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Vermont Hospitals Continue to Reduce Net Patient Revenue Growth

April 07, 2017

The Green Mountain Care Board (GMCB) has released financial performance information for the state’s not-for-profit hospitals. Vermont’s hospitals contained growth in net patient revenue to 4.4% this year, down from 5% in fiscal 2015, and significantly lower than annual increases of nearly 9% a decade ago.

Net patient revenue, one of the main financial metrics evaluated by the GMCB, refers to the amount of revenue hospitals collect from delivery of patient care before accounting for any expenses.

“There are many ways to slice and dice the numbers that were released today but the bottom line is clear – every day Vermont’s hospitals are meeting the needs of their communities in an ever-changing health care environment, while slowing cost growth and boasting the nation’s #1 health care system,” said Jeff Tieman, President and CEO of VAHHS (The Commonwealth Fund recently ranked Vermont at the top of its annual survey).

In the fall of 2015, the GMCB approved budgets that set a target of $2.31 billion in total net patient revenue for all of Vermont’s hospitals in fiscal year 2016. Last year hospitals earned actual net patient revenue of $2.38 billion, surpassing the target by $60 million, or about 2.5% of the total.

GMCB-approved budgets set a net operating income (revenue minus expenses) target of $60.3 million for fiscal year 2016.  Last year, hospitals exceeded that target by $27.8 million. That number represents 1.2% of the total net patient revenue of the hospital system. 

The main reasons for the difference in net operating income were increased utilization due to more patients accessing care and changes in payers (e.g., Medicaid vs. commercial insurance).  These factors contributed to approximately 62% of the variance.

“Many factors shape demand, including improved access to health care coverage and mental health challenges among others,” Tieman said. “In turn, this changes the volume and timing of patients seeking care.”

Tieman continued: “It is a success for any hospital, let alone the system overall, to come within a few points of a target set almost two years ago, and it is a real testament to the hard work hospitals are doing. With continued uncertainty at the federal level, these budgetary predictions become even more difficult.”

Six hospitals including Central Vermont Medical Center, Northeastern Vermont Regional Hospital, Northwestern Medical Center, Rutland Regional Medical Center, Southwestern Vermont Medical Center, and the University of Vermont Medical Center will appear before the GMCB at a scheduled hearing Tuesday, April 4, 2017 to discuss their budgets in detail.

For more information about the GMCB’s hospital budget process visit: http://gmcboard.vermont.gov/hospital-budget.