On July 28, 2016

Political banter on health care divorced from Vt.’s reality

By Emerson Lynn, St. Albans Messenger

The safest target for any politician is the company that is profitable and the person[s] running it. In Vermont, that target has become the hospital and its administrators—the University of Vermont Medical Center in particular.

In a Vermont Digger story last week it was noted that Vermont’s hospitals have done well over the last decade, “doubling assets, tripling profits, and increasing the amount of cash they have on hand for rainy days.” The University of Vermont Medical Center is the lead actor in this story for the obvious reason that it’s the system’s 800-pound gorilla; it has by far the largest patient volume and it constitutes over half of the health care system’s assets and three-quarters of the profit. The story makes for an easy, if simplistic, political set-up. Peter Galbraith, the Democratic gubernatorial candidate from Townsend, took the bait.

He was quoted as saying: “My concern is that nonprofits [Vermont’s hospitals] are behaving like corporations. That’s not what a nonprofit is or is supposed to be. What’s happening is that instead of keeping costs down—using the extra revenue, lowering prices, so that its focus is entirely on the service—the extra money is going into empire building and these outsized salaries.”

So hospitals are corporations—which are easy to demonize—and the people who run the hospitals are basically pirates building empires. It’s easy for the Peter Galbraiths of the world to use them as a political target. The inference is that the big salaries paid hospital administrators is the reason our health care costs are so high.

If only.

If that were even remotely accurate, health care costs would not be an issue. The answer would be obvious and the remedy immediate. Health care costs are an issue, but administrative salaries are but a rounding error in the sum of things.

Percentage increases in assets and profits are also misleading; percentage increases based on what? Far more important would be understanding the margins. For example, if a hospital operates on a 1 percent margin and increases that margin to 3 percent, that’s a 200 percent increase, which is a huge percentage increase, but not much of a margin. Is the objective to have our hospitals operate with negative earnings?

There is a lot to understand in the present health care environment, particularly in Vermont. But the conversation that is happening on the political front is almost completely divorced from the conversation that is happening between the state and the federal government on the pending all-payer model currently being negotiated. We still have politicians talking about how they would get the health care system from where it is to a single-payer provider, when that’s not even a conversation that is in the mix.

The all-payer model IS the reform.

Al Gobeille, chair of the Green Mountain Care Board, is correct when he says the current model—fee for service—is not one in which costs are truly controllable. But he’s also not advocating that the system be ditched for a single-payer system run by the state. However this evolves, it remains that for Vermont to be successful requires our health care institutions to be vibrant and prosperous.

Strength isn’t a pejorative word.

Northwestern Medical Center, for example, leads all other hospitals in available cash on hand. But for the last 13 years its rate increases have been the lowest in Vermont, meaning that if all the state’s hospitals were operated similarly health care costs would be lower than they are. It’s been able to do that operating from a position of strength, not weakness.

Being able to negotiate how Vermont changes the delivery of its health care needs is going to be a tremendously difficult and complex process. Success will, in no small part, require our hospitals, and the people running them, to be at the top of their game. The current political banter is not only wildly misdirected, but unhelpful.

Emerson Lynn is the editor and publisher of the St. Albans Messenger, a sister paper of The Mountain Times.

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