But as a board of five members, you look at things differently and you wanted to provide a tool for you to talk about that or think about that. So wrapping up, some of what came out of the budget hearing was a discussion on a case in mixed index and we reached out to our folks and boss to put together a compilation of what that has looked like over the past seven years and we thank them for that. But we wanted to provide this resources to the board of members as that was the topic of discussion more specifically with the UVM Health Network and we've also included MPR and STP dollars and percentage growth, which reflects the submitted budgets for your peruser as well as operating margin dollars and operating percentages. And with that, we have covered every possible discussion today. Thank you team, very thorough, very well done. I know you've been spending a lot of hours on this so kudos and before we start to walk through board members' initial observations, is there any member of the board that has a question for the team? I have two comments. Go ahead. Yeah, just two comments. One, when you're looking at, if you go to Gifford and you're looking at the change in charge piece. I'm trying to figure out what size it is, yeah. Would have been better than starting from the beginning. Well, I could have gone. I mean, it was the way this was similar on a few. One suggestion, whether it's for next week or next year would be to do this change as well off of their current forecast. So hospitals that are well off their forecast, where this is looking like they're asking for, well, they are asking for change in charge of 2.2 million on a decline of 3.5. But if you look at the revised estimate, they are asking for an increase over the prior year. So just as a comment, sometimes that might be helpful. I know their comparisons often are to their budget, not against their projection. So it's just really a reference to say where they are now, they're actually have an increase of X and this would be the percentage. I think it's more relevant. And if you did that, Marine, we'd be able to give you the change in charge as a percentage of the increase. So that's, thank you, we'll do that. Correct. And then just a comment on the network's changes to budget for the ACO participation. And I'm not sure it's really gonna impact anything, but that was budget. To me, I'm not sure why they're making a change. I get when we want apples to apples and when we compare the, as far as I know for how they're actually projecting 19, they're not including those numbers there. They actually put it back. So I think the 19 projection and the 2020 are actuals, but why they're saying their budget was wrong, that was budget, budget's wrong from day one, but that's what they put in their budget. So I'm not sure why they're making changes for the ACO piece for their budget. I don't think it really impacts what we're doing, but maybe that's a follow-up back to the network as to why they would be changing what was in their budget. Their budget could have been wrong, but that's what we built the budget on and that's what they made adjustments to and talked to last year. And they made those comparisons against 18 when they presented 19 and so, just a comment. Any other questions from the board? Tom? Just a couple of clarification things, I think. Number one is just to be, I think I'm clear on it, but just to make sure the change in charge chart that looks at the five-year trend, the five-year average of pick any hospital, that's not a compounded average growth rate. That's just a mathematical average over those five-year period. Correct. Okay. Looking at the Brattleboro presentation, I think on page, let me get there. So I remember during the discussion, and that my guess is the transcript was buried out, is that the relationship of Springfield and Brattleboro Memorial Hospital was significant in some significant change in terms of pediatrics and some other services. And that is in reference to here. And I think in that period, there was a reference that maybe we would kind of put some of that growth into their calculation because it's not system growth, it's just moving money around within the system. That's part of the following question we have. And they were one of the first hospitals and we asked them to present additional information. We just haven't received it yet, Tom. Right. So, but in my, Scott, you mentioned Springfield. Now, in Brattleboro, you don't mention Springfield. And I just, whether or not they submitted or not, I know that that was an issue. One more picky-owned thing possibly is on page 61, you have, on the right-hand side, the northeastern changes in charges at a 3.5% growth. And on page 64, at the bottom, you have it at a 3.4% growth. I mean, that might just be a rounder error. Right. Might just be a rounding error. No, thank you. And finally, more broadly, is something that would help me, or I think will help me, maybe nothing will help me, is to have a hospital-hospital comparison of payer mix. Because here, as you go through it, it's change in charge. And then you see commercial, Medicare, Medicaid. And, but that's only the change in charge that doesn't profile the underlying paying, payer mix across hospitals. And to me, that's a huge variable. To know that X-Hospital has a 60% pay or mark commercial mix, and somebody else has a 52% or a 49%, they are in a more difficult position. The lower the commercial fees, the more difficult position the hospital's in. And I just think that being in my face as I go through these would be helpful. Yeah, so in response to Brattleboro, we should have mentioned Springfield, because they definitely are getting some utilization from Springfield. In fact, we know that the closure of the childbirth in Springfield was an agreement with Brattleboro that they're working together there. Mount Scutney was able to, we're looking at their budget, so we're looking for numbers. Mount Scutney was able to point to a number. Their estimate impact on the Springfield visit Brattleboro did not. We're hoping that when they reply to us, they'll be able to provide us with some sort of figure. Well, maybe the representatives in the audience will let them know. I thought we were pretty clear at the hearing, but we just have had radio silence so far. Yeah. Other questions? If not, at this point, I'm going to start asking each of the board members to share their initial observations. I'm going to start with Robin and just work our way down. So Robin. Thank you. Thank you to the staff. I know it was a lot of work to put together these slides, but I think you really distilled a lot of the relevant information for us, so thank you for that. So I would say in terms of my initial thoughts, I am concerned that on a statewide basis that the overall NPR trend is over the all-pair model target, although close to the upper end before we hit corrective action. Of course, it's not a perfect crosswalk. We've talked about that probably every year that I've been here for the hospital budget hearings that the APM target is a PMPM. It doesn't include out-of-state residents. The hospital budget is overall growth. It does include out-of-state residents. But in the past, when we've had our consultants look at how to translate the two, the three and a half was a fairly good proxy, even though rough. So that does concern me. With that said, we do have a lot of our hospitals who at this point have multiple years of negative operating margin, and we have expressed concern about the solvency. Many of them, and Kevin has been doing lots of check-in meetings with many of our critical access hospitals in particular, but not just critical access hospitals. In terms of the, so when I go hospital by hospital, what I've sort of been trying to, the process that I'm using for myself is to look at the accounting changes in the provider transfers in terms of whether it represents like real growth or in the case of many of the accounting changes, moving things around, quite frankly for me that makes it harder to determine the real growth. But what I'm concerned about is the real growth that would flow through into the overall system totals. So for example, when I'm thinking about it is will this number impact somebody's premium or the bottom line for one of the public payers or is it truly money that's in the system but not really an additional dollars? And then what I have been doing is taking the hospital's individual NPR compared to the guidance and considering individual circumstances. So how much of the NPR is driven by the charge increase and I'll come back to charge in a moment. I think I've come around to Maureen's way of looking at things in terms of the aspirational budgets and does it look like what they're asking for in terms of NPR is really obtainable and just sort of my initial reaction is where I feel like it's not obtainable. I would rather adjust them down and then suggest they come in for a mid-year correction if they really are on target to hit that higher amount. That's just sort of my initial thought on that. And I would be open to reevaluating if in some circumstances if, for example, three new primary care docs are increasing access and we want to promote that, I would be amenable to amending later in the year but we really have not seen many hospitals even when they're adding providers making huge jumps year over year given kind of the way things have been going. Obviously the financial metrics and whether the hospitals is in distress is a big consideration and also for some of the hospitals looking at some of the access issues if they are hiring new providers and it's an area that we know is had high wait times. The example that comes to mind other than primary care would be for example dermatology at CVMC I'd be willing to give a little more room to grow when we know that it's an area that people really can't, are really having access issues. And then I also look at the five year averages and the blueprint metrics on cost and utilization to see if the HSA is where they are in terms of either a higher utilization area a lower utilization area as well as what the charge has been. In terms of how I'm looking at charges I do think we should think about medical inflation because that is something in workforce issues because that is something that is not always easy for an individual hospital to impact although I would say that we have definitely heard some variation in terms of looking really drilling down into their costs and there are some hospitals that have really been making a very good effort to cut costs and I think we want to encourage that as well. So what I've kind of been looking at in terms of the charges being high are the hospitals that are over 4%. There are some of them obviously that are in terrible financial straits and to your point Tom have a pair mix where really their only hope of breaking even would be in that asking for a higher charge so I'm willing to take that into consideration like we did earlier in the year for a couple of hospitals who came in. So that's kind of my thought process and how I'm approaching it both on the macro and the micro level. I would be ready to move forward and discuss hospitals with compliant requests if we can get that far today as well as if we don't have outstanding questions some of the others that would be compliant if we approve the provider transfers and those sorts of things. So that's where I'm at. Thank you Robin. Tom. Well, the kind of the area that I'm having the most concern about is trying to integrate the statewide systematic goals that we have with the bottom up approach to 14 hospitals. And it's, and that's why I'm just, as you say maybe today we can do the compliant hospitals. I'm thinking if there's an imbalance among the compliant hospitals and the say other hospitals that are not compliant in terms of resource allocations maybe we want to move some of that capacity around. In terms of the scale of all of this I did, if you've kind of walked down we have the three and a half percent budget over budget. That to me doesn't practically seem to be a scary task on first branch. The state budget that just passed it was general transportation funds at 2.8%. So it's a very large complicated budget that some, you know, the Senate and the House and the governor were able to bring home. But it leaves us with a $27.1 million problem to solve. That's the number. And when you subtract from that the $6.1 million in the total acquisitions it leaves us with a $21 million problem. Which is seven. Just to clarify, what is a 27 million problem to solve? 27 is the math would be the 2020 budget requests at 2.7 to 8 billion over the 2019 approved budgets at 2.61 billion that's the delta. But then we're making these adjustments for acquisitions and that brings us down to 21 million which is less than a percent above our target. So, but it's still a big number. And I'm kind of looking at issues like the cost shift and thinking is it fair for us to completely stay within our established lane and allow these other forces to be somewhat disruptive. And so I'm just, this is just a hypothetical example but I don't quite understand why the state's health care provider tax applies equally to both revenues obtained from fee for service and revenues obtained from fixed perspective payments. Fixed perspective payments is a reform effort that's very important. They came into place after the last law establishing what the hospital tax, hospital provider tax was applied to and the amount and that tax amounts to 23 million dollars. So if you, and this is just math, if you say okay, well maybe the provider tax should be 6% on fee for service revenues and 2% on fixed perspective payment revenues then that's a $15 million delta and that's a big step toward reaching our $21 million goal. And it's not that big a deal to the state. The state does have, and I know this dearly, options that they could have employed could employ to find alternative revenues for what they derive from the provider tax on fixed perspective payments in order to kind of match the federal funds as if they need that revenue to match the feds. So for me, is it, do we do the best we can here? Certainly do no harm here. Try to help, as Robin noted, the hospitals that have weak operating margins and are doing their best to both manage their bottom lines and participate in the state's reform systems but not put, but stay within our lanes rather than try to maneuver the process in a way that we effectively stay within our lane but we're saying to those outside our lanes, you gotta come to the table and help. You gotta get serious about this or it's going to be a very difficult road in terms of achieving the goals of the all payer model. And I'm also not opposed to moving money around within the, I kinda look at it as there's so much oxygen in the room at a 3%, 3.5% level. And I don't think that the submission process necessarily equally kind of shares that oxygen in the room and that the board might want to move money around within those requests to, in my biased opinion, help the smaller hospitals at the expense of those that are relatively well-healed. And I actually, the ideas that I have, I kind of put down here in a little spreadsheet. And since we haven't mentioned at the beginning of the meeting, we can't talk about this stuff. So here we are. I can talk about it here and I'll hand that out to you folks and you can do with it what you will. So I just ask a question about your public board. Do you want me to hold that? No, go ahead if it's clarifying, go for it. Robin, I remember you sitting next to me. So I'll be calm. So just on the provider tax stuff, I think, and I know you were giving that as an example, just an example, but there is very complicated federal regulation related to it, including requirements that would be consistently applied. So I think for things like that, and it's my lawyer training, I know you're using as an example to say the state has a mechanism potentially and just potentially to look at it, but I'm not really comfortable banking on that kind of a thing, particularly not around the provider tax without legal analysis because it is complicated. But that was my comment. My question is, can you talk a little bit about what you mean about moving money around because I think what you're saying is granting requests that might be above the target or higher charge for an individual hospital, which means we're not uniformly applying the three and a half, but is that what you mean? Because to me, it's not like there's real money to take from one hospital and give to another. It's not like there's a bank account where we can say, hey, let's withdraw from this bank account and put it in that bank account. It's projected utilization. The charge is obviously more firmer because that can then, depending on how the negotiations with the insurer fall out, those get put into contracts and then memorialized. But with the utilization, it is somewhat unpredictable in the sense that it's a projection and your provider practice patterns really matter there. So I just, I wanted to understand that better. Right. So let me just go to your first one real quick. Yeah, sure. It's the issue that you raised. So I look at what happened on June 30th, 2019 last year. And at the end of the year, there was a reconciliation of Vermont Health Connect. And from that process, there was $78 million that was extracted that wasn't used once they were able to reconcile the eligibility records. And that money was moved out of Medicare, the global commitment appropriation into the general fund. It's $78 million. It increased the human services caseload reserve from $22 million to $100 million. And that was money that was originally appropriated by the legislature for Medicaid. That's what it was there for. And they didn't need it. And so they not only moved it to the general fund, they moved all of the state healthcare resource funds to the general fund. And so that is a big picture item. There are other things like the, for example, the audit that the auditor did recently of Dr. Dinosaur. And the theory there was that in two or three years when the eligibility system gets resolved, there will be less money going out the door to pay benefits for people that haven't paid their premiums. So the state has options that they could bring to the table. And I'm just looking to find some way to make that conversation a lively one. I agree with you that the provider tax might not be the right path. And that there are these, you know, when I was finance commissioner, that's when we did the provider tax. And I'm sure it's over chained quite dramatically since 1993. Having, you're looking at your, asking the second question, I may not be very frank here. I look at UVM Medical Center. And I see that, well, we re-benchmarked them by $38 million for 2018. They came in with a budget that requested $19 million for 2019. And they passed that by another $23 million and now are into 2020 looking for another $52 million. That's capacity that engages a commercial rate change. So I'm not adverse to exploring whether or not a UVM could live with a 2% rate change. They've had very good years. You look at the history of their operating margins, very healthy, a great institution. They've done wonderful things in terms of having to start one care. So there's a lot of applause that's deserved there. But I'm then looking at like a place like Gifford. They came in with a request. Their bottom line request is very tight. It's clear that they have made the tough decisions over the last year and a half, two years to rebalance their budget and to put themselves on a better trend. I wouldn't mind giving them another half a point in their commercial rate that they didn't ask for. Just to say good job folks or a hospital that is struggling to put together reserves in order to join the ACO. One of our top priorities to give those hospitals that are struggling to find the reserves of a little extra. Just to give you a sense of scale is that one point of on the, so the four points that UVM is asking for on their commercial charge is equal to 20 million bucks. That's five million dollars a point. If you gave all the other 13 hospitals a one point increase that comes to six million dollars. So the scale of that kind of equity is reasonable. It's not like it wouldn't be mouse me to Gifford to get another couple of hundred thousand bucks. So that's what I'm saying. Okay, thanks. Okay, Maureen. Thanks. First I just wanted to acknowledge and appreciate all the hard work and effort. Both from our staff, but also from all the hospitals. It's clear that meeting the patient and community needs are really the primary driver for what's generated by the hospital requests. To kind of start to lay out where I'm thinking I want to look back at 2019. Overall the 2019 projection to budget is only a 0.1% variance. So pretty much right on target. However, 10 of the hospitals are short of projection and two are significantly over. And that's what's making up the 0.1. When we now look at the 2020 requests eight hospitals are requesting higher than the guidance which is either the 3.5% or the 5% if they were 2% missing on their projections. The two that are over this year are two of the ones requesting but the other six that are of the other six that are requesting five of those are missing their budgets this year. So they're missing budgets this year. They're asking for more than what we were looking for for next year. And I will say it again, but several of these do seem aspirational in what they're asking for. When we now look at operating margin, in 2019 all the hospitals were projecting positive operating margin. The current forecast shows that seven of the 14 hospitals are now projecting losses in 2019. And five of the six hospitals that are projecting losses in 2019 are missing their NPR estimates significantly. Since most of the expenses we've heard are fairly fixed for hospitals or they're slow to be able to reduce a top line miss can have significant impacts on their operating margin, which create losses. In addition, hospitals that are exceeding their forecast they're not showing leverage for the fixed costs. Partially because of poor forecast, they have a higher need for overtime locums and temps also at a higher cost. So we're missing it when somebody's low they're saying they can't cut their expenses when someone's high, their expenses are being cut and they're not making the difference up in margins. So now looking at 2020, several of the hospitals do have aspirational top line forecasts. The reason I wanna make this clear is because a reduction in NPR for any of these would be reflecting the trends that these hospitals are showing and not being a reflection of reducing services or turning away patients. I agree with Robin that possibly having these hospitals back if assuming that we do make some top line reductions on some of these hospitals that are exceeding requests the three and a half or the 5%, having them come back in at three months or six months to see where they're at and to see if it may be warranted to go to a higher number. The point there is some of these hospitals it looks like they're not gonna hit these numbers based on their forecast. They're building their expenses to these forecasts and then they're gonna continue to have losses which is a really big concern. Because it's really critical that the hospitals will align their spending and expenses with a realistic top line forecast. When I look at the commercial rate increases they do continue to reflect cost shifts as increase in Medicaid and Medicare are not covering the inflationary expenses but they're also reflecting getting to top line increases and covering shortfalls from utilization and potentially where they could be more aggressive on cost savings and efficiencies to cover costs. So overall, net where I'm looking at is I see a challenges in many of the hospitals with continued loss and operating margin and need to look at how we can change that. And some of them are asking for high increases in commercial rates. We may need to look at those and approve those this year to get them back on track but really focusing on is their top line still achievable? And I believe when we go through several of these individually that they didn't prove their case to me that that's where their top line was trending and I think that's really important again for the fact that continuing to have high top line they can't cut their expenses and they have losses. Some of the others that are over, I do think it's important to look at the facts that people are moving, getting their higher level of care potentially at the bigger hospitals that may warrant to have a higher increase year over year. So I'm willing to look at those things as well. I think particularly with the UVM network that they under forecasted where they needed to be in 2019. I do like the chart that the staff showed about where that would be if they had come in at the, I look at it as if they had come in at the 3.2%. We would have given them, they're about 1% over in total between the two years and that may be warranted based on people coming in from other areas across the state. So we'll get into more details as we go hospital by hospital, but that's really what I'm looking at. Thank you, Marine. Jess. I got a double mic here. All right, well, I guess like everybody else, I want to extend thank you to the team. I know that Patrick not being here, but that everybody here has done a lot of work and it's really appreciated. And this slide deck is so comprehensive. I think it's the best slide deck we've had as a summary of the hospital budget hearing process. I'm grateful to it. I also just want to extend a thank you to Voss because they've provided some supporting materials to us in this hospital budget process related to the case mix, but also related to the Medicaid and Medicare recent changes and reimbursements. And that's helpful. And I wanted to appreciate, send my appreciation for that overall thoughts. We all have these overall thoughts. Tough time to be in the hospital business. Tough time to be in the regulatory business, I would say. And I think about this and I think about a big picture. We're at this place where the Vermont population is shrinking, it's aging, we've got chronic disease, mental health needs, commanding more resources. We have these workforce shortages that are driving up wages, pharmaceutical prices are skyrocketing, public payers not keeping pace with inflation. And the result as we've just seen is that half of our hospitals are projecting negative operating margins for 19. Only three are gonna generate at least a 2% operating margin for this year. And I look at that as not really enough to build reserves for future investment. One hospital's going through bankruptcy. So I think what we do this year will really matter. And I think we have to tread lightly and I think we have to think clearly about hospital solvency in our short run decision making. So we may have to, as others have said, approve some higher NPR and commercial rates than we had originally hoped when we set out our guidance. But I also think, and this is to Maureen's point too, that we need to start asking and maybe requiring our hospitals to engage in some really long run serious strategic planning over the next year. I think what we're learning and seeing is that maintaining the status quo is not gonna work given our demographics and our growing cost trends in the industry. So what I want to the things I'm gonna recommend is that we ask hospitals, especially those struggling financially to submit plans for achieving sustainability. I'll talk about more what I mean in that in a minute. When I think about specifically after the adjustments, assuming that we approve all of those, the NPR fixed payment increases 4.7%, which is over our guidance of 3.5%. What I'm hoping is that there are going to be some adjustments downward coming in on the next day or two as a result of new information that has been received by the hospitals since their original submissions and based on recent rounds of board questions. And I'll give some examples. So I'm hoping for example, that UVM Medical Center looks into reducing their volume estimates as a result of the ambulatory surgical center picking up some of the utilization there that they would have otherwise had that was probably built into their original budget. And also EMR productivity losses. UVM did not make any adjustments for EMR productivity losses. And I think that there potentially could be some. And I know that was one of the board questions that went out. So there's a perhaps a downward adjustment that we might see from the hospital themselves on volume. I think Northeastern, my hope is that there was also a board question around, could there be some initiatives to lower some of their unnecessary ED volume and thus therefore some of the NPR. Mount of Skutney to the extent that their request included this reserves that the hospital budget team mentioned related to the Medicare cost reports that may no longer be necessary. The hope might be that that might be a downward adjustment. And I also think new information with respect to recent performance at hospitals like CVMC which may be resubmitting their budget, Northwestern Grace where their recent, since they submitted their budget have had some lower volumes. My hope is that maybe there's some downward adjustments there. So don't know what that's gonna look like because we're still waiting for those questions to be answered and some, but I am cautiously optimistic that we may come closer to what our guidance looks. I also think that we need to think about some of the hospitals that are coming up over their, up over our guidance, but are doing that because they're meeting needs in their communities such as for example, Mount of Skutney to the extent that they're adding three primary care practices. That is supportive of the all payer model and expansion of primary care which we know lowers overall costs in the long run. So it's not necessarily a provider transfer because that those providers didn't previously exist in the community, but how we think about that as we're looking at NPR I think is gonna be important. When we think about the average change in charge, so the average change in charge is 3.2% which is actually under medical inflation if we think about medical inflation as about 4%. So that tells me to some degree the hospitals are really trying to keep care affordable. And so for the most part I see the charge requests as reasonable. We have to acknowledge medical inflation holding charges below medical inflation year after year is gonna compromise the hospital's ability to remain solvent and to provide care. So there are two hospitals whose charge requests appear high higher than medical inflation. It's Northwestern and Copley. I think Northwestern's around 6% and Copley's around 10%. But I think as the hospital budget team laid out when you look in the context of historical rate reductions that we've imposed in the past those requests actually are reasonable in my mind given their history in the past five years. I do wanna say that I am concerned about those hospitals whose five year average charge or commercial rate increases have been greater than, you can pick a number but four and a half percent, five percent, we may approve their current rate requests particularly if their current rate request charge request is under medical inflation or the hospitals in financial trouble. But I think I would like to add something to the budget orders asking those hospitals whose five year charge increases have been outpacing inflation to think about ways to ensure that next year's charges are not gonna be above medical inflation. So what is the sustainability plan there? Same with hospitals whose, and we're getting this data and I think this is the first time we've really asked it and this actually came from the healthcare advocate but it's around the commercial reimbursement to Medicare reimbursement ratio. So I think we're just collecting that data for the first time this year but I, most of the hospitals tended to be between 130, 175 at least from my back of the envelope calculation from asking at the hearings. We're getting confirmation but those hospitals that are say over 200 percent or over 225 percent, I would again like to, we may approve their rate requests this year for reasons that everybody feels are appropriate but I think it's important to start to ask those hospitals to do some long range planning to figure out a way to get those commercial rate to Medicare ratios more in line with the rest of the state if they are outliers. Another thing to think about. So the other thing I think about is given that the average change in charge is only 3.2 percent, most of the NPR increase is really driven by volume and I think in most cases it's driven by an aging population that needs more care but of course there's always this worry about unnecessary utilization. How can we reduce wasteful spending? And I think we do that by moving away from fever service and volume and moving towards these fixed payments and into the all payer model. So I do think we have to think about as we're thinking about these budgets, what are the incentives, what kind of head room are we giving the hospitals to be able to do the delivery reform to move into the all payer model because I think in the long run that's gonna cut out some of the waste that probably does exist in the system. When I look at operating margins, 2.5 percent is the proposed system average and as Maureen said, many may miss that target again this year as they have in the past years and that doesn't really bode well for building reserves from which to reinvest in infrastructure technology and in fact delivery reform. So I wanna be watching those margins closely and I wanna be thinking about what that looks like. Tom brought up in your comments about moving money from the UVM into the other system. I'm concerned about that in large part because I do think for example that I'm worried about the operating margin at the medical center. They're at the 25th percentile right now among academic medical centers and I think jeopardizing their margin that's gonna affect their bond rating potentially and they're already getting warning signs about their bond rating potentially being adjusted and that affects their ability to borrow and looking at some of the plans that they have for investments and some investments and pretty important things in terms of what we need in the state. The biggest one I can think of is the inpatient psych bed capacity but there's also subject to CON approval of course but there are other investments that they've mentioned in terms of NICU renovations, ED renovations, dialysis replacement. So anyway I don't wanna compromise by what we do their ability to borrow at a minimum cost so something to consider. I also wanna bring up discussing whether or not we might wanna regulate the UVM health network as one unit. So it's come up in years past multiple times and I think one possibility might be giving somebody's got crickets. If that's somebody's phone if you could turn it off it would be great. So an idea here might be and I think we've talked about this in the past but giving UVM health network a total NPR with a related overall weighted average commercial rate. They work it out internally to ensure overall compliance with our regulation there but this gives them the flexibility to be more efficient I think within their network especially under a fixed payment system. It should incentivize them to move patients to where the care is most appropriately delivered and let the dollars then flow with the patients. It also may allow better leveraging of economies of scale across the whole network. So I think we still wanna request information about every hospital but regulating them with one NPR and one commercial rate might actually increase efficiencies and lower costs possibly. And what else did I wanna say here? I do wanna just talk briefly about some of the hospitals really do seem to be examining the appropriateness of their service lines and opportunities for cost savings and Northwestern and North Country come to mind. Many of them are looking for ways to collaborate and share services to increase access, lower costs and maintain quality of care. Brattleboro, Scutney and Springfield and those collaborations Southwestern come to mind but then there's some hospitals that are not doing this and may have a long road ahead and I worry a bit about those hospitals and I worry about low volumes and I worry about quality outcomes at some of our smaller hospitals if the populations are declining. And as others have said, I'm thinking that some of these hospitals have not done as much cost savings initiatives as I think they're gonna need to do. So I think in this year's budget orders it might make sense to ask some of the smaller hospitals particularly those with near zero or negative operating margins to submit plans for sustainability. Perhaps a justification for current service mix so that we can understand, are they delivering the services that it should be most cost effectively and high quality and are they moving towards a cost structure that's sustainable in the future. So I think it would help inform the rural hospital task force that Robin's doing to the extent that we got more information from them sooner. We'll be done by January. Okay, you'll be done by January. But I think we need to start moving. I think we need to do some care delivery system optimization as a system to really figure out how we can do this. And the last thing I'll say is I do think we need to move towards a process that at least factors in risk adjusted total cost of care per capita by payer as part of our process. And if we want that metric to be in the next budget cycle we need to start thinking about that how to get there this fall. So putting together a working group that could start to do that would be really helpful. As we saw this year NPR is one metric that we can use but it doesn't account for the movement of patients and we're seeing patient movement. We're seeing demographic shifts. We're seeing people moving from rural areas to the Chittenden County area. Mobility of patients doesn't necessarily is not reflected well in how we measure NPR. So we need to start thinking about that. Those are my thoughts. Thank you, Jess. So I guess I'm last. You know, there's so much conflicting ideas and information as we look at the submissions this year. And we look at an environment where the state of Vermont as a whole by some measures is doing okay. And yet you look at the disparity between regions of the state of Vermont and the institutions in some areas of the state of Vermont where the economy has been stagnant are in a downward spiral. And it doesn't matter if you're a hospital or a college where we've seen a few closings or a church or what have you, it continues to be a very dismal place to try to make numbers work. So on the one hand, you don't want to reward smallness. You don't want to reward inefficiency. You want people to gain economies of scale. But you also don't want to foreclose a community's chances for success either. And so that has played deeply in my mind. And I look at what we've seen with 107 hospitals closing nationwide. I think many people in Vermont thought that we were immune from that. But Springfield, I think, brought some reality to the fact that we're not immune. I think the change is difficult and just as it is for members at an institution of higher education, it's equally difficult for members at a hospital. And I do want to say that I do think that with what people saw going on around them, I want to applaud those community members from around the state who have stepped forward and are serving on their local hospital boards. Because I think I've seen much more involvement this year than I have in the past, especially when we looked out in the audience this year at the different hearings. We saw a lot more participation by board members than we have seen in the past. And I think that's a very healthy thing because boards have to know just how desperate a situation can be in an institution that they're serving for. So a number of things have been brought up today. And I think that over time, the network should be viewed as one entity and that makes sense. I do think we have to move away from our conventional metrics more towards what the actual cost of care is in an area and then try to help people get there because it can't happen overnight. And I'm not fully convinced that the risk adjustments that have been made are truly the accurate risk adjustments to be made that measure everything because communities are dealing with so many different things, whether it's age demographics, obesity, addictions, economic prosperity, if you are struggling to pay your bills from paycheck to paycheck, you're probably not buying the most nutritious of food. So there are so many things that are facing us as we get into this decision making process. At the end of the day, I hope that the decisions we make as a board show fairness and equity. And that doesn't just mean that everybody gets the same. So I have bought into a couple of arguments. I do think that there were over adjustments to a couple of hospitals that should be addressed. And so it's not so much, whether it's a 9.8 or a 2%, but it's really over time and where someone is in the total cost of care continuum. And I think that a couple of hospitals have adequately demonstrated that they are low cost providers. And so I'm willing to take that into account in the decision making process. The most important thing though is we created rules of the game and the rules of the game were in the guidance. And I would hate to see us not approve those hospitals that strictly played by the rules of the game in our managing to that guidance. So I hope that there's some low-hanging fruit that could be knocked off fairly early in this process. And we don't have a lot of time in the process. And that's one of the frustrating things. I wish we had more time to continue the back and forth, but I do think that the longer this dragged out, it would just be more questions asked and more workplace on hospitals and more workplace that probably isn't the most productive for them to get to where I would like to see the dollar spent, which is on direct patient care and not on having to have administration because regulatory bodies are requiring too much work from them. So long story short, I think we have some pretty tough decisions ahead of us. I do think, and I have agreed with Maureen from the beginning that budgets should be adjusted if they're just not realistic. And I know you put it in a much nicer language than that. But that's kind of where I'm coming from that the budget should be real. And so with that, I would actually hope that we could make some progress since we are way ahead of time. Maybe we could open it up to public comment first and then possibly talk about a few, what I would call low hanging fruit hospitals. So at this time I'll open it up to public comment. Yes, Walter. I just wanted to say more on Walter Carpenter and Montgillier. I just wanted to say that Jessica and Kevin were right about the status quo is no longer good enough anymore. We're seeing things falling apart in a sense. And the paraphrase of the writer that I read collapsed overall, not just with hospitals and that thinking within the status quo is only going to get us more ready. So I was glad to recognize that. Thank you, Walter. Anyone else? Jen. Your name, please. I can't see it. I'm sorry. Have your name, please. Your name in the city of residence. Middlebury, Vermont. I would like the opportunity if possible to work with the staff in terms of the interpretation information, particularly on slide number 77 for corporate medical center if possible prior to Monday. And just realizing that there were some very recent changes to Porter's projection right before our hearing due to the Medicare settlements and cost report refilings and things of that nature. So it would be great if I could have that opportunity to work with the staff. Yes, that's granted. I also want to take the opportunity to thank members of the board and members of the Great Mountain Care Board staff for their collaboration and partnership in trying to resolve the cost reporting settlement issues that the critical access hospitals that were participating in Medicare for the 2018 fiscal year in the face. So I do appreciate it and want to thank you for that. Thank you, Jen. I know that the whole board is very grateful for all the help that you have given us in the past year. I'm trying to get to the bottom of Medicare cost reports and everything else and you've always stepped forward and been very gracious with your time. So thank you. Other? Mike Fischer. Mike? Mike Fischer, health care advocate. Predictable comment from the health care advocate. It's easy for consumers for Vermatris to focus on affordability in the insurance rate review process. And I know the statute calls for that and doesn't call for it here. But significantly, the costs, everyone knows this, the costs associated with the rates for the insurance company's start at the hospital budget process. And so I just want to say out loud that the Vermatris who expressed concern about affordability in the insurance company and insurance review process, that those comments apply here and I think should be considered. It's an excellent point, Mike. I know that as part of the public comment, the board members were sent an article from the New York Times that talked about growth rates of different segments of the health care economy in hospitals being one of the most significant. So that's a point very well taken. Other comments from the public? If not, I would ask the staff if there are some low-hanging fruit decisions that we could make? Yes, there is. We're really happy to be able to help us. Okay, so the three that we've identified here are the hospitals that we started off with that fall within budget compliance and those would be Gifford, Rutland Medical Center and Springfield Hospital. So this is our recommendation for Gifford. We have no provider transfers or county changes to discuss there. Budgeted MPR is a 6.3% reduction from prior year and they're missing their target a little over 8%. So we feel that budgeted number is appropriate. They are recognizing the shortcomings in utilization and hoping for, planning for utilization of recovery as I spoke to, which 42% above the fiscal 19 projection. We are concerned a little bit with their financial health. Their projection is showing a shortfall this year just under half a million dollars, which is substantial recovery from the prior year and as we all know, recovery is taking time. The Chairman Mullin's point, the fact that they came in within the guidance they are showing recovery, we would approve as submitted the 5% change in charge with the additional recommendation that we monitor their performance on a monthly basis to make sure that operations are moving along towards recovery. So this is a hospital that we have been monitoring monthly and I want to thank Dan Bennett and his team there. They've been very faithful at presenting information to us whether it's information we want to hear or not. And that's important. And I think, you know, this is also one of the hospitals that creates so much conflict for me personally because I see them as a high cost provider when you look at the different metrics. But I also know how hard they're working to try to make it work for their community. And so this is one that I could certainly support. Anybody else in the comments? Anybody like to make a motion? I was gonna make a quick comment. I can support this as well. I just want to add though that again, this is a hospital that's their five-year average of rate requests has been high above medical inflation. So one of the things I would like to see, I'm willing to approve it, but I'd like to see something added to their budget order that asks them to do some sort of sustainability plan, whether that's looking at the appropriateness of service lines, looking at ways in which they could collaborate with other institutions, share services, find opportunities for cost savings. This is a hospital that I worry about and I think we need more strategic planning from them about how they're going to sustain themselves. So I would approve it, but that would be the condition that I'd like to impose. Would you add a second condition that continued monitoring? But I think that this is a case where it doesn't have to be monthly, even though it's easier for them than other hospitals because they're only 25 minutes down the road. I just don't want to waste their executive team's time on coming every month that they're not necessarily... Yeah, I think we need to reduce administrative burden where we can, but I do think we need to ask for a sustainability plan. What is their plan? So I thought I heard a motion, but maybe I didn't. I thought I heard you say that you were moving to approve with a couple of conditions. Sure, yes. Okay, is there a second to that? Second. Okay, thanks. Any discussion? Just some discussion. I mean, I do think the monitoring on this hospital is important whether it moves to quarterly or each meeting's not in person because they've, in 2018, we know they lost $5.4 million and this year they had a 1.4 million projection. They're losing 400,000. Next year they have a 1.5 million projection. We know they've had Covenant issues. So let's really see how hard it is for them the month. They do send in monthly reports, but maybe there are triggers for, at least having quarterly monitoring, but if they're operating at a loss, then it becomes monthly or something because I just worry to let it slip too far. I think because of their high net operating margin, maybe by monthly might be the right split in between the monthly and the quarterly for those meetings. We got all the mics down at this end. Now you don't want me to talk, is that what's going on? I can take any. Jess, can you just talk a little bit more about the kind of what you're thinking in terms of timing of the sustainability plan? Are you thinking for this hospital that's specific to the charge because they are a high-cost institution in their percentage of charges or are you thinking that's related to the margin too or would you just leave it open for them? So for me, I think that there's a couple of things that are driving my interest in a sustainability plan. One is the fact that the charge is 5%, which is high, higher than medical inflation, but reasonable given their financial situation, but it's also been high for several years. The charge requests, their total cost of care we know is high, I think was the highest among those blueprint profiles and what we've seen. So there's that aspect too, how are they gonna reduce their cost of delivering care? And I think to the degree that they start to look at their service mix and the appropriateness of it and whether they can cost effectively deliver the care in their community or whether some of it needs to be outsourced, I think these are big questions that they need to start addressing. Timing-wise, I wanna make sure that our request is reasonable that they can actually accomplish what we're asking them to do. So I think I would ask the hospital budget team maybe to speak to, this is not the only hospital, but I think needs a sustainability plan. So I don't wanna impose a plan on them without giving them enough time to do it appropriately. So I don't know what that would look like. I think we'll have to frame that out and get some feedback. I think we kind of need to have a timeline though, don't you Robin? Well, what I was wondering, so what I was wondering is whether a written plan is necessarily the best approach because I think with, because I've heard in your kind of discussion that you were thinking this would be something you would want for multiple hospitals. I wonder if what we would do is get a group together to talk about how to collect that information in a way that is useful to us and useful to them. I'm open to that. I just think we start that, we need to have these conversations. We need to have to move this forward. As Walter says, the status quo is not sustainable. So how do we start to move off the status quo and have those conversations? I think that, I mean, that makes sense to me. And certainly, I mean, I think this will, we have not yet in the rural health services task force tackled the hospital sustainability question that's in our future agendas and something called out specifically in the legislation to look at. So I just want to make sure there's enough wiggle room that if there are recommendations from that group that are, I don't necessarily think they'll be super specific, but if they are, for some reason I wouldn't want our order and then that group's recommendations to kind of be across purposes. So I just, that's why I was asking to see how much flexibility there might be in terms of determining the right way to go. But overall, I totally agree. Tom. So this is the hospital that I think is in recovery. My observation is that as they presented to the board over time, they've been very diligent about cost containment and you can see it in their operating margin trend, which is still, I think, a little concerning. And if you look at the additional amounts they expect to obtain from their increase in charge is $2.28 million. They hope that their operating margin will improve by $1.97 million and be in the black by $1.5 million. So I can support this. This is a hospital that deserves to be moved along, hopefully, and set the stage for a better time. But I would also, this would be one of the hospitals that I would be sympathetic toward giving them an additional quarter point or half a point, which I don't have to spend at this point in time. So I can support the motion. Further discussion? Is there a clear motion? Does everyone feel like they understand the conditions that? Can I try to summarize Jess's motion and see if that would work? So I think Jess's motion is to approve Gifford Medical Center's request as submitted with two conditions. Condition one would be continued monitoring of their fiscal year 20 operating performance every other month. And condition two would be? Just to clarify that, that's their actual meetings. They're still gonna have to present information every month. Okay, all right, so let me revise that. So condition one would be continued monitoring with meetings every other month. And condition two would be the creation of a sustainability plan with the format and content to be determined through staff working with a hospital group as appropriate. Is that okay, Jess? Yeah. Does everybody understand completely? Is there any further discussion? If not, all those in favor of the motion signify by saying aye. Aye. Any opposed? Hey, Patrick. Thank you very much. The next hospital we would ask for approval on is Rutland. There are also no provider transfers or account changes. They came to do budget guidance on NPR, 2.5%, change in chart, 2.7%. So again, I hate to be a broken record, but shouldn't we really be saying what they actually asked for, which is the 2.65? Correct, 2.65. Okay. We would request that you approve as submitted just to recap. They do perform solidly year to year. There is concern over falling margins and they do have investments to make. And they are actively involved with the ACO and they leader in psychiatric care throughout the state. And there are certain capital improvements they need to make using some of the bottom line revenues to achieve those goals. Kay, would somebody like to make a motion? So moved. What are you moving? Yeah. To adopt Rutland Regional Medical Center's proposal at 2.65% at a rate increase of 2.65%. And an NPR of 3.5 Ks or a second? Okay. Discussion? Can I just say that the Board's budget orders typically have some standard conditions? Correct. And I'm just assuming, correct me if I'm wrong, that those are complete. With all the standard conditions. Okay. I am happy to approve this. I just wanna perhaps have some language in the budget order that asks Rutland to, this is one of the hospitals where the commercial to Medicare reimbursement rate was particularly high, a bit of an outlier. And I guess I would like to have them think about over the course of the year coming up with a plan to bring that more in line over some long period of time. So to mention it in the budget order as something that was noted and would like the Board like to see progress made to bring that more in line with other hospitals. Something of that nature. Yeah, I just wanna add to that, just one thing, which is I think this is also one of the hospitals though where their payer mix is pretty skewed away from commercial and not that it's right to have that change, but I think here's where Tom's schedule comes into play when we at least see what percentage of the reimbursement is commercial versus Medicaid and Medicare. Because it's a little bit more of a challenge for those hospitals to make up any cost shift differential if they have a low payer mix that's commercial. So I think that's at least a factor to look into not saying that they shouldn't do that. And I really like the fact of looking more at what that reimbursement rate is between the payers. But I think as another factor of any hospital is understanding because I remember they specifically brought up for them to add more and a percent increase on commercial. They don't get as much because of their payer mix piece. Also for this hospital, I appreciate that they came in on guidance with the 3.5%. We've heard from them before how that was going to be a challenge potentially to come in to continue to come in at 3.5% when they look at their long range plan and what's coming into their market. And I appreciate that they're coming in at 3.5% with a relatively low commercial ask. Any other discussion? If not, all those in favor of the motion signify by saying aye. Aye. Any opposed? Patrick. Thank you. In our last hospital that we were requesting to approve before the spring field, notified transfers are counting changes. They've downgraded their budget request by over 19%. Just to clarify though, so people in the audience don't get nervous that the last one you're asking for today because there are a number of hospitals who are waiting for important answers to questions and things like that, but still would likely have a positive recommendation. Correct. So they've downgraded their NPR 19% to reflect some of the changes that have occurred in the hospital in the last few months. They are not asking for a change in charge increase. One additional recommendation that we would continue our monthly monitoring and responsibility on behalf of Springfield to report the impact of bankruptcy on their fiscal year 20 approved budget. So is there a motion? I'll make the motion to approve Springfield hospitals NPR and change in charge requests as submitted with two conditions. Condition one would be monthly monitoring of their operating performance moving forward or as I think they're doing it now too. And condition two would be, like frankly, this is more of a reminder than because it's already a standard condition but the responsibility to report the impact of the bankruptcy proceeding on their budget as part of that monthly monitoring. I think that Mike Halstead was pretty blunt when he was here. I think that they believe and I think most of the rest of the world believes too that unless they're able to create an alliance with another institution that keeping the doors open is going to be next to impossible. And right now the court is pretty much in charge. I wish that we had been presented with more clear data last year. Clearly we did not have all the information and this year I still worry. I think if I had been in their shoes I would have tried to get an increase even though they weren't sure if they would have been able to get that with the carriers but I think I would have at least tried. But I understand also where they're coming from and so to me this is one that has really opened everybody's eyes as far as how much attention, a small community hospital is going to need in order to survive. And let's just hope that we're not here in the future looking at other hospitals that are in this same situation. Yes, I would just add that this would be a hospital that I would definitely want a sustainability plan from but clearly given the circumstances under which they're in bankruptcy they're pursuing some conversations around an alliance and they're doing that. The hope is through the updates we're effectively going to get their sustainability plan. We hope. Yes, I mean that should be, I think. Reorganization plan. Right, I mean that's sort of the point of the bankruptcy and so I think that makes sense. As a question do we have any sense of what the reporting responsibilities are to the bankruptcy court? I'm just wondering whether our monthly monitoring and the monitoring that the bank is doing are kind of aligned. I think they are aligned, I think Lynn looked at it. They are reporting certain financial information to the bankruptcy court. I think it's every other week. Okay, thanks. And I think also that we can't delegate all of our obligations to the bankruptcy court. We still have a responsibility as a regulator to the state of Vermont and to the taxpayers in the state of Vermont to do whatever we can to help Springfield and we'll continue to do that. And no matter what, make sure that the residents of that area will continue to have access to quality care. Just a comment for staff on your recommendations for hospitals like this that have a negative, the 19.2% requests is within budget guidance but I would add the other piece of that which is that they're up 0.6% to their projection because that's really what shows us that they're within guidance because they could have gone up to 5% off of the negative 19.2. So just including that as well would be helpful as we go through these, thanks. There was no second. Second. I think Jess seconded. Oh, I didn't hear her. I just did it. Ha ha ha. Other discussion? If not, all those in favor of the motion signify it by saying aye. Aye. So I believe Patrick that's probably the limits of what can be accomplished today even though we do have a little bit of additional time. Agreed. We do have the potential for employees of the board to go after some of the provider transfers and accounting changes for approval. This would, if passed, would put on your plate next week just the budget below for those institutions. So do we have all the answers back? We do not. I'm a little bit leery when we've asked questions about those transfers of approving something. I don't know about the rest of the board. So we don't have information on all of the provider transfers but we have complete information for some of the hospitals. Well, those we could do. Okay. Would it be a pain to pull up the other slide deck? So we have a point of reference or I can just say the slide number if you all want to look on your hard copies. Hard copies. Okay. So the first is North Country who is requesting. Can you just give us a page number? Yes, I'm giving it to myself. So they start on page 30 and they have essentially one accounting adjustment which is the swing bed revenue that was double counted at Y-19. And so what this approval would do, my understanding of what your approval would do is to, this is their justifying their request. So it's kind of a weird one because it's bringing their budget requests up. So you'd be approving something that would make it look like they're growing more than they really are. But so this is the double counting of the swing bed revenue in FY-19 of $638 and $638,225. And that would bring them from the 2.6% up to the 3.4. So this would be sort of an official recognition that they have made a change in their counting but moving forward, we'll be able to have an apples to apples comparison. The additional adjustment that they made, it's my understanding does not need approval because they're basically increasing their FY-20 request by $644,000. So the question to the board is whether they would like to recognize that counting change for the record? I would recognize, I mean, from all that I'm hearing, it was a mistake and everyone agrees a mistake. There's no dispute about it. So the math is what the math is. Agatha, can you give us a proper framing of the motion on that? I can do my best. I have confidence in you. Can I just ask, I'm sorry, before the motion, can I just ask a clarifying question? So would this mean that they'd resubmit their 19 numbers and adapt them for now just for? This is part of what gives us heartburn as staff, is that it's adjusting their FY, they're effectively recognizing that something happened in FY-19 that should have been addressed but because of time limitations or the time in which it was detected, oftentimes they don't protect the issues until they're preparing their FY-20 budget. The only way that we can recognize it is through this sort of process during the budget hearing. So the record, historical record, adaptive will always show the 2.6 but the budget order itself would be able to reflect that there was an accounting change which actually makes the request more like 3.6. We would have them change their 20 budget because they didn't account for the expectation of each senator. So I think that the motion. The motion would be to recognize the accounting change in FY-20 to capture the, Rahma, do you want to give it a shot? I don't know. I would be happy to. Thank you. I think the motion would be to, the motion would be to accept the resubmitted budget information which reflects double counting of certain revenues in 19 and adjusts for corrections as well in 20. Is there a second? Second. Is there a discussion? I have a question. So is this going to be reflected in the order of the budget order? It'll be reflected in the order but this is simply just accepting that change. We're not going to vote on their budget at this point in time. It's just making it easier when we do come to that vote next week. I was going to say this was a strange one to start with because it increases their entire cost. The next ones will be much more natural to interpret. And thank you, Robin, for bringing that motion. Is there further discussion? If not, all those in favor signify by saying aye. Aye. Any opposed? Okay, where are we going next? I think Northwestern's next. Yes. Page number? 37. So in Northwestern, I'll start chronologically, they lost the dermatology practice in January of 2018. This came to our attention in their enforcement hearing. They did not request to have their FY19 budget amended and instead were instructed to include it in their FY20 submission, which they have. So this is unusual because this is a practice that's leaving the hospital, minus $700,000 in MPR. And then they're bringing on a primary care practice. And that, the effective date of that is January 1st of 2020. That will be an increase in their MPR of 941,347. So the way that these provider transfers, this is a much more straightforward thinking about it. I'm going to go back one slide. I think I'm going to go back to slides. The way that these work is the records adapted will always show the 3.7. But if you approve these budget, these provider transfers which have a net positive effect of 200,000, it effectively brings their budget request down to the 3.5. So on Cole Hollow, this is the financial information that they submitted to require this in Schedule A. It has all the line items for MPR and operating expenses and then they're net operating. They're going to lose money on this practice, but it's important in terms of how the hospital wants to improve access to primary care in their community. And one thing that we would suggest in your motion is to include language about pending the hospital board's approval and require a notice to patients pursuant to Act 143 because as you know, the patients from the independent practice would need to get a letter from the hospital notifying them that they're being acquired by the hospital. So I think what I hear the motion to be would be to approve the request on two provider transfers. One being a transfer in of Cole Hollow family practice resulting in a positive 941,347 addition to NPR. The second being a transfer out of Northwestern dermatology representing a negative change of 711,015 dollars. With the net effect being a 0.2% adjustment to the fiscal year, 20 NPR FPP with the caveats that it's subject to board approval and meeting the requirements of Act 143 as far as patient notification. Any discussion? Just a clarification, so when you say board approval, I'm looking at the record. The hospital board. The hospital board approval. Yeah. Sorry about that, Tom. Bicky, bicky. Any other discussion? If not, all those in favor signify by saying aye. Aye. Any opposed? Where to next? Okay, and then the last one that we're prepared to cover today is Southwestern. Porter did have provider transfer, but I just want to look at their schedule A one more time before we move forward. There was the narrative, Porter's narrative, and their schedule don't match. They have a follow-up question, which kind of ties it all together, but we haven't had the time to just... Well, Jen's looking forward to having a conversation with you, so I'm sure that you'll be able to work it out. Sorry if you have to make another trip, Jen. So next is Southwestern, and that's slide 45. I thought this was the one Kevin's question was still out there. Oh yes, that is correct, so we may not be prepared. We're waiting for the CFO to get back to us on how much money this practice made when it was independent, which my understanding is that we can ask that question, but we can't require it to be answered because it's information from an independent provider. That's true, but at least we should get an answer. Pause on this one. Yep. Is there anything else that could be, or is that it? No, that would be all for today. Okay. At this point, is there any further public comment to come before the board? Seeing none, is there any old business to come before the board? Seeing none, is there any new business to come before the board? Seeing none, is there a motion to adjourn? Second. It's been moved in second to adjourn. All those in favor signify by saying aye. Aye. Any opposed? Thank you, everyone. We'll see you Monday morning at nine.