Good morning and welcome to the Green Mountain Care Board. My name is Kevin Mullin, Chair of the Board. If the other Board members could introduce themselves starting in alphabetical order with Dr. Holmes. Hi, my name is Jessica Holmes and I've been on the Board for six years. Bench, I have been on the Board for four years and prior to that worked in various government health policy roles. Hello, my name is Tom Pelham and I'm a former Vermont Tax Commissioner and a former Vermont Finance Commissioner and I've been on the Board almost three years. Hi, I'm Maureen Youssefer, I've been on the Board just a little over three years and my background has been in corporate finance and other public and private boards. Thank you and I'm going to ask everyone to not use the chat function. Again, please refrain from using the chat function. That is not a method that records a public comment. We have an open public comment period currently that you can click on on the hospital budget portion of our website and that is open through the end of the month. Also at the end of the hearing we will take public comment as well. So that would be the opportunity to offer a public comment. Welcome to week two of hospital budget hearings. Today we're focused on the UVM Health Network and the three hospitals in Vermont and John, are you on the line? Yes, I am. So John, first of all, who is the court reporter today? Good morning, this is Sunny Donath. Hi, Sunny. Sunny, if you could swear in all of the UVM witnesses for today and if all the UVM witnesses could raise the right arm. All right. Do you soundly swear or affirm under the penalty of perjury that the testimony you're about to give will be the truth, the whole truth and nothing but the truth? I do. Okay, and I think at this point it would be helpful if everyone, all the witnesses went around and just gave their names quickly. John Bromstead. Todd Keating. Mark Stanislaus. Tom Thompson. Jen Bertrand. Steve Leffler. Rick Vincent. Anna Noonan. And Todd Keating is subbing his interim CFO for Anna. So he's already introduced himself. So we have somebody on our team, Chair Mullen, who is prepared to run the slides for us if that's okay. Yes. And you tell me when you'd like us to start. As long as Sonny is ready, we're all set to go. Sonny, are you okay? Yes, I believe I'm ready. I would just remind people to say their name the first time they speak so that we know who you are. But otherwise, I think we're ready to go. Thank you. Great. So John, remember you're ready. Okay. Well, Sonny, I'm John Brumsted and I have the honor and pleasure to be the president CEO of the University of Vermont Health Network. I'd like to start by recognizing the Green Mountain Care Board members themselves. We know that this is a heck of a lot of work and it's in a sea of a heck of a lot of other things that you're accountable for. So we appreciate your attention. I want to publicly recognize and express my gratitude to the UVM Health Network leadership team. They've developed an excellent budget in the most uncertain and difficult of times. It's a budget, a difficult budget that strikes a balance between what we need to provide the care that Vermonters need, deserve, and have come to expect and affordability. And this budget must be judged. The affordability must be judged in the context of time and not just in the increase in this one year, which is larger than any of us would like to see. So we can go to the next slide, Jen, please. So in the way of introduction, we may have many of the UVM Health Network and affiliate board trustees on, but I'd like to recognize a few of those. These folks give of their time selfishly and it's a lot of time to provide oversight. Not-for-profit governance is difficult, not always the smoothest ride. And these folks provide us a lot of guidance. And as a matter of fact, I'm very proud that my kitchen cabinet actually is made up of the chairs of all of our affiliate organizations. So I'd like to recognize Dr. Bob Leskowski, who's the chair of the Health Network Board. Allie Stickney, who is the vice chair of that board and recently served as the chair of the board at the Medical Center. Pat Dunhauer, who is chair of the UVM Medical Center Board. Tom Galanca, who is chair of the Center for Vermont Board. And Saban Kotel, who is the chair of the Porter Board. And also John Dwyer, who is the CEO of New England Federal Credit Union, who is chair of our finance committee. And obviously everything that we're presenting today has been reviewed, scrutinized through our governance process with the finance committee doing a deep dive in all of our boards approving the process and the final product. It would be great if through the morning we could give our presentations, recognize Chair Mullen that there might be a need for a break in the middle of that. We've tried to strive for consistency. And so things will flow. I think if we go into questions in some parts, it'll be very difficult to get back on track. So we would ask your indulgence to have us get through as concurrently as we possibly can. Next slide. We understand that you're going to do the whole presentation this morning. The only thing that I want to make sure that everyone knows is that when we go to questions, we will take them one hospital at a time starting with UVM Burlington. Okay, thank you very much. That works well for us. So this is the cast of characters. We all signed ourselves in and swore an oath. Just a couple of things to point out. Todd Keating, as I mentioned before, is double heading today. You all know him as the UVM Health Network CFO. He's also serving as Interim CFO at Center Vermont. So he'll be presenting Center Vermont's budget with Anna Noonan. And Tom Thompson, who is Interim President at Porter Medical Center. I don't want to date you, Tom, but Tom comes to us with several decades of experience in hospital leadership, much in rural America, and interestingly and importantly, much in leading hospitals or groups of hospitals that are part of systems. So he's brought a lot of knowledge with him. And he also has experience in implementing EPIC, which was important. So next slide. So it's important to remind everybody that the UVM Health Network, all of our affiliate organizations are not for profit organizations. We're not for profit. And as such, we are not driven by finances. We are not driven by any special operational aspects. We're driven to achieve our mission. And we take that incredibly seriously, all of leadership and all of governance. This is our true north to improve the health of people and the communities we serve by integrating patient care, education and research in a caring environment. And the education and research is incredibly important as the foundation of our integrated delivery system is built around the state's only academic medical center. It's important in recent times. We like virtually everybody is embarrassingly and disappointingly late to the party on diversity, equity and inclusion. And increasingly in our mission, we are being very intentional in how we serve a diverse population and are very inclusive and that we recognize disparities in health outcomes as a core issue to be dealt with if we're really going to move towards a population health approach. As a not for profit mission driven, we have to have a margin at the end of the day. That margin is the only source of funding to invest back into the infrastructure and the people and the programs that support our ability to deliver health care. We also have a vision that by working together we can improve people's lives. We are, and I hope you all agree, incredibly collaborative in our approach. We're collaborative amongst ourselves inside of the UVM health network. We've done everything we can to collaborate with state government in New York and in Vermont and to collaborate with others in the delivery systems that aren't a part of the UVM health network. And I think when we come back to talk more about COVID and the current public health crisis, that really has emphasized the importance of being collaborative in our approach in every way. So next slide, Jen. So here's who we are today serving Northwestern and Central Vermont and six counties, Northern New York. You all know that this is an incredibly rural geography that we cover. The Academic Medical Center have already mentioned five community hospitals, two of which are critical access hospitals, and that we are served by a large network medical group, all of the physicians and providers that are employed at any of our hospitals, by any of our hospitals actually are now employed by one network medical group. We have worked to move along the continuum, worked really, really hard, and it's really, really hard work to move along the continuum from independent 501c3 not-for-profits through sort of a holding company with a common parent, the University of Vermont Health Network to really be much more of an operating company. And that means that we really are striving clinically, operationally, and financially in every way to work as one organization. And that degree of integration, which is incredibly important to be able to consistently and sustainably provide high quality healthcare, is hard work. We've put in systems to support that, HR system, General Ledger system, budgeting system, and most importantly, EPIC as our health record. And you can see some of our numbers over under the network numbers section, and something occurred about 18 months ago as we were putting EPIC in that was really important to me. We've always said that this region has about a million people, and as a population statistic that draws significant accountability, that there's a population of about a million people that we're serving. But when we put together the master patient index for EPIC, and that's where you track every record and make sure that your demographic information and everything is very consistent, there were, as we said, close to a million records, just shy of a million records that were in that system. And for me, as a physician and a clinician, that really changed the way I was thinking about this. It's nowhere near the accountability of being in the operating room or the delivery suite with a patient right there that you're totally accountable to and focused on. But having those million records brought it a lot closer to that for me and I believe others on our leadership team than just a pure population statistic. I, we feel accountable for serving the population in our region, and that speaks to our mission. So we're moving along, doing the hard work of developing an integrated delivery system. And then next slide, Jen. Coronavirus and the disease that causes COVID-19 hits us. And I graduated from medical school in 1978. I've seen a lot of things, I've experienced a lot of infectious diseases, hepatitis A and B and HIV, blood-borne viruses, and so in the operating room or procedure areas a finger stick or a slip of the scalpel could actually make us as healthcare providers a factor for the disease, or we could infect others on our team. We've had H1N1 that we rallied and did a lot of amazing work with vaccinations. We had Ebola, which we actually were able to keep from heading to the pandemic stage with a lot of good public health work internationally. And COVID-19 has gotten out of the box, and it's terrible. There isn't anybody on this call. There isn't anybody in any of our communities that hasn't been profoundly affected by this. It doesn't matter if you're an introvert or an extrovert, I happen to be an introvert, even we are craving, getting in a room with our colleagues or with large groups of people and just interacting. It has just foundationally changed the way that we relate to each other. The only silver lining, I do look for silver linings always that I've seen in this situation. A couple of aspects. The first is what I experienced inside of our network with 12,000 plus healthcare workers that our response has been something that I've been unbelievably proud of every single one of those individuals. And just huge admiration for everybody. The resilience exhibited by coming to work every single day, the perseverance, even when we weren't flooded, thankfully, with cases, the anxiety created by being prepared and not knowing what's coming or when it's going to come is as impactful as maybe even more impactful than actually getting in it and day in and day out being delivering that care. We've also seen innovation that I'm unbelievably proud of. A group of folks at the Academic Medical Center developed a playbook on how to respond if a skilled nursing facility or a communal home is affected by COVID. Unfortunately, we've had to trot that out. We have people in our College of Medicine working with ways to extend our testing capabilities. We've even had folks develop a new sort of out of the garage ventilator. And that really has been amazing to witness. And the expressions of gratitude from those in our community has been a fuel that has continued to energize and keep our healthcare workers going. We've got a few videos embedded in the presentation and some photos at the end, and it's just an unbelievable thing to witness our community donating food and just again the overt expressions of gratitude. For me, boiling it down for us inside of the University of Vermont Health Network, it's reaffirmed for me culturally how everybody is committed to caring for our communities. There was a time to cut and run. This was it. And nobody has even moved one iota towards that.  So I want to give you a few slides just on the COVID-19, the financial impacts and then come back to the broader financial picture. Next slide, Jen. So this is just our three Vermont hospitals. It's just the revenue impact of COVID. And obviously anything in parentheses is a negative and it's off of what would be our traditional budgeted figures. And we saw the nadir in the decrease in activity and revenue in April. You can see that the numbers come back towards June, July has continued that trend. And you can see it broken out by the payer categories. Total revenue losses through June, $136 million. Next slide. So on the left lower corner, this is the $136 million of lost revenue. And across the page is the ultimate impact and our 2020 year end projection. So again, for the three Vermont hospitals with nothing changing, the projected 2020 margin loss, because of that revenue decrease would be about $120 million. Next column, we are estimating that stimulus and grant funds largely from the federal government will offset about $65 million of that. And the next of the additional savings measures implemented and again hats off to our leadership teams. This was the unbelievable hard work that as the activities and the services demand for services reduced precipitously, our leadership teams went to work to flex our expenses down and close to $50 million worth of expense reductions. Again, only possible because we weren't providing the services. But we started with preserving cash by moving capital expenditures to only break fix. The only other thing we kept going was Epic and that had been slowed down. We reduced all purchase services, supply costs, all of those things. We worked really, really hard to bring down offset by some supply costs that went up because of scarcity. And then after we had done those non-people things, we had to get into areas that were very, very difficult. These are managers and leaders that work with these people day in and day out and we had to move them into a furlough status, which meant that we continued to pay a portion of their salary and their benefits, but a major portion of their salary was offset by unemployment insurance, which we obviously helped them to get. Early on March, early April, we asked and it happened the physicians to give up a portion of their compensation and every leader from director and above also gave up a significant portion of their salary and total cash compensation and forwent contributions to retirement plans. So all of that in grants, those hard cost-saving measures related to decreased volumes were projecting that for the Vermont entities will end the year about $6 million in the red, which is close to but won't trip bond covenants at this point and through July, we think that that's still a relatively good number. But to the right of that, really we had budgeted close to a $50 million margin appropriate for a network our size and so we're $55 billion off of budget on our margin. And remember what I said a couple of slides ago, no margin and we can't make the investments. A nun who is running a Catholic system in the 70s, probably the most quoted nun ever in healthcare anyways said no margin, no mission. And that just says it all and right now this is a tough spot for this particular fiscal year. Next slide, Jen. So, no, before, go back one please. So we've been incredibly transparent with our financials and you all know that after the first quarter of 2020, well pre-COVID, we were $10 million in the red and that continued through January and February. So when COVID hit, we already were in a difficult financial situation. I had in my mind and with our senior leaders, we were really looking at 21, fiscal 21 as being the turnaround year that towards the end of that year we would get back to what an A-rated integrated delivery system with an academic medical center has for a margin. COVID has pushed that out so that we're not going to get back to that point just in this year. Next slide, Jen. So I think it's important to step back before these next few slides and regroup on what the Green Mountain Care Board and the University of Vermont Health Network have as shared goals. First and foremost, we share the responsibility to improve the health of the Vermont population, the population we serve. And as I said earlier, we have to really heighten our awareness and our focus on the health disparities of disadvantaged populations, whether it be because of race, sexual orientation, socioeconomic status. We really need to work across the board to make sure that we're very focused on improving the health of the entire population. We have to enhance access to do that. There isn't a day or maybe even an hour that doesn't go by where we're not hit by some example of difficulties in patient access in our system. At the same time, in this balancing act that I spoke to at the beginning, we have to reduce the growth of the total cost of care, but that has to be done on the per capita or per person level. Yes, it has ramifications for the total amount we spend, but the only way to have that be a rational approach is if we look at it on the per capita basis. And we're in a people business. We serve people and we can only serve people with the absolute best workforce. And so we are always cognizant of the fact that our initiatives do impact our people and we want that to be a positive impact that improves professional satisfaction every time that we possibly can. So next slide, Jen. So here's the path to financial sustainability. I mentioned that, you know, at least in my impatient mind and my impatient directives to our senior leadership team, 21 was going to be a significant turnaround year. And that isn't going to be possible because of the focus on the COVID pandemic, even more so than the one-time impact of COVID on our finances. And so right from the start, I set out with our team to look at a 30-month journey back to where we need to be as a integrated delivery system with an academic medical center. And that's a three to three and a half percent margin. And really now by the end of fiscal 22, we have to be on that run rate to make three to three and a half percent every year. I would point out that if you think that that's extravagant, go to the last slides in the appendix. I think there's slides 84 to 89 that show that all integrated delivery systems in our situation that close to 90 percent of them are A-rated. And so if you're not an A-rated organization, you're in the bottom 10 percent. And that's, I believe, part of a death spiral for an academic medical center. So we really need to have that three to three and a half percent margin, which actually is on the low side of A-rated organizations. We have three rating agencies that review us. Moody's did move us down a notch still within A-rating, but moved us down a notch in March. I think that they saw both our trend that was going in the wrong direction, but also the industry going in the wrong direction. And so we did get a downgrade. So we really need to focus on these margin targets. You can see where we were January year to date and what we've budgeted for our three Vermont entities in 21 and how that matches out. Before COVID, what I was just speaking to, we had a basic and foundational flaw in our financial structure. A basic flaw that has resulted in an unsustainable financial trend. Next slide, please. Revenues have not kept pace with expense growth. It doesn't matter if it's your personal finances, if you've got a small mom and pop shop, if you have a small business, or if you're multinational for-profit corporation or a large not-for-profit. Everybody knows that your expenses can't grow faster than your revenues. So this slide are actuals. The last on the right is January annualized. The lowest lighter green line is net patient revenue, which over this five-year period has grown at 3.4%. Total revenue, which includes pharmacy, grant income, the large part of that is outpatient and retail pharmacy has grown at 4.2%. And over this time period, total expenses have grown at 5.8%. You also see from this slide something that is very concerning to me. You see the divergence of the total expense line and total revenue, or net patient revenue, I'm sorry. And as those diverge, it means that we're not floating our financial boat based on our core business, that there are alternative sources of income, largely pharmacy that are required. Next slide. So you might say, well, with that, obviously reduce your expense growth. That's the obvious approach to that last slide. We can't afford more revenue, so reduce expenses. So here's a breakout, 20 budget to 21 budget of the growth and expenses. And this will be pretty much repeated with specificity by each one of our presidents. Let's just point out that 2.5% of that 8.3% growth is pharmaceutical. We really have nothing to say about that. We can do everything we can to group purchase and keep the prices to a minimum, but that growth is driven by what's available and patient need. Provider tax is what it is.  And so everybody always comes to, well, 3.9%, almost half of that growth is people.  Well, I can tell you that every single manager, supervisor, and above spends hours every day managing their workforce. First, we need the most skilled workforce and we're in a rural environment and it's hard to get those people and we're on a regional, if not a national scale to get those folks. We down to the cost center level have benchmarks on productivity and the number of FTEs. And so, yes, we could reduce the number of folks that we have working for us and that will go directly back to reducing access to necessary services and potentially even programmatic changes. There's no buffer left in this system and so we're up against it. We're managing expenses, I believe, as well as anybody in the country. The other box is 1.6%. But pharmaceutical and people costs are driving this. So how have we collectively gotten into this position with this basic flaw where revenues aren't covering this expense growth? Next slide. So stick with the top box and look at the commercial rate increases that we have been granted in our three organizations 2017 through 2020. And when I first said that the affordability of this budget needs to be put in the context over time and not just with this one year's increases, which again are greater than we would want, you see that over a five-year average, even with the increases that are required this year, we're below 4% over this time period, which is incredibly reasonable. I would tell you what you already know in each one of those boxes, in each one of those years, we have come forward with what we have calculated carefully is required to cover the expense growth in each one of those years and we haven't gotten permission to take those increases. We don't cry wolf. We don't pad budgets. What we do is very carefully calculate what is required to cover the cost shift and cover the growth of expenses that I just showed you. And in 2021, those are the rate increases that are required. They're not something that we just made up. They're not an option. They aren't my opinion or anybody's opinion. It's math. It's math. The calculation says that that's what we need to cover our expenses. Below will be covered in each of the President's conversations. Next slide. So this is the result of what happens when your revenues are under what your expense growth is. And this is what Moody's and the other rating agencies, particularly for the UBM Medical Center, will definitely react to if we don't turn this. This isn't COVID. It can't be fixed by one time money. Ask any legislator what one time money does. It makes you feel good for a couple of months, but it doesn't fix underlying basic structural issues. This trend just can't continue. And I'd like to go to the next slide because it really sets my blood pressure off when I see this next slide. So our plan to achieve financial sustainability, and again, these are our three Vermont entities. And this is 20 budget to 21 budget as the last two data points with the other four being actuals. And again, look at this over time. Our net revenue, net patient revenue over that time period, 4.2%. Our total revenue when you put in the pharmaceuticals and some other things, 5%. Total expense over this time is growing at 5.6%. And this tracks almost right on with what the office of the actuary for CMS has catalogued and projected as expense growth over this time period. And we better get used to it because they're projecting it for the next seven to 10 years as well. So this comes right from there. So these are the increases that we need. And again, if you look at it over time, it makes these not easy to swallow, but much more reasonable. So next slide. So our budget is based on the need just to summarize for revenues to cover expenses. And we just can't do that within the 3.5% that patient revenue growth. We've pointed this out a couple of years running now. It just can't get there from here. And we all know you've gotten into it a little bit with the administration around the cost shift. We have to have the revenues to cover not just normal inflation, but also the part of inflation that's not covered by the government payers. And we need to achieve that 3 to 3.5% margin. And again, I'd point you to the slides that we put in the appendix. We don't normally do this, but I think it's important at this point that we allow Mark Stanislaus to do a bit of a deep dive into how we calculate the required commercial rate increase. Because again, like I said, it's as precise as you can be in this world. And Mark and the other CFOs and Todd Keating are obviously maestros in this area. But I think it's important just for Mark to take a few minutes and take us through this. And then we'll move on to the UVM Medical Center. So, Mark. Thank you, John. Well, just for the record, this is Mark Stanislaus. Well, Jen, could you move slide 18, please? Okay, so what we did in this year's budget process is we took those same components that we've kind of looked at every single year, but we deconstructed them at a lower level to kind of show the math in a little bit more specifics. And we spoke just on four general categories for the commercial rate setting process for the hospitals. Well, changes in payment rates, there's a list of things that will primarily would drove that category with unit cost inflation, which is by far the largest driver of the commercial rate request. And we're going to speak about that in a little bit more detail coming up, financial sustainability and other payer offsets. And those other payer offsets, I think John just mentioned it, but Medicare and Medicaid have not kept up with just pure inflation. So those are going to be an offset to that. Each one of the affiliate hospitals are going to speak to each one of these in a little bit more detail, but we just wanted to give you a preview up front in the manner in which we went about this and we attempted to make it a mathematical exercise to show a lower level of detail behind the request for the commercial rates. Next slide, Jen. This is just a slide to say, based upon the structure of the individual hospitals, if it's an academic medical center, a sole community hospital, or either critical access hospital, all of these factors might impact those different institutions a little bit differently so the numbers may vary some. Next slide, Jen. So this is a slide that we attempted to say, how do we compare the hospital with growth rate for all of its commercial business to the request from the commercial payers as it relates to the Qualified Health Plan? We could spend a whole presentation on this slide. So we don't want to get into a lot of detail, but I do want to speak to some of the specifics on this. Obviously there's a challenge here to compare these two processes, but I think we need to find ways to work together to better understand the correlation. It's not going to be easy. This is complicated work. You know, you're dealing with challenges of different fiscal years between the hospitals and the commercial rate setting processes. How does population movements across the state impact the hospital process compared to the commercial rate setting or process? How does the aging of the population impact the state's only academic medical center that is the only institution that offers certain highly skilled and specialty services within the state that we know as you get older, our populations require, and they're good services to add to the quality of the life. And when we look at the commercial payer rate setting process, it really takes two years for the commercial payers to adjudicate their commercial rate setting process. Like in the FY21 rate request, they had the settlement for the 2019 year. So it's very important, I think, to look at this at minimum over a three-year average. I also think it's very important to take a look at this from actual to actual to actual, not budget to budget, because a true driver of cost is budget to budget, or is not budget to budget. It is actual to actual. And the hospital process, the hospitals have that same run rate. I think it only impacts us another year, but when we submit our 21 budget, we don't know where our 20 year is going to end yet, too. So there's also a lag there. And I just want to pause that we took year-to-date January 2020 annualized, because this is a very unusual year. And that was the best period that we could land on to say, how do we take a three-year look at this? And these are the numbers what the show, the Vermont hospital trend in the range of 6.4%. The Blue Cross Blue Shield is in the range of 8.2%. And MVP is in the range of 5.8%. And the impact of this, well that we do need to be sensitive to, and what's driving the three-year average a little bit higher, is the ask in FY21. And we do need to be sensitive that there's a compounding impact here that while some of these percentages might look very, very close together, every point of a percent is meaningful. And particularly when you think about it over multiple years, well the financial impact of that becomes more and more important as compounding takes place. And I can say in the FY21 numbers, the orders just came out with a Friday before. So we did the best that we could do to interpret those orders to say what that rate trend is. And then the other thing I want to say about these is this is specifically only focusing on the medical and the pharmaceutical expense trends. So this includes price, this includes utilization, this includes volume, this includes movements from patients from one county to another county. So it's very difficult to deconstruct how the rate compares. So you really need to look at it as a holistic point of view and then break down those percentages on how much of that is utilization, how much of it is volume, how much of it is increased access, how much of it may be related to aging, and then how much of it is the unit price change. So and, you know, noting that the total approvals for the Qualified Health Plan are much lower than that in FY21, but those reductions are coming from other line items within that process. You specifically need to look at the utilization and the price trends or related to the medical and the pharmaceutical inflation, and there might be a couple other categories that has an indirect effect also.  So if we could go to the next slide, please, Jen. Okay, so these are those four categories that we attempted to break down. Up top is the effective rate increase, the effective commercial rate increase for each one of the hospitals. And this is more of a mathematical exercise. There is the per 1% equino budget impact. I would just like to share there that, you know, this is one of the misconnectivities is that per 1% is for the nine month period of January 1st through September. And then if you go down, those are the dollar amounts in each one of those categories to those four categories before. And it is a simple mathematical exercise. You take, for the medical center's case, you take the 4.7 million and you divide it into the expense growth. And as you can see, the largest or the largest driver of the 7.97% is the unit cost inflation of 6.7%. And if you go down below, like I said, each one of the affiliates are going to speak to this as it relates to each one of their organizations. But that's the breakdown. So in the medical center's case, the 31.7 million equates to an overall 2% increase from a total expense per perspective. Obviously, that is highly driven by salary infringed. But to John's point, if you look at the medical center, salary infringed drives 64% of that 31 million. The other 22% is driven by pharmaceutical and med surge. At CVMC, 54% of it is salary and 32% of it is medical and pharmaceutical. And the cost structure is a little bit different at a critical access hospital. So those ratios are a little bit different. 83% of theirs is driven by salary. So this was just our attempt to break it down at a lower level of detail to hopefully take the numbers that we've said before in the past and put much more specifics around what is driving the ask. Thank you, Mark. So again, we've tried to stay consistent with how we're presenting the financial aspects of the presentation through the three hospitals. There's a unique story to Mark's point at each hospital that will be important for the president to speak to, and they will. So let's move along. Dr. Steve Leffler and Rick Vincent, CFO, if you could move into the Medical Center. Thank you, John. This is Dr. Steve Leffler. Next slide, Jen. So I think it just is worth mentioning that 2020 has been a challenging year for the Medical Center even prior to COVID. We had a temporary closure of our Phena Allen operating rooms, which had a major impact on access to care. It had a major impact on our budget. I'm happy to say that it's fully open now, but right after we were able to reopen it in February, we shut it back down because of COVID.  Epic Go Live was a major challenge for the Medical Center. We had clinical and revenue cycle systems that were impacted greatly. That was a tremendous amount of work that we did between November and the new year to get things stabilized. And then COVID hit and basically upended everything that we do. Starting in early March, we started having incident command and leadership meetings every single day, seven days a week to make sure that we were prepared to manage COVID patients, keep our staff as safe as possible, and be a community resource to work with the state, the government, our local leaders to make sure that we were participating as much as possible to keep Vermonters as safe as possible. On the World Day weekend, we had an issue with the rehab component of the Fannie Allen campus and we relocated our acute inpatient rehab patients from the Fannie Allen back to the Medical Center, Shep 3 North. That's the only acute inpatient rehab unit in the state of Vermont. And it was critically important that we continued to offer those services for our stroke patients, spinal cord injury patients, and many other patients who can't be discharged without having a comprehensive acute inpatient stay. We've had significant leadership turnover. I became permanent in January. There's a couple other VPs that are retiring or changing roles. So we've had some turnover on the leadership team this year. We have some ongoing recruitments and over the summer, this is a good news story and a bad news story. We've been very busy for most of July and August. We've run in the high 90% census range. Our ORs are back to 98% of normal activity. And we've been busy because we've been working very hard to maintain single occupancy beds for our COVID patients and keeping some COVID beds set aside for every day. So managing high volume of care, people who need access for their care and managing the COVID situation has been a challenge. Next slide, Jen, please. I thought it was important to show a slide that if you look between 2017 and 2020, transfers, this is specifically of remonters to the academic medical center continue to grow every year. So if you look at trauma services, cardiac care, stroke patients, NICU patients, psychiatry patients, anyone in patient dialysis must be transferred to the medical center. And what I would say is for the state of Vermont, for most of these services and a number of others I haven't highlighted, we are 100% of the capacity for some of that care. So if people can't be transferred to the academic medical center in Burlington, you have to leave the state or not receive the care. And so we are proud that we can offer these services and we're proud to be able to take these transfers, but it does take coordination in many of these areas. We feel like we must take the transfers no matter what's going on. So really important work. Next slide, please. And the other thing I would add to that is if you look at many of these services are provided at a significant loss. So for dialysis services for the state of Vermont, we lose about $14 million per year. For many of the medical specialties, we lose about $10 million a year. For psychiatry, $7 million a year. And that's not even counting emergency department sitters, which we lose about $1 million a year in compensation for the sitters. For rehab services, we lose about $5 million a year. For transplant services, $3 million. And for our stroke patients around $2 million. Basically, we use services that generate a margin to offset those that lose money. Many of the transfers that we just showed you fall in this category of losing money on those cases. But we are honored to be able to care for the monitors who need us and be an academic center and train the next generation of learners on this work. But it's critically important that we have the opportunity to offset these losses of services. Next slide, please. I think switch is to Rick. Rick, you ready to go? Yes, good morning, everyone. This is Rick Vincent. So Mark covered a little bit of this earlier, but just to dive a little bit deeper on this, the issue. Fine. Who is that? Oh, hi, Josh. Can I ask whoever that is to unmute themselves, please? Whoever is yelling at Josh, please mute themselves. Just to get a little bit more detail on the impact that not receiving a revenue rate increase has on not covering expense inflation. So Mark went into a little bit more detail on what it looks like for this year specifically using our cost increases this year. But in general, I think we've presented this in the past that if you use the ballpark of in any given year, our expense inflation is going to be around 3%. And we take a look at the fact that we have about half of our revenue base that we don't get a rate increase on means you essentially have to make up the difference through the commercial rate increase process. So when you use that 6%, I think every year, we've been right around that number. That's kind of a key number that we need to receive to keep pace with expense inflation. When you look at that impact compared to the rate increases that we've had the last several years, you can see that it's large numbers that it impacts the margin of the UVM Medical Center. On top of this, which I think Mark touched on a little bit as well is what's not shown here is the compounding impact of these issues where you really never make up for lost ground. Even if you do get a rate increase that covers the cost of expense inflation in one year, the rate increase is on a base that is obviously lower than it should be. So the compounding impact of this year over year really has a detrimental impact. Next slide, John. So this is a slide. I think we've covered this in the last few presentations where we've talked about the fact that the rate increase, not covering expense inflation, has negatively impacted our margin, but it also would be even worse if it had not been for how much we've been able to grow our outpatient pharmacy business that it somewhat has masked the real impact that not getting a rate increase to keep up with expense inflation has had. So it was actually quite surprising. When you see this on a graph, it's pretty stark. When you look back at 2016, which was the last year that we received a 6% commercial rate increase, our margin at that point in time was 6.3% at the end of that year. Our total margin taking all of both our core business of seeing patients and our outpatient pharmacy business. When you pull that out of the margin number in 2016, our margin on actually our core business, which is seeing patients was 4.4%. So the gap between those two numbers was fairly small. But as you move ahead, the last three or four years, you can see that in 2018 on our core business, we were just barely above break even. In 2019, we actually lost 1.8% on our core business. And then in January of this year, that gap has grown even more aware. I think hopefully helps to highlight the impact that the rate increase not keeping up with expense inflation has had because that total margin obviously includes that pharmacy business. Jen, next slide. So just a little bit of detail on some of the assumptions that we have in our budget. I think some of this was covered in our narrative, but just to highlight that. So admissions and discharges, we are anticipating a 6% increase from the budget to last year's budget to this year's budget. The majority of that is for us increasing our McClure 5 capacity. We do have a small increase that we projected in terms of all our cases, primarily from trying to create a little bit more capacity at the Fannie Allen campus. CMI, we are projecting to be higher in the 21 budget. We have several initiatives that is looking to try to improve how we are documenting and coding the acuity of our patients. We have an engagement that was actually supposed to start this summer, but we got a little bit delayed due to the COVID impact that really is focused on reeducating our coders and our providers. We have got some new policies that are coming along. And then finally, a project that we have been looking to implement for quite some time now is a system called 3M360, which is a data mining tool that has attached to it artificial intelligence that looks for where we may have missed the ability to truly document the acuity of our patients. And that's important obviously for revenue, but it's also important in terms of our quality metrics. We've seen over the last few years that when we look at length of stay, mortality, some of the different quality metrics, one of the things that's holding us behind a little bit is the fact that we still have some opportunity to more properly document the acuity of the patients that were cared for here at the UVM Medical Center. Medical group volumes are increasing a little bit due to some new providers that we're bringing on. And then we've bulleted out there just some ancillary volume changes. The last two bullets there, CT scans and NukeMed, they are increasing. We did probably have seen the data in the past in terms of Vermont being a low-utilizer of radiology services. We did kind of check that data again, and it's still the case. When you take a look at 2019 in a database that we have access to called SG2, if you apply the regional utilization rates to our Burlington HSA, in 2019 we would have done about 27,700 CT scans. When you apply the national utilization rates we would have done well over 28,000 CT scans. And in 2019 we actually only did 20,000 CT scans in the Burlington HSA. So while volumes are increasing in these areas, it's still well below utilization trends. Then finally GI and endoscopy. We do have some new providers coming on board, and that's an area that we have fairly significant backlogs that we're trying to address. Next slide, Jen. So this mark went through in some detail in the network section. I'll maybe just talk about a couple of the items on here. So first, that payment rate change that's built into the commercial, the required commercial increase that we have this year. I think we've shared this in the past that we go into a year obviously with certain assumptions in terms of payer mix, what we think we're going to get for rate increases, what we believe Medicare will be doing in terms of rates, but every year that tends to change. There are payer policies that come along that reduce the amount that we receive from commercial increases. There's things that come along from Medicare that we do our best to build into the budget that changed during the year. For example, we were assuming a 0% change in terms of Medicare outpatient rates, but a few weeks ago, it looks like there may be a potential where Medicare might actually decrease outpatient rates. So every year we tend to kind of fall behind in terms of our payment rates never really achieve the level that we plan for in our budget. Next slide. Just to break down the net patient revenue and fixed perspective payment and then other revenue increases in our budget. So as you've seen, our total patient revenue is growing by 5.7%. 1.9% of that is pharmaceutical increase. So that's in our minds is just a pure pass-through. That's whatever we have for volume there is and the cost that we incur is going to generate additional revenue. The aggregate rate increase when you take it all the assumptions that we have the commercial rate increase and the Medicare assumptions that we have in there is about a 3% increase. The lower collection rate we've talked about just mentioned. Something that we didn't spend a lot of time on in this presentation. Hopefully we did a good job at kind of pointing this out last year in that, you know, this area of Chittenden County in our main market area continues to grow in terms of patients and population. When you break down our total revenue growth this year about 1.7% of that is just growth in the number of patients. We haven't seen new population data, but just anecdotally, I'm sure that that growth has continued this past year in terms of population moving to our service area. So this is something that every year we've tried to point out that we're just caring for more and more patients here in our service area. And then finally a small piece for the CMI increase which as we address that does increase revenue. Nonpatient revenue is growing by 42 million. The biggest piece of that is our outpatient pharmacy revenue. As I pointed out on this first bullet here, that obviously comes with expense as well. So the cost of outpatient pharmacy drugs goes up as that volume increases. We have to hire more staff to address that volume. So when you look at the actual margin impact of that increase, it nets out to about $9 million. And then finally just an accounting change that actually impacts both revenue and expenses. So historically our grant revenue has been reported as a non-operating revenue. So has the grant expenses. So it's been in the total margin but not in the operating margin. In this year's budget, both of those are moving up into operating. So grant revenues are now operating revenues and grant expenses are operating expenses. So it has a zero impact on the margin but that $7 million is contributing to part of this increase in non-patient revenue. Next slide, Jen. A breakdown of the expenses. So our expenses are going up by 125 million or 8.7%. Most of these numbers I think have been presented already but inflation is 2.2% of that, which is 32 million. The outpatient pharmacy increase is 1.9% of that. So that gets back to the outpatient revenue and the volume as that grows. The expenses there increase salaries and benefits. So this is without the inflation piece attached to it but just purely FTE increases, which are due to patient volume of treatment labor. And you can see the rest of those expenses increases there. FTE. I'm sorry, I think there was a sound and that last part cut and you can see what? It sounds like there's dog barking but can you repeat that again? It's not my dog. I was just highlighting the rest of the expense increases there. And then physician FTEs, we are growing about 18 from the last year's budget to this year's budget. You can see the specialties that are increasing FTEs. Staff FTEs, we are growing by 129 or 2%. 95 of that goes back to the net volume assumption that we have that we're increasing armor glorified capacity. So that comes with some increased FTEs. We have 29 advanced practice providers that are being put into the mix, primarily the primary care mental health integration space. We have 22 FTEs related to the outpatient pharmacy increase, which I covered a little earlier. 14 of the staff are related to those imaging volumes that are increasing. We have about 37 staff across other areas that are increasing due to volume and systems. And finally, through our budget process this year, we did decrease or eliminate about 68 positions to get the FTE growth to really be just purely on what we need to take care of patients and the increases that truly align with the volume increases that we've seen. Next slide. I think that's back to you, Steve. Thank you, Rick. So looking ahead for 21 and beyond across the whole network, we're spending a significant amount of time re-evaluating our capital priorities given our significant losses that will impact where and how we are able to spend money going forward. We are making a plan for how we'll deal when and if COVID returns to Vermont. So we're building a plan for how we might manage elective services over the winter and really trying to build a system where we could care for people who need us even with some COVID present, all the way up through there's so much COVID that we pretty much have to preserve all of our capacity from our providers, ventilators, and space to care for COVID patients almost exclusively. Chinden County population continues to grow. Clearly, many of our primary care docs are telling us that there are patients who typically go to Florida for the winter are planning to stay in Vermont this winter. We believe that could have a big impact on services that are needed for our patients and possibly in patient census as well. And what I can tell you is prior to the pandemic, through the pandemic and in the future, the UVM Medical Center is committed to using our resources and expertise to be a state asset, especially in difficult times such as COVID-19, but all the time. Next slide, please. I want to make one comment before we get to this. I just wanted to give a day in the life of the Medical Center. So if you look at the Medical Center this morning, I want to let people know that we have a three-day inpatient survey started this morning for the Board of Pharmacy. We have one patient waiting at an outside facility to get transferred here that we didn't have capacity for last night, but we're working to move here now. We have three psychiatric borders at the Medical Center emergency departments. We're planning for 70 inpatient admissions today. We currently believe we'll have 43 discharges right now or census is what we call level two, meaning we can manage it, but it's going to be tight. But with that change in admissions and discharges by tomorrow, we'll probably be in level three census. We basically are managing in Chinden County right now that a bit of a crisis with providers for our nursing homes. We provide medical direction for five out of six of those nursing homes. And over the past about 10 days, we've had a difficulty having enough providers care for patients. And so a lot of time has been spent with our family medicine department and our internal medicine departments coming up with a staffing plan to make sure patients are still flowing there. So we've been extremely busy with that work. And now to finish up for the Medical Center, I thought it would be nice to tell a story. So I think many people here know that in the spring, Birchwood had a true crisis with COVID-19 patients. And they got to a situation where they had enough of their staff that was out either with COVID or being quarantined. And they had many positive patients and they contacted us and said, we're going to have to do something. We don't have enough people to provide for patients here with COVID-19. And so we worked collaboratively with Birchwood. We used Home Health and Hospice, UVM Medical Center network Home Health and Hospice. And we come up with a staffing plan to keep patients in their home at Birchwood. And we staffed it with our geriatricians and palliative care docs, our V&A nurses. And we're able to keep almost all of those patients in their homes, getting the care they needed, maintaining vital capacity at the hospital. And it was an amazing thing to see. And so no one can tell it better than Dr. Gramling. So I'm going to let him do it for us by video. My friend and colleague, Mike Lomantia called me on a Thursday when they recognized that they had their first positive tests of residents in the nursing home. And then we put together a team of palliative care and hospice experts to help be on the ground. It involved a collaboration really quickly between the Medical Center staff, physician and nursing staff, and our colleagues at AVM Home Health and Hospice. That place was filled with people who were leaning into this as best as they knew how not to abandon these people who saw Birchwood as their home and did not want to transfer to the hospital if they were to get sick, acknowledging that they would die where they have lived. So by the time we were there for a couple of days, we realized that we needed to provide 24-7 support. The Medical Center rented an RV that we lived in behind the Birchwood and dyads. We had made sure that there were two of us on call on a given night. The chaplain we were working with was doing night rounds on a person who had been doing pretty well during the day, a man who had dementia. He was acutely short of breath. The image is striking, including what we see with disease, that the frothing of the fluids at the mouth can be substantial. And so I quickly put on my PPE and got inside. And when I came down the hall, the first thing I saw were the care aides at the bedside who were one of the things that was ubiquitous for our experience was the people working there were not going to leave the people they loved. They were going to stay there and they were going to see this through. And the aides were helping to change the music and change the lighting and do everything that they could help. We're also terrified that this is not something they had seen and experienced. The nurse was there who met me and was leaning in as well and also recognizing that the doses of medicines that she is used to doing are not working. And it was similarly terrified. I came in the room and was there with our chaplain. We were able to over the next two and a half hours get this man comfortable with doses of medicines that were not necessarily unfamiliar to me in a crisis and a life situation. And during that time, we were able to talk with a family who had been, that our geriatrics colleagues had been in contact with this family right on through the process. We were very aware with this man's wishes where the family is where it was happening. And they wanted to be present. So he wasn't alone when he was dying. And we were able to get them on the phone and they were able to do some family rituals with him. And what the family did for ourselves to do is take the phone and wrap it around his head. And so they could say, you're loved here, you're loved here, you're loved here. And they felt very connected to him and it was inspiring for me and to be in such an intimate space. And also disorienting to be doing that at a time when he was also not yet comfortable. This was hard for a family to see. Took us about two and a half hours to get him comfortable. In an acute care setting with the right medications and IV and subcutaneous medicines, probably would have taken me about 30 minutes or so. And we had been working for a number of days recognizing we needed that. And from a just a systems institution regulatory perspective, we have been unable to achieve that by then. We did two days later, but that's an example of a systems level piece that made it harder to care for this man. Those coming 10 days have been the most meaningful of my professional career. We know that as unpredictable and different as this disease is, it's still a disease. And we have the knowledge of how to manage it. That when our institutional boundaries come down, like UVM came and brought an RV, we built up for us to change our clothes and in and out of PPE. So we didn't have to do it in the bushes that we can get the medications and the training for people to use them. And then people can feel they're not alone. They can have someone by their shoulder that says, you know, you're doing the right thing. You're doing a good job and this part. And I'm here with you. Those things are going to be what gets us through this together and with a legacy that we can be proud of. Great. Good morning, everyone. This is Anna Newton. I'm going to present Central Vermont Medical Center. Next slide, please. Just to reground us a little bit about who we are. Central Vermont's mission is to be central to our community and to care for a lifetime. We have about 1700 employees. We care for about 66,000 people within our towns and cities in Central Vermont. We have a total of 122 licensed hospital beds and 153 skilled nursing beds. We have 23 medical practices. And we have 283 providers, 213 of which are physicians that are now part of the UVM Health Network Medical Group and 70 advanced practice professionals representing 25 medical specialties. And we see over 400,000 patient encounters per year. Next slide. As you heard Dr. Leffler mentioned, 2020 has been certainly an extraordinary year for everyone and CVMC was no different. We have continued to see experience and have been experiencing roading margins. A major shift continues in our payer mix. We're at 51% Medicare Medicaid now. The growth in our pharmaceuticals is increasing rapidly and our labor inflation is as well. And we're also challenged by unpredictable volumes. We can actually double our volumes within our acute care setting within a single day. Back in October, we went live with Epic in our practices and our revenue cycle. And we are continuing with stabilization efforts at this point. And we're also preparing ourselves for wave two, which will occur across the rest of our enterprise. So resource consumption dedicated to those efforts has also been a challenge for us this year. And then in March, along with everyone, we experienced the COVID-19 pandemic. And I will share later all the efforts that were undertaken by Central Vermont and our team of providers, clinicians, our staff and the support of our community that really enabled us to deliver the care that our community needed at a time they needed us most. We also have had to restrict capital expenditures to maintain our liquidity. So I think the Green Mountain Care Board has heard me talk about the deferred maintenance that has existed here at CVMC for a number of years. We are continuing to defer capital expenditures with the exception of patient safety issues or break fix. And like everyone, we also have workforce constraints. A significant issue for us here in the Central Vermont region is retaining and recruiting the talent that we need to care for our patients. So we believe we've submitted a budget that we need to continue to provide the same high quality service that our community has come to expect. Next slide, please. Todd, I'm going to give this to you. Sure. Good morning, everybody. My name is Todd Keating. I'm the Network Chief Financial Officer for the University of Vermont Health Network. I am also the Interim Chief Financial Officer for Central Vermont Medical Center. In this section for CVMC, you'll see a lot of the themes are similar to what you've heard from the Medical Center and the overall introduction for the organization. This slide here is naturally specific to CVMC. You can see that the parallel between the total revenues and the net patient service revenues are moving up in a positive direction but not necessarily keeping pace with expenses as they had in prior periods. So we are projecting for fiscal 21 to have a 0.47% operating margin with the commercial lift that we're asking for. That translates into $1.2 million. We are working on a lot of other initiatives during the year to try to close the gap on the expense growth and the revenue trending that we're seeing now. Next slide, please. So on this slide, this is one of the themes that you've seen and heard before. When you look at the overwhelming majority of the increases for Central Vermont Medical Center, they would be in salary and fringes as well as the pharmaceuticals. Now, one of the things that's challenging Central Vermont Medical Center is the use of travelers. We basically, as although we want to be aspirational with regard to being able to replace traveling nurses with full-time equivalents, it's been a challenge that we haven't been able to meet in a short term. So what we did was to correctly budget for the amount of travelers that we feel we will be utilizing during 2021. That was actually an increase of 10 FTEs from the budget of 2020 to the budget of 2021. And to give you an idea as to the dollar impact, the delta between a full-time nurse, I should say registered nurse equivalent and the traveler is an additional $98,000 for that traveling nurse. So if we increase the budget for reality of recognizing that we would not have the full-time nurses on board, we would have travelers. That increased the budget by $980,000 in change just in that one capacity as well. When you look at the pharmaceuticals, you'll see in a later slide that I'm going to share with you that the growth in this really has been in the oncological drugs. That really has been the growth between the inflation, but the actual cost of drugs for oncology drugs has been a tremendous, let's say, force behind the growth in this area. The provider tax is pretty self-explanatory and other is a conglomerate of purchase services and a variety of other miscellaneous categories that got glommed into one, which will equal the 8.2% growth that we see here. Again, next slide, please. So if we go to this slide, again, this is the breakout of the different areas and how the percentages add up into that 8.2% as listed on the previous slide. One of the things that we felt would be interesting and important to note for everybody is that during the pre-COVID, and I'm saying pre-COVID, which was the October through February period, the organization's expenses were over budget by three and a half million dollars. Naturally, with the COVID shutdown, the focus turned not only onto the patient care that was delivered, which for CVMC was outstanding, but we recognized that we had to sit there and redo our expense structure during this time as well in anticipation that all those stimulus monies were going to be available, that they would not be the only source of recovery available to us, that pullback on capital, as Anna said, but we more importantly had to pull back on the operating expenses for the organization. And in fact, we did that. And for the period of April through June, we were below budget by about 4.8 million dollars and actually on a year-to-date number for expenses are in a positive compared to budget as opposed to the three and a half million that we were over budget and through February and such. We anticipate that we will have expenses be over budget by year-end as we start to get back into operations. We know that we have to manage our labor component. That is the one that is going to be the, it'll be challenging, but at the same time is the one that we have to flex with our staffing based on what our volumes are and such. So we are working on doing that. And right now, we have a very conservative projection for you and our financials and everything. But one of the things when we talk about unknowns and we did see this in July is through the June timeframe employees were not taking vacation time and the reason was COVID-19. And also if you wanted to travel to other parts of the country they were in shutdown and chances are if you wanted to go stay in a hotel if they were open you could stay there but you had to be quarantine for 14 days. So people were not utilizing vacation time during that time period through June. However, in July and we're anticipating in August that in fact we will see utilization of vacation time and did see it in the month of July. And we feel that we've captured that in the projections that we've gave you because it will lead to decrease revenues compared to budget and such. We just don't yet know the magnitude of the aggregate change for the months of July and August. So with that, Jen, next slide. So when we look at the growth this is a slide very similar to one that Rick presented. We do have some pharmaceutical revenue growth some because of the volume of patients that we're seeing and you'll see that in the other operating below that we also anticipate some growth in the pharmaceutical revenues in that sector as well. The aggregate rate increase of 2.3%. The reason that that is so low is because we have a Medicare increase of 0.85%. So when Anna was saying that we look at our payer mix that the combined public payers Medicare and Medicaid is over half of our business. When you get low increases from the public payers like we have, it does put a lot of pressure on the margin and also the commercial lift. So 2.3% as you can see is going to be is below the inflation cost for the supplies excuse me, the pharmaceutical and the salary and benefits slide you saw before. And that's where the pressure on the rates come from. Higher collection rate trend. I was the interim CFO two years ago down at CVMC. What I did notice is that there was an opportunity to improve not only the case mix and everything but documentation and coding overall for part A and part B had a ways to go. It did not move a lot during the year that I was not there but having come back in and such we will be focusing a lot on revenue to improve the documentation and coding around the party and part B side. One thing I would like to point out is as Anna has mentioned that we will be bringing the medical center part of CVMC online to Epic that the VP of revenue cycle is now has oversight of the central Vermont revenue cycle. The person who had it previously moved down south to be closer to family and we felt it was the right time now to start to consolidate the revenue cycle for central Vermont into what will become a network wide revenue cycle. So as an example that position is going to be eliminated permanently. We are assessing and planning on how to start to consolidate the CVMC revenue cycle into what will be the network revenue cycle and we feel that we'll be able to enhance the performance through coding documentation and other practices. There's been a lot of headway made in a short period of time even around the self-pay collection efforts which came out to be rather confusing and let's say has been streamlined since to make it much more effective. Naturally we'll have an increase in volume and such. You'll see that in the budget there's an increase in the physician RV use. We anticipate that some of that will lead to increased inpatient activity. When you look at the budget to budget between 20 and 21 you might look at the inpatient side and say wow that's a big increase as such. Please keep in mind that for this year in 2020 there was a 3% increase in inpatient activity for this year alone above budget. So that is rolled into the 2021 projection. When we look at the other operating revenues as was discussed before the pharmaceutical revenues 340B, retail pharmacy, contractual, et cetera, et cetera is becoming a more and more important part of hospital budgets because of the fact that the inpatient service revenues are no longer sufficient to cover the costs of operations. Central Vermont Medical Center does not necessarily have the full cadre of revenue streams within the pharmacy realm. Up and running yet we will be looking to sit there and grow and augment what is currently there and stuff but we did pick up five new contract pharmacy agreements with retail pharmacies for this budget and they are included at $1.3 million. And we also have an offset to a let's say a one-time adjustment that was budgeted in 2020 that naturally was not recurring so that actually had a negative impact to the 2021 budget when it comes to the other operating revenues. On the non-operating revenue side of things we're increasing the budget $2.4 million. It basically will be driven by our investments and such. We despite the COVID-19 negative impact as a network specifically to CVMC have recovered where we were and then some so we feel very confident that we'll be able to drive the investment income number which will drive the total margin for us. Jen, next slide please. Okay. This is an example of the growth within the pharmaceutical component for CVMC. So on the top box if you look at all pharmaceuticals this is basically all-inclusive and you can see starting in 2016 that the gross revenue was $25 million and if we go to the 2021 we're up to $57 million but if you look at the growth within the oncology drugs the impact of the oncology drugs on the overall gross revenues was about 35 percent and when you go across the page to the 2021 again it now comprises about 53 percent of the budget and if you look at the impact with regard to the net revenues and such it has a negative impact with regard to the net revenue less the expense because of the inflation growth of the cost of the drug outpacing the inflation growth of the different payers that are paying for these drugs in a variety of different ways. So this is kind of a sleeping or a kind of behind the scenes negative impact to the margin that you don't necessarily see cost to cost and revenue to revenue because you have these offsets that happen in the overall picture and stuff but this is one of the other pressures on the margin as oncology drugs and utilization of these drugs grow and the growth in revenue to offset these costs does not occur this does negatively impact the margin. Okay next slide. So this slide is consistent with the one that Rick had talked about before. You know when we look at the 8.5% commercial lift that we're looking for we are anticipating a little bit of a negative impact with regard to the impact of COVID-19 on the economy and having people migrate from potentially migrate from commercial products to Medicaid or charity care we have not seen that to date yet when I want to be clear we have seen which is somewhat unexpected is that the stimulus money going to people who have lost their jobs in some cases is actually higher than what they were earning when they were working and so you know naturally they haven't gone to apply for charity care or other things and the irony of this is some people have actually freed up some money to actually have paid some of their self-pay and get back to the productables etc. We did not anticipate this as a matter of fact we anticipated the opposite what we did anticipate is that the impact would be negative and we as a network and everything pulled back our collection agency efforts starting back in the April time frame and did not sit there and reinvigorate those efforts until July so I think we have yet to see what the impact of COVID-19 will be on the economy and what is going to impact the growth in Medicaid and charity care versus the commercial products so we are keeping our eye on that the next section down is the breakout of all the different expense areas and the allocation of the revenue lift to those expense areas and then as you can see at the very very bottom that between some of the let's say insufficient rates from other payers and what the sustainable products set that you can see that essentially they are one and the same so that basically is the breakdown of the 8.5% commercial lift. Next slide Jen. So here we do have the operating margin of 1.2 million dollars or the 0.47% I referenced earlier a total margin of 2.4% which is basically including the investment income which is going to be a little bit more clear and as I mentioned before that we are projecting an operating loss of about 4.5 million dollars for this year some due to the unknown of the last quarter of the year as to how things are going to move with regard to revenues and expenses as Anna mentioned before the volumes at CVMC can fluctuate dramatically in short periods of time whether there or not and stuff we're still paying for them so that's why we actually when we lose volume we cannot fluctuate the staff as much as we would like to be able to do that however we did learn through the COVID-19 experience how we can start to do that on a going forward basis with full-time staff. The salary costs have been stabilized through expense management as a senior leadership team in the organizations every month to make sure that we're not getting over our skis with regard to the labor growth in that area we did in fact receive 17.3 million dollars in stimulus funds to date which is used to offset $19.2 million through June I don't have the shortfall amount for July yet and everything but the stimulus funds were close in total and as I mentioned before the estimate for the fourth quarter is conservative for the don't know what we don't know particularly around vacation time and utilization of that time over the summer months next slide and naturally we have financial risks going forward basis and such we are crossing our fingers that we do not see increase in COVID-19 cases come this fall this is again one of the things that is incredibly unpredictable and very hard to trend right now because it's the first time we've seen it increased percentage of Medicare Medicaid payer mix as I mentioned if we see a migration of patients from commercial products to Medicaid payer mix and everything that will add a burden to the organization as great as telehealth was for us during COVID-19 and I have to say that I haven't heard a provider not like it yet unfortunately across the country there were cases of fraud even at the Medicare level and stuff so the reimbursement for telehealth is being reviewed by many payers right now to decide what to do with that program we're hoping that they look at it as an opportunity for the future and continue to go down that path as it provides much better access to a lot of people who live remote that may not have access hospitals if not for having telehealth being that the fear of going to a facility or doctor's office during that time was incredibly high and so rather than take the risk if you had a cough or what have you and you didn't want to go to the ED or doctor's office for fear that somebody may have COVID-19 telehealth was a great alternative for those patients and what have you naturally we were working hard on managing the workforce supply and labor costs as I mentioned particularly around the travelers we do have a program with the developing L and A's to work for the organization that at the Woodbridge nursing home for the first time in a long long time they did not have any traveling nurses as they hired a lot of the L and A's and we're looking to continue to grow that program to address the traveler challenge that we have right now and as John mentioned early in the presentation the unknown not only around the pharmaceutical inflation but there is noise now in Washington that big pharma is starting to come after contract pharmacy and 340B revenues yet again and the last time they did this it did result in negative revenues for some organizations our medical center took a nine million dollar hit and it was worrisome and stuff with the inflation cost growing the way they are and now talk of big pharma trying to have the government pull back on some of these revenue programs that are key to hospital margins and budgets and so next patient as I mentioned before the expansion of the L and A to LPN program to grow employees for the organization and I can give more color on this when she concludes our presentation and I think that is a positive experience for us the assessment of pharmacy revenue programs specifically right now central Vermont medical center does not have a retail pharmacy so we will be looking at that opportunity as a potential revenue stream for the organization and as I mentioned before documentation and coding is we need to get that up and running to a point where after the epic implementation of 3M360 that Rick mentioned earlier we are nowhere close to being able to do a program implementation of that size at this point in time and it would actually behoove us to sit there and do a redo of the current coding and documentation on the part 8, part B prior to the epic implementation and then post epic then go and assess the opportunity for the 3M360 Jen and with that I will turn it over to Anna. Thanks Todd. So we wanted to just reinforce that we are still in the midst of this pandemic but I also wanted to recognize in the incredible work that center of Vermont's team with the support of the network were able to continue to provide the services needed for the community we serve to date and this is an incredible good news story we've had zero positive COVID-19 cases at Woodridge nursing home and rehabilitation facility and that's not by chance that's I think the benefit of having a long-term care skilled nursing facility and rehab center part of an integrated delivery system so when we were doing PPE training for all of our staff which we did every half hour for months in preparing for the COVID surge we also did the same thing at Woodridge and those kind of services and that kind of education to the team down there is more challenging and skilled nursing facilities that aren't affiliated with an integrated delivery system additionally early on in the pandemic at Woodridge we shut down our visitation and we went to screening all staff very early on in March again all of those activities I think really served us well so again to date no positive cases of COVID at Woodridge the PPE donning and dotting education that I mentioned we did consistently for about two months and so literally everyone that touches a patient or goes into a patient room went through that training again including our surgeons and all of our providers again a re-reminder of the importance and safety measures that really come forward when you're challenged with a pandemic we increased the capacity of negative pressure rooms I think when we started we had under 10 we went up to 27 in total we increased our ICU capacity by 128% and along with the network we implemented a myriad of protocols to support COVID-19 airway management and code drills we expanded triage and treatment capacity and one of the things that was really wonderful to see is we cross-oriented our anesthesiologist and primary care physicians to come into the acute care setting so our primary care who we're seeing lower volume even with the use of telemedicine came into the acute care setting and served as hospitalists which gave us the workforce we needed should we have experienced that surge same thing with our anesthesiologists they cross-trained into our emergency department and like others in the network we established a pop-up testing site which we're continuing to run 7 days a week today and we also implemented an acute respiratory clinic to separate patients with respiratory conditions from other patients in our clinic practices we also continue to have our COVID-19 call center where we triage calls for the community and that's a wonderful support to the community as a whole and we also use that function to test schedule testing and other visits for our clinics. The other thing is as Steve mentioned we are also a resource for our community so during the pandemic when social service agencies required more support we sent resources in to re-educate them on PPE use we did N95 testing for those facilities and again it takes a team effort across the community to have the kind of results we've had to date related to COVID prevalence we I believe are the first in the state to implement thermal scanners to support both the acute care setting here so all of our patients and visitors when they come in are scanned for temperatures with a thermal scanner and what that did for us is allowed us to shift staff that we had repurposed during the height of the pandemic to do those temperature screens we moved those folks back into their primary roles and used the thermal scanners to support screening of individuals coming into our acute care facility also all of our employees are screened using the thermal scanner at the employee entrance and then lastly I just want to re-initiate the amazing community support we had from Central Vermonters they were with us through all of this and I can't say enough how grateful we are for all of their efforts to support our team during the COVID pandemic next slide, John so we are going to share with you a moment in time with Jess Sherman Jess is a doctoral prepared medical surgical nurse and she runs our med surge unit here and she also led our COVID-19 clinic unit here in the acute care setting during the height of the pandemic so I'll let Jen start that video I've been a nurse for 17 years and I've been in various roles, bedside educator, leader and this is probably the most stress I've felt in my 17 years of nursing in the break room there was a sign that said times don't last, tough teams do and that kind of became our mantra, our motto they worked through a lot of fear and uncertainty and I think they were really brave and I don't want them to have to do it again but I know they will the community was phenomenal their response was amazing very supportive they immediately donated any PPE they had they made masks they made little gadgets to put behind your head so the masks wouldn't be on your ears and hurting your ears but I think the best thing that the community did for us was making sure that they socially isolated and did hand hygiene and wore their masks and they did all the right things and because of that we never hit the high COVID surge that we saw in our neighboring states so the community did that and we're really thankful for that our organization as a whole came together and did amazing work to create policies and things that we can replicate and use again for a surge what stresses me out is a lot of feelings and the fear that will come back from my team and being able to keep them safe once again I know that we're going to have a flu season it's going to be big, it usually is we're going to be full and really the COVID surge depends on a lot of a lot of people outside of our control you have a lot of people out there getting bored with the idea of socialization and masking and I feel like we could have a huge impact if the community doesn't stay on board with this I can't imagine the stress and fear level should that actually happen is there a way to really wrap your head around it and it's just scary and it's on okay, Jen please just go ahead and flip the slide so I think actually this might be the best point to take a break before we start into Porter and I would suggest that we come back in 10 minutes at 10.35 okay, fantastic thank you 10.35 thank you so we're about a minute away from getting started again I do see Tom and Robin back on the screen Jess and Maureen are you on as well yes yes and Sonny are you with us as well yes I'm here perfect so with that Mr. Thompson whenever you're ready you can take it away okay thank you chair Mullen Jen if you'd just go ahead and flip the slide that'd be great alright thank you okay so thank you chair Mullen and board members we appreciate your service center pleased to present the Porter hospital budget proposal for fiscal year 21 as Dr. Brumsted mentioned my name's Tom Thompson and since February I've been privileged to serve as the president and chief operating officer of Porter Medical Center I was going to mention having served over 30 years in this capacity in community health systems John mentioned decades either way it makes me feel just a little long in the tooth but that said where it is relevant is that I have very strong appreciation for the importance of a vibrant health care system as provider, employer and community leader in many ways an organization's budget represents its priorities in our presentation you will witness that our community focused mission is our priority by way of introduction I will comment briefly on our COVID-19 experience to date the relevance of our organization's financial role our emphasis on ensuring new and access to care and the importance of a holistic perspective on our care system specific to our budget support for our skilled nursing facility Helen Porter healthcare and rehabilitation COVID-19 readiness is a subject of our recent past our present and our future as Vermonters and for our entire care system and so I'd like to start by offering you a snapshot into Porter's experience addressing COVID's uncertainties that have been stressful for all at Porter we are proud though of our goal-oriented and adaptive approach our resilience our innovation and our remarkable community support starting this spring we put an incident command structure in place that managed our COVID readiness work to very specific goals, objectives and milestones we maintain daily communication with our network peers and other care partners from outside our network to coordinate policies, supplies, people communications and patient care priorities we messaged our teams transparently and with great frequency so that everyone had the most current information then as spring slipped into summer we transitioned with discipline into a safe reopening of our campus and our different care settings as our COVID cases declined we gain much from this experience and continue to learn as we hard wire process improvements in readiness for a likely wave two experience as well as flu season in the coming months in 2020 as always the communities we serve have been amongst our greatest assets one of our nursing professionals Mr. John Countryman will speak to this source of strength at the conclusion of our presentation serve our community with sustainable financial health is where our organization's overall strategy is grounded in that goal reinforcing the message that adequate financial resources are essential to enable our teams to continuously improve our care and fulfill our mission sustainable is a key word in this goal statement referencing the importance of both stewardship of resources and smart growth defined as program investments that address priority community needs and which are capital efficient clinically appropriate and financially responsible our perspective on health care reform has a very strong emphasis on value that commitment to continuously improving value is at the heart of our efforts to be a transforming health system as is noted in our vision statement at Porter we advance this work through priorities that emphasize safety and quality in our care and excellence in our patient and resident experience and doing so at an appropriate cost community engagement is critical in optimizing this value equation as is a perspective that our patients aren't just our patients while they're within our four walls with that in mind I'd like to comment on some of the community based examples of Porter's efforts to support our patients and fulfill our mission programs such as our patient and family advisory council and our resident community council that involve our patients and our residents it purposefully in our program planning and evaluation providing food support for patients facing food insecurity issues outreach programs teaching self care practices to individuals managing chronic disease in their lives a doubling of food share co-ops a very innovative program a pharmacy program with an F serving patients so that they can access fresh and organic foods and a recent addition rides for wellness that helps patients with transportation issues get to their important medical and wellness appointments what it comes down to for us is that access to care is a core driver behind our goal to serve our mission with sustainable lives our organization focuses on primary care with appropriate local access to specialty care and services supported by our UVM health network relationships Porter's care continuum includes multiple clinic sites and specialties our acute care hospital and skilled nursing and rehabilitation care serves community residents across their lifetime enabling us to meet most caring needs locally our ongoing work to direct our resources in ways that best serve our community is supported by a great team of folks here at Porter as well as dedicated local governance and medical staff while today's presentation focuses on the budget for Porter hospital we believe that consideration to be inseparable from our support from support for our skilled nursing facility Helen Porter healthcare and rehabilitation Helen Porter is a jewel in our care continuum it's long-term care and post-acute rehabilitation resources enable timely and seamless transitions of care and a safe high quality living environment for its patients and residents Helen Porter is essential to our efforts to enhance value and serve our community unfortunately the payment model for skilled nursing facilities makes financial sustainability challenging we forecast a nearly $2 million operating loss in fiscal year 2021 for Helen Porter so a sufficient operating margin for Porter hospital is vital to maintain this local asset Jen Bertrand to whom I will now cede the presentation will address this subject further in her comments on behalf of Porter Medical Center thank you again for your consideration Jen and before I segue into the financial portion of our presentation I did want to take a moment to thank our community especially being an administrator that oversees our supply chain it was an incredible outpouring of support from our community members from donations of locally produced hand sanitizer to our community members sewing gowns and masks making face shields donations of PPE local veterinary clinics contributing to our PPE needs donations of food pizza, coffee, things of that nature and more importantly something that really struck home with our workforce were the signs that lined South Street on the way to the hospital it was just amazing to see the thank yous our healthcare heroes you rock it was just incredible and it truly does mean a lot to our workforce and we just really do truly want to say thank you to begin the financial portion of our presentation we did want to summarize that our request our request and highlight that our FY 2021 budget incorporates the balance of three principles number one is to remain dedicated to our patient centered mission-driven approach number two is to ensure continuous investment in initiatives that sustain high quality care and lastly ensures stewardship of our resources which is one of the core values within our organization I wanted to call out that Porter does continue to remain in compliance with Green Mountain Care Board's budget guidelines and we did want to point out that we have not incorporated any assumptions for potential future impacts of COVID-19 this is really due to the challenges of projecting future financial performance given the uncertainty associated with a potential second wave so we've chosen to rely on historical performance indicators to formulate our FY 2021 budget as it pertains to our commercial rate we have incorporated a 5.75% increase which I'll explain a bit in further detail in an upcoming slide over the last several years we've tried to reach financial sustainability but the Board has heard me say this over and over again in order to adequately invest in our workforce capital in our population health initiatives and services that truly meet the needs of our community and provide as Tom said that necessary access to care this year's proposed budget does provide that baseline funding that we find necessary to deliver the vital health care services that meet the needs of our community and Jen if you could go to the next slide please to touch on and summarize our net patient revenue and fixed perspective payments that have incorporated into our budget our net revenue budget yields a 2.7% increase over the FY 2020 budget which is in accordance with the 3.5% Green Mountain Care Board guideline and consistent with prior year budget submissions we have not implemented a price increase this year as it pertains to our ACO participation we are currently planning to continue to participate in the Medicare, Medicaid and commercial programs offered through the ACO and our submitted budget assumes our FY 2020 budgeted estimates simply as a placeholder for other reform and fixed perspective payments in terms of the risk reserve our revenue assumptions do not include a reserve for risk our current one care projections for calendar year 2019 settlement is yielding a second year of favorable Medicare performance so considering what is now a hopeful trend we did not incorporate a reserve for risk so consequently the risk reserve remaining at the close of FY 2020 on the balance sheet will be rolled forward into FY 2021 and Jen could forward the slide please slide 52 I want to take a moment to talk through our commercial rate and this slide obviously mirrors what my other counterparts have presented and as it pertains to our commercial rate again we have incorporated a 5.75% rate increase we have chosen for the fourth year in a row not to incorporate a price increase as I mentioned earlier and we really differentiate our commercial rate with commercial payers separately from price and this is due to our reimbursement structure with our commercial payers as an increase in price does not necessarily equate to an increase in reimbursement over the last three years we have been able to request lower rates from our commercial insurer partners and we have been able to find alternative ways to absorb that funding burden and whether that be through the increase in nonpatient related revenues the decrease is in expense or even reductions in margin the hospital has really been able to shoulder the disparity between true inflationary factors including the cost shift as well as the financial and administrative impacts of payer policy changes excuse me and what is being passed on to our commercial payers the latter the payer policy change point having the result of really diminishing that commercial rate increase that has been approved during the budget process we cannot continue just to sustain that level of contribution that we have provided in the past and so in order to maintain the minimum consolidated margin needed really is that lifeline support for our nursing home the hospital can no longer shoulder that lower rate request of our commercial insurers and just to touch on this slide for a moment as you can see from the chart we categorized our rate into three groups to quantify the 5.75% needed and I do really want to call attention to the offsets by other payer line as this incorporates the factors taken into account for cost based reimbursement which we do not pass along to our commercial insurers if you do evaluate this rate requirement as a value of 1% this year that change in commercial rate is equivalent to $278,000 which is one of the lowest compared to our critical access peers and in addition to that fact that we've been absorbing the gap in that funding burden we've also borne the impact of the current inpatient reimbursement structure we have with one of our commercial payer so for example with that particular commercial payer we have a fixed rate of inpatient reimbursement therefore any increase that's recognized will be allocated to hospital based outpatient services which then could reflect a higher percentage however does yield a higher dollar amount Jen if you could forward to the next slide we just wanted to touch on the expenses and margin assumptions that were incorporated into our fiscal year 21 budget and managing expense growth with revenue increase it just remains to be a constant challenge year over year especially when 80 to 85% of our total costs are fixed so also when accounting for that relationship between increases rather than the provider tax and one more accounting for inflationary factors particularly as that can attain to keeping pace with the significant wage pressure facing all healthcare organizations and like all hospitals in Vermont, partners recruitment and retention efforts are challenged by inflationary pressures wage compression and workforce availability and this really does continue to impact that balance between financial liability and adequately supporting the needs of our workforce and wage increases as Mark pointed out earlier comprises approximately 83% of the change in total expense when comparing budget to budget however I will say with this budget cycle we were able to strike a balance between the expense and revenue growth and this really goes back to supporting our commitment to ensure the stewardship of our resources. To touch on the margin for a moment our budget is yielding a margin of 4.5% for Porter hospital with that being said as Tom mentioned and as we've expressed in the past this does not account for the hospital's financial support necessary to subsidize our nursing homes so that support essentially diminishes the hospital margin from 4.5% reflected at the hospital level to 2.5% reflected at the consolidated level so it's important when evaluating the hospital's margin to really take this into consideration and honestly this support is essential to keep this vital resource in our community and how important is an integral part to our population health strategy and Shen if you could advance the next two slides are similar charts to those that my counterparts have presented and one more chance that just gives the expense breakdown as well thank you and you can see here that the majority of our expense increases are from salaries and fringe that's really the story for Porter hospital and I just wanted to close by expressing that the budget we are presenting is responsible it remains within Green Mountain Care Board's guidelines the budget we're proposing allows for that baseline funding that's necessary to build a sustainable future to ensure that we can continue to deliver that high quality patient centered care that really does meet the needs of our community and achieves our mission which is to improve the lives of our community one person at a time and now I'll hand it back to Tom Thompson to discuss our risks and opportunities thank you Jen I wish to use my closing comments to summarize those select risks and opportunities we'll continue to monitor and address in our fiscal year 2021 budget year and beyond so in the risk column we'll start with preserving access to care because an ultimate risk of inadequate budget resources or performance is reduced access to care Border Medical Center serves over 100,000 patients and residents annually across its care continuum a consistently strong margin when the hospital is needed to fulfill our mission across this care continuum's core services maintaining competitive compensation is only one of many workforce challenges placing pressure on financial resources adequate investment must also be provided to support education and training equipment facility improvements and other resources essential to providing for a safe care and a safe work environment Porter's access to the epic patient record is one of the many advantages of our network relationship yet we have to account for our cost share in that investment year over year going forward as has been mentioned several times now again our continued support for Helen Porter healthcare rehabilitation as a key asset is vital to our community it's efficient operation cannot fully overcome patient or payment shortfalls and so the Helen Porter mission must be subsidized significantly in order for us to maintain that vital resource serving our community as Jen stated the long-term financial impact of COVID-19 is neither known nor addressed in our budget assumptions yet it's important that you acknowledge the real possibility of again facing dramatic operational changes with unfavorable financial ramifications with future disease outbreaks and I'll close on the risk side with ongoing financial sustainability because continued escalating margin pressures are very concerning we are employing both cost reduction and process improvement strategies to optimize the resources that we bring to the bedside we are concerned about a time when these efforts fail to yield financial results that enable organizational vitality and our ability to continue to adequately address community needs and expectations now we are half full half a cup full people around here so as we go to the opportunity side let's start with population health which is something that makes us all very excited one of our physicians Dr. Natasha withers is very involved in this effort across our health network leading work toward identifying priorities of our organization this focus is essential to our mission to improve the health of our community one person at a time health is obviously also another area of great opportunity our telemedicine use exporter exploded this spring from a handful of visits to over a thousand visits in a very short time span when our in-person clinic services were all but shut down this resource has also enabled family members to stay connected to the loved ones at Helen Porter during the pandemic we will capture this opportunity to maintain this momentum in the outpatient setting as well as explore expanded applications within the hospitals for walls enhance access as well as quality and safety we will also be advocates for long-term payment support for enhanced access to care utilizing telemedicine resources our ongoing investment in existing and new services guided by again those principles of effective stewardship and smart growth is both opportunity and necessity to appropriately address evolving community needs and interests this work is a priority in our strategic plan objectives Epic while Epic adds to our operating cost it is also a game changing enabler of enhanced care coordination and care improvement across both Porter and with our network affiliates our work with Epic presents a unique opportunity to dramatically advance value for our patients and community and I'd like to close with process improvement we recognize cost reduction is important and always will be important in enhancing value but we also believe that process improvement holds significant opportunity and represents a much more positive compliment to this work our focus on improving value at Porter will apply improvement science practices to remove non-value added waste from our work and care processes yielding an increased percentage of available funds that we can dedicate to fulfilling our mission so I would like to now turn this presentation over by video to John Countryman of our nursing staff if you want to go ahead and flip the page here John has served as a team member at Porter on our MedServe unit for the past 20 months as I speak to people about John they always get a smile on their face when they see his passion and dedication for his profession so thank you again everyone definitely the beginning of this was absolutely very stressful for everybody this has somewhat decreased over the last few months but coming back and you have college kids going back to Middlebury and schools possibly starting back up so other stress levels is going to start to go right back up and hopefully going to be prepared for whatever comes next the initial surge was overwhelming because it was something that we never really experienced and even now we're still making changes daily usually you have a patient and you understand their diagnosis and exactly how you're going to treat that and what works and what doesn't but with COVID it's not like that so it's really kind of testing things out see if they work, if they don't you try something else but you're also trying to keep that patient as comfortable and as healthy as possible when honestly they could decline at any point and you have to be prepared for that so just being prepared at all times on the floor was I think one of the biggest challenges and we also had a floor full of other patients that we also had to care for so it just increased the cohesiveness of the unit making sure that we were on top of everything and just being ready for really anything at any point in time and COVID first started it was really the unknown so going into a patient room you didn't know if what you were wearing was going to keep you safe I would say a lot of people that don't go into the healthcare field you go into the hospital you find out that you're taking care of a patient who is positive or is positive positive a lot of people wouldn't be walking into that room and the nurses, the on-aids, the doctors here it's really patient first oriented which is I think why we were so successful during this and hopefully while we'll continue to be in the case of more cases it's nice being in a small community like Milbury we have a quarter here which a lot of the community members really rely on with the primary care with the ER, the infusion center special care, things like that we just know that while they rely on us on a daily basis that when we were running low on certain things like masks hand sanitizer that we could rely on them and they played a huge role in making sure that we had adequate masks, hand sanitizer, things like that making sure that people in the community continue to follow the social distancing guidelines whether or not you see what's doing well currently and has I think it has a lot to do with the fact that the people in the community have been following those guidelines and trying to be as careful as possible but just because we're not seeing a lot of cases now doesn't mean in the future that we won't so stopping those social distancing guidelines and such is only going to increase our chances of having another surge well it's a little daunting for me to summarize at this point I hope you share my admiration for the folks that in the face of all of this have put these budgets together and particularly the words of Dr. Graham Ling and John that we just heard and Jess it certainly magnified that by 12,000 people and I think for those of us in leadership that aren't on the front line that really has been unbelievably inspirational you know we are not for profit and the ultimate quantifiers the IRS through their 990 presentations can quantify the benefit that we as community assets give back in community benefit and for these three organizations the way that calculates it's over 300 million dollars of community benefit year over year but again I mean that financial measure just I think pales in comparison to what's brought to the table by our people who even in the face of incredible adversity have come to the four day in and day out so UVM health network in Vermont is a big fish in a relatively small pond but we are in a pond we aren't the only healthcare delivery organizations and I think stepping back we need to look at the total picture and that as a healthcare delivery system in the state and the financial health has eroded over this four year time frame you can see the numbers the point I want to make here is for the UVM health network on both sides of Lake Champlain but today Vermont we are doing the incredibly hard work of bringing together our clinical systems first and foremost our operational systems and our financial systems to be here to provide access to necessary services for Vermonters and we're doing everything we can to bring the clinical and financial value out of that intense effort at integration next slide so you know the whole system in Vermont has these margin challenges just to reiterate we certainly see those COVID-19 I'll come to this in a more emphasis in a minute but it ain't over it just is not over there is a likelihood of added expense that we cannot anticipate in revenue hopefully not as dramatic as we've seen in March through June and I can't even though we've gotten tremendous benefit from being a network being collegial being able to work together around PPE and policies there is a lot of friction in just managing capacity managing the flow of patients when you drop one additional factor into it like COVID it's hard enough when we have a flu season but I just need to emphasize that we've talked a lot about the expense growth outpatient outpacing revenues and something that's bothered me for a long time and Todd Keating spoke to this our reliance on other revenue it's just anybody that has business acumen if you drift from your core business to make your margin you feel like you're on thin ice we absolutely need the commercial rate increases that we've put into the budget or we will have impacts on access and programs at this point and there will be pay or mix changes that will result in increasing cost shift the office of the actuary in CMS over the next decade sees a 2-3% shift from commercial into Medicare that will be exacerbated in Vermont because of the aging of our population so that just gives you a order of magnitude next slide so COVID isn't over and the anxiety that I spoke to before I know for me personally as a provider it's less anxiety provoking to do what you're trained to do which is to dive in and provide that care even if it's a crisis emergent moment I've heard people say well you didn't see any surge in COVID patients you just got ready for it and again I mentioned this before for me formally a tip of the spear provider that would have been more anxiety provoking than actually had we seen a significant surge so here we sit today August 24th and we've got a lot of uncertainty State of Vermont implemented at the beginning of last week routine screening in skilled nursing facilities and Helen Porter had an asymptomatic patient come back positive so we have staff quarantined and within minutes of literally of Tom Thompson hearing about that he was on the phone with 15 of his colleagues and the innovation that I spoke to before you know they delivered them into the Porter staff not only expertise and backup but also a playbook on how to get through that Middlebury College, University of Vermont Champlain College, St. Michael's those kids are coming back and there's a tremendous amount of uncertainty in how that's going to go you've heard about Notre Dame and others that essentially shut down and North Carolina I think is another one so we have that hanging over us and you know again back to the impact on our people which is not to say that everybody isn't impacted but I'm just telling you the impact on our people of the uncertainty of the public schools and child care staffing has added the stress to the anxiety and the thing that is just unbelievable to me is that in all of this I see that resilience I see that perseverance I see that innovation and it just you know the commitment to serve our communities is foundational it's unwavering and we need the resources to keep doing that plain and simple I trust you will give us a couple minutes for Jen to go through the next slides which are images of our folks on the front line and some of the expressions of gratitude from our community which the presidents have all spoken to and then we'd be happy to take any of your questions thank you for that back to you chair mullen thank you john we are going to start with each hospital budgets separately so we are going to start with uvm burlington I'm going to turn over the questioning to board member ready to unmute myself before I start with questions I just also want to thank you know the members of your team Mr. Bromstead you know I went to the flyover central vermont which was a very fast but exhilarating and a sign of appreciation I've had to use the facility in fanny allen for audiology and my primary care physician here in central vermont and I just read any newtons periodic missives come across my screen and it's clear to me that we've had an existential shift in so much in the last months and that people have risen to the occasion so I just want to applaud your team because this is serious stuff and I think you've handled it well my my first question is having to do with the provider tax calculations and I just want to make sure I kind of understand your logic behind it that you know it's a 6% tax and if you look at your 2020 budget it is exactly 6% of the 2019 actual NPR FPP the 2020 provider tax at 73.6 million is 5.7% of the 2019 actual which seems to me a little low actually on the other hand the 2021 budget tax at 82 million is 6.7% of the projected lower 2020 NPR FPP and looks a bit high so my question is how have you been handling the application of the projections on this tax as revenues have changed with this pandemic and the changes in NPR FPP that might be a general question either Mark you want to start or Rick and just how you've handled the provider tax calculation for the budget maybe a Mark okay the first thing that I would say about the provider tax and we know Tom well we would have to look at the exact calculation and happy to do so but that's also before the provider tax I believe is you know before the application of bad debt and charity so you know there's also an impact there on the trend but you know the provider tax is supposed to be calculated at the rate of what 6% is of total patient you know revenue and we need to confirm the impact of charity and bad debt on that so you know we're happy to look into that the only thing I will say is there is a little bit of delay because we need to wait until we get our provider tax bill so there's like a exactly what the delay is but there's a 3-6 month lag delay depending on what the actuals are but we do always try to do our budget based upon that 6% right well my sense was there might be a little bit of cushion there in 2021 but the actuals will tell and so if you can provide a little bit more detail that would be helpful look at that calculation because the delta difference between the 6% and the 6.7% is I think $7 or $8 million so it's serious money my next question what has to do with the bad debt the bad debt offsets increase in the UVM budget UVM Medical Center budget for 2020 for 2021 budget in 2020 projection are 25.9% and 26.2% respectively these levels of increase are higher than the system wide average which is at 12.3% and 17.6% which also included UVM so for example Central Vermont's projection is 12.9% increase and a negative 5.4% and I think some of that might have been explained in the presentation and quarters is at 17.9% and 15.3% so I'm just curious as to why the UVM Medical Center projection for bad debt would be significantly higher than the system wide average and the amounts projected for order and for Central Vermont so I can take that one I think that's just historically the fact is we take all comers and we've just had a higher rate there's nothing I think that's changed in terms of the rate over the years and we can certainly do a deeper dive in terms of comparing CBPH for it to us to see what might be driving that but I think it's just a function of that we take we're essentially the safety net for the state of Vermont and so we take all comers I can add to that too so Tom as you think about bad debt and charity when you think about with a 10% to look at it as say a trend percent as a total percentage of gross revenue and the medical centers percent of total gross revenue was 1.76% in 2018 it was virtually the exact same percentage 1.76% in 2019 and in the 2021 budget there was probably a favorable trend when we put that budget together and this is what we're talking about that we put these budgets together before we know what the total year impact is and there's a lot of things that hits the payer changes but there are payer changes from the time that we submit the budget so in the FY20 budget that percent is 1.56% we saw the trend increase a little bit in FY 2020 through January to 1.9% acknowledging that FY20 is a very unusual year and it's difficult to draw a trend to but that rate in the FY21 budget is 1.78% of gross the exact same number or very close to the exact same number of 2018 or 2019 and acknowledging that every 0.01% on the medical center is not an insignificant an insignificant number but that trend in FY21 is appearing to be right in line with 2018 actual and 2019 as a percentage of total gross revenue okay well thank you I can go back and look and see from your income statements look for that my next question has to do with the epic offsets in December the Medical Center submitted an updated cost profile for the Vermont hospitals in Champlain Valley profiling a total of 43.5 million in offsets with 27.1 accruing to UVM Medical Center 4.3 million to Central Vermont and 2.7 million to Porter the profile projected UVM and Medical Center Central Vermont and Porter staffing and legacy system offsets 2020 and 2021 at 5.4 million and 12.3 million respectively so my question is are those projected savings those offsets still on track with the December submission or have things changed and where if they haven't changed where are they embedded in your balance sheet or income statement so do you want to take the I can take the second question Mark I don't know if you want to take the first one there well I mean I think Tom I think what I would say as it relates to Epic is we submit updates on our Epic project twice a year in accordance with the CON and answering a specific question on a specific year is a little more challenging because it needs to be put in context with what the total budget is for Epic as of you know right now I think all of our forecast for the total project are still projected to be in line you know with budget but you know we would have to take a look back and you know we would prefer to reference with a question in the manner of how it relates to those twice a year updates and I believe that we just submitted one back in July so happy to follow up on that question but I think that we need to manage that question in the context of the total budget and the CON approval versus a specific year that's absolutely correct and we do put in the regular reports and there's been a lot of issues since it's part of the CON to track back to what the two types of offsets are there's offsets that are people related where honestly we're a little bit behind because of timing issues and there are offsets related to the fact that we can sunset specific applications licensing fees and those and from the last report that I saw actually ahead there but to Mark's point and we can do this Tom we can true that up against this budget but this is something that we're tracking sort of from the beginning of the project to the end and when you sum those two we're pretty much on track but we have a lot of work to do and obviously our board of trustees and I see John Dwyer chair of our finance committee they're very much focused on oversight on making sure that we get those expense offsets what I thought I heard Mark say is that we might, the board might have an updated profile budget profile you know through July the last one I looked at was December and so did I hear it right that we do have an updated budget profile? I believe that we submit one in July so you know I know Eric Miller is on the line listening in too but I think we're supposed to submit the through June and that information is available the end of July so if it isn't submitted Tom it is it is coming very soon yeah so I can follow up on that we know we can get you the most current report on that Tom this is Eric Miller we did submit a July report that should be available to you and it has updated numbers on both the staffing offsets and the system offsets that John mentioned great great I had asked our folks on CON and the one they sent me was the December one so that was the basis for my question assuming that that was the most recent one we had my next question is in the narrative the the on page 16 their notes are projected one and this was also in your slides that you presented a 1.7% quote increase in patients and on page 17 cites a 54 million quote increase in staff and provider FDEs for increased patient volume and I'm just wondering if those two statements on page 16 and 17 are aligned is the 1.7% increase in patients equal to 54 million increase and yet as part of your increased 125 million dollar expense increase so for the most far they are aligned I think some of those FTE increases like we put in our slides today is not just based on patient volume increases some of that was related to our outpatient pharmacy increase as well so we had about 22 FTE related to that it's not related revenue but in general absolutely the increases and the total number of patients and aggregate volume coming in the medical center that's definitely the key thing that we that's in terms of an expense management perspective aligning we're obviously a very labor intensive industry and aligning that that volume and that revenue with staffing is something that they're definitely linked. I noticed as we went through the slide that the 54 million dollar wasn't there it was kind of a different calculation but close to 54 million and I just wanted to know whether the 1.7% increase in volume had a rough relationship to the 54 million I think we broke it out a little bit differently in the presentation today I think a 54 million is a combination of both the inflation and so the salary inflation and the FTE increases because what was in the slide for salaries it looked like 48 million so there's like what I'm hearing you're saying is like 6 million dollar embedded in inflation as well. Regarding the psychiatric beds I think the last quarter report we had received was last February and as I recall there was a balance in that call it a counter reserve of around 20 million dollars and so my question is the work that was done up through February is that in any way gone scale and we'll have to be replicated once this project picks up some steam again or is it whatever it won't be scale and if not when do you think that we can begin to pick up this project again? There seems to be and maybe I'm confused by the question let me just pick up the project again depends on our financial health and our ability to make capital investments to cover that as we've talked ad nauseum the 20 million dollars that we certainly have the cash capacity to cover that piece is a tiny piece of doing a project of that magnitude and everything as we've spoken to with our current even pre-COVID financial situation we're really squeezed down on capital to maintain our liquidity and the thought of even though it's incredibly important and necessary that we would be going forward with that psych hospital on the center Vermont campus we've got to get back to where the ship is righted and we're not talking about reducing access to core programs and so I don't know if there's a specific support that Mark or Rick or somebody supplies to the green mount care board pertaining to that 20 million dollars that was submitted several years ago that you're referring to Tom but that's where in my mind the project is critically important but on hold until we have the financial wherewithal to to be able to support it well I think I'd have to go back and check but I think that the board order having to do with that 21 million dollars at some point if this project wasn't going to go forward that that would be committed to rate reduction so there was a tag on it it wasn't I think I'd have to go back and look but I recall looking at it a couple of times in the near past and that language was there so I mean to me it's money that's in a reserve somewhere at the medical center for additional 25 to 30 psychiatric beds and if at some point you folks decide that this isn't going to go forward we should figure out what to do about that 20 million dollars the next my next question is having to do with Fannie Allen so regarding the difficult to Fannie Allen with the fumes do you I didn't see any kind of segregation of those lost revenues and increased costs associated with that in the narrative or in the slides do you have any kind of segregated view of the impact because I would think it would be a one-time impact of lost revenues at Fannie Allen and any increased costs associated with that fume problem so the impact was really built into our projection so when we we were talking about how January was not already was a struggle for us financially a chunk of that was the fact that we had to shut down Fannie Allen for a period of time so certainly the impact of that now is in our projection it's not in the 21 budget because we're anticipating those o