So it's one o'clock, so I'm going to call the Green Mountain Care Board back to order. And the first item is any updates from our Executive Director, Susan Barrett. Susan, are you with us? Well, we'll forego with the Executive Director's update and go right into the business at hand. And this afternoon, we are going to be hearing from the UVM Health Network on a rate request mid-year for two hospitals. And Joanne, I understand that you are out of state. So I have the authority under state statute to swear in the witnesses, but I'm going to delegate that to our staff attorney, Russ McCracken. So Al, could you tell us who's going to speak on behalf of the network? Good afternoon, Kevin. I can. Rick Vincent and myself. Okay. So, Russ, if you could swear, Al and Rick in. Great. Thanks, Mr. Chair. I'm happy to, if the witnesses could raise their right hands. Do you solemnly swear that the evidence you shall give relative to the cause now under consideration shall be the whole truth and nothing but the truth? So I'll help you, God. I do. Okay. Thank you. Okay. Al, are you going to present slides from your screen or how are we proceeding? We're going to present slides from Sharon's screen, and she can share whenever you would like, Mr. Chair. Whenever you're ready, proceed. Thank you. Sharon, do your thing. Okay. We see them. All right. Awesome. So, good afternoon, everyone. My name is Al Govay, and I want to give Rick Vincent a chance to introduce himself, so I'll turn to him now. Good afternoon, everyone. I'm Rick Vincent. I'm the CFO of the UVM Health Network. It's unfortunate, I think, for all of us that we're meeting on teams this afternoon. It would have been much better to get together in person. The awkward part of it being that I don't think Rick has, and I know I haven't met Tom Walsh, and so I want to take a moment and just say hello, Tom. Welcome to the process from the UVM Health Network, and we look forward to getting to know you. Thank you. Likewise. Absolutely. So, before we go into our presentation, I want to make a couple of points first. I want to praise the Green Mountain Care Board staff. We realize with a mid-year rate request that the information is fast and furious, and they've done a phenomenal job of working with us to date, and we just want to say that we appreciate that. Also, to all the staff that we have that are on our call, I want to say thank you to the UVM Health Network staff that have worked so hard to put together a good presentation today. Can't not mention them. Finally, to any doctor on the call, of which there are at least a few, Happy Doctors' Day for all of you that don't know it's National Doctors' Day, and so we have to say thank you to them today as it is their day. So Sharon, if you could go to the next slide. So I know we at the UVM Health Network tend to have a lot of slides, and today will not be any different. We'll try to move through them quickly, but before we do, I want to talk a little bit about the mid-year rate requests that we're making, the times that we're in, the seriousness with which we went about making the decision to submit this rate request, and our thoughts on why this is the right time to do this. And so basically, we know that these are tough times for people. We know when we go to the gas pump, the grocery store, the hardware store, that inflation is having a real impact on people, on our people, on all of you, and all of the citizens of Vermont and our country. We are no different at the UVM Health Network. We're seeing that same pressure, and we felt that the need to come to you with a price request outweighed all the other alternatives we would have to try to absorb the prices that we're seeing. And so we took that decision very seriously, and I will say that Rick and I really don't want to be here today. We wish that we didn't have the inflation that we're currently seeing. We wish that we didn't have the financial results that we see, and we also more importantly wish that the pandemic suffering over the last two-plus years had never occurred. And so you should all know that while we love and care about you, we wish we weren't with you today. Our agenda is laid out here. I want to try to really paint the picture for all of you of what we did to respond to the pandemic and its impact on our finances, and then what cost inflation we're seeing and why we need a mid-year budget adjustment because those costs are not transitory and are not temporary. What we think is our accountability as we emerge from the pandemic and the resulting financial crisis that we now face, and I think we do a good job of explaining what we own in this. I hope you'll feel the same way when we're done. Next, partnership and support that we need from you, the Green Mountain Care Board and the Green Mountain Care Board staff, you know, this is not a one-time event, meaning we're here today to talk about our rates, we're here today to talk about our budget. But this will take many steps today, the summer, and probably, you know, years to come for us to get back on the sound financial footing that we need to be on to serve our patients because that's what this is really all about is our patients. And so we need to have a dialogue with you. We hope today we can have a good dialogue about where we're at. And then last, how this will impact our budget planning for FY23. Because as many of you are aware, we begin that process in March, and so we are already building our budget for FY23 based on the inflation we're seeing and the volumes we're seeing. And so that's well underway and we'll be working on that. Next slide, Sharon. Next slide. So before we go into the costs that we feel are not transitory and are not temporary, I want to talk a little bit about what we've done in the pandemic since we met last in August and what impact that's had on our patients, on our community, and on our network. Delta and Omicron were the most severe part of the pandemic in terms of its impact on the UVM Health Network. We saw the highest census of COVID positive patients during this period. We also saw the most impact to the health care system. And I mean parts of the system that we own and parts of the system that we don't own. And we had to respond working closely with the governor and AHS to try to address the problems that we were seeing. And I will tell you that I likened it to a deck of cards where every week we took a different deck out of the car, a different card out of the deck. And we had a new challenge that we had to address to try to keep moving forward. And so the first bullet here, you know, we expanded more than 40 inpatient beds between CVMC and UVMMC at the height of the pandemic to have capacity, not just for COVID positive, but for also patients presenting with medical surgical needs. We also opened five ICU beds at UVMMC at the urgence of the governor. And we went from 8 to 14 beds at CVMC to try to give enough capacity to the statewide system. There were days in January where we had two or maybe one ICU bed open in the state and we were managing it literally on a minute-by-minute basis. We also expanded telehealth. We talked about this last August. We peaked in April of 2020 with about 41,000 telehealth visits a month. But telehealth has continued to this date. And right now we're at somewhere between 12,000, 5,000 and 15,000 telehealth visits a month. We think that will continue as long as the payers continue to support it. One of the biggest problems we faced during the Omicron period was in our skilled nursing facilities. These are both the ones we owned, Helen Porter and Woodridge, and the independent ones that are in our surrounding areas, where a lack of staffing and COVID positive patients and staff caused the closure of beds. We had to take steps in order to increase the capacity. And so we hired travelers, and we told you about this in August with Birchwood, and that deal continues to this day where we have a floor at Birchwood that we staff so that we can move folks out of our hospital and into a nursing facility. We've also done that at Woodridge where we upped capacity by almost 15 beds by hiring travelers. That continues to this day where Woodridge has a census as of this morning of 131 beds, which is the highest that we've seen in that facility's time during COVID. Last point I want to make on the third bullet is inpatient psychiatric capacity. We spent a lot of effort and time and money hiring locums and travelers to staff our inpatient psychiatric beds. These are adult beds. That allowed us to keep every single network bed open and our beds in Plattsburg for pediatric psych patients. The state and the Brattleboro treat did not keep all of their beds open, which meant we often had more inpatient adult psych folks in our emergency room and in our beds at UVMMC than in any other facility in the state. As you are aware, we also created mass vaccination sites, testing, etc. All of this was done sometimes on FEMA dollars, sometimes on our money, sometimes on federal money, but all done for our community. The last example of a card out of the deck I want to give you is the collection of blood in the state of Vermont. There was a time in January where the Red Cross, based on staffing, couldn't keep up with making the blood draws they needed for us to have enough blood for our patients. The governor asked us if we would help, and if you're not aware of the way the blood system works in the state of Vermont, we rely on the Red Cross, but our network has a lab at CVPH and we brought folks over from New York, the collection, the draw, and then brought it back to Plattsburg, ran it through the process that it goes through, and then brought it back to Vermont so we would have enough blood for patients throughout the state of Vermont. All of our employees were the only people that we took. Could I ask everyone to mute their lines unless you're speaking? Sorry about that. All of our employees were the people that stepped up to donate, and we did that over a six-week period. That's just an example of you wake up and the next card comes out of the deck and it's what you have to deal with as we've gone through this. The key thing about all of this is these are things that we did to respond to the pandemic. They had costs, sometimes they had money associated with them, but hopefully knocking on wood here. We'll move on from that now and we can get back to a life that's a little more regular. So next slide. So now I want to talk about some of the indicators that we have that aren't going away with the pandemic and that the pandemic in some ways accelerated but didn't necessarily create. And so let's go to the next slide. The board should be familiar with this slide from our presentation last summer. This is our volume slide. I'm only showing UVMMC because the story would be the same with CVMC. Just to orient you to the slide. On the left hand side you have the services. This is done by volume. So we show 2019 actual, our 22 budget. And then we do a non-seasonally adjusted monthly average. And then we try to show our volumes in red, yellow, and green to show when we're below significantly below a little bit and then on target. So obviously the goal is to be green in each area every month. And that means that we're on our budget. And so if you look at the far left side as you move into October 2020, you start seeing things going from green to yellow to red. And that was what we thought was the last wave of the pandemic prior to vaccinations. And our goal was to try to, by July, get back to positive volume, get back in the green. And if you look, you'll see, you know, as we move through May, June, July, August, we really did see volumes come back. And we were really hopeful that, you know, that was the end of the story. Unfortunately it wasn't. As we moved into September, we really began to see a system that wasn't functioning properly. So if you look at inpatient discharge, which is on the top on the left and you come across, you know, you'll see that we actually got back to our little bit above budget at 104% in July of 2021. And that slowly degraded. And that really shows the lack of flow in the system. So every day when I look at our census, I can tell you how many beds we have open at each facility. At UVMMC today, we basically had zero adult beds open as of 5am. And, you know, you can see that we're full and we're on red status if you saw the census update. The problem is that we've been full because people aren't leaving the hospital. And when they don't leave the hospital and go to long term care because those beds aren't available, you know, we are literally taking care of folks at a hospital level of care that no longer require it. But also the DRG, the diagnosed related group payment that we receive has been exhausted. And so it's not great for the patient and it's not great financially. And so as nursing homes have struggled with staff, our flow has been incredibly impacted. There have been times when we've had almost 60 patients at UVMMC that were in the hospital that really needed to just be in a nursing home. And so our normal average on that is in the, you know, we'll say the 30s to pick a range. We need to get back to that level. It'll never be zero. But we need to get back to that level to return to the volumes that are in our budget. You'll also see here that our OR cases and then the services associated with them go from green to yellow and red. And that's because we chose to not do day of surgery admits. Those are surgeries that are planned and scheduled that require a surgical bed because candidly we did not have the beds. And so we have, you know, we have concern about our backlog of cases and folks that needed care and couldn't get it. And so, you know, these are just things that happened in the pandemic. You know, for the board to understand the numbers you're going to see when Rick talks in a little bit, all of our assumptions are this goes back to green. You know, so we're not thinking that this stays yellow or red and that we have a budget request because it's yellow or red. Our assumption is we go back to green and get back to normal operations. Next slide. So here's average length of stay for both of the affiliates that we have before you today. And you can see from 19 to 22, we've had a serious increase in the average length of stay. You know, this is an indicator and a direct result of what's happening in our nursing homes. The lack of staff and the lack of beds is making it so there isn't flow in the system. This is not going to go away easy. The national nursing shortage is impacting this and it will continue to impact it into the future. Next slide. So here's the infamous now traveler slide. You know, it shows we started in 19 with a fair amount of travelers. You know, so travelers were a part of our business. They will be a part of our business, but we can't be at the numbers that you see 404 and 63.  So when we think about our inflation that we'll show you in a little bit. Salaries are what is driving the largest part of the problem that we see. The problem here is the traveler situation is not going to get better anytime soon. In the workforce situation when it comes to nurses and all of our other services from nutrition, etc. Those problems are not going away because they were here prior to the pandemic. And that's important for everyone to realize. Next slide. So the travelers and wage increases that we've had to do just to be able to hire folks even into entry level positions have caused our average staff salary per FTE. And this is non physician FTE dollar amounts to rise very quickly. And so we've gone from, you know, $71,000 at UVMC in 19 to 916. You know, that's a that's a huge increase.  Increase over a series of years. But this is what happens in order to hire folks so that we can take care of our patients. And I think that's a really important point for all of you to understand is that if we chose not to hire the travelers. If we chose not to hire the cafeteria workers, the environmental services workers, the lab technicians, if we just said they're too expensive, we can't hire them. We then have to lower the level of services that we can offer. We have never closed beds at CVMC or UVMC. We have not throughout the whole health network during the pandemic as other health systems have. We have always chosen to pay the incremental staff costs. And right now, if we were to at UVMC decide that we don't want travelers or to pay what folks need in our in our other service lines, we would not have the census we have today. And those folks would would have to go somewhere else. I'm not sure where they would go though. That's the problem. Next slide. So with our budget, you know, we're here today to say that our budget is wrong. You know, our budget is constructed is wrong. In fact, when we were before you in August, we said the same thing. When we build a budget in March, we know inflation pretty well from January. When we take it to our boards in May and early June to get it to you by June 30. We really know March. That's about it. And if you look here, March last year inflation was 2.5%, which believe it or not was high.  Our two budgets were put together at about 2.3 2.4%. You know, we do it from the bottom up, but that's what the averages came out to. And when we came before you in August, we commented that inflation had grown to 4 or 5%. And, you know, here we are today with inflation at 7.9% on an annual basis.  You know, I am old enough. I know most of you aren't joking. I am old enough to remember the hyperinflation of the 80s. But, you know, this, we recognize its impact on businesses and on families. And that impact is the same on us.  And we know it's hard on everyone's. But this is the reality that we see. You know, we don't know what comes after the pink as it moves to the right. But this is a pretty good story of our budget being set at one level and reality coming in and another that we could not foresee that we have no control over. And Vermont is such a small ship in relation to the size of this issue. We are literally just having to deal with it. And so that's where that's where our budget was put together in a way that is no longer accurate. And that's why we're seeing the financial results that we're seeing. Next slide. Rick, I'll turn to you. Thank you, Al. Sharon, you can go to the next slide. When we start the discussion on cost, we thought important just to level set is this in terms of the starting point. This is a slide that we've included in the last few budget submissions that we've provided. This includes the most recent orders worth of data. And it's just meant to highlight that when you look at the cost structure for the academic medical center, it is a low cost provider. From the standpoint of the providers costs compared to other academic medical centers. We've shared in terms of the low cost position that we also. We also enjoy from a patient perspective when you look at the total cost of care, but in terms of our costs. There's always room for improvement and we have a lot more cost opportunities to ring out of the system. But it's just important to level set since we're about to talk about cost inflation that we're starting from a very. Advantages position in terms of costs. Next slide. So this chart is the same chart that we've included in our last several budget submissions. It's the calculation that we use for determining our rate increase that we need for the coming year. And that rate increase when we go into the year is solely meant to cover the increase in cost inflation. So not. Changes in our cost base created by changes in volume or. Increases that we need to address changes in paramedics or volume shifts. The last several years we've laid out that what we can't absorb through our operations is the per unit cost inflation that. We just like any other business see from year to year and that's the piece that we need. We need support on from a from a revenue standpoint. This calculation as we've shared in the past does not mean that that cost inflation needs to needs to be covered solely by commercial insurance. Whenever there is. Revenue increase. Rate increase just to be clear or not, you know, not volume related increases in Medicare or Medicaid that to. Helps to cover the cost of our of our inflation. But this is this is the calculation that we've used that first set of columns is our actual submitted budget for the UBM medical center. And as Al just just went through the cost inflation that we were projecting at that point in time when we were building the budgets in March of 2021. So it was at the two and a half percent range. Moving forward to the first four months of this year. And this is this is actual data. So this isn't a this isn't a projection. This is the actual cost inflation that we've incurred through the first four months of the year. That number is up to nine and a half percent for the UBM medical center. The biggest piece is that top line that you see their salary and fringe. That's the combination of increased travelers, both the number of travelers. In addition to just the rate that that we're paying for travelers and other contract labor. And this is all the things that we've had to do to try to retain and retract and and attract workers to the UBM medical center and to see the MC. So we've had to adjust salaries to be more competitive. We've had to implement retention bonuses, sign on bonuses, all in an attempt to try to reduce our reliance on contract labor and to deal with the with the historic cost inflation that we've that we've been experiencing. We know we're that this was the inflation that we could expect to see this this year. The rate request that we would have made assuming the same Medicare and Medicaid rate increases that were in place last year when we built our budget that we would have been before you with a 28% increase in rate that we would need to cover that cost inflation component. What we actually received in terms of our budget order was a 6% rate increase. We had submitted a 7% request in our budget last year that was dropped slightly to 6% leaving us essentially if this same level of cost inflation continues straight through the fiscal year that from a rate perspective we would be 22% short of what our 22 budget was was based on. Next slide. So this is the exact same calculation except for CVMC. I'll just focus at the numbers at the at the bottom. Our submitted budget was a rate increase of 7.4%. The current inflation projected out through the end of the year at this same trend that we've experienced through January would have had our rate increase request at 26%. With the final budget order, settle that was 6%, which our current year budget from a cost coverage perspective for inflation is short 20%. Next slide. Factoring in both just where we think we're going to end the year for UVM Medical Center without any rate increase, we're projecting a $39 million loss. And as you'll see in a minute that is with financial recovery efforts that have been in place for the last few months. So that's not just allowing a current financial situation to go unchecked. So even with all those efforts, we still believe that we're that we will end the year with a $39 million loss for fiscal year 2022. If the rate request that we're here before you to discuss today is approved and we actually are successful in negotiating that with the payers. We could get that loss reduced, but it would still we're still projecting a loss of close to 13 million if the rate request of 10% is approved. The gross revenue projection. So the staff had asked some questions around that just to be clear where we we will need to increase gross charges as well. If this if this rate request is approved just for the mere fact that there may be rates that we need that that gross charge to increase to actually be able to to capture that revenue increase. Right now we're hoping that it doesn't need to be the full 10% to match the the rate requests that that we've made will certainly work to try to minimize that. But there may be some some areas where we do need to to increase our gross charges as well to to fully capture the the rate. The net patient revenue increase that we're looking to to achieve. Then finally just to put that in context in terms of our 22 budget. You can see that there's there's over a 70 million dollar delta there between. Even with a mid year adjustment where we would land compared to the budget that we submitted. Next slide. This is the CBMC projection. So without any rate adjustment, but with the same level of financial recovery efforts, we're projecting that will end the year at close to a 5 million. Dollar loss with the 10% mid year adjustment. We believe we can close that to to a loss of about 700,000. And compared to the to the 22 budget, we'd still be quite a bit behind where we where we need to be and what we're where we planned to be for fiscal year 22. Next slide. So to be clear with how we're covering this cost inflation that's not part of our budget. So on the on the left hand side, the chart you see there is just a breakdown of how much of that cost inflation is tied to salaries and benefits and how much is tied to all other. Expenses supplies and other related patient care. Supplies, pharmaceuticals, those types of expenses. So the vast majority as we've highlighted. Is in the salary and benefits area into a lesser extent. The other expenses that we have. In terms of how we plan to cover that. As Al said, you know, we have a part in this and trying to offset that on budgeted extraordinary cost inflation that we're experiencing. So the bottom component of the graph on the right is the piece that we're working towards. We'll get into a little bit more detail in terms of those financial recovery efforts, but the largest component of what we. We hope to to achieve in terms of offsetting that cost inflation is on us in those recovery efforts. In the form of trying to reduce our reliance on travelers by increasing by increasing recruitment by retaining the staff we have by cutting expenses. By maximizing the revenue opportunities we have, but the largest. The largest component of this this unprecedented increase is is on us. The rate request, if approved, you can see is the yellow highlighted section. The 10% would equate to about 27. Million dollars in additional revenue between now and the end of the fiscal year. I should highlight, I think this was part of the staff questions as well in terms of that number. Just to be clear in terms of the math behind that number. We do obviously know what each 1% of commercial rate increase equates to for UVM medical center and for CVMC. In our projection that we just shared in on this on this slide here we do anticipate that we don't actually. Achieve that full amount of that increase just due to our historical. Experience with policy changes, denials, things that that tend over time to reduce the actual amount of the rate increase that that we receive. The next block is the negative margin that we are projecting so again. Even this with this very large number and even with some rate relief, we will, we are projecting a negative margin for the end of the fiscal year. And then finally just to highlight where we truly need to be to be financially solid. The last block you see there in gray is the $64 million variance that we would experience from a from a margin perspective for the UVM medical center. Next slide. Same graph for CVMC on the left. The amount of cost inflation related to non salary related items is very small. Pretty much all of the cost inflation for CVMC is tied to salary and benefits. On the right. Same story the the largest piece of covering that cost inflation is our financial recovery efforts. The yellow block is the impact that the rate increase would have on that number. A small negative margin and again the margin variance that we would that we would generate. At the end of this fiscal year. Next slide. So to give the board a sense on what our plan is for emerging from this financial crisis. And this is where I'll shift a little bit more to the broader network. Because we're going to get into some debt some bond covenant and days cash on hand and other metrics that that's important for the to the board to know that those are viewed from an obligated group perspective for the for the network. But to give you a sense on where we what our plan is to emerge from this crisis. Obviously we have a lot of work to do to try to even achieve the projections that we have for this year. But even more important is how where we're headed from the end of this year into 2023. I shared with the with the board that a key a key number in terms of that financial stability is the operating EBITTA margin. I know we focus a lot on operating margin. But as we shared in in our budget presentation this past year. To be able to determine is are we are we generating the resources from our core operation to be able to fund the needs that we have both today. And into the into the future that we can't rely solely on non operating gains in the market or debt to meet the needs that we have both this year and into the future. So for us a key number is that operating EBITTA margin because that's the amount of cash that is being generated from poor operations. It removes the depreciation expense that isn't a cash expense. And so that's a key focus for us in terms of our planning and in terms of our recovery efforts. As you can see it's a big number even if we do achieve the projected margin that we have for FY 22. We still have a big gap to make up to get to a more solid position because the projection that we have for 22 cannot be where we where we remain going forward. So some of the things that we have in our plan and there's a lot more detail behind this and we even I think provided a little bit more detailed more specifically to UVM Medical Center and CBMC. In the questions that that we answered. But one is we do know because of what Al shared earlier in terms of just issues that we've had with inpatient capacity and other restrictions that we've had to place on ourselves through this. This Omicron surge that we do obviously have pent up demand that patients are waiting for services. We're hopeful that we've turned the corner there and we'll start to to see the impacts and take care of those patients that that have been have been waiting. We know as we look into the as we look into the future as we shared with the board in our budget presentation that. Yeah, compared to what we knew two or three years ago that Vermont is growing and is projected to continue to grow. In particular, the primary market area around Chittin County is planning to grow significantly. So we know we'll have more patients to take care of and those. Those increase those increases in population we need to be prepared for that. Those will come with new demands, both from a provider and physical capacity standpoint to be able to meet the needs of that growing population. So that certainly is a is a piece of what we anticipate going into the future. The next line we hope is sorry. Our side chair. The next line is a component of that line is why we're here today. We do need to recover some of the. The cost inflation that we're currently incurring and will continue to incur for the rest of the fiscal year and. Likely next again, we can't we can't sustain the levels that we're at currently and. Getting a rate increase on the revenue side that helps to cover the cost inflation is a key component to getting us back on solid financial footing. Next, we continue to have opportunities in nonpatient revenue with the primary area being our outpatient pharmacy business. And we're doing everything we can to maximize those opportunities to get us back to where we need to be. Then finally, the reduction in contract labor and other expenses is absolutely necessary. If we can't make headway there, obviously that's not something that's that's sustainable to be at the at the levels that we're currently at. Next slide. This as well we've shared with the board. Hopefully they've they've found it helpful in terms of the metrics that we use to guide where we need to be financially. It's important to just highlight again this is. Where we need to be in terms of cash and operating even a margin and where we need to be in terms of our plant is guided by. External benchmarks that we use to ensure that we're on solid financial footing. We use this in terms of setting our budget targets for the coming year. And it really is the guide that we use that tells us whether or not we're going to have the resources that we need to meet the needs of our of our communities in our region. Slide. This as well I think is probably a slide that is hopefully familiar to the board. This using those thresholds from the previous slide. Just highlights where we've been in terms of those metrics. So from an operating even a margin going back to 2019. You can see we've been below that threshold. In 2022 we are projecting a negative operating margin and operating even a margin that's again well below the threshold that we need to be at. And even as we project out into the into the future we still don't quite get back to the thresholds that we need to be at in terms of the amount of resources that we're generating from our from our core operations. In terms of debt that is a little bit more of a positive story in terms of the the amount of debt capacity we have. But as I should also share in a moment the the second line there the annual debt service coverage ratio is where we have significant risk. You can see that we're projecting in 2022 to be down at 1.9. For that ratio and you'll see in a minute why we're quite worried. With that number and obviously is nowhere near where it needs to be to be on solid financial footing. Days cash on hand again like the other metrics are pretty much in the red they have been in the red. We popped up a little bit in 2021 primarily related to to the stimulus money that was available in 2021 but that obviously did not come from our from our core operations. Even as we look in the future that days cash on hand number is not at a level that that we need it to be at to be in a place that we can invest in meeting the needs of our patients today and more importantly the needs of our patients in the future. Particularly in light of what we know is is coming at us from a population growth perspective. Then lastly the average age of plant which all that number is is just how old. How old are your facilities how old is your equipment and obviously you need to ensure that you're replacing your facilities and replacing your equipment to keep them current keep them modern. Keep them from getting to to a state where they where they break down and get to a point where they can't they can't be replaced. The last thing I'll point out on this slide is just just to be clear. We don't include the Medicare advanced payments in our cash number because that money has to be. Paid back and has been getting paid back for some time now for both UVM. MC and CVMC were on track that by August roughly by August those Medicare advanced payments will have been fully fully paid back. Next slide. So I mentioned the debt service coverage ratio. Our projection as I just shared on the previous slide where we're projecting will be at 1.9 for this year. And just to explain what that number means and why it's important to the to the holders of our debt. What this tells the debt holders is are you making enough money from operations to be able to afford your debt payments. Obviously they're keenly focused on this to ensure that their debt is safe. And so right now at 1.9 that number is actually deteriorated a little bit from this. The number that's on this slide now for us. This is for the UVM health network again. Our bond covenants are at the obligated group level so it's not an individual hospital by hospital bond covenant. But for a consultant call that number once it gets to 1.35 that's when the consultant call can be made with our debt holders. Once we get to 1.25 that's a that's a default on our on our on our bond. And that's when the rating or the debt holders can essentially force us to have have people come into the organization and certainly take over some of the decisions that are made in terms of how the organization moves forward to ensure that that debt is protected going forward. To give you a sense on just how close both of those events are if our projected margin drops below what we've shared. By more than 31 million that would trigger the consultant call. If it drops by more than 37 million that will trigger the default on our. For a bond company. Next slide. There's been a lot of discussion I think in the in the press and I think even some of the questions that we've been asked why are you not using your reserves to get you through this period of time. We put this slide in here just to be very very clear that we are using our reserves. We ended last fiscal year at the end of September. This is just for the UVM Medical Center. We were at 185 days. We're now through January down to 157 days. That's a significant drop. So we are using our reserves, but we cannot continue to use them at this at this pace. What this means for us is that we're in critical space of being able to continue to meet the needs of our communities again today. But more importantly, looking into the future. That cash and those resources are needed to make sure that we can continue to invest in our organization in our communities to meet the needs going forward. Next slide. So why do these financial metrics matter? So one, you need good balance in terms of these metrics to ensure that you're in a solid financial place. So you need to be generating resources through your core operations. You need to be generating resources through your investments. You also as an organization of our size can utilize debt, but you need good balance between those sources of resources. And that's why those benchmarks are there is to ensure that the balance is there across those metrics. You need to be there to ensure you have the financial stability to meet unexpected events. Our two organizations were not in the best place in 2019, leading into the events that have transpired since then. So in 2019, the events that followed obviously a pandemic that is an unexpected event. We had a cybersecurity event and now we're faced with this historic cost inflation, all of which you could certainly characterize as unexpected events. And because we weren't in the greatest of places in 2019 has has had an even more dramatic impact on our financial stability. And then finally, I've said this, I think probably enough enough times now through through my slides, but you need these resources to ensure that that we meet the needs of our patients today. And just as importantly, if not more importantly, the needs of our patients looking out into the future. Next slide. So with that, I'm going to hand it back over to Al. Thanks, Rick. So when we come forward with a 10% commercial ask in the documents that we've submitted to you, we've sort of done the math to let Medicare and Medicaid off the hook and said, since we can't do anything there, we turn to commercial. And, you know, I think that Tom Pelham has done a good job of calling that out and saying, is that the right way to think about this. And so we just want to provide to you what Medicaid rates would do to our ask, what Medicare rates would do if they were increased to our ask. And also to make clear that we have advocated to diva and to the secretary of AHS that Medicaid rates are increased for the July 1 budget start, because that would go a long way to helping the commercial customer, whether they be an individual or small business. And, you know, we hope that CMS does something with Medicare rates to influence the hyperinflation that everyone is seeing across the nation. But without that, we're forced to do the math and get to the commercial ask, but we don't want to leave that good point off the table. The other good question we've been asked is, where's Porter? Or why haven't the critical access hospitals come forward? We can't speak for the other seven critical access hospitals in the state, but we can speak for ours. And I think it's important for folks to know that our reasoning is that critical access hospitals are paid differently than the way that CVMC or UVMC are paid. Medicare does give them a rate increase through the Medicare cost report on the costs associated with the Medicare portion of their business. And so that is a big help to Porter Medical Center and other critical access hospitals around the country in the way that they deal with inflation. And we put the last bullet in here just so everyone understand that if UVMC was a critical access hospital, it's a little tongue in cheek because a 500-bed hospital isn't going to go down to 25 beds anytime soon. Or CVMC, it would cover about half of the rate increase we're asking for. So we're just trying to level set why we went to commercial, but also point out some of the government rate impacts. Next slide. And so a big part of a mid-year request is just how will you negotiate with payers? Is it possible for payers to pay more, so to speak, and how will you go about it? So this is in the answer to some of the questions we've heard and some of the things we've submitted to your staff. But we have sent letters to all of the major Vermont payers, letting them know that we, if approved, intend to do this. We would need your support. You know, I think through the United Healthcare example, if a health insurance company chooses to not go along with the rate that we're given by you, we're on our own to negotiate that and fight it out. And it is not any fun. And I know that you didn't think it was fun either. But that's the position we're left in. So we'd need your support. Next, we're not sure the true impact that this would have on the insurance companies that they'd have a choice to make in terms of how they pass it on. You know, we've had a choice to make with the days cash we've used, and we've made the point in hearings over the course of the pandemic. And I'm jumping down to the second to the last bullet here that the insurance companies based on our low volumes have not been billed for what we would normally have billed for while their premiums have not gone down. Some insurers around the country have cut their rates. That has not happened in Vermont.  So, you know, well over $250 million. And so the question is, what impact would it really have on the insurers? And are we digging into exactly where they're at? Because, you know, everything we do is very public. Everything is out right now. We're showing everything. You know, we need to know the impact of our declining volume on the per member per year payments they've received versus what they've spent on paying us. And so that's something that we think could be done over time to reconcile this. Next slide. Next slide. So we had two big goals in coming before you for a mid-year rate request. First, to get our request today, to get the needed dollars to support our ongoing operations. So that's an imperative. But second, to have a dialogue with you about how you can support covering cost inflation in this moment and in the summer rate filings. Because very candidly, we will have very critical decisions to make on where we go from here. And we really need to hear from you how you're going to go about this. And so we want to work with you on that as we move towards building our budget. We're hopeful, again, that Medicare and Medicaid increase rates. And if not, unfortunately, we'll be back in the summer with another double-digit increase. And if this isn't granted, that will even be higher. And so, again, we want to talk with you about how we're going to handle that because planning is really important. And just waiting doesn't really help the situation that we're in, as you can tell from our financials. Next slide. So as I've said, and I won't go through these in detail again, you know, this hearing is a signal to us on the future. We want to make sure we hear you and understand your direction because this will have impacts on what we do and how we do it. And I'll stop there. Next slide.  Thank you, Al. Thank you, Rick. Normally we would start immediately with board questions or comments, but because of the short time period that our finance team has had in analyzing this, I'm going to give them the opportunity to ask some questions first in order to try to save time so this doesn't drag on for another month. So, Patrick, I'm going to turn it over to you for any questions you or your team have. Thank you, Mr. Chair. And Mr. Vincent, Mr. Gobi, thank you very much for the presentation today and the thoughtful responses to our questions to date. My first question is for Mr. Gobi and you spoke in a recent interview on NBC five about the needed rate increase, which was in part based upon some of the lagging inflation estimates established in the budget combined with the unanticipated inflation that has been experienced as of last March 2021 for the 22 budget. Given that we're in March of 22 and the health network hospitals are likely at the same stage of their budget creation for 23. What's the plan of a thought process for the UVM hospitals if the opposite occurs moving forward? The potential that maybe estimates around inflation are that they'll remain at relative heights or go higher and because it's evolved so quickly it could potentially proceed quickly too. And so thinking about some of the rate payers as the discussion has been today. What's the plan if those estimates are over and essentially at some point they're approved at higher levels, but then the situation turns around again and we begin to see a recession in inflation rates. So where it's working against you here it could very potentially work in your favor in the months down the road and understanding of course that's impossible to predict. So I'm wondering what your thought processes around that. Yeah, so Patrick, that's a that's a great question. I think if you, you know, you go online and you look at inflation data and you look at what happened after World War One and World War Two you saw a hyperinflation and then, you know, for a very short period of time you saw some negative inflation numbers.  So our choices are very different than a normal business, meaning we don't just limit services if costs go up. That's unethical. But, you know, basically if our costs were to decline that would be in the hospital budget process and we want to show that in a very transparent way. You know, what what goes up would come down if it actually came down, but that's only happened a couple times in the last 100 years and very in a very, very short brief moments. But, you know, it would work in both directions. The other thing I would add Patrick is kind of the unknown going forward as well as why we've only requested a 10% increase again going back to just the pure math. If this cost inflation continues straight through the end of the fiscal year, you know, the needs there are north of 20%. And, you know, we're essentially willing to, you know, have a negative margin and and cut into the reserves, essentially hedging our bets and and seeing what will happen in the in the future so that we're not in a position of, you know, increasing rates, you know, significantly at this point in time and then having that potentially have to be essentially reversed at some point in the future, depending on what happens with with Medicare rates and Medicaid and what happens with the inflation that it would have to be a pretty dramatic decline in the rate of inflation to to close that gap between the, you know, the 20% 20% plus that we're incurring today to the 10% that we've that we've requested. Okay, thank you. So my second question, Mr. Govay kind of dovetails into that. And you spoke in that same interview about how your leadership is working on efforts to constrain costs at its hospitals to mitigate the need for further large rate increases and you've spoken to that today. So again, given that this is March budgets are already being built for the July 1 submission process to the board. Well, the network have enough time to ramp up those efforts and have definitive data to assist in the budget bill that could aid in mitigating the need for further large rate requests in the 23 process. So let me break your question down into two parts. And first, we didn't we're not starting the recovery efforts today. We've we started them. We've had margin improvement plans ongoing. I mean, if you look at our margin, it's so bad that we've literally had an ongoing the entire time I've been with the network, you know, different initiatives that we've we've worked succeeded on or not succeeded on and then come up with new ideas. The ones that we have in this year's plan really began October, November. In January, we came out with another set of of efforts. And in February, we did as well. And so they are having an impact. And they will continue to some of them rely on, you know, the ability to move on from the pandemic to get rid of the temporary costs we're seeing. Some of them are to address fixed costs. So that's the first part of your question. The second is, you know, what will impact FY 23, right? And if inflation stays where it's at, it won't look like anything did because we're fighting.   I don't know if you want to add anything. I think I break up the question to maybe into two different kind of costs. Components Patrick. So one is kind of the clinical operation. Obviously, you know, there what we're trying to do is decrease our reliance on contract labor. We'll have to make an estimate at some, you know, at some point in time where we think that will land eventually based on all the efforts that we've put in place to try to attract and retain more people to reduce our reliance. And, you know, we continuously are making improvements in just in terms of just the clinical, our clinical care models to try to reduce waste and and become more efficient on the administrative side. We've been on in terms of cost, cost containment and efficiency. We've been on that path for quite some time with a very clear, you know, path forward that isn't that isn't necessarily tied to specifically a margin improvement plan, but has been more so tied to systems coming online. So Epic coming online is going to be a key where we're done this weekend. Well, done ish this weekend we go live, but the work will continue from some from from from that point on is a key milestone in terms of being able to to have everybody on the same system that will allow us certainly in our billing shops and some of the other administrative areas tied to revenue cycle to extract the full amount of value we have there. We have a GL AP and purchasing system that is almost fully rolled out across the network. We've been gaining savings through that through that roll out as we've been going along. But we'll continue to, you know, to gain those savings and then finally workday, which is our HR and payroll system that when we go into the budget, we know kind of where we're at in terms of those stages of development and just the goals that we have for reducing costs on the administrative side. So that that component, I would say we have very clear idea when we submit the budget to you on just, you know, how much we anticipate to to bring out of the system if you will. Well, thank you both. Mr. Vincent, on page three of the network's 2021 narrative to the Greenmount care board, it was stated that in response to this financial situation, certain non critical capital projects will be placed on pause relative to the pause that occurred within the network across several capital projects due to the initial onset of COVID. Are there any major projects that are currently in the CON pipeline, specifically those that the Greenmount care board has been alerted to that are considered non critical? So I guess I'll just start by maybe not answering your direct question, but just to give you a little bit of sense on, and then I'll get to your direct question just so you realize we've continued that process in terms of capital spend throughout this fiscal year. So we're we're in that what I would call break fix mode. So the only capital investments that we're approving this things that are either literally on the on the brink of breaking down or have broken down that are truly absolutely necessary to try to conserve cash. But going back to that average age of plant metric on the on the. The sheet I showed that has that has a very negative impact because it means that all of our equipment our facilities are aging when we don't make those investments and they're getting older. So that puts the organization at risk to be again in the same position where we're having to make those decisions. In terms of the CONs and the larger projects, I think this goes to what, you know, Al, I think was trying to to share when like one of his last slides that, you know, we need to know kind of where the direction is headed in terms of the ability to be able to cover this cost inflation that we're incurring to determine if those, you know, if any capital projects that we have in the works, if we have the financial resources to be able to support them, I think that's, you know, those are the that's what we have to kind of go back and determine based on where we think things are headed. Okay, thank you. And my final question relates to some of the debt covenant conversations and some lenders provided borrows of flexibility or allowances around some of those due to the gravity of COVID-19 and its impact on organizations. Did the health network receive any of, were any of those allowances or short term forgiveness is extended to the health network? Are they still in place if they were? And when did they sunset if they were extended to you? So luckily, we didn't need, at the height of the pandemic, we actually thankfully do the stimulus money that came from the state and from the federal government. We didn't have to go down that road with our debt holders. This situation, as I think Al alluded to earlier in the presentation, healthcare organizations, I think are in a different place across the country and just in terms of the impact that this cost inflation has had in the decisions that they've made. So not all organizations likely have made the choices that we've had to make because we're the, you know, because of the role that we play in this region and in this, in our communities that, you know, they're likely are organizations that have been decided not to hire those travelers or decided not to incur a certain level of cost. So the financial performance in certain parts of the country may look different than what you see here today. I think that's likely, you know, a small group. We did receive some data a couple of days ago that, you know, pretty much the entire healthcare industry, the first two months of this calendar year are, you know, pretty much struggling across the board. But our debt holders in terms of how they would look at this, you know, compared to other organizations is a bit of an unknown. In the pandemic, everybody was in the same boat. With this, people might be at different places and, you know, the willingness to, you know, to kind of give us a little bit of leniency on this is a little bit of an unknown. Okay. Thank you both very much, Mr. Chair. I'll turn it back over to you. Thank you, Patrick. I'm going to turn now to board questions or comments, and we're going to go in alphabetical order starting with the letter P. So board member Pelham. Alphabetical order starting with the letter P. Thank you very much. One kind of contextual question I have is kind of the short term decision versus the long term decision and my inclination is, as I said this morning in the, with the Rutland proposal is to push this into the budget process as much as possible. Because there there are more tools to work with. We just today voted for a two year NPR budget process covering 2223 and 24 our hospital sustainability project looks like it's it's going to get some air under its wings. The legislature is still in session. Maybe things like forgiveness of provider tax. I saw that as one of your inflation costs. It was like $6.3 million, you know, you know, due to underlying inflation. I mean, maybe maybe the legislature would forgive that for a year or so. We have the issue with which we've discussed off and I think a little bit the issue of FPP with the commercial carriers. And obviously the commercial carriers are not fully in your corner on this one, but but but being able to have to I mean that less than 2% number of fixed perspective payment across the hospitals. With the commercial carriers to me is just a sore thumb and something that needs to be fixed. And I, and I think you and and Dr. Brumstead agree with that. We've had, we've had this conversation before. So there's opportunity there. So I, you know, I just don't know how to balance. You know, or I want to figure out the best way to balance using our long term tools to kind of bring this in. It's going to be a bumpy landing no matter what, but the alternative that's being presented here is basically increasing premiums on commercial folks, which is administered to in a free a fit a fee for service process, which we are trying to unravel. So we were almost kind of working against ourselves, as opposed to focusing on on the long term. And I just wonder if you have any thoughts about that at all. Yeah, Tom, I'll go first and kick it to Rick if he wants to follow up. But, you know, we've been, you know, on the path our strategic plan is called the road ahead, you know, to move to capitated payments for a long time.  So that said, you know, this is a critical moment. And it's a critical moment for us to understand the intent of the Greenmont Care Board, meaning, you know, we've been an entity that has suffered rate cuts repeatedly, and now we're in dangerous waters, and we have no ability to raise our prices without you. Yet all of the businesses that we deal with can.   I mean, you know, it's not the same price as it was a year ago. And so the question is, how do we handle it when we can't raise our prices? And the most important point, Tom, is we don't know if you're going to let us or how much. And so it's putting us in a position. You can see our margin over the last few years. It's putting us in a position where we are completely disadvantaged to staying modern. And I just see that as an existential threat for Vermont and the region. And so we just need clear direction from the Greenmont Care Board, which is more important than money on where this is headed and what you're willing to do to support us. And so, you know, it's a it's a moment in time that we need to know, I guess is the point. And so support would be an answer. Well, I understand that I understand that. And but we also have all those folks out there, some of whom, you know, can raise their prices with many of them can't. And I still think that the longer view is the better path.  And there was always this longer view as the foundation for the decision making process, sustainable spending, we called it. And I'm just and but it worked.   And so I'm just struggling with that, that tension here. And I think our second goal here, Tom is is what, you know, I'll now call the longer view, meaning we're we're here today, but we also want to have a longer view as to where this is headed because when inflation was 1.8, you know, and we were coming in for a 3. something percent NPR, which translated to a 6% commercial, you know, that was one level. Now you triple those numbers. And, you know, we end up where we are today.  As I said at the beginning, agreeing with you. No, I understand. I mean, as you know, out of two out of the last three UVM Medical Center budgets, I've been a dissenting vote. And it's because I felt because I was looking at where the margin was going on an overall basis and it was going to the UVM Medical Center, and the smaller hospitals. And so, you know, there's their survival going forward to as well that needs to be considered. And so it's, you know, it's all related. Let me ask you, have you thought about asking the state powers to be about giving you some forgiveness on the provider tax? Not anything that I've any conversations I've been in on Tom. Okay. Figured that wouldn't be popular. Well, but I don't know, I have no fear, you know, kind of direct feel for what's going on with all this money moving around at the state level I used to used to know a lot now I know a little. But it seems to me that there's a lot of money moving around up there. And somehow, a forgiveness for your two of the provider tax or this inflationary driven increase in the provider tax might might be something that can get some traction. If they can't give you more Medicaid money, for example, because of some, you know, the Fed, the 1115 agreement. So here's something that caught my eye. In the Rutland application. They showed 22 projected NPR versus 22 budget NPR going up going up 10.6%. So they they were looking at a fairly large increase in their NPR revenues. And the problem that they have is that their expenses in their presentation were not 12.7%. And the delta there is the seven and a half million dollars that they were looking for. But I noticed that your revenues at both the central Vermont and that UVM medical center are going down 4.9% in terms of the UVM medical center and negative 3.1% in terms of the central Vermont medical center. And I know these could be apples and oranges, but do you have any insight into that at all? No, I don't. Rick, do you? Yeah, and I think hopefully when you get a chance, Tom, to take a look at the, and I apologize again for the short timeframe in terms of the staff and the board getting data. There's a little bit more detail in terms of the questions that we've answered that I'm sure Patrick will share or at some point, but it's driven. So one, it goes back to what Al was sharing at the beginning in terms of our inpatient capacity. We've had to just restrict some of the services that we're providing. And those services that have been restricted are primarily inpatient surgical cases and all the related ancillary revenues that are tied to that and other revenues that right now the service mix that we're experiencing. It's a lot more chronic kind of medical cases that just have a different reimbursement. They actually have a lower reimbursement level per encounter than what you see in a surgical encounter. So the balance is off in terms of what we were anticipating versus what we were actually experiencing. The second is that that pair mix shift. So we had a slide that showed just how much we're coming in under our budgeted commercial payments for this year and more of it again, because a lot of the volume has been inpatient chronically ill, COVID related patients that primarily are Medicare patients. So there's been a shift there too that's created that. And then the last thing that's also connected to the access or the capacity issue that Al was sharing is that when that length of stay gets out to the numbers that we had on that slide, you have and because most inpatient stays are paid on a DRG basis. So it's a fixed, it's essentially a fixed payment.  And so that, even though we're generating charges for the services that we're providing, you know, the revenue that's coming in is helping to kind of cover the services that are being provided. Thank you both. Thank you, Tom. Thanks, Tom. Next, we'll move to Board Member Walsh. Tom. Thank you, Chair. And thank you Al and Rick for the presentation and the kind of some more of the background of what you're seeing in your numbers as they come through. That's very helpful to me. There's a lot that we agree on. You mentioned earlier just today that if that you don't just limit services if costs go up that that would be unethical and I think we agree on that that's a good place to find agreement. I think at a, and I agree with Tom Pellum a few moments ago that a long view is appropriate, even in, in a time like this, we're moving as a state and as a, as a country more toward fixed prospective payments or a capitated arrangement and shared risk. And in those situations when we have a set amount that we're trying to work under if we go over it's a loss. And we're organizations don't just close up shop. When that happens they rearrange they learn they grow they try to figure that out. And so that's it seems like that's the type of situation that we're in. At the same time I'm really concerned about the debt service coverage the days cash on hand. The, the covenants that that you have and so I'm trying to understand, and I'll need the staff's help over the over the next few days to really understand that better. But in a real big picture type type of look. I think it was on slide 15 that you have the total revenue for the year estimated at 1.7 billion and the loss that you're facing at 40 million. That's a 2.3% loss. That's it's. It's 2.3% and that's my only comment for now. I've got a lot to learn about the debt situation and the covenants. But I'll pass it back to you, chair. Thank you, Tom. Do you want us to comment chair mullen or. Feel free. Yeah, so so Tom, thanks. Thanks for your for your insight. I, you know what, let me say a few things. You know, first, it is negative 2.3. You know, if that, you know, that's a projection, but let's say it's that. But back to Tom's good point the long view backward is not a pretty one. And that's not a sustainable path and for a state's only academic medical center.  It's not the 2.3 for, you know, a moment in time. The second point I want to make is that. And Tom, we should spend some time together, but you know we do dialysis for the state. You go to North country hospital. It's our dialysis Rutland. It's our dialysis. CVMC is UVMC's dialysis.  And so, you know, that's that's the responsibility of the academic medical center, but it's not the way it's done in every state. Not every academic medical center, even New England bears that community, academic and statewide burden.  That's why we want it. That's the question of the existential future. Like, where's all this going because we can't keep our finances the way they are. And be all things to all people. Right. And so we're not sure how that ends up, but we want to keep talking with you. Yeah, I appreciate that. And I'd like to talk more with you. I think. Where I come from with this and, and, you know, having used health care myself, like we all have having worked in a large academic medical center as a provider. And having worked with large organizations across the state from the VA system, Navy medicine, Advent health, and seeing a lot of organizations. Well, I'll be honest. This is my first pandemic. But it's your last for all of us, right? Yeah. Having seen organizations struggle with this transition to these value based reimbursement plans. This situation isn't unprecedented and and how to get through that. We have to find our own way in Vermont. We can't really look to somebody else to see how they've done it for all the reasons that you just mentioned. But dealing with this type of situation where there is a loss and out ahead looks really, really bad. We've got to figure out a way to change some things. We have to have conversations about how to make those changes. We have a mid year double digit rate increase on a small fraction of the of Vermonters. I don't think is a way to do that. I appreciate. I'd appreciate the chance to talk more with you. I think. I don't want anybody to go broke. I don't want providers of health care to go broke. I don't want patients who need health care to go broke. Next, we're going to turn to board member homes. Jessica. Okay, great. Well, thank you. Thanks for coming today. I think I think we could all agree that none of us wants to be here today. But we have to be here and I understand that. And I apologize if I cough in the middle of this. But and I want to say, you know, I appreciate the work that you all have done during the pandemic and I appreciated today's presentation and I and I understand the challenging position actually that we're all in here. Negative margins. They're not sustainable. The inflation is real. And as I said this morning hospitals are not immune and I think you made this point out to these inflationary pressures. I think we're going to have some really tough budget requests this summer and I, you know, to telegraph I think businesses should start planning now for increased health care costs in the future. I mean, I think that's real. I think as you know if you've heard from our conversation this morning the issues that are most important to me are the timing of the rate increases I suspect these rate increases are inevitable. To me it's a question of timing. And who is likely to bear the brunt of large unplanned mid-year rise in health care costs and then who's best positioned to absorb those unforeseen shocks and I think, you know, we have to recognize that for small self-insured businesses and households facing, you know, large deductibles and large co-pays, they have limited reserves so part of it to me is the timing and whether you can plan for it and absorb it to shock, which is one of the issues. The second issue is what types of cost growth should fall into a mid-year commercial rate increase. And so I think, I think it was slides 13 and 14. They're really helpful. And I need to dig into them a little bit more. And unless I'm misunderstanding those slides are about expense growth, which are inclusive of both cost and growth in cost per unit as well as increased utilization and or increased hires. I think Rick you said the first line includes both, you know, inclusive of wage increases retention bonuses higher rates for travelers and the higher number of travelers. And that to me is expense growth. It's not inflation. Inflation to me is price alone. So I'm looking to better understand, you know, UVM and CVMC's price growth, their actual inflation. And I can't discern from that table what is temporary expense growth and what's permanent expense growth. I think Patrick is going to be sharing an Excel template that should help us, you know, identify what's permanent cost per unit increases that you're experiencing for both UVM and CVMC and distinguished between temporary increases in your wage bill. For example, you know, these one time retention both bonuses that you reference that's temporary. But I suspect and I understand that there probably have been permanent increases in compensation for your benefits eligible long term employees. So I'm looking to figure out what's temporary unit costs that are going to be carried forward in perpetuity and those are different to me. So I need to understand both of what's happening under underneath the hood in terms of true price inflation, what's temporary, what's permanent and really just isolating the price effects, not the utilization effects. In my mind rate covers price inflation and revenue growth covers cost growth right so to me they're different entities. I think Patrick's going to send that and I think that will be helpful so we don't have to unpack that here. But that's, that's, it's coming and I think that will help understand us understand isolating that impact. Excuse me. I appreciate the concern about triggering bond covenants on slide 23. And I'm wondering if in a follow ups, you know, submission or some more information the finance team can unpack how much each hospital in the network, inclusive of your New York hospitals contributes to that debt service ratio and the covenant targets for the health network. So be helpful for us to understand I think since you're presenting the debt service covenant, you know, target and the ratio for the entire network, how do each of the participating hospitals contribute to meeting those targets. And I, and it may be related to that then is how are you adjusting mid year charges in your New York hospitals to ensure that those covenants are met. That would be helpful for me to understand and I can stop there if you feel like you can address that now. Yeah, just in terms of the, the first question you had Jessica that. So for more perspective, any increase in the hourly rate is inflation. If it, if it went up from one year to the next, you know, for us, that's, that's, that's a per unit, you know, increase. It's not that we increase the number of FTEs, you know, the number of people that we have to kind of meet the, you know, a change in utilization. But if that per that rate increase that, you know, that to us is is cost inflation in terms of that. I agree with that point. So I agree with that point you I thought you had said that that's your total expenses in that chart which include the fact that you had to hire more travelers and also uncovered retention bonuses. So, which would be one time. So I may have misunderstood, but it looked like that was expense growth and inclusive of the number of people that you hire inclusive of one time bonuses.  We budgeted for 3% you're getting 5% that delta of 2% to me is absolutely wage inflation. With the hopefully with the chart that Patrick Patrick sends that will become more clear. Even though it's one time so it truly is just even the traveler after these what it's done is it's replaced a what would be a permanent employee. So, instead of paying a permanent employee, you know, $70 per hour or paying somebody $200 an hour. And the one time payments. That's that's the unknown. Those retention payments that we're making right now. Couldn't literally turn into salary adjustments on October 1st. That's the, you know, that's the, you know, the, the process that we have to go through right now. We've made some specific salary changes because we were confident that the salaries have to be changed. But there are others that the retention payments are just buying us some time to determine is this, you know, is this something that we're going to have to stay at that level. So it's. It's inflation now it may not be inflation in the, you know, in the in the future in terms of when we submit our 23 budget. Okay, let me just add one thing when you are completing that table to the degree that you are you just mentioned replacing a permanent employee with a traveler that you know that you used to pay $70 an hour to and now you're paying $200 an hour to. I just hope that there's an offset there for the fringe benefits that you're not paying for that traveler so as long as that's all in there that's just what's helpful to me is to understand what is the net cost price alone effect. That you're facing and, you know, I think we need to understand that and I totally understand that they're real.  And, and Jessica, I'll only add that in the chart that you asked about with the obligated group at the bottom, it says that you VMMC and CVMC are 75% of the revenue of the obligated group. Just to give you some scale. Okay. Yep. Thank you. Yep. So, and let me just ask you, do you have predictions for what total margin is going to be for both hospitals now. We do and I think Patrick will be able to share that with you. We send that back to the set of questions. Perfect. And then I guess my, my final question really references. Al, you know, your points on slide 27 about partnership and support and the public payers. You know, I think you may have heard we haven't heard back from AHS on our request for more information on what Medicaid reimbursements might look like the availability of one time funding relief to try and offset some of these, you know, what I would argue are related, you know, inflationary pressures, pandemic related costs, things like that that I recognize there are some limitations to what can be used with federal dollars but still, these are, as you all have said, these are coming somewhat related to the pandemic so we haven't heard back from AHS and I'm hoping that we will, you know, you all are kind of in a unique position you've got multiple members on your team with intimate knowledge of Vermont's Medicaid program. I'm just wondering, you know, is there a path forward here that would better position Medicaid to keep pace with inflation? I mean, what to use your words Al, what role does Medicaid play in the network's existential future? What can we do here? I think that's a great question, Jessica. I'd want to think about it. I mean, we've other than talking to them about rates and working with them on, you know, it's probably the most successful payment reform model that we work with. The work that Medicaid did on, you know, on their capitated payment. So, I mean, I think we, something we should talk about. I don't have anything right off the top of my mind, but it's a good question. I do want to say, Jessica, that I worry, I worry a lot that we think all of this is transitory. You know, it's not, every day that I work that's not what I'm seeing.  I don't mean it won't go away in five years, so I'm not willing to bet a soda on it or anything, but this is not going away in the short term at all. So, it's baked in our cake. I can't put it on the pandemic. When Rick and I work on it and try to separate it, too much of it is going forward. And remember that our ask is not the bolus of inflation that we're saying. It's not the $107 million for UVMC. We're asking for a part of that now, because we just need to have confidence that we're going to be able to raise our prices in response to what we think is actual inflation that's with us for the long haul. And if we're wrong, we'll adjust to the downside, like I said. Yeah, no, I can appreciate that, Alan. That's why in some ways I anticipate what we're going to see this summer is going to be, you know, an understanding of what's the new normal in terms of cost pressures that our hospitals are facing. To me, I'm trying to discern what is, you know, what needs to be adjusted in the mid-year and what can be, what is a more longer term look that I think will be higher costs and probably higher rates in the future. I understand that. Thank you. I guess my last question is, your explanation about the dip in OR cases makes a ton of sense to me with respect to your throughput to nursing homes. My first question would be, are there any long term plans to thinking about, you know, adding more beds, adding more sniff capacity to deal with that one. And then I guess the other related question is with some of the wait times so long at UVMC for imaging and procedures, I'm surprised, I'm surprised to see the dip in utilization in those areas. That seems unrelated to throughput, but maybe it is, but given just the long wait times we've been hearing. So maybe those are two questions, sniff capacity, long run, deal with this, and then imaging and procedure, dip in utilization. Yeah, so skilled nursing facility capacity and utilization, we have never used all of the beds that we have in the state throughout the pandemic. You know, there was, and I don't have the number today or in the last few weeks, but when I was literally dealing with trying to get people out every day, you know, three weeks ago, four weeks ago, we had 500 open beds in the state that could not be filled because of staffing.  We paid travelers at other institutions and the state stepped up in a big way, a really big way to open over 100 beds. But, you know, as that goes away, flow will not improve. That's why I'm not convinced that we'll see the type of flow that we had in 2019 come back. You know, we'll see, hopefully, you know, hopefully we do, but it's not a bed capacity issue. It's a workforce issue. Oh, and as far as imaging goes, sorry that the skilled nursing facility thing has been pretty stressful. So sorry to go so deep on it. So as far as imaging goes, some of that is literally imaging associated with surgery. And so schedule. So the problem we have is we were canceling surgeries the day of two days before. So there's other parts of that that just, you know, just the system doesn't work well when you're canceling stuff, trying to figure out your beds every other day. So that's why we have that pent up demand number that we really need to get onto. No, thank you. That's really, really helpful. I appreciate it. Thank you, Jess. And it's a sign of a true public servant. As bad as JS sounds today, if you had spoken to her yesterday or the day before, this is a market improvement. But despite how bad she sounded, she was still sending everybody texts and questions and doing your homework and just incredible. So just shows you the dedication that's there. And now I just want to say that I agree with you that I don't think that this is transitory, but I do think that Vermont can grow its own and solve some of these workforce pressures. And I would just say that we've got to make sure that the bottlenecks are solved this year and not put off for another year. We've been talking about these every year since I first started five years ago. And when we have Vermonters who are willing to go to a nursing program and three quarters of them get rejected because we don't have sufficient faculty or sufficient precepting and clinical placement, that's a huge problem. But I'll get off that soapbox and turn it over to board member lunch, Robin. Thank you. Thank you both and everyone else from the network who are here today to talk about your request and answer our questions. And I'll just give you my apologies up front that I did not have a chance to review the Q&A from the staff that I know you sent late in the day yesterday. So if my question relates to something in there, please just let me know. I will of course read it and study it after the meeting. So I had one clarifying question on slide 12, which is the expense per adjusted patient day. And I'm wondering if you could just speak a little bit to that metric, the expense per adjusted patient day. What is adjusted there? Is it related to case mix or payer mix? It would be helpful to just explain that a little bit if you're able to. Yeah, there's no case mix or that type of adjustment in there. So an adjusted patient day, we can actually get you the the calculator. It's pretty close to a patient day is just how you calculate the day and where midnight is and that sort of thing. So we can get you the math line. Thank you. I just wanted to make sure I understood that right. I, the slide, slide 24, which where you discussed the UVM reserves, it would be helpful to also have a similar analysis for CVMC so that we can understand that in a little more depth. Obviously, you don't have to address that now, but if that's something you could provide that would be really helpful to me. Actually, you'll see quite a bit of detail. So we've done, we've actually taken. Patrick was thinking ahead. So the questions that he and the staff asked for. He's got your cover there, but essentially taking that both the medical center and CVMC taking that 185. Reconstructing it to the to the January numbers for both for both organizations. Great. Thank you. And then I had, I have a few questions related to the payer arrangements. And I just want to be upfront in that if I am asking you to answer a question that requires you to disclose confidential information, please indicate that we do have the ability to go into an executive session to have a confidential discussion around that. So I know we had gotten a letter from Anne Cramer being a little worried about asking these questions. So I just want to be 120% clear that I'm not asking you to disclose confidential information, but I am asking you to indicate if there is confidential information that we could potentially discuss in an executive session in order to answer the question. So on slide 28.  You had a discussion in here around commercial payments being below budget over from 2020, 2021 and 2022. I'm assuming that those numbers reflect self-insured commercial as well as insured commercial. And my question is do they ink how much is in each bucket approximately because I think the way it flows back through premiums to the employer differs. If it's as you know I'm not telling you anything you two don't know would be different for self-insured where they would see that directly as opposed to insured where we would look for it in rate review. And also whether there's anything else under that commercial bucket like Medicare Advantage for example. We can definitely provide that that detail and if just to be safe probably make sense just to pass that through Patrick. To be honest I don't know if it's confidential or not and but that's probably the best other the best way to tell you. Great. Thank you. Okay. I would like to also have a little bit more of a discussion around slide 17 and 18 where you had indicated in your testimony that the rate amount that 28 million for example on slide 17. There was an assumption there that you wouldn't get full credit for the amount of the rate increase because of various factors. I wonder if you could go into more detail about that. So the rates that we when we do the math and we that we include in our budget submissions and how we did the math here we know what 1% of a commercial rating groups should be. We do the math without any assumption for deterioration of that number. But the reality is you know there are new you know prior off requirements that come along. New medical necessity rules different policy changes that all at the end of the day results in that number not materializing so that's the assumption that we've made and that number is based on our historical. Our historical experience in that space that we produce that number down to something that's more in line with what we truly net out at the end of the day. Okay. And is that number something that you can share and again it can be separately if you need to check on the confidentiality. That one I'm sure is something we'll want to pass along confidentiality. Okay. Thank you. I think that is the that's really the the other areas that I was interested in I think other board members have already asked about which is one of the benefits of being toward the end so thank you very much. Thank you. And I get the benefit of going last so mostly hard questions have already been asked but Al I want to start out before I even ask a question. You asked us a question and I think we owe you an answer and that question is. You were looking for direction. And the direction as I see it. And again I can only speak as one member of the board. The direction is that we need to make sure that every hospital in Vermont is on firm financial footing. As we begin to figure out what are the next steps in health care reform in the state of Vermont we can't start from position of weakness. I just agree is whether or not a mid-year adjustment is the place to start. But that's another topic and the board will debate that and we'll try to figure that out. But I would say that at least in my mind, and I hate to say this publicly but the reality is I think that the decisions that will be made this summer are going to be the highest increases since the inception of the Green Mountain Care Board. And I say that unequivocally because I don't believe like you that these inflationary pressures are short term and transitory. I believe that there's some long term relief that's going to be seen, but I don't see it happening quickly. And so that's the direction that I think we have to be in. We have to make sure that you have a margin. I say it often and I can't say it often enough without a margin. There is no mission. Again, we might have an argument about what the right margin percentage should be, but that's okay. That's a good discussion to have. And I understand that you're going to have a higher number than what I would think would be the right number, but that's okay. We can fight that out. But I think we're all in this together. And so the answer to your question is that we all have to be working together to make sure that we have a healthcare system in Vermont that is on sound financial footing and is sustainable and is affordable. And that's where the rub lies. And we all have to keep plugging away and trying to work in that direction. So one of the questions that I had from listening to what you presented today and this is miniscule in the overall scope of the discussion that we're having today, but I'm curious on the sniff beds that you did at Birchwood. Did you get a higher reimbursement rate for those sniff beds from the state? No, we didn't get anything from the state for Birchwood. Okay, that's, you know, I was hopeful that you would have a different answer to that. But the reason why I asked that question is, and some of the board members who've been around for a while know that this is something that has always bothered me. You talk about the fact that you can't find beds to move patients into and they almost end up into a swing patient status that, and you take a look at the reimbursement. The highest reimbursement in the state of Vermont, and you know this L because you're the former secretary of AHS is to the veteran center and why is that because we have state employees there. And that really bothers me. And then you look at what's the next tier of reimbursement and it's hospitals and really that next tier is a couple of your own facilities. And then I feel so bad for everybody else because they're getting reimbursed at a third of what you're getting reimbursed and I don't know. It's the most vulnerable population in the state of Vermont and it's troubling for me. So that's another soapbox I'll get on today that I really am concerned about where we're at when we treat our most elderly and vulnerable population. But so thank you very much for being able to prop that up and even at a rate that probably didn't reimburse you properly. So you're to be commended for that. Thank you. What happens now, if the board says no, we're not going to do a major increase. We're going to wait and do this all in the regular budget season. What happens to UVM and Central Vermont Medical Center? Yeah, I think this is the doom and gloom moment and I don't like them. You know, I think threatening to close something. You know, there are people that run things for us or our teammates or our family. We care about them. We love them. I wouldn't do that to them. What I'll say is that, you know, money to us is a means to an end. The end that we want is health care for a million people and health for a million people. And if we don't have, use your words, Mr. Chair, if we don't have the margin, we don't have the mission. You know, I've talked to Rick about this and John about this. We could say we're going to sell dialysis or some other cavalier statement almost like a Washington Monument moment. But that's not how health care gets actually harmed. Health care gets harmed through the age of plant conversation and the access conversation that Jessica's been having with us today and that she's been a champion of. But it's not access like we close UVMMC. It's that we just don't have the most modern equipment, the most modern scope or monitor or, you know, some other device because we don't have the capital. And when you look at the CVMC capital numbers, they're worse than UVMMC. And so, you know, I'm just worried that we won't shine. I mean, people need the Academic Medical Center and the UVM Health Network to shine for the region, but we won't be able to do that if we stay negative the way we have for years. It just won't happen. But I, you know, I don't want to be the doom and gloom guy, but I mean the last few days worried about coming to this hearing. I mean, by the way, I don't want prices to go up either.  No, but I mean, you know, I don't want that. I mean, I wish there was a magical way to do both, but there's not. And I worry, I have incredible worry for healthcare in our region if we can't get the rates we need to cover our costs. I'll leave it at that. Thank you, Al. Before I go to public comment, I'm going to ask the Health Care Advocates Office if they have any questions. Thanks so much, Chairman. No questions. Just, I mean, I know it's been a long day, so I'll be super brief. I just want to say that we stand by our written comments and we appreciate the board taking a serious look at these requests and asking important questions to make sure we aren't asking for monitors to pay more than was absolutely necessary. Appreciate it. Thank you, Sam. So we'll open it up to public comment in the first hand that I've seen raised is Rebecca Copans. Rebecca. Good afternoon. I am pinch hitting this afternoon as Sarah teach I was called to testify before the legislature so apologies for using me instead. You already know our position on these increases. We do not believe that the information provided today justifies a 10 year a 10% mid year price hike on Vermonters and the employers in our state. Nor should you be fatalistic and approve increases now because they will inevitably result in higher budgets next year. No other entity in our healthcare system has the ability to shore up their financial projections with price increases on Vermonters halfway to the year. These institutions represent an enormous portion of our state healthcare system. These increases are not a local issue. Everyone will eventually pay more even residents of Southern Vermont in Bennington or battle bro who've never set foot in these facilities because health insurance premiums are for statewide costs of medical care. A number of individuals and employers have provided compelling public comments and I hope you listen to their voices. Thank you. Next I'm going to go to Ham Davis. Ham. Thank you Kevin. There's a million questions come out of this hearing I think there's a huge inflection point for healthcare reform in Vermont I just got a couple of specific things that struck me today and this is just a start. The first one is a question to Patrick Rooney grows out of Patrick Rooney's question, which is if you how do you know that if you get an increase today that the that the inflationary drivers won't ease off in the future and and make that unnecessary. What I would say is that question is pretty obvious we've seen that before 2017. This board, if the if the UVM is taking in too much revenue. And the board gets to be the judge of that the board gets to be the final judge of that question, then they just demand to get it back in 2017. It's spiked because of volume it's it's spiked it's it's it's top it's it's it's margin from 20 million to 40 million and you demanded it back and they gave it back to you and deal you guys worked out on the on the mental health beds for Central All I'm saying is that I think that question is is it is just a non non starter the reality is that nobody has the power, nobody has the going forward power anywhere in the United States that matches yours. So if you've got a problem with what you did today, and you think that you spent too much money, you can just demand to get it back. And so that's just one point. The second one is the second one is just my view. One of the things I did that I don't I don't understand is that I think everybody agrees even though they don't really want to talk about it that what really makes sense in terms of of a regulation of healthcare spending is cost per capita in the service area. The idea of trying to make trying to regulate trying to regulate 825 bed hospitals on the same template that you use for a 500 bed academic Medical Center that represents the whole engine for your entire system strikes me is just almost literally kind of crazy. And one of the things that I would just said I would I never I never hear according to the Dartmouth Health Atlas, which you placed a lot which people place it all over the United States place a lot of confidence in the total cost per kit per capita adjusted adjusted adjusted. Okay, for Chittenden County is 6600 Medicare $6600 per year at places like places like Rutland, Bennington, Gifford, it's $9900 per year, the average for all in the middle is $8500 per year. So the idea that that because UVM is big that it must be by far the most expensive place in there. Does it does this board care is anybody in this board care at all. Okay, about the total cost of about the cost per capita in the service area. That's a question that's a question for the whole board Mr Chairman. It's a public comment. It's not a period for you to ask questions of each of the board members here. Question Kevin. Thank you very much. Walter carpenter. Walter you're on mute. Still on Walter. Still not there. Let me. Yeah, we're just not hearing anything Walter good. He's leaving and he'll come back and while he's trying to come back in. I have some time here. I'll say Al you started the presentation with saying that you'd prefer that we were in person and I would say that what just happened with Walter is a reason why it would be great to be in person but then if you take a look at the health situation that one of the board members is in. We all have bronchial problems next week so there are some advantages to these remote hearings and that should be reducing some costs on the health care system. Do we have Walter back yet. You see me hear me can hear you Walter so that's progress. I made it. I don't mind the zoom meetings actually except when a tech glitch like this happens it's kind of fun to sit at home and be half with everybody. We do get a kick when Robin turns into the chipmunks. Yeah, well. I haven't seen that one yet let me know when that happens. The question I have predictable up Walter I'm sorry to say otherwise we would let you know. I think the questions I have concerns etc the more echoed by the board members. Kevin especially who talked about the wage payers and because all this money that's being thrown around is being paid for by people who make 1617 $20 an hour maybe $13 an hour. And when we talk so blissfully about raising rate is people like this who will have higher costs higher premiums and their wages don't go up. So once again you're putting a strain on us, you know on all of us who make whose wages just don't rise to meet all these costs you know that. I just wanted to ask about how I read in the digger about how UVM has all these millions or billions of cash on hand reserves. And I wonder why they're coming to us to ask for more money when they have so much in reserves. Well I think they did show charts today that showed that slippage in reserves but I shouldn't answer for them now do you want to answer that question. Yeah Walter. It's good to see you in a long time. I what I would say is that we do have reserves Walter. We also have debt. And when we talk about our bond covenants. That's our agreement with our lender. And you know I'll say this to the chair that the Green Mountain care board has a lot of power and authority over us as a regulator. Our lenders have a lot of power and authority if we want to borrow money. And so you know this is the age old statement of you can't borrow money if you don't have money. And part of the bond covenants are you have to keep cash on hand to borrow that money. This all said this is the financial conversation when it comes to taking care of people that nobody wants to hear. And so I understand your point. But we can't possibly spend down our reserves to cover this and be a going concern. So you want us to be strong financially so we can take care of our patients. That's the that's the end that these means get us to. Is that fair chair Mullen. It is fair. And now you know what you and I both come from small business backgrounds and it's true that you you have to have money to borrow money when when I was struggling to try to find money to expand my business. It was always very hard to get that money. And what's comical is I sold my business after coming into this role and still to this date. I probably get 10 unsolicited calls texts or emails a week trying to loan me money. And I'm not even in business anymore. I needed it. Where were they. I too have owned a small business Kevin but. Yep. Okay other public comment other public comment. So Alan Rick. As you know we just got those answers back yesterday we haven't had a real chance to process those. Patrick's team has not had a chance to do their analysis and recommendation to the board. So we're going to be coming back to this with a possible vote next Wednesday. But I don't even know if we'll be able to get to it next Wednesday so I don't want to promise you something that. Doesn't occur but it is going to be noticed on both next week's meeting and the following week's meeting. And if necessary will will hold special meetings to get you an answer one way or the other because I think you're owed that. So thank you very much. We've learned a lot today and again thank you so much for everything that you've done during the pandemic and keeping Vermon are safe. Thank you Mr chair and thank you to the Green Mountain care board and staff. We appreciate your time today and we'll be available when you need us dependent on your meeting schedule. Thank you. Absolutely. At this point in time we're going to transition to a discussion on seal and thresholds and Mike Barber are you on and are you prepared. I see you Mike so this morning we were asked by the boss to make sure that we put this off until now so that Devon green could be available Devon are you available. Yeah, I appreciate you putting it up until now. Thanks. Okay Mike whenever you're ready to proceed. Everyone. Mr chair can you see my screen. Yes I can. Right. So for the record, my name is Michael Barber general counsel for the board. I'm here to make some recommendations on adjusting the certificate of need dollar thresholds. Just a quick reminder. This is the certificate that gives the board authority to adjust the dollar thresholds. It says that the board may periodically adjust the monetary thresholds. In doing so, it must reflect the same categories of health care service facilities services and programs recognized in the statute. This is made by the board shall not exceed an amount calculated using the cumulative consumer price index rate of inflation. Just to remind you guys that these are the dollar thresholds that we're talking about. There are three main jurisdictional triggers in the statute that incorporate dollar thresholds. There are four hospitals and other types of health care facilities. So a CLN is required for the construction development purchase renovation or other establishment of a health care facility or any capital expenditure buyer on behalf of a health care facility for which the capital cost exceeds a certain amount for hospitals that's $3 million and for non hospitals that's $3 million. Second certificate of need is required for the purchase lease or other comparable arrangement for a single piece of diagnostic or therapeutic equipment for which the cost or in the case of a donation the value exceeds a certain amount for hospitals that amount is 1.5 million for non hospitals is 1 million. Second certificate of need is required to offer a new a new health care service or technology having an annual operating expense that exceeds a certain amount of money for either the next two budgeted fiscal years. And for hospitals that operating expense amount is $1 million and for non hospitals it's half a million dollars. There are three CON dollar thresholds that relate to conceptual certificates of need. The primary requirement here is that if a project is anticipated to cost in excess of $30 million the conceptual CON is required to spend money on planning and design activities for the project. That threshold is $30 million. It's the same for hospitals and non hospitals. And then lastly there's an exclusion for expenditures that are made in preparation for obtaining a conceptual CON. I can't personally recall a time where this has ever been as issue has ever applied but the exclusion amount for hospitals is $3 million and for non hospitals it's one and a half million dollars. And just to refresh your recollection here this is a chart that shows the last time that each of the dollar thresholds was last adjusted. This chart relates to one of the things that you asked me to address. Mike is there a way for you to do something with your screen so that we're just seeing the chart versus your whole screen. Oh you're seeing my whole screen. Okay. Yes one second. My apologies probably everybody else could read it easily but I was struggling. I'll get back to the same look but I'll go ahead. I think the PDF documents but maybe you can increase the size of the PDF document. It's okay I can read it Mike. I'll just go ahead. No no let me um is that better? A little. Oh boy that's a lot better Mike. Okay. Now I can sit back. I've lost my notes but that's all right. I'll just keep going. So just to recap I presented to you guys on March 2nd. The next day on March 3rd we opened a special comment period. We emailed a number of interested parties to solicit feedback. So we emailed Vaas, the VNAs, VMS, Health First, HCA. I won't go through it all. We did email AHS last week. They had been inadvertently omitted from the initial email. We did receive one comment back from the UVM Health Network that urged the board to increase the dollar threshold by the maximum amount allowed by statute and to do so annually going forward. So you asked me on March 2nd to come back with a recommendation. So that is here. I'm recommending that you increase each of the dollar thresholds. In 18 VSA 94-34 A through C by 12.18%. And so this is a table that shows you what that would do. Is that maxing those thresholds, Mike? As I recall there were two different ways that it could be calculated. Is this the higher of the two? Yeah. I think if this is the highest you can go and I'll get to that next. So if you'll recall the statute limits increases to the cumulative consumer price index rate of inflation. There was a question about, you know, what's the starting point for that calculation? And then what's the appropriate CPI to use? So the starting point is really, really the big question and I had recommended starting from July 2018 and still recommending starting from July 2018. Based on the fact that all the thresholds were reviewed by the board in 2017 as part of a stakeholder process. Two of the hospital thresholds were adjusted by the legislature effective July 20, July 1, 2018. And I think that to maintain kind of the relative relationship between the various thresholds, we should be using one date. Otherwise, you're going to have three sets of numbers and potentially, you know, that would allow the board to really mess with those relative relationships between the CON thresholds. And I have an example here, you know, the equipment threshold for non hospitals is $1 million right now. So it's two thirds of the threshold equipment threshold for hospitals. If you calculated cumulative CPI growth from the date each of those thresholds was last revised, you know, you could essentially make make it a one to one relationship. So I don't think that's reasonable. I think we should go with July 2018 as the starting point in terms of which CPI measure to use. These are the ones we looked at. And I've highlighted here and at the top, the one that I think we should go with. So that's the broadest CPI measurement all items in the US city average all urban consumers. It also happens to be the highest of the ones we looked at. It is seasonally adjusted and I can try to talk about that without my notes but my recollection is the Bureau of Labor Statistics suggests that the seasonally adjusted numbers be used for purposes of like policy and research because they eliminate the seasonal variation in prices. And I think that makes sense to do in this case but opened a discussion on that. One thing that I did notice in going through the legislative history on the last revisions that the board did propose modifying the statutory language to specify the consumer price index rate of medical inflation. So specifically calling out that medical CPI index and that was not adopted by the legislature. That's pretty failure by the legislature to adopt language is pretty weak evidence of legislative intent. But you know given given that history given that the broader average is the highest number we have. I think it makes the most sense to go with that. So that's the recommendation. Happy to try and answer any questions you have and have some potential motion language here if you're inclined to make a motion and vote. Thank you Mike. I think that you know all of us recognize that these thresholds should be raised because prices have gone up and the reality is given what we're hearing from. People who are currently in capital projects. It's going to be even higher in the coming year. And we've seen huge inflationary pressures on the project at Bennington. We've heard of incredible pressures on the project in St. Johnsbury. And I think we're going to that's going to be a consistent theme as we move forward that prices have gone up. But this is really the threshold at which we would even have to look at a project and some of these smaller scale projects. The question is is the the juice worth the squeeze of going through the whole regulatory process for them. So with that I'll open it up to comments or questions from board members. This is Robin. I I like the recommendation. I I strongly agree with starting in July of 2018 given the reasons that Mike outlined. And I think this makes sense. So that's where I'm at. Okay. Other board members. I guess I would just say that I support the recommendation and in fact would would also support inflationary adjustments going forward on an annual basis. But for now I do support this adjustment of 12.8 percent. 18 percent. Okay. One thing I I'll add is that you know this is probably not going to exclude a ton of. Because the numbers we're seeing are much higher. Yeah. One of the things that. I think we'd like to explore internally is. Trying to create some forms. That would help streamline some of the more routine medical equipment. Projects like MRIs. And that so that that's on our kind of to do to look at. I think that would be very helpful and appreciated by the providers. Yeah. So I just wanted to make you aware of that. Other board members hearing none. I know that. We would like to hear from the health care advocate and from Vaz before we open it up to public comment. So I'll start with the health care advocate. Thanks chairman. We support the language here. I think it makes sense and it's it's prudent. Thank you Sam. Next we'll move to Vaz Devin. Thank you. We do appreciate you supporting the maximum. Amount of inflation and would also support. Doing inflation inflation adjustments going forward annually. Thank you Devin. Now I'll open it up for public comment. Does anyone wish to offer public comment on increasing the thresholds for CON. If not Robin are you prepared to make a motion. Sure I move. We increase each of the dollar thresholds in 18 VSA 94 34 A through C by 12.18 percent. Is there a second. Second second. We got the quick Tom Tom. Take your pick Evan. It's it's been moved and seconded. To increase each of the dollar thresholds for certificate of need in 18 VSA 94 34 A through C by 12.18 percent. Is there any further discussion. If not all those in favor of the motion please signify by saying aye. Aye. Any opposed please signify by saying nay. Aye. Aye. Aye. Aye. Aye. Let the record show that carried unanimously. So we're now going to go to old business and I'll start since Susan I called on you and we didn't get you at the beginning of the meeting. Would you like to offer an executive director's report. I did offer one this morning. I don't know if you want me to go through that again but I will just offer that at this point in time 3 30 on 3 34 in the afternoon I have not. We've not received a letter from AHS. I do believe they may be giving some comments to us. But so we should hear from them by the end of the day. I'm hopeful we will. We've been hopeful for three days but we'll continue to be hopeful. With that another piece under old business this morning we did not take up the minutes of Wednesday March 23rd. Is there a motion on the minutes of Wednesday March 23rd. So moved. Moved to approve them. Second. Thank you Jess. It's been moved to approve the minutes of Wednesday March 23rd without any additions deletions or corrections. Is there any discussion. If not all those in favor of the motion please signify by saying aye. Aye. Any opposed signify by saying nay. Is there any other old business to come before the board at this time. Hearing none is there any new business to come before the board at this time. Hearing none is there a motion to adjourn. So moved. Second. It's been moved and seconded to adjourn. All those in favor please signify by saying aye. Aye. Any opposed signify by saying nay. Thank you everyone it's been a long and trying day very very very hard decisions to make and I appreciate the incredible effort that this board has put in on some tough subjects and Jess we hope you feel better you look like you really could use a nap and we strongly encourage you to take one. Second. Bye everyone. Bye.