Welcome to the legislators that are in the room. It's an important topic that I'm going to discuss this morning, and I'm really glad to have you here. Before we get started, I want to turn it over to Susan Barrett, the executive director of the board. Thank you, Mr. Chair. I don't know if these microphones are working, but I will speak loudly. They're not. They're not. Okay. We're working on it. So I have a couple of announcements. First on scheduling for our April 10th meeting, we have flip-flopped the agenda. So in the morning, we're going to be hearing from our own staff on the all-care model implementation update and the total cost of care update. And then in the afternoon, we'll hear from hospitals on enforcing care. And then I'd encourage folks to check out our website and our April schedule, because we've added several additional hearings throughout the month of April. The second thing I wanted to inform the board and the public on is yesterday, the Data Governance Council of the Green Mountain Care Board met. This, for folks who may not know what the Data Governance Council is, is a sanctioned committee of the Green Mountain Care Board. Its duty is for stewardship of our databases that the board owns and oversees, which are the all-care plans database that are known as V-Cures and the hospital discharge data set that are better known as BLAS. Yesterday, the council voted to approve their new principles and policies. And then we also reviewed some updates to the V-Cures role and at next meeting in June, that board will vote to approve the updated V-Cures role. That role then will come to the full board and then work through the process at the legislative level for rule updates. And that is all I have to update you on. Thank you, Susan. The next item on the agenda are the minutes of Wednesday, March 27th. Is there a motion? I move to approve. I'll second. It's been moved to approve and seconded to the minutes of Wednesday, March 27th without any additions, deletions, or corrections or any discussion. Seeing none, all those in favor signify by saying aye. Aye. Any opposed? So now we'll get to the real purpose of this morning. And I'm going to turn the introduction of the panel over to Robin Lunge in just a minute. We just want to personally thank Robin. She is the incredible talented person that put this all together this morning. And it's a great position to be in when you're chairing the Dremont Care Board because you have an incredible staff of truly dedicated public servants. And then you get to work with more incredible colleagues. And Robin is the epitome of that incredibleness that we witness every day. First met her almost two decades ago when she worked for legislative counseling. She still continues to amaze me until today. So what we're going to talk about today is really the plight of rural hospitals. And I just wanted to quote before I turn it over to Robin a couple of sentences from February 19th, a navigate analysis that was published. And what that analysis said is rural hospitals are essential to the health of 16 million Americans who live in rural communities. Beyond providing care, they're also economic engines, often the largest employers and drivers of additional businesses and jobs to communities. But for close to three decades, rural population growth has been significantly lower than the urban areas. A factor contributing to the closing of 95 rural hospitals across 26 states. And I learned from a conversation with Eric last night about what happened to her. So the economic effects are immediate. A study found that when a community loses its hospital, per capita income falls 4% in that region. And the unemployment rate rises 1.6%. So what was interesting also in that article was that Navigant didn't list any hospital and Vermont at risk. So they haven't even caught up to some of our recent challenges. So with that, I'm going to turn it over to Robin. And again, thank you, Robin. I'm sure you're going to thank John Olson. Absolutely. Thank you, Kevin. My mic isn't working, so I'm going to try and talk loud. And I will be brief because you're not here to listen to me. We have a terrific panel, and I'll just take one moment. Also, before we begin, I would like to thank Representative Lippert and Senator Lyons for making time in their busy committee schedules to have their committees attend this morning. And I appreciate that. I do want to thank John Olson. John Olson is the Chief of the State Office of Rural Health and Primary Care. He was instrumental in helping us coordinate this morning's discussion with funding from HRSA's Rural Hospital Flexibility and other grants. The Rural Health Program at the Vermont Department of Health works with statewide and local partners to support and enhance health care delivery services for rural and underserved volunteers through quality improvement workforce incentives and financial sustainability. Without the Department of Health's help and support, we would have had a much tougher time pulling this panel together, so thank you. I also want to thank the many hospitals, CEOs and hospital personnel who took time to come here today to start to begin this conversation around rural hospitals in Vermont. I think we need that perspective. And I also want to thank, I see in the audience, many other health care providers and representatives of health care providers, and I also want to thank you for coming as well. The purpose of today's panel on rural hospitals is to really deepen and broaden our understanding of the challenges and opportunities facing Vermont's hospitals and to learn more about what's happening in the national context and the national pressures. We know, as Kevin said, that there's a number of rural hospital closures around the country and we've been fortunate in not seeing a closure to date, but we do know that several of our hospitals are having financial challenges and that we've stayed on immune to the many pressures facing hospitals around the country. My hope for today is that the discussion will help inform all of us both here at the board and our regulatory duties and decision-making as we move towards our enforcement hearings on 18 and setting hospital budgets for 2020, but also that it will help inform discussions that, quite frankly, have already started at the Vermont State House, where the House has passed a bill establishing a rural health task force that is currently scheduled to be taken up and set at health and welfare. So I hope that our panel is timely and helps contributes to those discussions as well as discussions around the state and the community. So with that, I want to introduce our panelists, my apologies to them because I'm going to shorten all of their bios at the interest of time. So our first speaker will be Eric Schell. Eric is the leader in supporting rural health care as we transition, the country transitions to population health. He works at Stroudwater Associates, where he is the leader of the firm's rural practice and chair of the firm's board of directors. He has 30 years of experience in healthcare financial management and consulting, and he is a frequent teacher at rural conferences presenting on the future of rural health care, critical act of hospital reimbursement and reimbursement issues, as well as rural hospital performance improvement. He works with a number of different states who have heard the grants to support this kind of educational initiative, as well as rural hospitals. Then we will have Jeff Thiemann, who is the president and CEO of Vermont Hospital and Vermont Association of Hospitals and Health Systems, BOSS, with which he joined in 2016. I think probably most folks in the room are familiar with Jeff, we can call it BOSS. Prior to BOSS, Jeff was the Chief of Staff for the Catholic Health Association in Washington, DC, a national organization representing more than 700 hospitals. He worked there for 12 years where he managed the office of the president and CEO, directed strategic planning, and led the organization's messaging. And then earlier in his career, he was a reporter for the Washington Health Care of the United States. Then we'll have Kevin Stone, who is the interim Chief Operating Officer of one here in Vermont. Kevin Stone is the interim, sorry, Chief Executive Officer of one here in Vermont. One here, as I think most folks know, is the statewide ACO founded in 2012 by UCM and Dartmouth Hitchcock Health. One here is currently implementing Vermont's all-care model ACO program. And prior to this role, Kevin served at Dartmouth Hitchcock as the Chief to the Executive Director of Management here in Contacting and Southern Regions Chief Operating Officer. And then we're fortunate to have two CEOs from two Vermont hospitals, Dan Bennett from Gippard, and Steve Gordon from Broad River Memorial Health Hospital. Dan has served as President and CEO of Gippard since September of 2016. Prior to that, he worked for 11 years in Lullaby County Health Care and Lullaby House of Maine. He served as the Director of Community Services for three years and Chief Operating Officer for eight years. Steve is the President and CEO of Broad River Memorial Hospital. He has nearly 30 years of experience in health care and hospital management. Prior to joining DMH in February 2011, he was the President and CEO of Good Samaritan Medical Medical Office, Chief Executive Officer, and as Chief Administrative Officer for Children's Hospital, so really what our format today is, Eric is going to start. He's going to provide the overview of the challenges between hospitals around the country and strategies for weathering those challenges really from a more national perspective to give us that way of understanding us in the larger context. Jeff is going to provide some strategies from the American Possible Association Rural Community Support as well as providing a rural context. Kevin is going to provide context from the perspective of the state catable care organization Health and Health Care Reform. It's into the conversation and then our two CEOs from rural hospitals are really going to bring it home with discussing what they're working on as a small rural hospital and which challenges and strategies resonate with that. So I'm going to stop talking now to Eric. Thanks, Rob. If I just speak like this, can you hear me? Go back, Rob. Otherwise, I've got something in this hand and it's going to be a challenge. But first of all, it's an honor for me to be here speaking to you, Vermont. I very much respect what you all are trying to do here in health care. It's truly remarkable. I'm working with Pennsylvania right now on the global budget payment system and you've taken what they've done and have already advanced it for years. So here's what my talk is going to do. We're going to talk a little bit about where the industry is going and why it's going there. And then we talk a lot about challenges of rural hospitals. I look at the opportunities for rural hospitals. I think that there are a lot of opportunities for rural hospitals and we'll talk a little bit about why I think that. And then also the next part is the third part of a presentation. So where and why the market is going, what the opportunities are for rural hospitals and the third part of it, what strategies do we have to do to make sure that we're there and we're successful as this thing unfolds. And so that's the talk. Usually it's an hour and a half talk. Robin said you have 45 minutes. So buckle up. I'm originally from a small town in Michigan, New York so I can talk pretty fast and get back. So anyway, it's funny that after listening to some of what you have going on here in Vermont and really kind of trying to get up to speed, I ended up waking up at 4.30 this morning and couldn't sleep because I'm like, how is this national talk going to apply to what you all are doing? And so let's see what happens. This is what's going on everywhere else. You guys can try to figure out and just figure out how to tie what I get into what you're doing here in Vermont. Kevin's also. Anyway, here let's go. So we've got a lot of things going on right here. We've got a lot of things that have been rolling out over the last six or seven years. And they're having very interesting effects on where we are in the rural market. And I would suggest these are some of the underlying causes of what we're seeing. This craziness, schizophrenia that we're seeing in the marketplace. And they go everywhere from the hide-and-up to health plans, to under-insurance, to macro, the whole physician fix and all of these things are pieces of it. I just want to touch base on some of these. First of all, the high-deductible health plans. We can all remember the day, at least I think we're all gray hair out there. We can all remember the day in which we used to say we're not going to fix health care until we can tie in the patient, we can tie in consumer purchases to the hip pocket. Well, guess what? We have now 63, or was that 68% of small businesses of high-deductible health plans. The reason why that's relevant is because small businesses, what's in most of our rural communities. And so now we can no longer say we do not have the consumer a purchaser of health care services tied to the hip pocket. And think about the effect. I mean, how many of us in this room have high-deductible health plans? And has it changed the way you consume? Absolutely, it's changed the way I consume. It's changed the way everyone. And we start to think about the demand, especially for that more elective outpatient services going to the physician. You generally think twice. And this is something, again, it's just new. This is just in 2009. We only have 42%. We've had a 50% growth in those high-deductible health plans. We've had reduced remissions. Older slides. So at one point, these these admissions, this was all revenue to hospitals. And as that trend line of remissions come down, what was once revenue is coming out of the system in terms of inpatient care. Now, here's a slide. You can hardly see it. Here's the trend line with the United States in terms of admissions per thousand. And it's going down about 1.5% a year. Here's Vermont. You guys just eat way too much healthy food for a long time. I'm giving this talk in Louisiana next week. The number starts at 148. Shows down to 120 at this point. So you got, I don't know. Anyway, but what, you know, so what's interesting is a lot of our big hospitals where 60, 70% of our business is inpatient services and we see this trend line. And it's been doing this for the last 30 years. We're seeing this decline in inpatient admissions, a big volume, a great revenue generator for our hospitals and we're seeing that trend line go down.  MACRA, we all felt the effects of MACRA. I look at MACRA, right, so this is the whole movement in the way it's engaged physicians in alternative payment models, advanced alternative payment models, as well as, you know, kind of, you know, those that are not participating in advanced payment models are now going to be scored relative to their peers on four different kind of measurement domains and they're going to get a score and it's going to affect payment. So, we all know about this, this is old news, but here's what I find interesting about the whole roll out of MACRA. First of all, we used to talk around the timing of the flip, you know, the tipping point of when our payment goes from fee-for-service to population-based and value-based payment. I look at the tipping point somewhere out past 2022 when the risk of standing in fee-for-service is essentially an 18% differential in physician payment, the grassroots of our health care, our sick care system. So, the timing I see when the tipping point, when we really hit a point where we're going to move fully into value-based payment is somewhere right around here. So, let's just say that's 2024. We're right now in 2019. Anyone that's doing a three-year strategic plan, you're halfway into this flip to this new payment world. The second thing I would say is anybody thinks that just because we have this administration in Washington, D.C., that we're going to go back and just stay on fee-for-service, the MACRA was pure kind of the facts that Congress came together, Republicans and Democrats came together and said we are going to move health care. We are going to change, we're going to change the payment system. And that means a whole lot. And we'll talk a little bit about the incentives here in terms of the different payment systems but it's meaningful. And so again, the timing of when the tipping point hits around moving payment and the fact that we're not going back, those are the two pieces that I saw come on out of the MACRA legislation. And so we think about that. We live in this world, maybe not in Vermont, of price times volume is net revenue. Price times volume is net revenue. Pretty straightforward calculation. You look at a lot of the things that are going on here. A MACRA, the whole measurement, the MIPS measurement around cost containment. You look at the reduced re-admission. You look at the high-drug full health plan where now consumers are tied and want to actually think about twice before going to the doctorate. There's a fundamental attack on the volume equation. Price times volume is net revenue. Volume is under attack here. And so what do you do? Oh, it's easy, right? You just increase price. How's that working in Vermont? So all of a sudden price times volume is net revenue. It gets to be an interesting calculation. The Affordable Care Act passed long, long time ago. Gosh, nine years at this point. But there are pieces of it that I think are really important. There's three pieces of the Affordable Care Act that I think are still relevant. First, more people have insurance, right? We've got 32 million more people with insurance. Now, in the last gosh, 18 months, we've lost 7 million from those roles of the insured. And as we're starting to see that, unfortunately, creep back up. But more people have insurance. First part of the Affordable Care Act. I look at the impact on rural. One is that, you know, rural has always been kind of documented as the, you know, root rate and other studies that rural is the highest percent of under and uninsured population relative to urban area. So now everybody, theoretically, has insurance, is not rural a more interesting marketplace for others. I would suggest yes. The second piece is have insurance will travel. And we're seeing that in our rural hospitals. We're 70% of the business drives right by our front door to the other cities. So the first impact of the Affordable Care Act, and this is the one that's being politicized and everyone's talking about it. Here's the one that I consider this the carbon monoxide of the Affordable Care Act. And it's this right here. The update factors. Medicare update factors. Medicare says we're looking at market basket 2.9%. Then we're going to take off it overall across the industry. A lot like we do in Vermont here, if there's a gain in productivity, we're going to take that off the top of the rate increase. And then where the government, we can take another 0.75% off because we can. And so how does that look like from a legislative or from a regulatory perspective? Here is the rate increase for rural hospitals last year for inpatient PPS. This is the rate that you're receiving. A 1.1% increase in your inpatient rates for hospitals paid under the DRG, the PPSP for service payment system. 1% 1.1% outpatient rates went up 1.35% for 2019. And physician payments price went up 0.13%. Now the average cost last year for hospitals went up 5.5%. If your average reimbursement from your largest payer went up on average somewhere around 1.3% or 4%, all of a sudden price relative to cost is going down. So now let's go back to this equation. Price times volume is that revenue. When price is going down relative to your cost, what do you do? You raise volume. Can we just talk about volume? Now what do you do? Kevin here appropriately termed this. This is called the risk of staying in fee-for-service. These are your Medicare margins. Remember how I said that we're going to take off gains of productivity and we're going to get to take off another 0.75% off of that because we're the government and we can. The communal effect of that is really starting to take shape. In 2017 the average rural negative Medicare margin was 6%. Negative 6%. And in 2013 it was a positive 2%. This is the accumulation of 0.75% coming off the system. And frankly I just read yesterday MedPAC just issued its March 15th report to Congress. And one of the things that MedPAC, two interesting comments. One they project for non-rural, the overall hospitals the negative Medicare margins negative 9.9%. They're projecting that rate to go to negative 11% for this year. Negative 11%. In the language what they literally say in the report is that we are going to continue to put pressure on the fee-for-service payment system until we get people to flip. In this big long study but that's exactly what they're getting at. This as Kevin coined it is the risk of staying at fee-for-service. So what do you do? If price is going down relative to cost then what do you do? And in the third part of the Affordable Care Act kind of addressed some of that where it said the government said hey we're going to put out we're going to start measuring quality we're not no longer just going to pay for quantity anymore we're going to tie quality strings to this a lot of things, reduce readmissions and value based purchasing and all of these programs and then we created this thing called the ACO the Accountable Care Organization does anyone remember when the Accountable Care Organizations were introduced back in March of 2000 I believe it was 11 it came out and you remember what the market said about the ACOs they said they're never going to fly we're not going to see them they're like unicorns they're not going to happen and then what happened and what happened 40% of total fee-for-service beneficiaries now the Accountable Care Organization what happened how did the market get this so wrong that these ACOs now are a dominant player within our Medicare payment system how did this happen and ultimately for those of you the whole concept of an Accountable Care Organization it's a budget based payment so it's reimbursement tied to a budget based on prior year total dollars spent for beneficiary it's a movement away from just the fee-for-service price times bonds that revenue to a reconciliation to a budget sounds a little bit similar to what you all are doing here and so look at the growth we had all of these throws every year CMS comes out with new Accountable Care regulations and rules this last year going into effect for July 1st of this year they're going to, essentially ACOs are going to have to take a downside risk there was only a few ACOs that were taking on that downside risk but now until we continue to see the improvement in the rules here's the trend line on ACOs and again I ask you the question why are we seeing this the market said they weren't going to fly and they did fly and why is that here's I like to show this is an older one but there's an important point I want to make here I'm going to start to build the case for the importance of rural hospitals with this slide and the reason why is so the physician ACOs are the dark blue line the hospital system ACOs and this was aged, it is aged are the red line and at that point we saw physicians getting into ACOs at the same rate that the large systems were getting into ACOs and you think back and originally there were studies saying it would cost a million dollars to get into ACOs but why are physicians willing to kind of get into this and so it really comes down to the group of there was a 10 site primary care group out in Nebraska all primary care doctors they decided they wanted to get into this ACO first year they got right into it and you start thinking why would a large multi-site primary care group practice want to get into an ACO and they start why would they want to do that and spend all this money here's the answer how much of the total Medicare spend let's say it's $10,000 a year for you guys it's probably like $4,000 but the rest of the country it's like $10,000 how much of that $10,000 do you think is actually spent in the primary care physician's office 10% maybe not much 6% 6% is spending in our primary group I get 6% of the spend with an ACO with a game share model with no downside risk at that point they get to play on the other 94% in other words if they do something to better care for their patients create health within their population or otherwise reduce costs they get 50% of what they say they have this incredible lever in rural hospitals frankly have a similar level of lever because anywhere between 60 and 70% of the spend is spent outside of rural communities and so rural hospitals have this similar lever as well and so again the primary care physicians with that incredible lever all of a sudden said wait a minute let's sign up for this because I want to play on that other piece I can't control all that 94% but I can influence some of it I want a piece of that and so we started seeing primary care physicians getting into the ACOs and then this came out a couple of years ago Previa Health is a large kind of physician and bomerate down outside the capital in Washington and what they do is it's kind of the old MSO model the management services organization just remain an independent practice but be part of a larger organization that has had an ACO and we think about they have this ACO and then they got this $400 million essentially contribution so that they could create a national expansion and guess who they got that $400 million contribution from anyone familiar with goat and sacks in company Wall Street what is Wall Street doing putting $400 million into an organization that physicians allows physicians to remain independent practice but then participate in ACOs or something like that so here's an A or B Wall Street heard that primary care physicians are underpaid relative to their specialist peers and wanted to get the primary care physician compensation up or G Wall Street found out about the lever and decided they could make money on the lever and there's others Allidate is another one I was at a critical access hospital in north east Mississippi that the three physicians and the primary emitters to this one critical access hospital they all became part of this Allidate same management service organization with an ACO every dollar that those physicians keep out of that hospital they get 50% off on the savings so all of a sudden the primary care physicians are an interesting group and people are going after them so I keep going back to this question Warren I think you'll be familiar with this this question of the market said the ACOs weren't going to happen the ACOs happened and why did that what about this why did this occur and it gets back to a study we were working with four critical access hospitals in northern New Hampshire Mr. West hospital it's one of the leaders of that and they brought us in because they said let's um we know we're going to take out 10% of our cost to be a best physician to be to kind of solve for this new world that's coming that we know is coming and they created a shared service corporation in which they could get together as four hospitals and figure out ways to you know standardize quality you know revenue cycle and they created all the different options of reducing cost and when we ran the numbers there was only about 2.5% savings and they were shooting for 10% so then the question became well maybe we need to look at the other side the revenue side and maybe we have to start thinking about a population health strategy and so the first thing we did is we said okay let's do a 10 year pro forma staying in B for service of the four hospitals and we had to make assumptions I'm not sure for example the patients are paid $250 to leave rural communities for outpatient surgery to get outpatient surgery in Concord and ambulatory surgery center we had to make some assumptions around that we had to make some assumptions around the reduced you know kind of price that ensures we're going to pay relative to cost increases and so here were all the assumptions that we made here and what happened it became a holy cow scenario because here's what the combined financial performance of these 4 credit glasses hospitals was on an operating income and on a cash flow basis and it hit me at that point the reason why we started to see this incredible influx and adoption of these accountable care organizations is because people that were starting to look out beyond a 1 or 2 year budget cycle were seeing the B for service payment system not surviving it's a dog that won't hunt forever and that's why we saw this incredible growth in the ACOs people are saying as long as I don't have to take risk I want to be part of this new payment system this population based payment system and I would test that that's kind of what we're seeing right now and for you all here in Vermont they have a statewide ACO and you created that that in the first year or two of the ACOs absolutely insightful and visionary so really really a project for that I just want to say this because again we get back to a lot of people who are saying well are we sure we want to do this we had administration come in there was a change are we still going to continue on this path towards alternative payment models in value based payment and it became very clear last year when the director of HHS secretary AIDSar came right out and said there's 4 things I'm going to do healthcare and the one that I have circled here is use MACRA and CNMI Centers for Medicare and Medicaid Innovation to change the payment system and if you start thinking about all of the things and the regulations and the inpatient rules and the outpatient rules and the physician fees rules that have been rolled out in the last year all of these are in line with this vision of essentially transforming payment and I want to share you this because this is his deputy director of CNMI who literally his quote was we are going to blow up fee for service and so blowing up fee for service this is a big thing because we have all been really good at fee for service for a long time in our hospitals and so some of the implications you know again the Affordable Care Act I look at it and say more people with insurance absolutely we've got that carbon monoxide of payment you know the overall the kind of the destruction of fee for service through a thousand lashes small lashes is what we're seeing right there that accumulating loss is going to continue to accumulate that we're going to get people to move off of the dime and then ultimately the third piece of the Affordable Care Act is offering all of these new payment alternative payment models to get people to think differently and to change payment and so I look at it so here's some definitions here we've entered into a world in which we're competing for patient lives on quality and cost that's the new world that's the world that we're living in and so it's this equation right here patient value is quality over cost applied to a population we're trying to increase quality reduce cost applied to a larger population when we do that we win the I look at an accountable care is a payment system it's in a payment system and this is a really important concept it's a payment system where providers are able to monetize the value of increasing quality reducing cost so think about that providers as well accountable care is a payment system and we'll use population we'll use all of these different words but essentially accountable care payment system providers monetize the value of increasing quality reduced cost applied to a larger population and it takes lots of different forms it in bundle payments value based payment providers self-insured health plans or think about that provider if we come together and we start managing the cost of our own employees we improve their their health their outcomes we benefit from that providers monetize that value Medicare ACO which you guys are all in and then ultimately the capitated provider sponsored health plans the Kaiser's the UPMC's where the providers are taking that residual claim on health and and and and I always get to this point and there's people in the room saying yeah didn't we do this it was called managed care it went away we put our heads in the sand it went away and isn't this going to happen again isn't this just our business and and this is why I think this is for real this time first of all we got the incentives right we're a big believer in incentives in other words back in the day the accountable for excuse me in the managed care era who monetized the value of increasing quality reducing costs insurers or providers insurers who had the greatest ability by multiple factors to affect quality and cost insurers or providers we had the incentives completely wrong in the managed care era no wonder it failed it frustrates me in some of these states that I travel around in where they've gone back to MCOs to manage their Medicaid programs they're going back to a model that failed and it's very likely to fail again the government's all in this time right back in we did it all for 20 to 30 percent of our care mix now the government's saying hey we're gonna blow up fee for service we're moving we have good information systems to manage quality and cost and back in the day managed care you know we were all waiting for claims runouts if we were working with the insurers, IPAs, those types of things we wouldn't get data for six months to see how we affecting quality and cost agreed upon evidence based protocols we have science now and a body of knowledge and agreed upon procedures where providers can hold themselves accountable to science based standards of care different than it was in the managed care and the last one is going back is not an option this is to me the most important one when premium family and premiums got over $20,000 a year at some point it got too much and this is the effect of that as price increases you're going to have substitution basic economics supply and demand with price continuing to go up substitutions going to affect essentially what Jeff Bezos and some of these other folks at Jamie Diamond they came in and said thank you very much healthcare system we don't think you're going to get it solved we're going to solve it for you and I think this is scary because the combined balance sheets of this organization they they're so significant that I don't really know I really thought about the fact that this is going to have and but ultimately they said here's what we're going to do we're going to reduce the healthcare costs while improving outcomes but he said first we're going to do it for our own organization and when we figure this out we're going to roll it out to the rest of the country I think we here in this room we have an opportunity to disrupt this but it's going to have to be taking some costs out of the system that's substitution effect and that's why the things are different so here's where I want to talk a little bit about the value of rural hospitals so you guys can get excited here for a second we talk a lot about the plate listen to the NPR article about Vermont here's where I think the value in rural hospitals are so back when the regs for the ACOs came out as I was reading them there was one line in the regs this was like March of of 2011 and it said a hospital primary care physician can belong to one ACO so hospitals and specialists can belong to multiple ACOs so I'm an Arthur Anderson trained accountant why did that one line jump out at me as essentially here's the value for rural hospitals how many times can you attribute revenue to an organization unless you're an Arthur Anderson trained accountant once, right how many times can you attribute expense you can cut up expenses what that one line just said primary care physicians can belong to one ACO hospital specialists can belong to multiple ACOs that just told you about who are the revenue centers in the new world and who are the expense centers your primary care base are your revenue centers of the new world I got the slide in ripped out 15 or 16 slides from my last presentation to try to get you done in 45 minutes anyway, I look at a rural hospital as a primary care base delivery system average per capita healthcare across the United States a year ago were just norms of $10,000 a busy primary care practice with 2,000 patients and it has a future healthcare market value of $20 million a rural hospital a rural hospital that is aligned with ACETOS a five busy primary care physicians has a future market value of $100 million for direct costs of probably $25 our rural hospitals have built themselves around a primary care based model in which the value is here it's the new revenue denomination any rural hospital that is aligned with their PCPs has a stroke is efficient and high quality has high value in this next world we just have to figure out how to get there I'll put this up here to show again, we're going to be okay cost fee for service to population based payment very quickly in a fee for service payment world costs start out very high every time we generate incremental volume we admit somebody this afternoon in our hospital our costs go up a tiny bit they go up $100 a day but our revenue goes up $1,500 so in the fee for service world as we push out volume the steep slope of the revenue line will ultimately catch the shallow slope of the cost line basic economics any organization has high fixed cost relative to variable cost in the fee for service world the key is this revenue line right here pushing volume out and increasing the slope of that revenue line kicking it to the left what's a great opportunity to kick that line to the left how about this neurosurgery, cardiothoracic surgery orthopedics anything that we can do to get paid more on a procedure basis increases the slope of this line so let me ask you who benefited in this world from those of the rural hospitals now let's compare to a population based payment system how do we generate more revenue what do we have to get more of patient lives how do we get more patient lives in most cases lives are attributed to their primary care physicians so we need more primary care more busies primary care physicians a rural hospital that aligns with a primary care physician randomly aligns with them all of a sudden 20 million dollars 20 million dollars guess what just became the new cost specialist technology in bricks and mortar became cost right if you're not a revenue center you're a cost center those have an incredible opportunity in this new world when they get there if they survive to win in this just to realize their value in this new world and it's tied to the strength in the relationship with their primary care providers and so what we've got to do is here's we've got to figure out a way to get from here where your primary care physicians your rural hospitals were the lost leaders to a world in which we are high value and it's a population based payment world this is a really cheesy slide but there's some really important concepts here for everybody and here they are very stable platform we looked at it for 30 years price and quality is net revenue we have perfectly aligned delivery system and payment system the more sick care we do the more we make the more sick care they do the more we make everybody's aligned over here we have a perfectly aligned healthcare system the more healthcare we do the less sick care we do the more we make but what we have to do is figure out how to get here because we don't have a healthcare system we have a sick care system we don't have a healthcare system we have a sick care system it's going to take us years to create the infrastructure of a healthcare system to be able to get out and be comfortable here all the time the payment system on fee for service is going to go down the system on population based payment is going to increase this is the point of schizophrenic where our financial statements you guys in Vermont have done an incredible job of booking that payment to this world of population based payment but how many of our financial statements in our hospitals actually when you start taking volume out show you benefiting show your cash increasing show your bottom line improving the schizophrenia that we're talking about here ultimately our financial reporting system I think are what really are goofing us up but we've got to figure out how to get from here to here because this I would suggest based on the Medicare margins this is smoldering and once you step out onto this bridge can we go back I would suggest no, are we going to go forward I would suggest we have to and I would suggest that it's going to get worse before it gets better until we figure this out now a year ago the deputy director he defined what the payment systems look like going across this bridge he said calm on fee for service with no links to quality and value and we put that right here calm to fee for service with no links to quality and value I would suggest most of the country now is here fee for service with links to quality and value and that would be here that's taking a step the next column is APM's alternative payment model built on a fee for service architecture I would suggest there's only one health system in the United States that isn't here this is where the feet are right above the crocodiles because it's we're built on a fee for service infrastructure everything we do to create health shows up very poorly on our financial statements and then our board and our hospitals are not happy with the CEO and then the last one is this population-based payment built on a population-based infrastructure there's one system in the United States that has figured this out it's called Kaiser Kaiser says we are successful when our beds are empty even folks like UPMC when you read about UPMC University of Pittsburgh and Russell I used to date the largest insurer in western Pennsylvania they haven't figured it out because there was an article just recently a month ago that talked about the fact that they were underperforming relative to their expectations because the hospital business had lower volume while the insurance business was actually profitable the hospital business had lower volume what are we doing here are we working at cross purposes only Kaiser's figured this out but I would suggest this column right here is where we've got to go and that would be I'm sorry that's right here so we've got time but it's moving and it's going to get ugly before it gets better this is an important slide to me because this explains everything about what the future is going to look like if you believe in the fundamental premise that form follows function follows payment think about that form follows function follows payment think about the payment system of fee for service the functional imperatives of a fee for service payment if one could manage one's own cost utilization and price one could be successful think about that right if you could manage your own price utilization and cost one organization as a standalone could be successful and so what was the form that evolved out of that fee for service payment system one's competing with other one's for utilization for market share for services that resulted in a fee for service essentially it's a disaggregating payment system now turn that around and say we're moving to this accountable care payment population based payment think about the functional imperatives of that to be successful in that world there's some things that we have to do why do we have to aggregate scale to truly diversify insurance risk we have to be north of 80,000 covered lives to truly diversify insurance risk providers have to take that residual claim on health in order for this to be successful if providers don't have an incentive around health we're not going anywhere they're going to be crosswise just like UPMC hospital insurances and so if providers are going to take this residual claim on health they've got to be able to diversify that insurance risk so covered lives north of 75,000 that's just saying the second thing they do if we're going to manage the help of an entire population can one organization do that as a one or do we have to engage others tertiary, rural, primary care specialist, nursing post-acute care, public health ambulance assisted living all of these become part of a population based payment system so again more falls, function falls, payment the functional imperatives of a population based system are fundamentally different than those of what be for service and they are going to create an aggregation of healthcare and sick care resources under a common umbrella this slide like I said I think this slide as simple as it is explains so much of what we're seeing across the country when we're seeing this everyone's coming together right now diversifying insurance risk and creating the systems to care for a population and so here is in the last six minutes I think it's in the last I've already told you Eric I'm going to let you go this right here I had the chief medical officer of the Georgia hospital association talks about Eric and his shaky bridge he said this is a concrete path across the shaky bridge so if you give me four minutes to explain this to you this is so important to how we think about the future and I'll explain it so what we have is here's the payment systems evolving from fee for service so this is this is the fee for service with quality and utilization this here is that right above the crocodiles alternative payment models built on a fee for service architecture and this is where we start to stable it out in the end providers are going to be taking that residual claim on health in other words Kaiser's UPMC's those types of systems where insurance and providers come together as one in order to do this we have to kind of transform we have to this section up here is health we have to transform our sick care system we have to create a health care the blue bar in the middle is create a health care system and we have to proactively pick up and move payment again in Vermont you guys have already done that some of that and so there's three initiatives the orange bars of the strike point when the initiative hits the strike point you implement the first one is operating efficiencies quality patient engagement we got to do that today because the payment systems are definitely here at this point we've lost a hundred and two rural hospitals haven't figured out the payment systems they haven't flipped and they haven't transformed themselves think about taking five percent out of your cost structure and focusing on your quality the second is you're aligned with your primary care and we have to do that by the time the payment system gets out to here and that's because the revenue centers of the future are your primary care if we don't align with them somebody else will you know the largest employer of physicians right now united health care they're figuring it out so we better align so we better plan to align to align the second is service air rationalization this is coming together in larger systems to create the systems of care for a population and diversify insurance risk so today we can create the strategy we create an implementation plan and the strike point is out here ultimately taking five percent of your costs out here we're going to take fifteen percent out of your costs the costs that we take out we're going to take half of it and plow it back into creating a health care system which is here the other half we're going to get back to the GDP to reduce the risk of substitution we got to create a health system patient centered and everything we do here in this phase cannot have a negative impact on fee for service because if it does we're going to shoot ourselves in the foot so we can build our patient centered medical homes we can build case management care management, data analytics, evidence phase protocols all these things that we can do here out here hot spot creating that value attribution model which I understand you all are working on here payer and private networking so think about creating a health system as walk or crawl, walk, run, sprint we don't want to come out here sprinting because if we do we're toast we're still living in fee for service and then we got to proactively pick up and move payment and right now you know in this world in Vermont you guys have actually taken it up a notch but right now you're self-funded health plan you know all the quality and utilization incentives that the commercial payers have out there for you participate them take the dollars and invest them in your health care system you know here's your transition Panama this is the ACO the model Kevin your entire state is working with you know we got to create a plan to implement and you guys are here so what's interesting is I see you guys you've moved out here in this column and it's a question have we done all of these other pieces but in the end we've got sick care health care and payment coming under one umbrella and this is how we got to get there this right here is the essentially the vehicle of how we're going to move it takes this concept of population health it's so vague it turns it into bite-sized operational pieces that hospitals can engage around I just have a couple of slides you know here's efficient how do we define efficient appropriate patient volumes really have high quality be able to compete with all the other hospitals around on your quality scores your age cap score measures primary care alignment understand that just because you employ a primary care physician does not mean they're aligned and just because they're independent does not mean they're not aligned I look into the relationship with a primary care using Stephen Covey's rules of dependent depending on your five-year-old I don't know what that 26-year-old relationship looks like but it's got to be better than the 18 relationship so when we talk about that we've got to think about aligning primary care contractually, functionally and through governance CINs and you guys have implemented CIN and with your four hospitals so great opportunities for aligning with your primary care if I walk out here with you, nothing else the importance of primary care I hope you understand rationalize your service area look for these interdependent relations six-year relationship through function, governance and contracts with developing systems great opportunity for us all look at some of your own self-funded employer are we managing the risk of our own employees, are we doing things to get them better with claims analysis and those types of things great opportunity participate in a fee for service and quality and again so we went right down through here and population health strategies patient-centered medical home are we extracting value through all the wealth issues and all that getting paid for all that huge opportunity for us claims analysis capabilities where are we understanding the claims you guys are in an ACO in our individual hospitals do we understand where our patients are utilizing healthcare services and then so ultimately I look at this thing again as the coming together of sick care healthcare payment over time over probably a six-year period eight-year period of time but that we've got to start moving so in phase one we ought to go through and check every single one of these boxes to make sure we've done it because you and Vermont have advanced beyond you've really got to start thinking about this what's in this category because you're moving it but essentially in the end this is where it's going providers have to take that residual claim on health to truly engage them in that environment which means insurance function and provider function will come together it's a three and a half trillion dollar industry that the economic forces are so strong this is the direction this is where it's going you know force is the vector force of motion are going in this way what we don't understand right now is the timing of it so again in the end my last comments we lived in this fee-for-service world the fee-for-service world has gotten us in trouble it's gotten us too much we've focused on more sick care rather than more health care I believe as an accountant our how we pay and how we reflect payment is what's gotten so much of it so many of us in trouble here we're measuring the wrong things we're valuing the wrong things and when we start fixing payment supporting of our payment systems we have a great opportunity to truly transform health care crossing this thing is going to have to be proactive we're going to have to recognize that it's going to get worse before it gets better and until we come out in that fourth column of population-based payment on a population-based infrastructure we're going to struggle and I think we have to be prepared for that so some of these things increase leadership awareness all these key pieces that are going to help us get there apologize for going two minutes over but thanks for listening and hope some of this makes sense there's attention to this important issue and the chance for the hospital association to comment on the topic that's so important here today which I agree with Eric is both a challenge and an opportunity we are not the only state in the union that faces the set of challenges you've heard about from Eric and that you're going to hear about from the challenges but I do believe strongly that we are the only state that's addressing it in such a deliberate and strategic and careful way to create a different health future so it's important if not obvious to point out that in Vermont we have a mostly rural state this graphic that I got from the rural health information hub illustrates the point pretty well the tiny sort of tan colored area there you see in the left corner is the only area by the U.S. Census Bureau and the greater Burlington area represented there is small even by the definition of urban which begins at approximately 50,000 people so all of our hospitals in Vermont from the academic medical center to the smallest hospital in the smallest rural community are delivering care directly to rural populations or are involved in delivering or coordinating that so in 2016 the American Hospital Association convened a task force task force on ensuring access to care in vulnerable communities and what they wanted to do was identify a few things first what is meant by a vulnerable community ways to ensure that access to care can be ongoing and reliable in those places and then to look at federal and state policies that may in fact impede our ability to adopt the strategies developed by the American Hospital Association and agreed to by many others generally speaking vulnerable communities defined by the report are those with low access to primary care poor economies and high unemployment rates high rates of uninsured and underinsured low education and health literacy levels and environmental challenges given this set of conditions as defined by the report Vermont like many states nearby and far away has many communities with the characteristics we just defined and the community health needs assessments that hospitals conduct under federal law to identify those factors and help develop the programs to address them are a huge part of the work hospitals do every day so I know that the Green Mountain Care Board and many people in the room have seen and heard what's on this slide many times but it's important it's the story about how hospitals across Vermont play so many roles in the lives of our state and in our communities we are as a state highly ranked across measures of access quality cost and patient satisfaction like many hospitals across the country like all I would argue we are employers and providers and community partners our work intersects with the work performed by so many other vital community organizations and institutions from designated agencies and schools and the coalitions we are involved in to food pantries and other direct service providers and all the other partners we need to help meet community need and address the challenges addressed by those needs assessments in addition hospitals in concert with many others are leading the work of health reform I think it's important to point out Vermont has long been a leader and at the forefront of health policy we were among the first states to have guaranteed issue and community rating and to make it illegal to deny someone insurance coverage because they have a pre-existing condition and now as we sit in this room we are well into a unique and compelling 5-year agreement with the federal government to change how we deliver health care services in Vermont and I think it's important sometimes that we step back from the weedy policy issues that often transpire in this room and for good reasons but to understand what the all pair model is and why hospitals in Vermont are doing it and even the small ones it basically says this that to bend the cost curve and to get better results for patients while we spend less doing it we can't keep doing the same things the same way and so we're not we're putting primary care front and center we're creating new incentives for quality and better outcomes we're encouraging investments in partnerships and building clinical bridges to make sure that we're surrounding patients with the proper set of care and supports this work is compelling because it makes sense we prevent disease in the first place we pay doctors to do more of what they love to do instead of paying them for the volume they need we coordinate care more effectively powered by the data and analytics available from the ACO and other sources we coordinate care and more effectively and we deploy community health teams so that more happens outside the walls than inside them this is what the all pair model means its framework is health promotion and prevention and it is as Eric pointed out a statewide commitment to changing our focus from wellness from illness to wellness from volume to value and to a system of care that meets patients where they are to do all of this and to do it right we need to make strategic investments we have to align the work of the entire system improve our facilities and modernize clinical equipment and provide IT connections to be clear all of this work takes time and it involves significant financial risk especially for smaller hospitals hospitals need to perform all the functions I described earlier as caregivers, employers and community builders because that's what we're expected to do every day if hospitals are limited in their ability to earn the revenue needed to do these things and to simultaneously make these investments in health reform the all pair model will not be as successful and our goals will be jeopardized similarly if Medicaid rates are cut or dish payments are further reduced hospitals ability to continue this transformational work is also threatened and I think it's important to say too that as much as I personally believe in the power of the all pair model and the power of policy and collaboration to move the needle in health care and reform we recognize that rural hospitals are taking a big leap to absorb the financial risk that's involved in this model which is placed squarely on hospitals to orient you to this chart getting a little bit Vermont specific here the green bars represent national operating margins for hospitals in rural areas as reported to the American Hospital Association in 2013 so the data is a little behind we're actually working with them to get some updated figures but a major takeaway from this is that more than half of rural hospitals in the United States have an operating margin less than 3% in the blue box you see the physical year 18 operating margins for hospitals here in Vermont where the statistics show that 86% of hospitals have a margin less than 3% it's also really important to note that margins are not profit for Vermont hospitals which are non-profit organizations all of them have healthy margins it's hard to make investments and improvements to borrow money to meet bond obligations to buy new equipment to weather federal changes respond to a disaster sustain unexpected headwinds the list goes on and on so that leads into the challenges and pressures that we face and this is another slide that the Green Mountain Care Board and others hear a lot about when budget presentations take place today and they manage all of them together any one of the items in this table could justify its own 3 hour panel I would just call attention to two on the top of the slide which are workforce and our aging population two factors that make the provision of health care ever more challenging in our state one of our small hospitals for example Northeastern Vermont Regional Hospital in the Kingdom recently said the recruitment and retention of health care professionals at all levels represents a significant risk for the organization that's something that's echoed across the hospital field here in our state meanwhile eight Vermont hospitals that reported to us have spent approximately 21 million dollars in a single year for the cost of traveling nurses alone physicians, PAs, therapists of all types home care providers LNAs even infotech people and admin people are challenging for physicians for hospitals to fill and that applies to organizations both large and small so this is a slide I took from the American Hospital Association which essentially depicts the same set of challenges named in the last slide but in a way that I thought was really interesting because it shows them based on three categories persistent problems that we've been managing for a long time like geographic isolation and aging infrastructure to recent problems like a growing mental health crisis and the skyrocketing cost of specialty drugs and then emergent and current problems and issues like the opioid epidemic and the need to protect our hospitals and patients against cyber crime and violations of privacy so just a few things that are on hospitals plates every day along with all the other care providers we work with so Eric touched on some of the closed rural hospitals this is a map actually from Stroudwater that shows 101 rural hospitals have closed since 2010 apparently 102 one closed last week in Tennessee one closed last week in Tennessee I have the list of New England hospitals if anyone's interested but it's three in Maine one in New York and one in Massachusetts you'll notice on the map that you're looking at on the slide that the highest rate of rural closures is concentrated very heavily in the south and in Texas a couple correlations there one is that this region has not expanded Medicaid largely and we also know that these states for various reasons tend to sit at the lower end of the access quality and affordability rankings so this is the big slide I think in a lot of ways because I think it shows that the American Hospital Association's recommendations to manage the rural challenges we face across America line up so very well with the goals that we have embedded in the all-pair model they suggest considering and adopting new payment models in concert with the Center for Medicare and Medicaid Innovation we've done that in signing the APM and just last week a delegation including our governor went down to Washington DC to meet with the CMMI team for what I understand was a very productive update the AHA also suggests addressing the social determinants of health in a coordinated and deliberate way which is a big piece of our reform model along with primary care and prevention and the experts that studied the most effective strategies and the most promising practices also said that employing telemedicine more routinely will reach people across difficult geographic boundaries we've known this for a long time but the all-pair model makes telemedicine easier because the lack of reimbursement for those services and a fee-for-service system creates obstacles that have prevented the widespread adoption of telemedicine it's also important to name some of the barriers that exist to achieving our grand vision of a health system that works for all Vermonters and is affordable high quality and patient center first the all-pair model as you'll remember from the early stages of its development is provider-led and voluntary almost all of Vermont's hospitals are in so far for at least one-payer program but the risks are significant and the challenges are many so not every hospital can be in right away or maybe at all in these circumstances and financial situations we also need to remind ourselves that the all-pair model is Vermont's primary chosen health policy direction it is a written agreement with the federal government that holds us to real-mile milestone to ACO attribution public health and cost growth with all of this underway we think it's unwise to move an alternative policy direction and especially not because we get impatient or because we see another shining object we need to give this program a chance to succeed it is already showing results as I think you'll hear a little bit from our next speaker and I believe it will thrive if we do not expect results to materialize overnight or if we don't take our focus away from this effort and of course I'll say again that legislative and regulatory cuts and arbitrary financial limits are highly problematic when we're trying to encourage small fragile rural hospitals to invest in a new payment model that can work for their organizations and for their communities so to wrap up the Vermont Association of Hospitals overall recommendations and observations about the rural environment we're in and how to protect Vermont's vital but clearly still vulnerable hospital system I think we've covered all the territory on this slide but just to sum up hospitals face a number of persistent and emerging challenges that span operations, finances public health, economics and state and federal policy meanwhile in Vermont hospitals are doing the brave and bold work to improve healthcare and save money simultaneously while also doing the ultimate thing which is to make the system work better for patients and create better outcomes the hospitals need room to do that work they operate in the most highly regulated environment in the nation and it is also one of the most transparent environments in the nation which is why we sit here today having this conversation regulation and lawmaking in my view should now be centered on achieving our state's reform and population health goals and that includes fair and reasonable rates as much as maintaining disproportionate share of hospital dollars and other funds that help us maintain our operations and offset the cost of still growing uncompensated care it means also that together we appreciate the combination of challenges that has been described here today and that you're going to hear more about and that we keep this important dialogue moving so I really appreciate the opportunity to be part of the panel and to have our perspective included and look forward to the rest of the remarks thank you so much for one care Vermont the state's ACO trying to help Vermont achieve the goals of the all and I appreciate the opportunity to be here today to be part of this dialogue on this critical topic I have the added bonus of reconnecting with Eric Schell the only years after leaving Dartmouth Hitchcock as a full-time employee I've been a consultant at Helms & Company a company in New Hampshire that does mostly rural provider consulting in Maine, Vermont and New Hampshire and so Eric and I have crossed paths a few different times as we've worked in various hospitals and their challenges so what I'd like to do today is talk about how I think one care can fit into much of what Eric talked about in his presentation but also talk about where we are in our evolution and some of the challenges that we face currently so 2019 began our second performance year healthcare as Jeff said was envisioned as a willing coalition of providers this shows the breadth of providers that are committed to this reform effort we have a broad range of participating providers and 12 of the 14 hospital service areas are involved for at least one of our core programs we have a high level of rural hospital engagement even though as Jeff said our model has the hospitals responsible for much of the financial risks associated with working under a fixed budget recall that the all-pair model bargain at its macro level is that the willing providers would agree to manage of an attributed population under a fixed budget while also working to improve quality and in aggregate and that's the all-pair part across all pairs in aggregate that budget would be set at a lower growth rate than what had been incurred historically that is how the state locks in savings under the all-pair model and it's up to the delivery system and largely with the hospital's bearing the risk to figure out how to be successful underneath those fixed budgets one care as an ACO is the provider organization excuse me I told you I was finding cool that was formed to help achieve the same it's important to have an ACO because the ACO allows providers that have a firm relationships that work in multiple communities to be able to collaborate and work together and not run afoul of federal loss it's hard to collaborate at an arms length under the federal regulations in health care in our country the federal government waves those limitations for providers participating in an ACO that agree to work together to manage cost and quality that's why it's such an important vehicle for the state when we began this journey everyone involved in the all-pair model agreed that to succeed there needed to be investment in key resources and infrastructure to successfully transition from a fee-for-service system to one working on a global budget exactly as Eric talked about we didn't really have a together system and we needed to invest to build the fabric that we would be successful under a global budget and we identified three principal areas as needing investment primary care care management and coordination largely with nurses and social workers and others being involved and we needed the community support services and those are the three areas that have been the priority for one care in its population health investments we need one care has three sources of funds to help make that investment in the necessary infrastructure the payers the hospitals and the federal government and the federal government money is received through payments to Medicaid the federal government when we launched the all-pair model made a sizable amount of money to Vermont over 200 million dollars for the five years but it was set up as funds that required matching from the state of Vermont because this federal government wanted to make sure that the state of Vermont was equally committed and serious to helping with the transformation to build a system that it needed and that the money would be spent in the areas identified as important to achieve this transformation this slide is representative of how the funds flow through one care it's sort of a Medicaid example but under our contract with Medicaid one care the ACO receives funds for all of the attributed lives that would be rendered to providers that participate in the one care communities one care in turn provides a front and fix monthly payment to the hospitals and that payment covers not only the expected cost of delivering the services within their organization but also funds for some of the population health investments that I mentioned they get the fixed prospective payment for services population health management care coordination in addition there are back in funds available to the participating hospitals through quality improvement our value-based incentive fund and if they're successful at working and positively underneath the budget link-shared savings that would also come back to hospital those back in funds are earned through performance so I mentioned that one of the areas that we identified is needing investment to be successful under this population health model so as we launched one care we learned that the federal support dollars that would be stopped by the state of Vermont would be less than what we originally anticipated but the need for the investments to transition the system to be successful under fixed budget population health remained and it was the hospitals since they were going to bear the economic risk that stepped up and said we will put up more funds for the transformation that's necessary for this to be successful this slide is one care's 2019 budget so it's our expectations for investment in population health services you can see it should be reflective of primary care as well as the community's reports and services and care management in 2019 the hospitals are going to put up just over half of those funds in prior years the hospitals have put up well over half of the population health investments I would say that the hospitals made this commitment at a time when perhaps they had greater economic strength than they enjoyed today one care established a policy by our board and endorsed by the hospitals that we would essentially apply a Robin Hood principle in assessing the hospitals for their contribution to the necessary population health investments and the operations of the ACO so we assess the larger hospitals at a greater proportion than we do the smaller hospitals in addition the critical access hospitals get a 50% discount on the assessment methodology calculation so we are trying to alleviate some of the burden on the most fragile rural hospitals but despite that it's still a lot of investment that is required how have we done so far early science that we have some good signs of accomplishment we've certainly seen provider participation growth and that's a good thing I think we're up over 2700 participating providers now as I mentioned 12 of the 14 HSA's are involved we've seen improvements in wellness improvements in care being received by folks who have chronic disease we've started to see some impact on ER utilization particularly some of the years that have done some focused pilots we've seen some disease management success so I think there's some very good positive signs but it's early how have we done economically well this is one of the issues we've not yet finalized our performance year one and we won't actually have final economic reconciliation with our payers until July so we have some preliminary estimates that we think we're doing pretty well but we're uncertain and we're actually cautious so the reason is that it has been a struggle for our payer partners particularly the government payer partners to be able to process claims correctly under the population health model and to be able to give accurate reporting to us that we can then share with our hospital members on how we're doing financially and because we've had such turmoil in receiving accurate and consistent reports particularly from Medicare it makes it hard for the hospitals to feel really confident that the work we're doing is in fact bearing fruit we've not had a settlement yet so that they can see how have I done economically for the efforts that I've put in to this work we're hopeful we think it's going to be good but we don't have the ability to confidently report how we're doing as we go along and I think that creates anxiety and is daunting in the minds of some of the smaller hospitals this last slide talks about the aggregate risk that we as an ACO board bear that in turn our hospital participants bear and I've highlighted for you the Medicare the Medicare risk is by far the greatest amount of risk that the ACO and thus the hospital is fair part of that is because the expenditures for Medicare patients is much higher than it is for commercial and Medicaid and part of it is because under our agreement with Medicare we have to have the greatest amount of risk exposure Eric talked about upside and downside ACOs we have been a downside ACOs well we've always had two way risk meaning if you do well you beat your budget you get to keep it you do poorly you blow through your budget you're going to have to pay bear the economic consequences of that that's been part of the deal out of the gate and the hospitals have stepped up and accepted that part of of the responsibility but this Medicare risk when it comes down to some of the smaller hospitals can represent one to two times their operating margin and so you can imagine some of the trustees worried about solvency when they sit in finance committee meetings the hospitals will say should we participate with one care Medicare model it's a hard call for that and we've not yet been able to show them the economic rewards because we haven't even reconciled performance year one yet so it's just a hard spot that's where we're at right now today I think for the hospitals Eric showed a slide that I think had the Vermont admissions well below that of the rest of the country and there's a difference when you're in this ACL world between attainment and achievement most of the ACL models are trying to reward the providers for achievement doing better reducing cost beating a cost target beating trend that's good but when you start out at a place that has already had good attainment in terms of being a lower cost area it's harder than to find the areas of waste and inefficiency to create improvement but the hospitals have signed up for that challenge but I would remind folks that particularly for Medicare and Medicaid Vermont is not a high cost state it's a low cost state we've already attained lower cost yet the ACL model is still challenging us and we accept that to try to still do even better underneath our targets so what are some of the one of the concerns that I have about Medicare about half of our hospitals are in the Medicare program and the other half are not of our 12 participating communities one of the reasons that's a problem is that part of the commitments that the all pair model makes to the federal government is the scale targets that we would have a significant proportion of Vermonters the all pair model by 2022 part of that is to guarantee that if we have a lot of Vermonters under the model we've truly transformed the delivery system in Vermont and there were two requirements that we have to meet one is that 70% of all Vermonters will be in under the model by 2022 but the other one is that 90% of Medicare beneficiaries will be in the model but half of the hospitals say we're not sure we can bear the risk of being in Medicare if it creates a lot of problems for us we're not going to be able to meet that 90% target and that's something that we have to try and work on so I'll just end with some of the challenges that I see that are facing us one is the willingness to continue to support the necessary community services we already fund one pair already funds largely SASH and blueprint I already said we're not in six communities are not in Medicare is continuing to fund those programs we fund some of the support services that are needed to transition the community we're concerned when we hear discussions looking to one care to fund even more at a time when our hospitals are facing growing economic challenges and a particular concern is has the state of Vermont maximized the influx of out of state federal dollars to invest in this transformation rather than asking for models to redeploy scarce Vermont dollars and I hope that we are going after every possible federal dollar to invest in the areas that Vermont believes is important to invest in secondly is the Medicare risk mitigation as I mentioned right now that's a barrier to growth for us we have to find a way to be able to get the smaller hospitals to be able to be in the model of Medicare may have a willingness to alter the risk model for smaller hospitals but Medicare works on a two year lead time so any changes that we'd be able to affect with that probably wouldn't become effective until 2021 we likely need to do something sooner than that to try to gain greater participation in Medicare and then lastly is the issue of reserves we have to meet reserve requirements of the great amount of care board and government we should make sure that we think broadly about the reserves for this risk and make sure that we're not having the same risk as it being reserved multiple times by multiple entities from a one care perspective when we put up reserves it's money from the hospitals or it's debt that we borrow we recently received a budget amendment from the Green Mountain Care Board that allowed us to lower our reserve requirement because of the reinsurance protection that we had procured we're very appreciative of that but we know that our Medicare reserve requirement is going to go up next year and we've already borrowed money to meet that anything we could do to reduce the reserve requirements on one care Vermont would simply be savings for the hospitals or savings on debt expense to one care as an ACO I would say that Vermont has really accomplished a lot in a relatively time as a consultant I've worked throughout Northern New England and I think Vermont is admired for what it's trying to accomplish but it is a really big undertaking and an undertaking that large as we gain experience it's natural that we're going to face challenges that we may not have anticipated when we began this journey Vermont is not unique in its challenges and you've heard that from our panelists today all you have to do is look across the Connecticut River where 26 hospitals exist and now only three of those 26 New Hampshire hospitals are independent the rest are either under an affiliation or establishing an affiliation with a large organization and I'm not sure there are any independent hospitals remaining in the state of Maine so we all need I think to be involved and be part of the solution as Eric said it's everyone that's going to make this transition in the all-year model successful so it's payers providers legislators regulators and the public all working together for continued success these are challenging problems that we face but not unique to us in Vermont and I'm sure that through the collaboration that has been done historically and that exists we'll be able to find good solutions and I appreciate the time today to speak with you thank you I think I need to go see my massage therapist my neck look at the slide because all we have is this little computer my eyesight after turning 60 is not that great any longer but I want to bring us down to really ground zero and Dan and I will share what it does feel like being a hospital CEO in a rural hospital and what's interesting for me to start off with is looking around the room and I see Tom D from Bennington I see Jill Bowen Berry say all of myself we all started here relatively about the same time eight ten years ago we're now the senior hospital CEOs in this state so turnover in this state is probably about 50% of the CEOs in the last three years that's a factor as we look at rural health care is a turnover of CEOs you've heard a lot of the high level challenges and I'll just summarize very quickly rural demographics we've got an 80 population we have out migration declining birth rates poverty, homelessness substance abuse, opioids, heroin alcohol, mental health Wyndham County is probably all sought is one of the least healthier counties in the state of Vermont with all of these issues with demographics hospital specific in a rural environment not just Brattle Bar but for all the hospitals we've got issues of retention and recruitment of both clinicians and staff which has led to a very significant use of temporary labor that's contracted nurses last year when we went in front of Rebound Care Board we had about 11 contracted nurses at our at our hospital I think Tom Huebner you had probably 20, 30 it's a real challenge for us and we're paying double for our contracted nurses as we do for our own staff it's a real major problem clinician retirements I mentioned CDO retirements we've had an onslaught of clinician retirements in Brattle Bar alone we've had over the last 20 years we had three of our primary care physicians who had come to the hospital in the 70s and 80s opened up a practice hung up a shingle Dr. Tordelani, Bersingh and Chesney 6,000 patients these thoughts are tired 6 months notice where do those 6,000 patients go when it's difficult to recruit new physicians to an area real challenge for us in terms of the age of, not just our age but the age of the physicians in our areas migration to the employment model when I came to Brattle Bar 9 years ago the majority of the medical staff was private independent medical staff but as you can see these retirements happening who else, who's going to come now to your community and set up a shingle and go into business cost 40,000 dollars alone to have an electronic medical record well it will pay you less as a private doctor if you don't have an electronic medical record so it puts an extra burden on the hospital now to employ physicians and clinicians and in Brattle Bar as I mentioned we probably had 8 physicians that were employed when I came we're now up to 55 clinicians because we have to provide access to primary care and medical care in the market and who else will do it in the hospital we also are focused on Medicare designations there are several designations Medicare gives hospitals in this state half of the hospitals are determined as critical access hospitals you also have hospitals such as Tom's hospital and Benedict that is a sole community hospital they get preferential rate structures from Medicare cost plus to a pure DRG reimbursement for a diagnosis code Brattle Bar we're the only hospital listed as a Medicare dependent hospital and the problem with that is that is the least stable designation under Medicare by the feds in every couple of years there's a move not to or to eliminate the MDH designation is about four million dollars substantial dollars so we've always got to be conscious of how we're going to maintain our preferential status under Medicare because if Medicare decides to have a diminution of its payments to critical access hospitals or to sole community hospitals or to MDH that's going to put added pressure on us it's substantial money and we don't really talk about it a lot in our hospitals in this state regulatory requirements not just for centers for Medicare and licensing and protection but also Green Mountain Care Board puts another layer of regulatory apparatus that we have to respond to and in a small hospital like Brattle Bar or Dan's hospital it costs us money to respond to the regulations to file our budgets every year and departments that do this it's myself, it's my CFL working together with our leadership at the hospital so that's an additional pressure that's on the hospitals IT and technology we migrated on to CERNER platform we had eight different IT platforms throughout the hospital, throughout departments whether it was OD or the MedSurge or the ER that cost us several million dollars and almost every hospital in this state is going through that transition those are huge costs a couple years ago when Aldo Bay was still chair Kevin's predecessor Green Mountain Care Board we went into our budget reviews and he asked, his first question was what's that blue age going to mean to you moving forward what's the blue age has to change we have to move from just addressing medical needs in our community to addressing the social determinants in our communities that is a huge shift for us because if we don't do it who's going to do it is it the Green Mountain Care Board is it the state, no it rests on the hospital is the agency that's going to be a convener of other community agencies to address the social determinants of health in their communities working with the medical staff that's another huge change for hospitals in rural areas so let me talk a little bit about some specific responses we've had at BMH one is we've got to drive to different models and new models of care so the first is development of a progressive care unit and post surgical units probably about four or five years ago we had a typical medical surgical unit we also had a typical five bed ICU intensive care unit we started looking at who was in that ICU unit probably one patient out of probably maybe the three patients in that ICU were truly defined as critical care patients but we had a staff every patient into that unit as if they're in ICU level of care and that's a two to one ratio very expensive let alone trying to find ICU nurses in a very highly competitive market which we find ourselves in Browdenville we've got Massachusetts and we've got New Hampshire right across the Connecticut River so what we decided to do is create a progressive care unit we do not have a separate ICU but we have to provide that level of care through our organization so we developed a critical care flow pool that will tend to intensive level of care patients not just in the med-surg unit but in the ER but OB if we have a mum baby crashing in the OB unit or elsewhere within the hospital so you're going to start thinking a little bit differently about how you deal with your care on med-surg and ICU we also brought on Scribes to help the physicians and the clinicians so that they don't have to be tied to their laptop looking at your laptop taking notes they can give that patient in an exam room in an ambulatory setting eye-to-eye face-to-face conversations that's a recruitment and retention issue for us with our medical staff post-acute team we have physicians and nurse practitioners serving the three nursing homes that we have in Brattleboro and that's substantially reduced the re-admissions that I think Eric talked about back to the hospitals telemedicine, care coordinators who have been funded in part through the ACO one of the things we added this year was a psychiatric nurse practitioner in our emergency department are we getting reimbursed for that? absolutely not I asked Al, I asked the DMH for more money now that didn't happen because the budget was very constrained but we have to do that because of what we've seen as a change in our emergency room population and the challenges there the last piece is dental care it's kind of like Dr. Kirby's secret in Vermont because I see these stats that show the number of dentists for a thousand population the problem is how many of those dentists have open panels for Medicaid for adults how many do you think? not many, right? the hospital said we've got a problem here so we've partnered now with United Way we're opening up a dental center the hospital is committing the space the equipment and we're hiring the dentist and United Way in partnership with United Way who's actually going to be employing the office staff to serve the adult Medicaid needs for folks that don't have insurance dental insurance that's what adds more pressure but you know what? we have to do it because there's no one else that's going to step in that role of the hospital to address those needs and those needs in terms of dental care and those of all of us in the hospital know that those patients end up in our emergency room the abscesses, horrible situations of mouth infections, etc we've got to because no one else is going to do it we've got to address that need Tom D has a great program we went to visit him a couple of months ago in Benton so they've addressed it in Benton we're addressing it in Brattleboro but I think more pressure will be on the hospitals to address that need as well Jeff mentioned workforce development huge challenges for us we're close to other population centers we're competing for scarce resources being physicians, being nurses being technologists so what we've done at Brattleboro is we've got to start looking at how do we control that pipeline of the workforce so we've worked very closely with CCV Julie our president there and I sat down a couple of years ago to create a medical assistance program now we're doing our residency for new grads we're going to hire new grads we need to staff the hospital so that we have that level as we have nurses turn over and we can have those new nurses come in as residents and after a year be able to work in our units environmental services aids something as simple as a housekeeper if you try to go out and hire a housekeeper that's a pretty difficult position so we work with the Department of Labor we work with CCV on a program a training program for environmental services aids in collaboration with the educational institutions now we're working with VTC for an LPN and LNA which is the licensed nurse assistant so we've got to partner with state agencies with the educational institutions to address this major problem that we have in the state for workforce development the other areas as associate providers we would really be in a very difficult situation to grab if we didn't expand our roles of nurse practitioners physician assistants and midwives there's not enough MDs or DOs to be had especially on the primary care front so we really focus hard on the recruitment and retention of our associate providers and finally we've been pretty lucky in utilizing working with this state in bringing in Canadian physicians and these are mostly Canadian physicians that have attended U.S. residencies and we're providing them with H1B and J1 visas and despite all the things with Trump and you know reducing the number of visas we have found that this has been a very good avenue for recruitment as the Canadian physicians who want to stay in the states after doing their residencies number one responsibility for us in Bradowaro like most hospitals is about access to care that's what we're here for is access to care for our communities but you know what we can't be everything to everybody that has to change but how do you get to that point of caring for that community when you know as a small hospital you can't provide all those services so you've got to provide those pathways to provide those partnerships to have those services available to your community and that's what we're doing with Mike Halstead and Springfield in terms of helping, in terms of the OB's in terms of Bradowaro other areas we've developed we had a strategic partnership that we created with Dartmouth and more importantly with Cheshire Medical Center in Keen, New Hampshire it's about 35 minutes away to again develop those partnerships whether it's continuing with oncology, radiation therapy vascular surgery, those kinds of things cardiology so that's our role I think in the community that we for Bradowaro that we find ourselves being able to if we don't have that services being able to have those relationships and those collaborations and partnerships in which to provide our community with those services we have no choice but to have a community of reform our major payer as I mentioned or did mention is Medicare Medical Repentance Hospital 65% of our patients in-patients are our Medicare recipients I'm really nervous and so is the board that every year our designation is on the block luckily we have Peter Welch in Washington that every year we can count on him excuse me, count on him to reimbursement to re-institute this program and we got it re-instituted Peter got it re-instituted for five years ago and that was well for five years that was about two or three years but you know what at the end of that five years where are we going to be we're still going to try to maintain that but that's kind of a losing battle with what goes on in Washington these days but our board said we've got to be all in to the ACO we're there because we're not so sure with all the uncertainty in Washington about our number one payer where that number one payer is going to be in terms of continuing our Medicare dependent hospital status so we were one of the first hospitals that jumped in right off the bat to all three programs and we continued that and it's been a great partnership for us and it just worked out Kevin gets us all the numbers but the other piece too is philosophically where Brownborough is at and where our board is at is that we believe in making that migration away from FIFA service to risk based contracts and to population health and we've been very very aggressive in funding our community health team we fund ourselves it's not coming through the ACO or the blueprint of our population nurse a nurse who's actually we place in the homeless shelter working with Brownworks is an organization that works with the homeless population Jill Bowenberry has been an architect of Rise of Vermont we're all into Rise of Vermont and that is part of the ACO now Care Coordination every one of our primary care practices and now surgical practices and orthopedics as an our own care coordinator we don't get paid for all of that or reimbursed for that but it's the right thing to do as we look at making that change to the population health as opposed to being paid for medical services as I mentioned the continued uncertainty of our designation continues to drive us to embrace health care reform and finally continued focus and deep focus as we're part of a group purchasing organization through NIA which is doing Alliance for Health which is a Dartmouth affiliate program of hospitals I think we have probably 12 hospitals there we are constantly looking at how we can slim down our management structure and consolidate our management not to affect anything that goes on at the bedside or in the practices and then always looking at our utilization of labor whether it's OT overtime, placement physicians and really consistent effort for cross-training of our staff that's it a lot of the themes that you've heard already are consistent with Gifford is mission-driven focus at Gifford mission-driven organization that strives to meet the needs of our community we're here to serve people from new mothers, young families students, seniors with high quality affordable health care in the rural communities that we serve we believe in promoting the well-being of all ages throughout our service area for us success really will be defined about whether we're able to continue to work in a way that allows us to respond to what these needs are in our community and continue to do that we think that is going to make us successful and it's going to make our communities more successful I want to give a Steve talked a lot about partnering and I think on my notes here I have partnering written about 12 different times so I'm going to just start out with giving an example of how we partner some of you may know the village of the map that Jeff showed before Gifford and our great smack dab in the middle of the state what the map doesn't show is the top the topography of the state and all those different mountains and valleys that are in there Randolph is the center of where we serve but we serve a number of other communities and most of those are separated by mountains and are in the valleys Chelsea is one of those communities it's two mountain peaks to the north northeast of Randolph it is a traditionally farming community and like much of our area has an older population and obviously is a rural population in that community there is a partnership made up of what is a nonprofit organization called the Chelsea Health Center Board they own and maintain a facility within that facility Gifford Health Care our federally qualified health center maintains a primary care practice we also work very closely in that practice with the Clara Martin Center which is the designated agency in our area and they provide mental health services in that facility we also work very closely with another nonprofit that is called Health Hub and they provide mobile dental services and their mobile services are at the Chelsea Health Center as well and then finally in that facility there is also a private pharmacy called the medicine shop that has offers pharmacy services that is the kind of partnering that is the kind of grassroots organizations that exist in our rural communities they are the heartbeat of the communities and in a community like Chelsea if we were not able to provide all of those services and be right there for them that would impact whether people are able to live in that community when they age communities and their health ultimately I mentioned all the mountains transportation is an issue and it is a would be difficult for someone from the Chelsea area to travel over to Randolph to travel north to a very mobiliar area down to the Lebanon area for services so having those services in that area are very important so Gifford has a unique structure back in 2014 really taking advantage of what has been the philosophy long term at Gifford that of providing primary care and primary prevention services for our communities Gifford made the step of establishing a federally qualified health center that federally qualified health center at Gifford Health Care is an organization for all the other services at Gifford a federally qualified health center is a primary care organization so Gifford now has at the top of its organizational structure primary care which is where we think it ought to be which is I think from the comments from all of the others on this panel where they think primary care ought to be an organization that is imprinted on our structure and our governance structure without that FQHC it would be very difficult for us to provide services in some of these smaller communities like Chelsea like Rochester and we would realistically only be able to provide those services in the metropolitan areas like Randolph so we do have a strength in that structure we do think it is the right structure for our community and harkening on comments from Eric about the value of primary care in this health care reform environment that we're in we feel that we are well positioned to be strong in that health care reform environment however part of the purpose of this panel is to talk about challenges so I want to talk to you about why that is challenging even for an organization like Gifford that does have primary care at the top of its organization the Vermont Department of Health in 2016 did a physician census report where they looked at a number of different things and with the physicians in the state of Vermont one of the stats of that is that in seven of the 14 counties in Vermont at least 39% of the primary care physicians were over the age of over the age of 60 so let me give you a little glimpse into what that looks like at Gifford at Gifford when we look at the entirety of our physicians in primary care and that includes family medicine, internal medicine, pediatrics OBGYN, psychiatry and addiction medicine 56% of our physicians are over the age of 60 however if you peel that back a little bit more and look at just family medicine and internal medicine physicians who are practicing outpatient care in our community 80% of those physicians are over the age of 60 if I sat here last summer and talked to you about that it would have been 100% this is the reality on the ground and in rural America you've heard panelist after panelist here today and if you read any of the literature how important primary care is to the future of healthcare in Vermont and to the future of healthcare in America in the rural communities in particular it's dire and we need to put resources behind investing in our rural communities and making sure that we can have care providers and those primary care physicians who can care for their community members like Steve we've done a number of different things to try to make that situation better we have been very successful in bringing in a number of talented nurse practitioners and physician assistants certified nurse midwives throughout our organization and that has been very helpful in our being able to meet the needs of the community and have physicians in those communities we take our providers take advantage of Vermont's AHEC program which provides a loan reimbursement for primary care providers however those resources need to be expanded and those opportunities need to be expanded we need to make Vermont a place where primary care physicians and other providers want to be practicing and where it's attractive and affordable for them to be practicing Steve talked a lot about partnering and I want to talk a little bit more about that as well and I also want to talk about balance in terms of services that are provided as I noted before transportation can be a big issue in rural communities whether that's because of an aging population is because of those mountains that we all love and love to enjoy from a recreation standpoint not to mention to look at but they're awfully hard to travel over so it's important that there's a balance of services in these communities it's not enough just to be able to provide primary care services we need to be able to provide the core specialty in surgical services in our communities as well it's difficult for people to travel for those services particularly for the older population and for the population that does not have the financial means to travel so we need to also invest in those core services whether that's general surgery orthopedic surgery whether it's cardiology services having those services available in these small communities we continue to look for ways to do that at Gifford we've partnered with larger organizations whether that's Dartmouth-Hitchcock whether that's Central Vermont Medical Center the UVM Health Network to provide services in our community like orthopedics like cardiology, like pathology oncology services staffing our tumor board these services that that we need to make our our health care community vital Gifford has made the choice to participate with one care from the all payer model we are participating in the Medicaid program only at this point we are one of those community hospitals that is really struggling with how and whether we'll be able to come into the next step of participating with Medicare I think when Kevin was talking he said that that risk the financial risk of the Medicare population that financial risk that's represented with going into the all payer model for that can represent one to two times small hospitals operating margin that's a fear of the black if you're in the red it's a lot worse than that so we need to have the stability in our small hospitals to be able to participate in this we need to have creative ways if we're going to be participating in this I'm encouraged by the conversations I've been able to have with Kevin around this however more work needs to be done to make it so that small hospitals can be more of a player in the health care reform efforts we think that we've been doing all the types of services that are consistent with what is happening with health care reform here in Vermont as I noted different as a long tradition of providing primary care and preventive health services we also have a long history of community health and community outreach programs and that's something that we've really emphasized since I've been here as well the last two and a half years we now have a new partner in that who's going to help us to expand upon those community outreach services that we provide that's Rise Vermont which Steve noted this is one of the real assets that our small communities can get from participation in the health care model and it's something that Gifford is going to be a part of going forward as well and again these are things that we've been doing but now we have some other resources to bring to bear and I think this is what we need to continue to do in Vermont is to find ways to support health care that is provided in these rural communities we know our communities we are mission based we are trying to figure out what the needs are in these communities and provide the services that are required so I just wanted to note one of the things that we really had to focus on at Gifford is looking at our costs across our organization every employee has been focused on finding ways that we can be more efficient that we can cut costs we have seen some pretty good results in the last year in that regard but we also have to recognize that there's only so far we can go you've heard a bit about workforce issues here today if you've I'm sure it's not the first time you've heard of that we can't go so far as not where we can no longer invest in our employees where we can have competitive wages for them where we can attract people to come to Vermont and come to the small communities to work we have to have investments in a well rounded core of community based services that can be provided in the rural communities so that is those are the things that we're focused on that is the rural model that we think is successful will be successful as I noted at the beginning I'll go back to it for us success is going to be measured on whether we're able to continue to meet the needs of our community we look to do that through the services and the people that provide to those efforts but we also look to do it in working with the numerous partners that we have in our community and across the state and that is what we want to continue doing so with that I want to thank everybody for the time today and for your attention great to have the legislators and the remanded care board interested in what we can do to improve rural health care Vermont so this time we'll open up to what we normally would do is the board first for questions and comments but because we do have legislators in the room I also want to open up this period to give them the crap and ask them questions so if the legislator has a question they would stand as soon as no kind of act like Phil Donahue run around to get over to you in the meantime I'll start it okay I'm home okay I'm going to ask you to Phil Donahue so you're going to have to deal with those questions yes we're there for questions hi thank you so much all for coming I had a question for Mr. Shell which was yes I'm a Mr. Roger so I'm one of the state representatives and I had a question for Mr. Shell which was I was wondering if you I really appreciated you going through kind of the the financial ways that the ACO model could be an opportunity to hospitals and I was wondering if you could just revisit the clarification for why you thought this model specifically as an opportunity for rural hospitals compared to other hospitals and then combined with that in I guess the second part of the question in Vermont a lot of the leadership for ACO has come from the larger hospitals and I'm wondering if that's a trend throughout the country or if that's a Vermont thing and if it is a trend wide that is a lot I think as we start to move in and as the primary care becomes that revenue center of that new of this new world the rural hospitals are built around a primary care based delivery system which is the outside value we didn't build ourselves around the future fixed cost centers of the new payment world so if we start thinking about it's an inherent value it's a future economic value it's not necessarily here in terms of dollars and cents today but I do think that the rural hospitals have incredible value in this new world with regard to the larger systems so there's a couple different business models most of the ACOs are a majority of the ACOs are large system led they have the dollars to invest but there's also other the four critical access hospitals over in Northern New Hampshire they pull together four critical access hospitals into a system to get enough covered lives to get at least 5000 covered Medicare beneficiaries so that they could be an ACO they partnered with an organization called Caravan Health that has, they work around some between 40 and 50 ACOs all rural communities banding together to pool their lives to get to the 5000 live threshold requirement for Medicare they are now because of the new risk criteria on the ACOs under the pathways to success are recorded essentially they're merging some of their ACOs together to diversify that insurance risk the idea that the larger systems are taking the lead that's a majority right now and I think it gets back to that imperative of coming together coming together to adjust the the primary functional imperatives of that new payment system which are aggregating lives to diversify insurance risk to take that claim on health to me that's the most one of the most important things we could say is that provider organizations taking that residual claim on health is going to be one of the first things that would get us going towards a true healthcare system and so the larger systems taking that lead they have the resources and frankly they're going to be rural hospitals and larger systems are going to be a part of it except they take the lead it's okay they have the resources to do that at this point I just walked all around your question I'm not sure if I answered it there's a lot here that you said I would just like to comment you know the larger systems UBM Health at Dartmouth helped stand up the ACO to get it launched and there were a lot of costs that are talked about in his discussion about upfront costs to set it up and get it going but we're evolving and we have evolved our organization on governance so I'm interim but my new successor when hired will be a full-time devoted employee of OneCare Vermont I would welcome people to go onto our website and look at our board composition we have a broad diversity of providers on our board we have to have 75% of our board at least the providers that's a Medicare requirement for a Medicare certified ACO we have a diversity of providers and provider voices and for most of the big decisions that we make as an organization we have a super majority requirement meaning that two thirds of the board members have to vote to operate OneCare which means that no one stakeholder or no sort of provider type can rule or dominate the actions of OneCare this is a collaboration so we want to make sure that decisions that we make and efforts that we undertake have the broader support of the provider community and aren't just representative of one or two stakeholders so Eric I'll throw out my question for you you heard that that you mentioned that $219 was spent on travel and tourism you can't hear you Eric is it working? yes so Eric one of the huge problems that we're facing in Vermont is our workforce shortage there's a analysis done by the business roundtable that shows that in the next two years we need 3,900 new nurses we do a little better in Vermont on primary care than the rest of the country but as you know we've got to flip backwards in the US with two times the specialist of primary care where other countries have twice as many primary care providers as specialists and so as Vermont is trying to figure out how do we address this workforce shortage when we have a declining population in the state in the working age and everything what have you seen around the country in your travels that would be something that we might be able to learn from as far as trying to address this huge problem for our state and some of the best practices that I've seen there was a hospital in Minnesota around provider recruitment where the CEO has an eight year medical staff development plan where he looks out eight years potential retirement and starts planning them which puts him right into the high schools the local high schools so they start identifying the kids in schools that are interested in the biology the sciences and start having them it's really a great plan. He said if I have to recruit for next year a doctor it's a failure in my system around the nurses and the technical providers a lot of that I see a lot of partnerships between healthcare systems and colleges where nurses are rounding in and they're doing their programs in the rural hospitals and I see a lot of that activity you know I hate to say this but if we think back probably 12 to 14 years ago when we had this major pending nursing shortage you know it was interesting you know there were all the doomsday reports where we're going to be out of nurses in 10 years and then what happened was the market worked where wages went up as wages went up you know the classic supply and demand as the RM rate rates went higher and higher and higher there was more substitution but there was also more supply being offered the more demand more people wanted to be interested because they could make a decent living being a nurse and the schools opened up and the markets kind of solved that over time so you know it gets back to this in my economics class you know the my employer does not set my rate the market does and I think the market is probably going to be seeking here in the very short term around some of these real nurse shortage challenges Thank you Jess I wanted to ask a question about scope of services Eric you mentioned rationalizing the service network and I heard from Dan and Steve about you know the partnerships and the appropriate service lines Jess can you speak out I can speak out about scope of services so the financial strains are real right the demographic challenges pyramid challenges, workforce shortages shifts from inpatient to outpatient high fixed cost hospitals closing all over the country the reality is everybody wants just like they want a school in their backyard in their community they want a hospital in their community and they want a full service hospital in their community in this climate I'm really questioning whether this is realistic is rethinking the service part of our path forward in the sense that many rural hospitals are often a wide array of services should they be should we think about right scoping right size and right scoping hospitals recognizing we have some trade hospitals of economic drivers in their communities lots of jobs there's a vital need for emergency services in communities particularly in rural areas where transportation is an obstacle kind of research is done in other areas in other states around what is the appropriate scope of services for a small rural hospital the idea that are there services for which the volume is actually not sufficient for either financial efficiencies financial sustainability or frankly meeting quality of care credentials if you've got low volume if you're doing enough of these services to meet a quality threshold if you're not meeting your fixed costs what's happening to the total cost of care of that so my question is about appropriate scope of services in rural hospitals so Vermont I'm going to ask for Vermont on this one because when I go around and I help rural hospitals improve the performance 90% of the time my recommendations are finding out new services to offer the community increasing market share for services currently offered or getting paid better for what you do and the reason why is that when you have 80% of your costs fixed increasing you add one more lab test you get paid $12 for that lab test your variable cost of that lab test are $2 so you drop in $10 to your bottom line to cover that 80% of the costs that are fixed and so one of the lessons I give talks on this of the economics of a rural hospital is creating thousands and thousands of contribution from lab services x-ray services all the services doing more in a fee for service environment creates that contribution to cover your fixed costs and so that's the fee for service mindset that we get in and that's why we are where we are when we start talking about the Kaiser model the Kaiser model says we're successful and we're empty it's a very different equation I look at the four critical access hospitals in northern New Hampshire I don't know what's going on there now but as they came together as one system let's just say three of them right now are offering 24-7 general surgery do we really need three 24-7 general surgery programs in a two county area in northern New Hampshire or as they come together they can start to I like to use a rational they can rationalize the services they're offering recognizing that as we go into these accountable care payment types we just don't have to have all the services to create many contribution margins payment is going to be fixed all like it is here in Vermont gets back the asterisk around Vermont and then we can decide how to best rationalize services that are provided but there is a right size I mean it was at a two-bed hospital in critical access hospital in east Tennessee it's a two-bed critical access hospital it goes anywhere from Littleton in New Hampshire where you have $90 million net revenue critical access hospitals so there is so scope of services is going to vary really based on the population the demographic so it can be supported so I have a question for the audience who is responsible at the hospitals to define the scope of services at the hospital I see one gentleman patient of the man patient of the man who is responsible that's exactly right it's the board of trustees and our case is the board of directors who are members of our community and a lot of our job as CEOs is to educate our boards as to whatever is talking about about how are we going to survive and more importantly what is that age going to look like that's your board's response but how many board members are here so we have a number of board members who have hospitals yes so that's your responsibility as board members of hospitals and your CEO's responsibilities is to educate and present the challenges that we face and what are some of those tough decisions that are going to have to be made like in the case of Springfield not doing deliveries when you get to 125 deliveries a year that is very difficult there's a hospital, Lakes Region Hospital in Laconia 285 deliveries a year our size in Bradmore that's how many we deliver in Bradmore they shut their OB down now there's some other factors because they weren't able to recruit and retain OBGYNs that is a very scary thought for any community but those are some of the very difficult decisions that are out there to be made it's not the Green Mountain Care Board that's going to make those determinations it's going to be our local board of trustees can I just real quick I just want to expand upon that a little bit I also think that it's incumbent upon us to look for creative ways to do that don't think we should be duplicating or providing services that are not appropriate for a small community but there are there is a core of services that ought to be that ought to be delivered in the end business we've talked about here today but are there creative ways to do that so we're not duplicating and I can only point to with Dartmouth-Hitchcock on orthopedics I would say is a core community service we are collaborating with them on that service we're doing the same thing with cardiology so we are not duplicating the number of people who are providing this service in a wider area we're leveraging resources that are already there we are basically adding to the capacity of what these physicians can provide those are the kind of collaborations that we are partnering but I think we need to be focused on as we're moving forward because resources are scarce but the need is there and the barriers to patients accessing services and having to travel for services is great and if those services are not providing the local communities the people who are going to suffer are the older people and the people who don't have the means to travel and at the end of the day the chiefs and have the responsibility to look out for those people so that's how we approach it Eric, were you trying to weigh in? Yeah, I just made some real quick my context is very interesting my first trip to Alaska I was 800 miles out in the Aleutians in Dutch Harbor anyone see the show The Deadly Sketch it's a king crab fisherman in that community of 3,000 people 800 miles out in the Aleutians they have 3,000 people they have a clinic, it's a fairly qualified health center that's all they have for health care when you're a female and ready to deliver 6 weeks before you go to Anchorage and so the way I think about this is coming from that type of far extreme to a hospital discontinuing delivery services 30 minutes outside of bank or man it's very different really Alaska is very different but once we come over here deciding what makes best sense to keep the hospital open is the most important thing and if we're losing a million and a half or two million dollars on delivering 125 babies it's a tough economic question it's tough to maintain that My question really goes around some of your recommendations that you put in where you talked about many of the rural health providers have not yet considered the magnitude of the change or the required strategies and I want to set up a little bit about some of the things that have changed over the past couple of years and then ask if you have any key strategies or some big movers because when you look at the past four years in Vermont four years ago, three of our hospitals were losing money at operating margin three years ago, three hospitals were losing money at operating margin the past two years it's jumped to eight and seven losing operating margin and last year all seven of the hospitals that lost operating margin also all missed their top line budget whether that was poor budgeting whether it was patients moving to different places of care I'm just trying to say how do we get to a situation where we can go to some of your recommendations maybe on the magnitude of change or the required strategies because Jeff put up a slide as well that in the 50 states I think we have we have almost 60% of our hospitals losing money at the 14 hospitals where you look at nationally in that category it's like 35 so we are seeing the move we're seeing our hospitals are beginning to financially struggle and it's not sustainable over the long term so what are the things that are going to help turn that around and whether you have any key strategies or things to help with that it was really in that it was called the transition framework we're still living in that fee-for-service environment right now where we talked about the carbon monoxide of Medicare of margin and it's go