The first item of business today is the executive director's report the executive director is on vacation this week So in her place our general counsel Judy Henkin will deliver the report The understudy fills in the only thing I have to report is we have not had a regular meeting in several weeks since that time the board has issued the Decisions in blue cross and blue shields qualified health planning the individual and small group market and in also MVPs Individual and small group market filing blue crosses was issued I believe in August 14 and in that filing the board reduced the average annual rate Increase from nine point six to five point eight percent and because there are increased availability of tax credits The average rate felt by Vermonters Approximately 3.2 percent and the total savings is an estimated slightly under 13 million on that filing in MVPs filing the board reduced the average annual rate Change from 10.9 to 6.6 percent and with taking into consideration the premium tax credits The average rate change felt by Vermonters is approximately 1.9% and that savings was a little over 6 million and I guess the only other thing I wanted to bring up is I know that we had some we had what was called a petition that came in today and I think I've discussed that with you. I don't know if you want to just address that briefly at the start because it was in BT digger this morning sure so For those who read Vermont digger, they know that Ken Liebertof has submitted a petition Which in this particular case is is almost a public comment Because we don't have a formal petition process But I will say that as I'm trying to remember the word that mr. Liebertof used well in the article it the quote was that it was that Doing the two requested tasks in the petition would be symbolic symbolic. That's for what I'm looking for so As much as that it would be symbolic. I'm just going to say that At this point the board has never Um Interfered in any type of contractual relationship that an institution has Either with an employee or an outside party and while we do Examine their budgets what we're what we are looking at is basically revenues and expenses and we don't get into Such detail to set someone's specific salary or Say how much a Hospital bed would cost or things like that We do however try to shine Light on things. I think that this board has acted in a manner to try to create the transparency that allows the overall Vermont community to see what expenditures are and in fact in our guidance we Tell the hospitals that they must submit the hospital's policy or policies on executive provider and non-medical staff Compensation and they have to identify outside consultants relied on for benchmarking peer groups to which the hospital's benchmark compensation targets in terms of percentiles for each staff category and the hospital's actual Compensation level compared to target for each employee group for example executive provider and non-medical staff so We believe that we are bringing information to the public and more specifically to Individual hospital board members so that they can make better decisions And I think it's through that transparency that comes to light when there is a deviation from what a particular community Will accept as far as compensation and not accept so we feel that we're shining the light on it and it's now up to individual Board members at the hospitals Take it from there with that. I'm sure that knowing Ken he will Bring this up during public comment at the end of the meeting and we look forward to hearing what you have to say on the matter But that's where we're at right now. Can I add something sure? Yeah, and just as the board's attorney I will just add that we wouldn't be able to interfere in the contractual relationships between employees and the hospital anyway, so Capping salaries wouldn't be something the board does and also in somewhat contrast to it being a symbolic Move the information requested in the guidance this year that the hospital budget team asked for and has received and is reviewing With the board that information can be used to get considered in decision-making but it it can't be used to specifically change salaries or Do the type of line-by-line changes that it appears are requested and It is information for the board when they're looking at their overall charge to adjust expenses costs However, NPR And as they go through the process, so I just wanted to add Okay, thank you the next item on the agenda are the minutes of Wednesday, August 8th. Is there a motion? It's been moved and seconded to approve the minutes of Wednesday, August 8th without any additions deletions or corrections any discussion Seeing none all those in favor signify by saying aye Aye, any opposed? I would abstain Because I was absent let the record note that Robin lunch is extinct abstain because of her absence Okay, at this point we're going to turn it over to Pat Jones in the hospital budget team Whenever you're ready Pat take it away. Thank you Good afternoon for the record. My name is Pat Jones. I'm the health system finances director for the Green Mountain Care Board I'm joined joined here by Lori Perry and by Kelly Thoreau Very able members of the hospital budget team and health system finances team this Basically kicks off the decision-making phase of the hospital budget process So today What we want to do is first of all just do it right now review the next steps in the process We today are looking for you to begin a hospital-by-hospital review and Develop some preliminary decisions and the reason I call them preliminary is because we are still in an open Public comment period that public comment period closes on September 10th The board has a deadline of making final decisions on the 14 hospitals budgets by September 14th our statutory deadline is the 15th. That's a Saturday and similarly written orders to the hospitals are required to be Transmitted by September 30th again a weekend So in this case we'll be looking at getting the orders out on September 28th the next thing I'll do is just show a slide that outlines sort of a system-wide summary on some key metrics that you look at in your decision-making and Then we'll begin our hospital Specific recommendations from the staff and your review and discussion As I think everyone knows this is my first year in this role when I looked back at the past couple of years what I noticed was that staff came in first with Recommendations on which hospitals budgets should be approved as submitted or could be approved as submitted And that seemed to make sense to me. So I decided to take the same approach here, which is really starting with those hospitals that may be less complex and where The budgets might be approved close to as submitted or as submitted and then Probably that will take us through today with maybe a high level overview of the remaining hospitals But we're really thinking that next week will be the opportunity to take a deeper dive into those hospitals with a more complex budget picture So assuming that that works for you all that's the approach that will that will take today So this is the system Summary you've all seen variations of this document before it shows all the hospitals We've put what we see is some of the key high-level metrics including the dollar amount of The hospitals fiscal year 19 budget as submitted the change From fiscal year 18 budget to fiscal year 19 budget shown as a percentage growth rate the change between fiscal year 18 projections To fiscal year 19 budget again showing a percent growth The percentage growth in rate Submitted by the hospital the operating margin That's also a percentage the total margin and the days cash on hand And these metrics will be shown later in the slide deck for each hospital But this is a way to have a complete system look just a couple of Points you'll notice that for Rutland Regional Medical Center For both the MPR budget to budget growth and the rate requests there are two figures Board members will recall that when Rutland presented they indicated that because of some change in ACO Fees that they were Reducing their budget to budget growth requests from three point two to three point one percent and Similarly reducing their rate requests from a three percent increase to a two point six percent increase Some of the figures for the totals I'll just just mention the total system-wide budget to budget MPR growth Comes out to two point nine percent for the budgets as submitted When you look at the fiscal year 18 projection to 19 budget that growth rate is 3.2 percent and the rate request is The weighted average of the hospital's weight rate request is coming in at a three point one percent increase So I'll start with Grace Cottage And this would be one of the hospitals that The staff is recommending Approval as submitted this data you saw In similar fashion last week and we'll show it for all of the hospitals It gives you their base budget their fiscal year 19 proposed budget one thing We added because we thought it might be helpful for context is the percentage of the system Total in submitted 19 budget that is represented by this particular Hospital so you can see for Grace Cottage that that that Sort of system impact is zero point seven percent You know we then have the MPR growth rate What's happening in health care reform investments in this case Grace Cottage? requested no dollars for health care reform investments and then the Night fiscal year 19 rate requests and an important metric is what does one percent of rate? increase represent in terms of dollars So you saw this last year for our last week for it felt like last year for all of the hospitals And this is this is just a recap of that In terms of hopefully aiding you in your decision-making what we've done is put together Table some financial indicators for each hospital and then a table with the staff recommendation on a Variety of factors in this case are only to MPR growth rate and rate increase the financial indicators you'll see up top include the fiscal year 19 budget Projected operating margin in Grace Cottage's case It's zero point seven percent and also the dollar amount represented by that Where applicable we will note if the hospital is projecting an operating loss in fiscal year 18 So as you can see Grace Cottage is in fact projecting that they will have an operating loss the board I believe it was board member Yusuf or who suggested that we add total margin as well So that metric is there for the fiscal year 19 budget days cash on hand and then also the the change in the fiscal year 18 projected to fiscal year 19 budget MPR growth so you can see that for Grace Cottage their MPR growth rate budget to budget is three point five percent They're projected to budget is actually five point six percent and their commercial rate increase and in fact rate increase across all payers is They requested three point two percent just a word about these two Measures which are the items that you make decisions on Our hospital budget guidance does set a target for MPR Growth so for fiscal year 19 The target was two point eight percent growth and then hospitals that requested an Allowance for health care reform investments were Permitted Potentially up to zero point four percent additional for health care reform investments So if a hospital use that entire allowance there the target for their MPR growth rate would be 3.2 percent and Then when we talk about the rate that the budget guidance doesn't include a target for rate Increase and I just want to be clear about what we mean by rate increase what it really means is the percent growth in charges For the hospital over the prior year and most of the hospitals. It's the same across all payers It's not necessarily the same across all services So you'll see in the budget narrative that a number of the hospitals have a zero percent They're overall rate increase in this case for example might be three point two percent but they have Varying rates depending on the type of service so often physician services are Proposed for level in terms of the charges Whereas some of the other services might have a higher rate than the overall rate So just a note about what rates are and aren't it doesn't mean it's what the hospital is going to get in fact You know there are the hospitals make assumptions about About whether they'll get that for Medicaid and Medicare generally they assume they won't But it is a ballpark in terms of what will happen with their charges So in the crate in the case of Grace Cottage We are recommending That you accept the NPR growth rate of three point five percent part of the reason for that is that Grace Cudge is showing a near zero operating margin for fiscal year 19 And they've also recently hired some providers including primary care providers, and you'll remember that Improving access to primary care is one of the goals of Vermont's all-payer model, and then we're also recommending that the commercial rate increase of 3.2 percent be also accepted that The Vermont Department of Health on their hospital report card website Does have some information on charges. I again want to emphasize its charge is not prices and Grace Cottage showed that charge is they don't have enough Services to show charges for inpatient or outpatient care But for physician services There are charges appear to be near below the average from from the BDH website The data is a couple years old, but just to give you a little context so I'll stop there and See if the board wants to have any discussion on Grace Cottage. So Before we get started, I just want to say that Again, these are staff recommendations the board will have to Deliberate which we are about to commence On those proposals, but I wanted to say that the public comment period is open till September 10th so even though It may appear that some decisions that may be made today. Those will be subject to Either a ratifying or some type of more permanent vote Next week so that I know that Jess wants to talk about tying it in so maybe I'll Refer to her for the minute Okay, fantastic I just wanted to say Pat and team that one of the things that I think we have to make sure that if we make some preliminary straw decisions today You know we are going to wait for the public comment period obviously to end in case there's some Public comment that changes our minds but the other piece that I want to make sure is that as a system we look at all of the Individual decisions that we've made along the way and we line that up with the QHP and You know the filings that we had and the unit cost increases that we basically imposed effectively On the carriers just to make sure that we're in alignment. So I want to be able to See the entire system at individual decisions all in one before we make any kind of final decisions I think that would be helpful. So I just want to say that So the other thing I wanted to Mention before we start Pat is that In order to try to expedite that decision Decision confirmation next week if a member of your team could Keep a list of all decisions made today And I think it might be easier for the motion next week to be to ratify the tentative decisions Except for and then get into now Maybe there's so many exceptions that it doesn't make any sets next week But let's try to use that framework to save some time So with that I'll open it up to the board for discussion on Grace Cottage May I just suggest that maybe today we have the discussion and just don't take the votes at all and run through them Next week that would be I'm just worried about the time. I'd prefer to try to get some Tentative decisions in place Okay. Yeah, I think we can see who's in agreement and what issues remain and I was thinking maybe we could just run down the hospital Some will go very quickly Hopefully So board members Grace Cottage I'm sure looking at the recommendation that the staff has put I think it is reasonable because of the struggles that they've been going through on the bottom line and trying to get some New hires and you know when we look at the overage here of 3.5 versus a 2.8. It's very small. It's $88,000. You know, this overall is a small hospital it's not going to move the needle for making changes and You know, I do think your recommendations are reasonable So I'll jump into in that I think the recommendations are very reasonable However, in order for it to be consistent with what I may have to say on all the other hospitals I had knocked this down to a 2.9 percent commercial rate in my notes my sense is that I Could accept the staff recommendation on this one As I look at the spending side of their budget going back to 2015 their growth rate has been less than 3% on the expenditure side and it looks that they're trying to You'll restore some bottom-line issues having to do with total Martian margin and I would support that so There wasn't anything any issue here That I felt would necessitate any major change and recommendation Do you want to go to sir? I'm either way I'm also fine with the staff recommendation. I I Like your idea Kevin of knocking down the commercial rate, but I'm a little worried because of their previous financial problems So that would be my hesitation. I think there I would just say it was kind of like a To use mr. Liebertof's word a symbolic move. Yeah, it was such a small knock. Yeah three-tenths of a percent on the commercial rate that I felt Was sending the message that I hope we can convey overall so that it does fall in alignment with what we did on the Insurance rate decisions. Thank you. So, you know, I I can be content with the staff recommendation as well But I I feel similarly to you Kevin and that I think that some of these commercial rate increases are too high and To keep it in alignment. So I think depending upon how the rest of the board feels since it's a small change I could go either way quite frankly. So dropping a little bit to keep it in line with what I hope that we're going to do and some of the other commercial requests So as I expected we're not gonna have any real easy decisions Pat So was that clear as mud I think so I think so Think we have it. I mean I took it as a tentative Decision to go with the staff recommendations, but with some a couple of members wishing to see the rate lower The commercial rate. Yeah Shall we move on? Yes Okay I'm going from smallest to largest among the hospitals that we think might be You know close to being approved as submitted. So in that order, the next one is Mount of Scott me hospital and health center You'll note that under the second bullet they represent one point nine percent of the system total They have an MPR growth rate of five point two percent over eighteen budget and a Nineteen rate requests of two two point nine percent increase the one percent rate increase is worth four hundred eighty nine thousand dollars for this hospital so You can see their Financial indicators on this slide. They are actually budgeting for a an operating margin of zero And their total margin Comes in at one point six percent in their 19 budget They have a hundred and seventy six days on cash on hand Interestingly, you'll note that their 18 projection to 19 budget MPR growth is at three point four percent, which is pretty close to the target of 3.2 percent So they are you know, they're a hospital that is Seems to be growing a bit beyond what was budgeted in 18. They did identify health care reform investments So one decision that the board needs to make is whether to accept Their health care reform investments at the zero point four percent allow and say actually identified Almost a million dollars worth of health care reform investments, but the zero point four percent is a hundred ninety five thousand Staff recommends that you approve those health care reform investments the MPR growth rate at five point two percent We recognize that that is higher than the than the target that was outlined in the guidance but we actually Recommend that you accept this MPR growth as well Some of the rationale for that is that as you can see as I point out earlier They're projected to budget 18 projected to 19 budget is pretty close to The target they have you know Mount of Scott knee has a very specific Set of services that they offer They aren't trying to do a ton of different services. They've really focused on rehab and primary care And they also have quite a bit of out-of-state business as well They're getting referrals particularly from Dartmouth and they're now affiliated with Dartmouth so We actually are recommending acceptance even though that exceeds the the target and we are also Recommending acceptance of what is one of the lower Commercial rate increases at two point nine percent. So I'll start it off just by saying I Understand what the staff's recommendation is this one is another one that I Disagree with in that I didn't feel that we had sufficient data to see that the delta on the out-of-state business was what was driving The five point two if they could provide that to you before next week I think I would be more sympathetic To that what I would consider a very large MPR growth rate and On the commercial rate here. I had it Somewhere between one point five and two percent rather than two point I'm going to jump in here. So one is I'm comfortable with the health reform investments I'm glad that they put that in Seems like they're doing some great things there the second piece I would say is I'm actually comfortable with the commercial rate increase Feel more comfortable under three percent in general. So they're under there for my Comfort level the piece that I would say I agree with Kevin about is Five point two is high I believe that they had testified that about thirty percent of their business comes from out-of-state if I remember correctly So if there was a you know thirty percent of that NPR is still above our target so if there was a If they could quantify how much of that growth is coming from out-of-state And we could then make an adjustment perhaps for that an allowance for that But I still think if it is in fact thirty percent This is an NPR that might be a little bit still too high so But I would just add on to that it really should be the delta of the change in Out-of-state business it shouldn't just be if they had if they had twenty five percent of Out-of-state business last year and it went up to 30 it should only really be that additional increase Sure I'm sort of with Jess. I'm comfortable if the rate increases under three So I'd be curious if you feel like sharing Kevin more about your thinking about how you got to that those percentages Basically it was trying to get the NPR down to a number that I thought was more realistic But still exceeded our guidance got it. That's interesting On I and I agree with both of you that the NPR is too High and I'm also open to an adjustment based on out-of-state business So I think I agree with where you guys are headed Although I would note that they are projecting a zero operating I'm Looking at the long-term trends for Mount of Scott they end their NPR trend since 2015 has been 4% which is Seems reasonable And their spending trend has been 3.8% It looks like they are trying to recover some total margin And I think that that that would be helpful one thing I worry about is Looking at comparing their 2019 budget proposal to their 2018 Projection to where they are now and then looking at the revenue at the payer mix that comprises them hitting their target and of the the total target in terms of the Delta between 2018 projection and 2019 is 1.7 million and they're looking at only 314,000 of that coming from commercial payers and 2.3 million coming from Medicaid payers and over 4 million coming from Well, I'm sorry. It's a negative 2.3 million from Medicaid and a positive 4 million from Medicare And then they're losing $383,000 in dish. So I worry that this payer mix Might not get them to where they want to go But that is their decision. The other thing that I think might be helpful to them is that if they Engage Dartmouth-Hitchcock in negotiating with the with the commercial payers So that was one thing that came out in the hearings that There still is as a small hospital on their own But they are aligning themselves with Dartmouth-Hitchcock and it might help if and I and I think they look down the road Implied that they look down the road at working more closely with Dartmouth-Hitchcock, but I think the sooner they get there the better off They'll be Okay, what I was scrambling for is they did put in their payer mix in one of their charts And they showed in fiscal year 17 26 and a half percent came from New Hampshire their 18 July year to date was 25.8 and their 19 budget was 26.1 So it seems to be saying flat or declining slightly. I mean it's small dollars, but it's not gonna I don't think it's gonna contribute to the growth. It's about flat My take on this one was one of the concerns I had about this hospital was The patients that they received from Dartmouth the Dartmouth subsidy that they were supposed to receive in 2018 which was I think about 1.6 million and because they became more profitable They didn't get they're not getting that subsidy and they're not getting the subsidy going forward Yet they did talk about the higher cost of care for some of those patients that were coming over from Dartmouth So it's hard to quantify to what extent we may be subsidizing that But I was looking at this one also at about a one and a half to two percent rate increase And that would then bring their NPR growth down to you know, three point nine to four point three And again part I think we need to put that really understand where that goes into the mix and I don't think we completely Have that wrapped up. So I would also be where Kevin was on reducing the commercial rate increase Also just because I don't want to sound like a broken record I'm just gonna go through kind of some of my thinking's overall on all the hospitals So first I want to acknowledge the hard work all the hospitals have put into their budgets The challenges are significant with hospitals facing declining utilization Operating losses and unpaid unfavorable payer mix shifts Also a flat to declining an aging population that present more more complex care needs opioid and mental health issues Uncertainty in federal programs like 340 v and the risk assumed with with movement into a fixed perspective payment or an ACO Also factors in Vermont needs to prepare for these trends and uncertainties to continue Hospitals need to make strategic decisions on what services are right for their demands We need to make sure hospitals are financially viable and find ways to become more efficient and reduce waste across the system I Really like the mindset of one hospital Which was the challenge to match payment for the lower payers Medicaid and Medicare to be equal or higher than the cost and card Which would move us towards reimbursement by a payer including commercials aligning I Find several hospitals are trying to solve their financial problems by raising commercial rates beyond inflationary rates And or higher NPR levels above our guidance All hospitals spoke to cost savings through supply chain and Opportunistic staffing costs as ways they're filling the gap, but these programs need to be more robust To push more cost reductions We need to do a lot more here Where higher education or corporations face these challenges they forego raises or they are selective and only increase hourly or lower salaried employees Benefit plans are shared more by employees And what the business pays less They set strategic plans for the future and service lines are eliminated or added based on demand The reason I'm talking about all this is because the specifics of these reductions or change or changes need to be led by the hospitals I don't think we can dictate what gets done at a specific salary level But the pushbacks that I know I'm going to be pushing on rates and NPR growth rates on hospitals with specifically with declining utilization They need to find additional ways and a path forward and the strategies This may mean they're going to incur losses early and they're going to have to utilize Existing cash until they can right-size their services and staff with the population needs You know, I just feel like a lot of the hospitals are trying to solve their problems by putting in excessive rate increases And we're sitting here saying well, they're having operating losses. Well, that's true But they need to change their expense levels and I've been preaching this for a long time And you know, I think since last year going through this and I think that's one of the things I'm going to push back on on all these hospitals some of the hospitals that have higher increases for 2018 like a hospital like this They're coming in strong for 2018 over guidance They should be giving some of that back as well and in rate reductions So I just wanted to put that out there because that's where I'm going to be coming from when I push back I understand a lot of these hospitals are struggling financially But that's not going to change unless they change the service mix or become more efficient or reduce waste It can't be fixed by just Continuing to increase rates year after year or in many cases We're going to see hospitals asking for what I see is Unrealistic NPR growth when you look at their year over year They're declining this year and then they're asking for a six percent, you know over the prior year So I just kind of wanted to lay that out there because on most of these hospitals I will be pushing back, you know on their rate increases But I'm not sure if you have any Suggestion I would say what about running this one with the lower rate increase which and the Accordingly lower NPR as and for next week and then we can see how that impacts system-wide I think the one thing we did decide is everybody accepted the health care reform Yes Any information on out-of-state Delta? Yeah. Yeah Okay, the next one is Gifford Medical Center They are 2.1 percent of the system total They're the only hospital that's Requesting a negative NPR growth rate at minus six point one percent their rate They did Request health care reform investments, but because they're below that 2.8 percent target It wouldn't really be necessary to approve those the the fiscal year 19 rate Increase is requested at four percent and the estimated value of a one percent rate increase is just over $400,000 so Gifford is projecting for the 19 budget and operating margin of 2.5 percent if it is accepted they are projecting an operating loss for fiscal year 18 Their total margin is higher at three point nine percent They are also projecting a deficit in the total margin for fiscal year 18 days cash on hand 177.5 their 18 projected to 19 budget NPR growth is 9.8% They as I said they did identify Particularly in the health IT area health care reform investments We're not making a recommendation on that because they're below the 2.8 percent cap The NPR growth rate You know, it's a little optimistic given where they have been recently But they have hired Two surgeons to replace to who laughed and two family Practitioners they also had an EMR Implementation and so productivity was down while that implementation was occurring and their anticipating a productivity increase and they are also Expecting a slight favorable Payor shift from Medicaid Medicare to commercial which would bring their revenues up a bit so the staff is recommending accepting the the minus 6.1 percent NPR in terms of their rate increase We're actually recommending a 1% Decrease from 4% to 3% When you look at the VDH website that I mentioned earlier And again, these are charges. I want to make sure we have the caveats out there But their charges Are appear higher than average on the VDH website for inpatient outpatient and physician services. So We are thinking that slowing down that rate increase Make sense if you so why again, that would be a decline of just over $400,000, you know, that's a good chunk of their operating Margin, but if they were able to make some expense reductions as well, it wouldn't you know have that as big of an impact So thank you Pat, I think that was important to point out what we show as their Charge master from VDH and that we don't really truly have the true picture, but we have no reason to believe that Gifford is being reimbursed Significantly less than other institutions in the state so it would lead one to believe that they are at the high end of rates currently and That makes that 4% a very tough one So I I actually could live with the staff recommendation of the 3% My gut would have me go lower and so would my brain except that Again, we're dealing with an institution that I think has to make significant changes in order to Have a good long-term mission so with that who else wants to jump in I'll jump in a little bit on the Pricing So I actually did look back at that VDH website and some of this is where the 4% is is too high for me Not only is there are their pricing and I understand gross charges It's not what the actual, you know price might be but I'm just gonna give some examples for the other board members who may not have Looked into this a hip and knee replacement at the state average is 43,000 Gifford charge is 62,000 gross charge a C section State average is 16,000 Gifford charge is 26,000 a broken wrist at 14,000 Giffords gross charge is 31,000 Historectomy 21,000 Giffords gross charge is 46,000 so for me some of these very identifiable Common frequent procedures are well well well above the state average so a 4% commercial rate ask is Seems really high and troubling to me also when you look at their total cost of care from the blueprint they're already an outlier in Expenditures in total cost of care so on the high side so for me I really feel strongly that we need to lower that commercial rate ask because I can't Justify increasing these rates even higher on charges that are already outliers Up there so and you know their days cash on hair above the state average I I see their projected deficits and their operating losses and I do agree with you Kevin And to your to your point Maureen as well, you know, we can't change I feel like we can't throw good money after bad And so to the extent that we need to think about what is the business model here? What is the services that should be provided? How can we write these ships? It can't always be through a commercial rate ask Particularly when those commercial rates are already high Yeah, I agree with the comments and you know I'm gonna read some numbers from their history because This is a similar discussion that we had last year, but in their 2018 budget they had a 60 million dollar NPR and 59 million dollars of expenses and they were supposed to make about 1.3 million in Their projection now their NPR is for their operating revenue is 52 million So down about eight million dollars their expenses are fifty eight point two million So down only eight hundred thousand and you know, this is an example of showing how it's really difficult to be able to respond to Lowering NPR and and actually are actually having too high of an expectation So they're projecting a loss of six point two million dollars this year So if they don't make some fundamental changes to the way they're running the hospital They're not going to be able to sustain these losses year after year and So I was concerned last year when they came in with this request Because in 2017 their budget had been 58 million remember we go off budget So they went from 58 to 59, but they really came in at 54 million on NPR So, you know, I'm afraid they're doing the same thing again They've justified that they've hired some surgeons and it's gonna come back But we're gonna really have to watch what happens here because if they don't get that top line that they're Projecting and they have hold their expenses, which aren't easy to make a quick shift. We're gonna see another big loss again So it's tough, I mean, you know, we're reducing their rate to three percent as you've suggested it's about four hundred thousand dollars I Think we should reduce rate because you know We can't just keep increasing to try to make it work But even that change of four hundred thousand dollars is not gonna be enough for them to really make the change They're gonna need to on the bottom line So I'm just concerned that their growth rate from where their forecast is now at 52 million going up to 57 million Which is a 9.8 percent increase over where they're trending this year is again too optimistic You know their NPR growth at minus 6.1 is certainly within guidance I'm not saying, you know, we can bring it down that much But I just want to you know caution and I did when we had the meetings with them that if in fact They don't get that top line They're gonna have their expense base targeted to that and they're just gonna continue this Situation where they're losing more and more so, you know, I support the staff decision But I just caution that this hospital is is struggling financially deeply and even these modest changes either way Is it's not gonna be that much of an impact? I have to agree completely with with Maureen This is it looks like a problem Here that goes back to 2015 at least that's as far back as our data go goes where they have been trending on NPR at a negative two percent and Expenses at 1.7 percent and again if you look at these dramatic swings between 2017 and 2018 budget and 2018 projected You know for for where they are now 2018 projected They're looking at almost a five point five million dollar increase in NPR as Maureen said That's nine point eight percent up and up on the revenue side and they're looking at a two point nine million Reduction in expenses, which is five percent. So, you know, they're looking down the road And they're saying we've got to raise our revenues by nine point eight percent and reduce our our expenses by five percent And that is a a heavy lift and I so it seems to me there are some structural problems here that really need to be addressed and that Wishful thinking by getting even a higher level of NPR doesn't matter if they can't make the target then Why why give them that target? to try to reach I Agree with what everyone says I and I can certainly live with the staff recommendation of three. I think I would also go lower and that's in part Because of some of what you were saying Maureen about a wake-up call really Part of what is happening in with this particular hospital is they are they do have a transfer of dollars to the FQHC and They have not begun participating in any of the ACO programs in part I think because probably their primary care folks aren't interested which I'm sympathetic to accept in this case the primary care in the hospital are very closely linked in the hospital appears to be Helping to Support the primary care. So I would actually go lower than three if other people had appetite Yeah, and I was just sad actually I had written down to and I think if we look at their history, you know This has been a hospital. We have not adjusted in the past 2015 they asked for five six and rate they got five six 2016 they asked for five eight. They got five eight two thousand seventeen three nine three nine two thousand eighteen four and four You know so I don't know, you know, we need to to be sending a message We can't just every year be having higher increases between four to six percent for the past four years showing significant losses and Running at this higher expense. So I had actually put in two percent for my recommendation I could go with the three percent as well, but and I should just say like if Part of my thinking is not necessarily that they have to join the ACO, but they have to do something differently So if they don't want to join the ACO, that's fine But then they need to articulate what they're doing to change their business model because driving You know this business model doesn't seem to be working very well for them or the state as a whole and I would accept too as well if there's anyone else who Wants to go lower so I did not at least Maybe they said it and I just didn't hear it, but Tom and Jess, I'm not sure I heard what you were thinking of for a commercial rate well, I Don't think I'd I have resolved that in my mind. I I think I could go lower because I think it is On paper affording them read them revenue that they're not going to earn anyhow So They would be offering them revenue That is difficult that is a very low probability of them achieving anyhow And I think it would be helpful to reduce the parameters of their revenue expectations to something that are more reasonable I would be comfortable with a two percent So I think I heard three members say to that Yeah Nobody seemed to Object to the NPR although I think everyone was skeptical that even the minus six point one would be reached Yeah, that's why I went Back to the prior slide each one percent decrease in the rate is project you know projected to have an impact of just over 400,000 so Assuming that that holds it would in fact impact their NPR These decisions are obviously interrelated Okay North Country Hospital is the next one they are proposing a fiscal year 19 budget of Almost 82 million they represent 3.2% of the system total their NPR growth is 3.1% They did Request health care reform investments, so They would in fact be Under the target if you accept their health care reform investments of three point two percent North Country is participating in the Medicaid ACO program this year, and we Have heard nothing to indicate that they won't continue to do so at least in that program for 19 their fiscal year 19 rate request is 3.6% and the estimated value of one percentage point rate increase is 649,000 We so so North Country's operating margin is pretty low. It's at 1.1% their total margin is 2.8 their days cash on hand 196.3 and They're 18 projected to 19 budgeted NPR growth is at 5.5% percent We're recommending accepting both the Growth rate for NPR and the commercial rate increase They you know the some of the rationale for that is that they really are a hospital that has Challenging social determinants Demographics pay or mix and so forth and they're you know They're they're pretty isolated up there in the Northeast Kingdom in terms of other hospitals being nearby They have also Just recently hired two surgeons to replace two who had left And they have a you know a pretty low operating margin. Oh and in terms of the health care reform investments you all had made a preliminary Decision last week to accept up to 0.3% of their health care reform investments since they have a NPR growth rate that is under the 3.2% target if you assume a 2.8% base plus the point three that gets you to the three point one Okay, who would lead it off on North Country Maybe I'll go first and get it over with I You know again, I take a look at the longer term trends just to make sure that There's not a consistent Negative pattern, but that and but sometimes hospitals hit bumps in the road and a current year situation doesn't necessarily profile a long-term trend so North Country from a an NPR point of view going back to 2015 has grown At about 1.8% and their expense has grown at about 1.8% Which seems Pretty much that that that they're toe on the line Get you know You know from from an economic point of view The thing I worry about is is maybe a kind of a mini version of what we saw in a previous hospital Where they are kind of falling behind in 2018? So that their 2019 target From an NPR point of view is 5.5% above their 2018 projected and their 2019 expenses are four point six four point six million or five point seven percent Over their 2018 projection, which again is a stretch, but I think that they've been you know working hard to stay To you know to not be extravagant by any means I do know that they have the lowest population determinants of any hospital in the state and so I would Pretty pretty much follow their lead on this one and You know accept their their their proposal I Would just propose maybe a slight reduction in their rate increase. This is another hospital that has had a History of pretty high rate increases Which we have not changed in the past so in 2015 they had an 8.3 and they received 8.3 16 of 4.8 17 of 3.5 18 of 5 So that this 3.6 is below the trend that they've typically asked for so I appreciate that I think the fact that they you know do participate within the ACL You know so I put down between a 2.6 and a 3.0 Rate change Just you know based on their history of high rate increases They do have a low operating margin that was well So on this one I agree with the Marines logic I just hadn't gone quite that far I had I had considered a half a percent cut which would bring it down to 3.1 But I certainly could live with the 3.0 that Was the high end of your range. Well, I'm pretty much right there, too. I thought you know Given their days cash on hand and given their recent rate requests over the past few years And also looking at the charge master, which I agree is just one proxy And it's not to be all and all but they tend to be above the state average and many of their gross charges So and I think that's the accumulation Some degree some of these rate requests over the years so I could be comfortable with 3.1 You got your wish you got to go last Robin. Thank you, which means next time you go first Who's next I Can probably do that I could really go either way on this one. I think I'm fine There's already three members who are interested in the rate Decrease anyway, so it doesn't really matter what I think but It always matters what you think The thing that with the country once I am sympathetic to North country because of their demographics And which means that they don't have a lot of place to go except the commercial rate increase I'm also sympathetic to them because they are they did indicate they're moving to participate in all three ACO programs and they Talked about some of the ways they're looking to do some operational changes So that makes me that so that's why I wasn't particularly sure where I wanted to land quite frankly on the rate increase The other thing is I don't feel like I entirely understand yet And it's I think because of the way our process works how That ACO decisions that will make in December then we'll come back to impact on the NPR growth rate in particular it shouldn't necessarily impact the growth in charges since that would apply to the fee-for-service revenue, but I think that's an area that I Don't think we'll understand this year, but for next year will be a bigger issue as we grow and scale So that was a long way of saying I'm sort of on the fence with North country, but I can go with the flow Just want to add I fully agree with Marine that their history of rate increases Is high it's a On average a four five point four percent rate increase But I note that their actual trend in NPR is 1.8% over that same period and what I worry about with North country is that they have a they're heavily dependent on Medicaid and so for them in 2019 to achieve their target over 2018 Injected which are the two best numbers that we have they they are looking for a 13% increase in in in their Medicaid revenues, and I just I worry that that's not going to happen and It's going to be harmful to a hospital that is in as Robin said is has kind of not the best demographics among all Among all the hospitals Yeah, we just also point out that you know on their expenses They've been holding their expenses around 84 million from 16. It was 83 817. It was 84 2 18 budget was 84 3. They're actually saying their 18 projection is going to be 82 So that that's all really solid. They're 19 budget They're going up to 86 6 and part of that was their investing. I think about 2 million dollars 1.9 million in Athena in a Information systems program But they need to find cost offsets in order to do some of that So, I mean, I think they have a really significant jump in expenses year over year as well And that's you know being offset some by this increase so It's not we can debate whether we should reduce them or not But you know, it's not significant reduction. I think what we're talking about to go to a three But does start to send a message that they need to be addressing the whole mix of their P&L So it sounds like the board is narrowly headed towards a 3% commercial rate Subject to change obviously. Yeah, I just wanted to point out in terms of the expenses and I'm gonna Look to my friends to the left and right here. I Think this may be one of the hospitals that was changing from An EMR system not cloud-based to cloud-based and that does change their expense picture I'm not sure if that factors in or not, but I Just wanted to point that out It does it was about two million dollars and before it would have been in To be seen an offsetting depreciation reduction, which we're not seeing Significantly from if it was a capitalized cost before. Yep. Thank you Okay Southwestern this may Fall into the more complex realm. I'll let you all decide. It's obviously a larger Hospital we're now getting into a hospital that contributes to the system to the tune of 6.3% There were they they've actually proposed an adjustment Which we discussed last week and which you all Tentatively Decide to accept so their MPR growth with the with the proposed adjustment It's actually a dental home that was approved in a co n After last year's budget So their their MPR growth would be 3.2% if we accept their health care reform investments that would be right at the target They are participating in the Medicaid ACO program in 18 and you know while we don't have definite information on 19 no reason to believe that they won't Continue to participate with the ACO their fiscal year 19 rate request is 3.2% and The estimated value of a 1% rate increase is just over 811,000 You can see their financial indicators there that you know, they're projecting some pretty healthy margins there they're their Operating margin at 3.6% Their total margin at 4% their days cash on hand as 46.3, but when you include their parent it's it's 180 to 189 Days depending on how they decide to fund a pension and then Their fiscal year 18 projected to 19 budget MPR growth is 3.7 So that adjustment To the fiscal year 18 base It's a co n that has been approved and so the staff recommends that you accept that Healthcare reform investments they provided information on Far more than needed for the 0.4 percent allowance. We recommend that you accept the 0.4 percent allowance the MPR growth rate again is at the target and With when we Consider the adjustment and so we recommend acceptance of that the commercial rate increase Comes in at 3.2 percent you'll Start to see as the hospitals get more complex that we Sort of lay out options and so the options here are to accept that or to consider reducing to 3% or less You know, I'll I'll go out on the limb here and say that I Believe that they could handle a slight reduction There they have strong margins They do it is important to note that they have greater out of state revenue than most of the hospitals given their location but Could withstand in our opinion a slight rate reduction. I'll go first I As Pat said I think to me so I I think we discussed this last time But I actually could be wrong but I had asked the question about the co n and the condition in the co n and Staff did go back and look at that and we did approve The dental home with the understanding that it would increase NPR so to me That's kind of just being consistent with what we've already decided and less of a real decision On the health care reform investments, I would accept the point for but I would explicitly say that we don't accept the million in What I would call kind of it prep to be able to move to different EMR And but they don't need that million quite frankly to reach the point for in health care reform investments So it doesn't really matter for the point for I just wanted to be explicit about that one investment On the commercial rate, I would go with the reduction And I don't have a number in mind so I would be interested in what other people are Have in mind, but I'm certainly fine with the three Now we're going going down the line and maybe I Could support a modest rate reduction as well as Robin indicated Southwest has had a pretty steady trend over the last four or five years of three and a half percent increase in NPR and 5.4 percent Increase a year in in expenses. They have a pretty good bottom line They're anticipating a 4% at a total margin, but I again I hear I worry about the payer mix To get from where they are now in 2018 Projected to 2019 and they'd be looking for a little under six million dollars Unadditional revenue and as you look at their Allocations of that to commercial Medicaid and Medicare 76% of it is coming from commercial With 23% from Medicaid and only one half of 1% from Medicare yet Medicare makes up In terms of their overall NPR 37% So I'm not quite sure how this all fits together, but it seems to me that they're healthy enough to take a minor Rate cut First I think this is their P&L is strong and they seem to be well managed each year They're making about six million in their operative income when I look at their commercial rate increase. I Had them going to a 2% and my logic there was they have about 70% they have they have about 30% of their charges I think it was for medical supplies and some of the physician professional services at zero and the rest was at 5% So basically they're showing a 5% increase across Some of the inpatient outpatient, etc If I knock that down to 3% on those that would bring their commercial rate increase overall down to 2 So I blended them to a tube I put them down to a 2% and that would assume again that they got 3% on most of their services And the ones that they were holding at zero still hold at zero Because I just felt the 5% is really what they're reflecting across 70% of their line I'm okay with their NPR and with the rest of their P&L. They also have seen some increase year-over-year and expenses Because they are putting in a million dollars of that prep cost for potentially going to epic and you know one the savings we would get potentially on the Commercial rate increase if we went down. I think is about 800,000. It was about 400,000 per point So there's 800,000 there. I'm not saying that's why but in a way, you know We're commercial payers you could look at it as a trade-off or paying for that That specific line item. So I think they do a good job managing their P&L They're going to need to get some additional cost savings if they want to stay at the profit And I would recommend a 2% so I have to say up front that I'm not prepared to Offer what I think the commercial rate should be at this point in time I'm waiting for the transcript of that hearing to come back. There were a few statements that I Felt didn't reconcile with information that I had and I just want to reconcile that This is a very well-run hospital. I've been very impressed with everything. They've done down there but I'm not prepared at this point to accept the 3.2% commercial rate increase and if I'm not willing to accept that then it probably would lower the NPR, but I Just need to do some further research on my end Before I prepare to even discuss Southwestern No, I don't have an exact number, but I would I I Agree with some of my colleagues here, and I think this hospital could afford a shaving of that commercial rate increase I don't have the exact number, but somewhere between two and three percent makes sense to me I'll give it more thought So as I was afraid of we're not making as good of decision-making progress as we had hoped but let's keep going Pat I think it's going okay But I believe there is a tentative decision to accept their Adjustment accept their health care reform investment and accept the NPR except the NPR would be adjusted That's right. Yeah. Yeah. Yeah, that's right. Yeah Okay, I think just just on that point We may need to Discuss with some of the hospitals whether or not, you know, truly. Yes, if you just reduce rate, that's gonna go to NPR growth some of these hospitals may have been You know capping themselves to the 3.2 if they're not gonna get the rate, you know They're not that precise in all cases with with forecasting You know, we see most of the hospitals don't come in right on the number there They tend to sway one or two percent. So I Would be open for some of the hospitals that are under the cap if we take their commercial rate down That they may still stay at the 3.2 I wouldn't always say it's gonna go down and and it's more just because of the precision Yeah, if one for one if I take it out, it's it's 800,000 and it drops to the bottom line But they're not as precise in forecasting budgets are obsolete the day they're done, right? So things change. So I wouldn't necessarily hamstring with that That's just my point of view on that, you know, if they're under the 3.2 We take a commercial if the hospital resubmit, you know, takes that commercial rate and still ends up at 3.2 You know, I think that could be acceptable point. We'll take can I just jump in on that point to me It would the determining factor on that for me is whether they're participating in the ACO because we know if they're participating in the ACO they're taking a fixed payment and that will have an impact on MPR growth, obviously But it also means that they have a disincentive to drive volume Whereas if there's a hundred percent fee for service then keep then keeping the MPR growth Just gives them the incentive to drive volume. So I don't know how that plays out, but I just wanted to say that out loud And the only other thing I might add to that point is it when it comes time to look at their actuals their 19 actuals as you recall we have the trigger for when hospitals are above or below by a certain amount and You know, just keep in mind that if they come in low Say they keep the same MPR, but then come in low Getting information on how much of that is related to the rate decrease would I should think be helpful to you all So the next hospital is Rutland Regional Medical Center They represent nine point nine percent of the system total. They're coming in with a proposed budget of about 259 million their MPR growth rate was in their submission 3.2% you probably recall that when they provided their presentation and I mentioned this at the beginning they revised that to a three point one percent MPR growth and They are requesting the zero point four percent in Health reform investments. They're not participating in ACO programs in 18 But all indications are that they plan to participate in the Medicaid program in 19 Their fiscal year 19 rate request was 3.0 percent with an estimated value of a 1% increase of 830 thousand dollars They have revised that request as well to downward to 2.6 percent The staff, you know, they're they they're pretty healthy looking a 2.3% Operating margin in their submitted 19 budget their total margin 4.4 percent days cash on hand one of the stronger ones in the system at 205.7 days and They're 18 projected to 19 budget MPR growth is pretty low at 21% We are recommending Accepting their health care reform investments accepting their MPR growth rate, which if the investments are accepted is below the target that was in the guidance and Accepting their commercial rate increase of 2.6 percent So to change it up. Yes, I'm gonna ask you to go first. Okay. That's fine I'm actually happy with the staff recommendations. I thought that they did an excellent job with their presentation I thought their reform investments were Right on the money and I you know, I appreciate that they're well under our guidance and under the under 3% for the commercial rate ask so So on this one I Still look at the total cost of care for a hospital service area knowing with the measurements that we have for the all-payer model and it still concerns me but On the flip side of that, I thought that the presentation that they made in Castleton was probably one of the better presentations by any of the hospitals and I also Appreciate that over the years they have come in and willingly on their own lowered rates so As much as I I'm tending to want to cut commercial rate increases I'm willing to accept all three of the decision points there My recommendation would be a slight decline in rates to 2% You know, this is one when I look at their salary and fringe They're up 4.4 million dollars and that point 6% is 500,000 and you know, they're giving 3% across the board increases I'm not saying that's where they should cut, but I think there's some opportunity there to To be more efficient. I do really appreciate that their original submission was a 3% and they came in at 2.6 But again, I think there's some room there and I would recommend it to put 2% I could Support a rate reduction here Again, I haven't gone into the weeds enough to figure out what specifically that recommendation would be But I I do note that the hospital's long-term spending trend going back to 2015 has been four four point three percent a year That they have year over year unlike most other hospitals had very good total margins of In recent years of four point four percent projected three point one percent five point three percent seven point five percent and eight point three percent and so I think that a rate cut here is Is affordable? One thing I do worry about again is looking at their 2018 projected budgets versus their 2019 projected budgets in terms of where their NPR comes from and That Delta is a total of five point three million And they're looking for six point a six point nine million dollar increase in commercial offset to a degree by a One million dollar reduction in Medicaid Receipts and another $900,000 negative in dish receipts, so I worry again about their payer mix but They're closer to the ground than I am and if they think this is you know that the appropriate distribution I have no reason to argue with him But overall I would support a a rate cut here I'm kind of where Kevin was I I do They are one of the areas with a higher total cost of care I but I also very much appreciate that they Have historically come in and offered rate cuts proactively Which is really what we would want them to do which makes me inclined to be lenient for whatever reason but So I guess I'm a I'm a little bit on the fence on the rate cut, but so I'm I don't know yet So Pat what I think I heard is that we're accepting the health care reform investments. We're accepting the NPR and We have a split board on the commercial rate Yeah, and I just want to point out the trend and I know there's one year That's not on here where they did put further reductions But in 15 they got an 8.4 percent increase, which was their ass 16 3.7 17 minus 5.1 and that's because they had a pretty significant overage the year before and I think they did a second They may have done another reduction that year Last year they got a 4.9. So, you know last year they were on the higher end So I just wanted to point that out Okay, is there any additional information on Rutland the board needs from staff? I just need to mull it over myself. Yeah, understandable, okay So those were the hospitals that we would have categorized as less complex if there is such a thing and You know, I'll tell you that our thinking on the on the remaining hospitals is a little less developed because of their complexity and You guys are making great time too. So What I was thinking is that we could walk through the remaining hospitals we could point out You know some some of our thoughts and some notes about each hospital You know, maybe take the board's temperature on each of them if there are You know if you if there are things you can approve Tentatively like healthcare reform investments, that would be great if you want to dive in we'll do our best to keep up with you But that was sort we were thinking of being a little more high level on these remaining hospitals thinking that you might need some more time to Think about and address them. Does that make sense chair mull and it does. Okay, so Others were pretty difficult. So That's I I thought the ones we already discussed. We're pretty yeah. Yeah. Yeah, you really go. Yeah, I think pre-calculus to calculus. Yeah Yeah, so we'll start with Copley Which certainly is one of our more challenging decisions that we need to make Copley came in With a proposed budget of seventy two million they represent two point eight of the system total Their MPR growth was the highest proposed at five point nine percent They requested healthcare reform investments. They totaled 0.1 percent of their base MPR So that would give them a target of two point nine percent if they were to follow the guidance so The difference between two point nine percent and five point nine percent for MPR growth They are not participating in a co programs in 18 You know, we've certainly heard from them that they're thinking about it for 19, but don't have Definite information on that their fiscal year 19 rate Request is also the highest requested of all the hospitals this year and that's at seven point nine percent the estimated value of a 1% rate increase is 392,000 so They are Projecting in 19 an operating margin of two percent They're also projecting an operating loss for fiscal year 18 in their 19 budget the total margin is two point five percent and Again, they're projecting a deficit in fiscal year 18 days cash on hand Is the lowest in the system? I mean Southwestern's was lower, but they have the parent organization Copley also has a parent organization, but We queried them and it doesn't add a lot to their days cash on hand I think about six days. Is that correct? So and then They're you know projecting this strong MPR growth for 19 in their budget, but It's even a higher Rate of growth when you look at their fiscal year 18 projections to 19 budget 8.4 percent their healthcare reform investments again as we said totaled 0.1% We would recommend that you accept those MPR growth rate Here's where we begin to sort of give you a menu of options and so options are to accept it to reduce and We do think that a reduction would be in line given their projections to 19 budget and So I'll just leave it at that and then another option might be because this is I mean this is so You know the cuts to get them to the 2.9 percent target are Significant enough they there would be no margin and then some unless they found some Significant ways to cut expenses. So one option is to I mean I think you know I'll look to our general counsel here if she doesn't mind but one You know one Option I think we have to approve something For them and so one option is to approve but then ask them to present an alternative budget possibly And then on that we've had precedent on this because this has happened before with this particular Yeah Right Right Yeah, thank you, Judy. I appreciate and then the commercial rate increase similar You know they're coming in at seven point nine percent Options are to accept it which I don't anticipate the board going in that direction to reduce it by some amount and to Ask the hospital to suggest an alternative budget and propose rate increase the You know just to give you an idea again a reduction to four percent Would again eliminate their margin unless there were some strong expense cuts So I'll reluctantly start it off. I don't think that we should accept the premise that Decisions made are effectively coming out of margins I think that decisions made to have to include hospitals going back to the planning table and reconfigure what their budget is so In this particular this one I had the highest rate increase of commercial rate increase of any of the different hospitals only because we Historically had cut them over the last couple of years and I feel At least looking at the day's cash on hand that this is a hospital that's headed in the wrong direction I'd kind of like to give them a bridge to try to get to the right direction so But with that being said I I know I couldn't go more than four and a half percent so I'll leave it at that Yeah, this is definitely one of the hospitals that's challenged and The It's almost like they are bridging their gap with the higher npr growth and the higher Commercial rate increase. They're actually showing some utilization declines I'm also sympathetic to the last three years. They've had a rate reduction and possibly They were, you know too deep and and that's that's Kind of has hurt them, you know, I was looking at a commercial rate increase of potentially four to five percent I think an eight percent is not realistic to be given I also think that their npr growth is optimistic Particularly when you look at the 18 projection off the 19 budget to be an 8.4 percent And so I would really challenge them to go back and bridge that change They did a bridge off the budget to where they were showing and I think they really need to bridge that change Back to their projection because I think some of that would fall out of their npr growth when we look at Their history an npr in 15. They were at 63 5 16. They were at 62 a 17 they went up to about 65 18 they're going to 66 for so every year. They've been fluctuating around a million to a million and a half up this is going to 72.1 from 66 on an npr growth and Again, I think it's almost plugging to the expense load that they have and That's not sustainable. They can't continue, you know on their expenses. They were at 67 and 2017 In their 18 projection, they're at 69 and they're going up to 71 point seven So we're continuing to see expenses going up significantly npr going up because of rate and In just the higher npr primarily due to the rate growth and utilization going down So, you know, they have to correct this But I also do worry about their Viability their days cash on hand. They're projecting What was supposed to be a flat margin to down 2.2 million? This year because they're missing the top line. So again, it's you know, how can they react to missing the top line? changing their expense load and Getting a you know a P&L that's going to be financially viable for them. So the 66 stays on cash I think is about the lowest of all the hospitals So I think we need to be careful about, you know, how much we push their rate increase But I think it you know 8% is they were you know solving their problem by having a rate increase rather than solving their problem by cutting expenses We are not telling them to cut utilization and We're just telling them that this this You know is not a realistic ass. So I would be around the you have four to five percent for commercial Sure everything the marine said make it easy No, I think marine headed is if you again look at their long-term trend on npr it's up year over year 1.5 percent on average, but their expense line is up 4.7 percent and With a wind in their face of rate cuts in 2016. It was a 4% cut in 2017 a 3.7 percent cut in 2018 3.4 percent and so now we've come to the inevitable conclusion that in in in 2018 Their margin is negative. So I And their days cash has dropped from 108 in 2015 down to 62 and in in 2018 projected so I You know, I wouldn't feel it unfair if if we gave them a decent rate increase With the one what the concern I have is with the one that's proposed 2019 over 2018 I'm projected they would be calling for an 11 percent increase in commercial revenues Which may not be a stretch with a seven or seven percent or so Great increase, but I think this is this hospital's at a turning point and You know, we should try to help stabilize the ship of state there I just wanted to add one other thing to I meant to say which was You know, this was another hospital to in their budget for a top line It was sixty nine point four and they're coming in at sixty seven point seven Their expenses were sixty eight sixty nine point three and they're coming in at sixty nine point nine So it's again, you know showing if we get kind of ahead of our skis and we're you know Putting up a higher top line and we don't hit it. They're not able to pull back on their expenses They stay the same or go up slightly Which creates the loss and that's why on the five point nine even without a rate change or anything I think they're not gonna hit the five point nine which is a eight percent increase year over year and They're gonna have an expense load for that. So if they don't change that it's just you know Nothing that we do is gonna change that they're just gonna miss their top line have their expenses and lose money again. I Agree with what everyone said I do think Both MPR and commercial rate is too high And I'm sympathetic to the financial difficulties although I'm probably less sympathetic having lived through the board meetings Where we were enforcing the budget overages Because they've made a particular business choice and it's not working out the way they expected and I I think they need to do exactly what you said Maureen which is focused on expense reduction Because they're trying to be a surgery center without the efficiencies of a surgery center so I would I would also bring down both the rate increase and the MPR and I'm fine with Maureen's range or Kevin's four point five. So I'm fine with four four point five So I agree it's great to go last because I can agree with everything everybody said Well, I think I'm at a place where I feel as though the budget I would send it back And ask for a redo I'm sympathetic to their days cash on hand But I also think that and and their financial situation that the operating losses and the deficits We've been talking to this hospital about expense reduction for multiple years And I think that they've tried some small changes. I think larger changes are what's needed Their marketing costs are high their cost of admission permission is high their FTEs per adjusted bed are high above the average They're asking for one of their big drivers expense drivers is a 30% increase in drug costs. We didn't see that in any other hospital Most other hospitals seem to be Controlling some of their costs to some of their group purchasing agreements that they have I don't know. I wish I could ask now Copley, which you know if they're part of NIA or some other group purchasing agreement But I do think that to the extent that perhaps they could instead of us imposing a certain rate Lowering the rate to some degree in the NPR. I would like to see them Perhaps come back in with something that's more reasonable in terms of a commercial rate and NPR Ask With the idea that they have actually looked harder at their expenses and their expense line Because I agree with everything that everybody has said already So that's kind of where I am and I know that they were optimistic about potentially joining one care That may change their budget as well if they've moved in that direction. So maybe that could help in some ways I don't know so Certainly for me, I want to see a reduction in expenses to some degree matched up with a line more with the lower growth rates and commercial rates in NPR and I'd like to see them just try again Let me ask you a question though. Do you actually think that they would be able to come in in a week's time or the revised budget? I don't know and maybe it's not in a week's time I mean, maybe the budget on it. This is where I defer to Judy But I I have remember in the past We've actually asked Copley to come back in and they came back in in December with a revised budget. I don't remember what the how we legally Did that but I and the other piece I would say actually is I'd like to see them look at some You know, they're the only hospital or one of the only hospitals that doesn't have any grant income So what are they doing to generate to increase revenues as well as reduce costs, but I don't know I defer to Judy I know we've we've kind of been down this road before so We have and we've actually had some I won't call it non-responsiveness, but I know when we were doing enforcement It was very hard to get some of these adjustments done as requested sending things back What I would suggest is that we have the hospital budget team look at this again Conferred with Copley about what was discussed here today And that we would like a new budget back for the board to consider and I think we should try to give them some targets of cuts in expenses or Whatever and ask how they would do that because I think without giving some sort of target that you might be able to establish a budget around It will be very difficult to just get a fully redone budget because I think some of the budget detail once we Have it voted on and establish the parameters. We want to know they're going to be able to do that So I think I think we should talk in this coming week about what kind of targets are realistic And how could they achieve that and get that information in front of the board before you go? I would just add that The hospital budget team believe is quite skeptical that they could get something in a week, you know, they'd need to Develop it and we want it. I mean I'll editorialize here a bit, but we would like it to be a thoughtful resubmission and You know, they would most likely need to take it through their board of directors and so forth so it would seem to us that the option is to approve something as a placeholder if we decide that we want them to weigh in given the extent of the potential cuts and Give them some time to put together a thoughtful document. So just just throwing it out there. I would suggest that the Target that we give them is the 4.5 percent commercial rate and then reduce the NPR accordingly and Go from there and we also can include as we have at the past a regular reporting, which may be in person as needed In person as needed by the hospital. I think on this particular hospital. We probably should go to a quarterly reporting I Think you could even say the 4.5 and 3.2 NPR growth because I I don't think they're They're going to get that growth. I think they're optimistic in what their growth was just just from their trend line So I think it may end up being around the you know, if they would be at 2.9 I guess 2.8 it would give them but 3.2 And I want to clarify it wouldn't be in substituting for the regular reporting But if they had to come in and answer questions for the board as actual numbers were coming back in That option should be available Right. Yeah, we are just going to point out that you know, once we get into the next fiscal year Toward the end of the year they begin reporting monthly, right? Yeah, they report their numbers. We don't have them though come into that's right And that's I think what the distinction we're trying to make. Yeah Okay Northeastern Vermont Regional Hospital So They have come in with a budget of almost 81 million. They represent 3.1 percent of the system total They have proposed some adjustments and Their MPR growth with the proposed adjustment would be 4.8 percent for their healthcare reform investments they have Requested the 0.4 percent allowance and it provided documentation on what those investments would be They are not participating in the ACO programs in 2018 But indications are that they will be participating in the Medicaid program in 2019 and their fiscal year 19 rate request is 4 percent with an estimated 1 percent value of 384,000 The Northeastern's 19 budget operating margin is 1.7 percent Total margin is the same 1.7 percent They have 122.3 days cash on hand in their 19 budget and their Fiscal year 18 projection to 19 budget MPR growth is a little below their MPR budget to budget growth rate of 4.8 We are recommending That you do accept the adjustment to the fiscal year 18 base and you guys actually made that preliminary decision Last week that relates to a cardiology transfer. We also recommend that you Accept their health care reform investments at 300,000. I'll just note particularly And it's 200,000 of that was either ACO dues or Accountable community for health expenses and we had some questions about how they might measure Effectiveness of the accountable community for health and how they might use those dollars We did get a response from Laurel Ruggles on how they would measure success, but if they end up Participating in the ACO as we anticipate We could rely on the rigor of our ACO budget process to understand how those dollars are being spent their MPR growth rate From fiscal year 18 budget to 19 budget is 4.8 percent With the adjustment We're laying out two options. One is to accept it. The other is to reduce by 700,000 so we received a letter last week from Robert Hersey who's here and who is their CFL and There were a couple of items in there It basically related to drivers in the revenue Projected revenue increase and there were a couple that We weren't sure about one is that the So they they identified some mental health Expenses that seemed legitimate to the staff that I mean they're all legitimate, but they seemed really important some you know ways of caring for people who are Arriving at their hospital in need of mental health treatment embedding clinicians in Ed there was some palliative care Increase in there, but there were a couple of items that we weren't sure about that added up to about 700,000 the first was that The part-time Psychiatrists which didn't appear to be in their narrative, but was identified in the letter the narrative actually indicated that that psychiatrist might have been financed using 2018 health care reform dollars, so it seemed like that might be sort of Double counting and I think that was the best I could tell was around 115,000 and then there was 600,000 that was related to expense increases wage increases drug costs and so forth that didn't seem to necessarily have revenue associated with so that's where we came up with the 700,000, but this is it's a pretty complicated Discussion and that's why we sort of bump them into the more complex hospital realm and then on the commercial rate increase they're asking for 4% and Again, we're thinking that the options are either to accept or potentially reduce The value of a 1% rate increase again is 384,000 estimating On this one I Would just push a little on the rate increase and push for some more cost savings. I believe The hold on one sec their inflation's adjustments were I think about a million four And I just think you know this is where we could push a Bit to get more cost savings. I think overall they've done a good job So I was looking at a two and a half to three percent commercial rate Each percentage is about four hundred thousand. So it would be you know about a six hundred thousand ask in cost reduction When you look at their Increases and expenses in 2017 actual was seventy seven point four in the budget it was seventy eight point six They're trending above budget both in revenue and expenses expenses are seventy nine point eight But in the nineteen budget we're going from seventy nine point eight to eighty three point two And you know there's a lot of things going on in there depreciations up other things are up but you know that trend is We're showing a four point six percent increase on revenue on top line and a four point six percent on expenses And you know we need to generate some income off those expenses. So You know overall that would be the adjustment I would look at it may still trend them higher than the NPR growth rate of three point two But I think they've had some things going on cross borders and things like that that have impacted their increase Tom You know again here the that the trends are a little rich The NPR trend going back to 2015 has been five point nine percent and the expense trend has been six point eight percent and So I and the rate increase average over the that period of time has been four point two percent so I don't You know, I don't have any specific recommendation at this point. I would like to point out Just a contextual issue that has jumped out at me as I've gone through these budgets and here's an example of one where They are not protect projecting any major increase in in in Medicaid revenues, you have four four payers commercial and Medicare and Medicaid and then you have what individuals pay through their their premiums but I I do want to note that in the of the eighty three million dollars total NPR increase that we're dealing with and 2019 over 2018 Only four point seven of that four point eight of that Is associated with the Medicaid increases? Only four hospitals have Medicaid site Medicaid increases associated with the rate increase And that means that the other ten do not so I think What I'm seeing here and is a live example of the cost shift And it's interesting to note that it's it's not a secret that every hospital from UVM Down to the smaller ones of Brattleboro Mentioned the cost shift and documented it. So You know, I'm looking at at this budget and I'm not seeing Medicaid sharing in the Increased revenues for their their their proposed NPR increase and Again, it's most of them are the most of the burden that is falling on the commercial insurers, which is I think I think a structural problem here Okay, Robin, I think it's interesting that you chose to point that out given this district's legislative delegation Tom You're So I was I was very happy to hear about the decision to join that ACO in Medicaid for 2019 and I would certainly accept the ACO participation fees and the palliative care increases as health care reform investments and I In terms of NPR and commercial they are both on the high side. I liked Maureen's Suggestion about cutting the rate and then adjusting the NPR So actually like Robin, I was happy to hear that there was movement on one care for Medicaid I Look at the day's cash on hand a little below average and the margins 1.7 interesting that there's no significant non operating net revenue right the total margin the operating margin of the same But not particularly high I do think though that the NPR growth rate and the commercial rate increase are on the high side and in particular because we just Rebased them last year for out-of-state revenue. So we gave them An adjustment in PR are higher than what we had expected last year or what we had guided last year So to me, I would like to see some of that coming down I appreciate it your suggestion so I too appreciated Maureen suggestion. I agree on the adjustment to the base on the health care reform investment and Again because we Gave them an increase over the guidance in the previous year I Would like to see some reductions in both NPR and commercial rate I Could live with that range that Maureen suggested 2.5 to 3 I probably would be more comfortable on the higher end of the range than the lower end but And from there we have to take the NPR down accordingly, but in this particular case I'm not sure that I would just take the NPR down by the amount of the commercial rate reduction I think I might take it down to the 3.2 percent, which is what the guidance was So that one again was crystal clear right now. I think one thing to look at there though, right because they're They're up in 18 so If we reduce this rate if we reduce the commercial rate what we're talking about You know, they're probably gonna only be up three or so. I'm not saying we can't go lower I'm just saying they're up in 18 So the reality is you know if they're coming off of a higher number in 18 If we reduce them to 3.2, I guess I'd want to see what the 3.2 is If we were at a 3.2 against their budget Yes, but what is it against their projection because that's going to be a two You know high one or two just might not be realistic. I'm so that's the only struggle there Yeah, I would just add that there you know again I'd refer you to the letter that we received last week But there are some services that they're providing Particularly around mental health Care and we know that part of the state And really the whole state lacks capacity for mental health treatment there's some additional providers, I believe urology and a couple of other services and You know they I just would refer you again to that letter because it really does outline what the drivers are Revenue, but I think the drivers are similar to other hospitals And the reality is that everyone has to treat mental health the same way that they treat physical health, so Brattleboro Memorial Hospital is the next one Brattleboro is coming in with a proposed budget of almost eighty four million there three point two percent of the system total They've proposed an adjustment With without it their NPR growth is six point five with it. It's four point eight they have Requested health reform investments that exceed the zero point four percent allowance They are participants. They are you know one of the smaller hospitals that's participating in all three a co programs in 2018 Springfield is the other and their fiscal year 19 rate requests is four point nine percent with an Estimated one percent value of three hundred ninety two thousand their Operating margin in their fiscal year 19 budget is submitted is quite low at zero point three Percent they're one of the hospitals. It's projecting a fiscal year 18 operating loss Similarly their total margin at one point two percent with a projected 18 deficit Days cash on hand pretty good a hundred ninety six point two days their NPR growth projected to budget is Actually six point eight percent so the adjustment you all Tentatively approved last week which was To restore an NPR reduction that was imposed Last year that we believe shouldn't have been So that has been Accepted so that would bring their NPR growth rate to four point eight percent their healthcare reform investments were recommending that you accept all except for a neurologist that they Are hiring are hired and asked that that be part of their investments We were having trouble making a direct link between that and the all-paramodal goals healthcare reform goals So options, I mean we didn't get real specific here on The options I mean accept or reduce their NPR growth rate their commercial rate increase at four point nine percent I Would just note that reducing a half a percentage point to four point four would Nearly eliminate what is already a low operating margin if they did not make concurrent expense cuts And I would just also note that on the VDH Website braddle borrows charges are mostly Below average on that website sound So just you want to lead off on this one Okay, so Robin how about leading off on this one? I have no idea what to do with braddle brow How's that for a leader? I? Mean I do think they're on the high side But they're clearly Having some financial issues Although their days cash looks decent compared to some others, so I Don't know the rate increase in particular Bothers me at almost five percent. I know that's not very helpful, but that's okay. You I think we tentatively decided last week to accept the Adjustment to the base everybody was okay with that correct Yep, okay, and I'm good with the healthcare reform investments as proposed by the staff At the three fifteen five eighteen, so that's all they really need for the four Okay So Tom your thoughts on Brattleboro So my thoughts on Brattleboro are that they have some problems The again just looking some of the trends the NPR trend with with the adjustment Going back to 25 three hundred three and a half percent It's been trend expense trend is four point four percent and they are looking for And their trend in that regard has been two point six percent But again here it's it's the you know that the problem I having with rate increases is how do they apply? basically to their portfolio and so here you're looking at As soon as the rate increase you're looking at Medicare Portion of the NPR going down from 30 million to twenty four point one million 2019 budget over 2018 projected Again, you're looking at the Medicaid portion stink of slightly negative at six tenths of one percent And then you're looking at what we're looking at the commercial portion going 29% from thirty two million to forty one million and So it's just I'm finding Obviously we've all got to make a decision at one point time But I'm a little hesitant because I just don't know how the rate increases apply apply to these pair mixes and So, you know It's clearly a hospital that that needs to enhance its revenues and in their presentation Most of that burden has been put on the commercial payers but I Don't see how that's possible actually Okay, Maureen Sure Just looking at their commercial rate increase They had actually a seven percent rate increase across seventy percent of their categories and a zero percent on thirty percent, so they didn't increase some of the physician services and Drugs and supplies so They also are coming up. They did something similar last year and We approved a five point seven percent increase for them last year. So this is another hospital that is Becoming fairly dependent on rate increases to help Maintain their profitability. I would recommend a three and a half percent rate increase, which would be five percent across Those seventy percent categories and then zero on the other thirty percent I'd also comment that their performance In 2018 right now, they were projecting a million dollar loss and now they're projecting a two million dollar loss That most all of that is driven by an increase in bad debt and free care that went from four point seven to six point seven And I believe they talked about making some changes and some write-offs and next year they have it going back down to the more historical levels which is like five and a half million so That does contribute some to the what will be the year-over-year change from their projection If I if I looked at their I Think we're showing like a six point eight percent change from their budget from their projection But part of that's been brought down because of this bad debt free care. That's impacting their NPR But I'd also say this is another hospital their utilization seemed to be declining And their rates going up When you look at their expenses in 2017 it was eighty one point three in 2018 it's eighty about just about eighty four and in 2019 budget is eighty seven so you know again need to look at those cost increases I believe they had a salary plus Another adjustment in their pay scale, so that's one area they could potentially reduce so if we were to cut them to the Three and a half percent. I think that's about a five hundred and fifty thousand dollar decrease Which would you know they need to offset from expenses that would be my recommendation So similar to Maureen's recommendation I had them in the three point four to three point nine commercial rate range This is a hospital They think is trying to do all the right things as far as collaboration participation in All three areas in the ACO So you know you kind of root for them But I do think that there has to be a reduction in that commercial rate and so Again my range was three point four to three point nine and Maureen's three point five falls right in there, so Great, thank you So again, I agree with much of what has been said. This is a hospital I think that's trying to do all the right things. I was very impressed first of all that they're all in all three payers Hopefully will be again Their access issues they reduced, you know these new patient appointments from 120 days to 30 days And I think they're really trying to get at Developing more stronger primary care network and Move population health in a way that we want to their days cash on hand is pretty high so I can See a slight shaving and commercial rate or a shaving and commercial rate One of the reasons I'm not advocating for a huge reduction in commercial rate is when I and I've been looking at these charge Masters, but when I look at them, they're really low relative to many other hospitals and well below the state average On many of these charges. So and again, it's just a charge master I understand that but it's a proxy for me for what is the actual price relative to what other hospitals are putting on their charge master So I would probably be in the range that you're talking about Kevin You know three and a half to four, but again allowing them You know Some leg room there to increase you know to reverse the deficits in the operating losses and realizing that their price increases Where their charge gross charge increases are not similar to some of the other hospitals that are only about the average so I think that We accepted some points there especially the adjustment to the base the health care reform investment for the staff recommendation I think what I'm hearing is that there seems to be a consensus here to lower the commercial rate to below 4% and I think we'll have to iron out those details The next hospital is Northwestern Medical Center Northwestern's proposed budget is a hundred and thirteen million. It's four point three percent of the system total they've recommended a number of adjustments If we accepted all of them Their MPR growth rate would be three point two percent if we accepted none of them It would be six point three percent. You'll see that we've recommended Portion of their proposed adjustments health care reform investments they did requests the amount equivalent to zero point four percent and They are another hospital that has been an early adopter of the ACO model They're participating in all three ACO programs in 18 and indications are that they will continue to do so in 19 their fiscal year 19 rate Request is the lowest of any hospital in the system at 2% and the estimated value of 1% is 530,000 their operating margin projected for 19 and their submitted budget is pretty good at two point three percent their total margin at 3.2% they have the most days cash on hand of any hospital in the system at 106.5 days in their 19 budget their rate of growth from 18 projected to 19 budget is 6.3 percent their adjustments related to provider acquisitions and the the the reason the staff didn't recommend approving all of them is that several of them Are actually for services that don't begin until 10 1 of 19 and so it wouldn't Be an adjustment to the 18 base but there is a Significant adjustment of 1.7 million for a transfer that occurred of their Occupational health practice and that one the staff does recommend accepting Healthcare reform investments, we recommend accepting and PR growth rate with the staff Recommended adjustment is four point six percent You know again our options are to accept that or to reduce it It would take a reduction of about 1.5 million to get them down to the 3.2% MPR growth rate we recommend accepting their commercial rate increase again as The lowest of all the hospitals Just want to start off on this one. Oh again Northwestern is a hospital I think that leads the state and a lot of the health reform initiatives and Being all in and all the all-pair and taking risk early I appreciate that Flip side of that. I appreciate their days cash on hand, which we've always looked at and many other hospitals look at enviously I Accepted the staff recommendation on the adjustment Given, you know the transfers that are not have not occurred yet And so with that the four point six percent Growth rate is still above, you know our guidance and given that I would like to see that come down You know they have a total margin of three percent. They have days cash on hand. I think it could come down I have to think about whether that 1.5 million is the right amount But somewhere, you know, I would like to see them at 3.2, which is what our guidance was so perhaps that's the way to do it Okay So I think we're probably all in agreement with the staff recommendation on the adjustment and The health care reform investments Certainly look acceptable You know and again, they did come in with the lowest commercial rate increase, but the NPR is too high and I Didn't have it going all the way down to the 3.2 that Jess had it But I had it going down by a million dollars corresponding Computation of the NPR Yeah, I think I'm actually okay with everything on the page. I just want to clarify Isn't the 1.5 million Overage if you will because in their 2019 budget they have these new Physician practices coming on it's not in the 2018 base if I guess there's one of two ways that you could slice that right one is to say, okay Take those out of your budget right now, and then when you get them approved in at 10 1, you know They would end up coming in and being acceptable Seems like a lot of work and Chris is here Or the other option would be to to say if if in fact those really would qualify To be you know, and I know the staff hasn't You know a pint on all that but if in fact they would be qualified then I'm okay with the 4.6 2% definitely has to go down now. I'm kidding. I think The two I think they came in and they talked about their willingness to take a lower rate Increase them what they would have wanted so I'm actually Okay with everything you have up there including the 4.6 percent if in fact the 1.5 You know would have been approved. I think it's just a timing and Chris did they did bring that up in their presentation If you say those aren't qualified Numbers can I just ask you about this because this is I hear what you're saying Maureen and I agree with you if they're actually Transfers if these are new services in the community that don't exist elsewhere in the system, then it's not a transfer Okay, so that's where I think a little bit of Homework maybe this week between this week and next week's my recollection is that some of this 1.5 million It's coming from services that that don't already exist in the community And in fact probably exist in UVM's catchment area and now is being relocated to Northwest one way to deal with that is this is these are services that occur in the State at large and maybe we make the adjustment downward at UVM and upward at Northwestern because there's services that are Pre-existing, but I don't think that they exist right now in the hospital service area of Northwest Yeah, thank you for bringing this up. I should have explained a little more carefully about this The so these three services We we did get applications for physician acquisitions and transfers from NMC Unfortunately, they came at precisely the time the 14 hospitals budgets hit So we haven't had a chance to really dig in on those on the face of it I think at least One of them is appears to me to be I guess it would be called a transfer. There's a retiring. I'm Going to say I think it's a surgeon that they Have been able to replace with a hospice an independent practicing Surgeon and they've been able to replace that person with a hospital Employed surgeon so on the face of it that one would look good the other two. I think there was ENT Maybe you're all I can't remember what the third service was. Sorry Chris But those you know, we just would it would be helpful to to look more carefully at those when we can You know, it may end up being you know, sort of a one for one We're down the road. We end up where they're proposing anyway We just haven't had a chance to look as carefully at that as we would like so So I guess I'm okay with Maureen and to the extent that if they are Legitimate physician transfers that we will approve down the line then and making it in now I guess my question is are they do they follow? But what I'm hearing Pat say in code is they don't have time to really do the due diligence in the next week I don't know if that's what you really meant Pat But I don't know if I meant that we'll do our best to come back to you with more information on those next week I would say if you if you aren't able to do what you would normally do with this application That we should go with the 3.2 with the understanding that you will then process the application and that typically would then adjust the NPR Yep Otherwise, I'm so I'm good. I'm good with what you guys said. I don't need to say anything else So again, just looking at some long-term trends the expense expense trend has been six point two percent The rate increase trend has been a one point eight percent and the NPR trend is I Guess a volatile here depending on what we assume about These adjustments I Would I would support? at least looking at a Some reduction in their In their rate I'm looking back again on their their trends in terms of total margin and Their eight point one percent six point two percent six point eight percent one point four percent two point nine percent And this proposed three point two percent. I don't want to punish somebody for doing for doing well But I again here don't Have a have a complete grasp of how the rate structure affects Commercial Medicaid and Medicare I'm looking at their 2019 budget over 2018 To to to get from their 2018 Proposed to or projected to their 2019 budget They would be looking for an additional six point three million from commercial a decrease in Medicaid of one point two million and an increase in Medicare of one point nine million and so I just want to spend some more time thinking about How that all gets integrated? But I I could support a rate reduction here May I just clarify whether you mean a Reduction in the commercial rate or a reduction in the rate of MPR growth? well, I'm I'm Not looking at the NPR growth. I'm I'm looking at the the rate from two percent Maybe it could be a little bit lower and I'm I'm Looking at trying to understand though how that might affect NPR Given the the payer mix and I just don't have a grasp on that So it's it's until I you know for a lot of these hospitals until I can understand that better I don't want to be firm about oh, let's cut it by a half a percent or a full percent or whatever It's I just don't know how the math works Well really as I said, I mean We had anticipated just sort of in a cursory fashion going over these more complex Hospitals, so I think we're getting more than we hoped for I guess and I just want to say I'm really appreciative of their commercial rate increase I mean two percent is was the lowest so I appreciated that Okay The next hospital is Springfield base budget a proposed budget of almost 60 million They're 2.3 percent of the system total their MPR Growth is 1% their hospital that was coming in quite low on their actuals versus budget and They did not request health care reform Investments and didn't need them to hit the MPR target. There are another smaller hospital that has Stepped out and is participating in all three ACO programs in 2018 and no Indication that that won't continue their fiscal year 19 rate request is 5% and the estimated value of a 1% rate increases 319,000 of relatively You know low ish Operating margin in their 19 budget of 1.3 percent a total margin of 2.7 percent I would know that they are projecting and operating loss and deficit in fiscal year 18 their days cash on hand are at 106.8 days and Their 18 projection to 19 budget MPR growth is 5 percent the staff recommends That they that you accept their MPR growth rate at 1% in terms of the commercial rate increase again, we're just sort of Suggesting options here one is to accept it The other is a slight reduction a 1% reduction would Take up nearly 40 percent of their operating margin if they had no Concurrent expense cuts So Springfield I thought when they came in did a pretty good job of talking about how they had historically tried to not raise rates in that they may be May have hurt themselves in the long run by that But on the same token, I think 5% is is outside of the acceptable range. So My feeling on this one would be to cut it by 1% down to 4 Anybody else want to jump in here? anybody Yeah, I think with Springfield there another hospital that has For the past two years continued to show that they're soft at their top line to their forecast Their expenses stay about the same and they lose money when they were projecting not to so in 2017 Their projected MPR was 59.2. They came in at 52 million and instead of making 1.8 million on net operating income They lost 3.8 million in 2018 Their projection was sixty point eight million in total operating revenue. They're coming in at fifty eight point six Their expenses were supposed to be fifty nine point eight and they're coming in at fifty nine point six So only a reduction of two hundred thousand on a over two million top line reductions So instead of making a million dollars, they're losing nine hundred So again, this is another one that's trying to make that up through a rate increase When they really need to align their expenses More in line with what their revenues going to be and when they come in with they're looking now at a five percent top line growth Against projection only 1% against their NPR They may be setting themselves up again for having too high of a year over year increase Putting their expense base in and if they don't make that there's not enough time for them to react and they lose money again So it's a challenge. I I think the five percent rate is high and They did get last year Six and a half percent rate increase In 2017 they were at zero. So, you know, there's maybe some correction there But last year they had one of the higher rate increases So I was between, you know, three to four percent. I think they need to Really look at their costs not just from a rate reduction, but really aligning where they're a Realistic forecast for their top line with expenses Otherwise we could be back here next year With them having a loss again and missing top line. So I definitely think they're struggling Their days cash on hands not that high So, you know, I was with a small commercial rating decrease Jess Yeah, this is a hospital that I struggle with Similarly, I feel like they are it's probably optimistic that they're going to get five percent I'm projected to budget growth and You know, we did off we did give them a six percent rate hike last year They're asking for five percent this year many of their inpatient gross charges are above the state average already But they have operating losses deficits. They're in a very challenging community that has any socioeconomic Challenges so I Hesitate to cut their commercial rate too much, but I would support a small some cotton Simply also because their gross charge is already high So it's not this is not the vehicle to write the ship. I think to keep asking for commercial rate increases Expense reduction has got to be in order Okay, Robin, I'm I'm at the same place as everyone else Just again looking at their long-term trend their NPR trend has been very meager at seven tenths of one percent growth rate and There and that's despite rate increases of On average three point six nine percent and here they're looking for a five percent Again, I'm I'm worried that the payer mix is something that maybe I don't understand or maybe That they're there a bit murky but here again It's not the commercial rate payer that is Looking to fund their proposed increase it is actually Medicare comprising fifty four percent of the proposed increase and I just you know, I would just like to spend some time thinking about this and and understanding and talking to At least one or two board members not not collectively To get some insight that maybe I just don't have right now, but their expense trend has been very modest as well 2.3 percent it is a hospital in a high needs area and I Would just look to set a rate that just puts them on a stable course So the last three hospitals are the UVM health network hospitals There's a fair amount of complexity here. So we'll walk through them one by one There is so first of all all three hospitals have proposed adjustments to the fiscal year 18 Base in the case of central Vermont It's in two areas one is an ACO accounting change the hospitals Until this budget have netted out their Their ACO participation fees From MPR on the advice of you know, their auditor possibly not but you know There's let me just say that in the ACO accounting on the participation fees. There is no right answer We have auditors because this is so new we have auditors who disagree On how this should be booked You know, there's probably some variation in how hospitals are doing it and it's a very high Priority for your hospital budget team in the coming year To sort of sort that out and hopefully give some guidance to hospitals on how to book these Participation fees and even the FPP a the fixed perspective payments. So it's not a right or wrong answer But UVM the UVM hospitals have made a change because their auditor recommended it So it it makes it look like their MPR Is increasing more than it is partly because of that accounting change So I just want you to keep that in mind as you look at the MPR growth rates for these three hospitals And it's laid out to some degree in their narrative as well and in their responses to to staff questions So and then the other adjustment is for CBMC is for provider transfers And you'll see that we have a similar situation with them as we have with a Northwestern We'll explain it later Their proposed budget is 211 million there eight point one percent of the system total without any adjustments their MPR growth will be six point five percent with the staff recommended adjustment It's still six point five percent and if we accepted all of their proposed adjustments It would be five percent their health care reform investments. They did propose some and It is at about that zero point four percent Level they are another hospital participating in all three ACO programs and their fiscal year 19 rate increase requests is two point eight percent With that's made value of a one percent ready rate increase at one point two million They're operating margin in their proposed 19 budget is one point four percent their total margin is three point three percent Days cash on hand kind of middle of the pack at a hundred and twelve point seven days Their 18 projected to 19 budget and PR growth is at three point six percent so the adjustments there was an adjustment of a hundred and two thousand seven hundred two dollars for a provider acquisition a Pulmonology practice which we are have approved and are recommending and you Actually agreed that that should be an adjustment to their fiscal year 18 base the accounting adjustment We're we're saying Not to accept because we're not You know, we just don't have clear guidance on how to book this but in saying that if you decide to Agree with us on that we would just ask you to still keep it in mind because again it over It's not we won't be comparing apples to apples from 18 to 19 And so you need to keep in mind that the result of that is that it overstates their MPR growth rate Healthcare reform investments we recommend that you accept those The MPR growth rate with the one adjustment that we're suggesting is six point five percent Some options are that you could accept or reduce it if you decide to reduce it one option is to look more at their projections for 18 and Which are at three point six percent and so maybe reduced by that zero point four percent Commercial rate increase, you know two point eight percent is one of the lower ones So you could consider accepting that if MPR ends up being reduced At all you might want to consider reducing The rate to to generate that MPR reduction Yeah, I think we probably are gonna need more time than we're gonna have today to kind of go through the network but I do want to point out that I think the six point five percent Really is five point two percent to what Pat was saying what what we do need to do In order to have apples to apples is move up the what they put down in expenses For the ACL back as a reduction to NPR just for how we're looking at it You know, we know they may need to report it that way for their auditors This is something we've already said we need to take offline after this But we wanted to have consistencies in the budget So I think the easiest way to fix that right now is Moving that expense up and that does make it five point two And that's that's just and we can check with mark on if that's apples to apples But I believe that it would be but I just want to state that because you know the six point five We're looking at is already well and above You know and if we're at it is a five point two This one's kind of interesting because what they talked about in their discussion was they didn't get rebased in 2017 because they were only one point eight percent above and So therefore if they looked at it from from and there where they're coming in an 18 Which is higher it would only be three point six percent I may support that but I would also say if you're trending hot which they are for 18 There would be Potentially some concessions that would have to be given back for coming in higher. So and right now in 18 They are trending and I'm looking at the roll-up And I think they adjusted it some from this but they were trending instead of two to twelve about two seventeen So they're coming in about four or five million hot on the top line They're not so on the bottom line because their expenses are going up from two hundred and eight to two hundred and fourteen So they're eating more than that as expenses, which is an issue. We can't run expenses higher than the increase so My initial one on this would be to look at at the rate commercial rate and Go at least one percent below which is about one point two million And part of that again is going to the fact that 18 is running hot That's why they want to justify having a higher NPR that would still give them an NPR I think of about four point two percent up. So it would be above the three point two so You know, I think we're going to be doing more work in total on the network But I would propose to look at a lower commercial rate increase Potentially giving a little bit higher NPR against budget because when you actually go against where they're trending it won't be as high and adjusting for the Making sure we adjust out of their expenses that accounting change To to put it back up netting it against NPR and then we can figure out during the year Really how we want to report that in the future More Maureen answered my I had an ACO accounting adjustment because every time question because every time I think I understand it It might it gets turned over in my head but what you said made sense to me Maureen because it made sense to me that It should be apples to apples so that's all I'll say about that And I think I'm interested in your idea Maureen. I don't have any other specific thought my other than that Part of what I think is going on here is related to Sort of the network strategy of moving care to be more local So which I think is a good thing and I think overall Reduces costs to the health care system and I think to some degree you can see that Maybe in the network budget as a whole when you look at it So to me, that's a mitigating factor. I'm not sure where that lands me on any particular number, but I'm also thinking about that I have a just a quick question in terms of the health care reforms the In that Request is a $300,000 associated with EPIC. Is that simply moving money that was approved in the CON into Central Vermont's budget or is that an increase above what was approved in the in the CON? Yeah, can we can we address that question next week? Thank you. Okay other than that I Here I note is a distribution of the burden of a Spent of an increase year over year That is much more balanced. The commercial is up 3.3 million in total Medicaid is up 2.8 million and Medicare is up 1.3 with dish going down 135,000 but you know again Most hospitals did not assume increases of any significance in Medicaid And so some I just wonder where how these numbers get crafted and I've just got to spend some time, you know Digging into that more deeply. So I I understand it and and and how it relates to a rate and and You know how that rate affects different sources of revenue Sent a text by the taskmaster Christina reminding me that We do have to try to be finished by 415 and I do want to allow time for public comment. So With that in mind, I'm just going to say my comments on central Vermont as I would only reduce the commercial rate by 810 some percent I'll actually the interest of time hold my comment, but my thoughts are swirling so Okay, I'm just wondering if we just I mean, maybe since you only have 10 minutes, do we just move the whole network? We could say how we're going to get through So with with with that in mind then I'm going to make an executive decision, which I know some people aren't going to like But we will meet on Tuesday at 2 o'clock, which I assume was the time that you could be there. We'll also meet starting at 930 on Wednesday with the intention of finishing up that morning at 1130 which would give our staff at least an hour and a half Before we resume again at one to make the final decisions And again, if we can't make the final decisions, we'll be back here the following day so But Christina, I think you have to post so I think it's safe to post Tuesday at 2 and Wednesday at 930 So with that I'll open it up to public comment We'll take that first and if we do have a little bit of time left we can go back to our conversation Know what everybody jump up at once? Ken And I know you can do it I Want quite involved And I do also recall that since 2011 Or did not see fit to publish the salaries so it was five or six years or Frankly the arrival of the new chair and he was breaded to the city right there said It is more transparency, but the first time The actual format is all that satisfactory I don't think So the point of this point of this a little introduction simply to say Change takes time And it's a really bad And I say that because it is based on Self-care simply not sustainable Until we really begin to figure There's no more sacred cows that it's time to ratchet down all areas We are going For There's a great need to reduce Great discrepancies I think it's under my And frankly, I think you talk about salaries by hospital Should be and must be compared to those who provide services And to the degree that you will not Or seemingly not be fine to pursue it, but that was at one o'clock. It's now four o'clock and they could be a change So, you know, there used to be that the petition is about transparency Disagree with Earlier And if that's a fallacy Still I mean you're dealing presses dealing with salaries That have been published in the last couple of days better from And I can guarantee you that the change between then and now Is absolutely I raised other issues about transparency, and I'll just throw them in. I've said for a number of years there should be transparency about the amount of money spent on advertising and marketing, and if there's any information on that. And, ultimately, the question is who's paying for that? And I believe it's the consumer at this point. It's very unfortunate and a lack of transparency. And it goes on and on. You know, the fact is that we're moving to a model that I would say where it's evolved into a model where we have a hostile industrial complex that has a lot of the components of big business. And there's a conflict that's raging, as you said, and it's the conflict between corporate values and Vermont values. And it's no good secret that I think it's symbolized in the U.S. organization of salaries for the community and the university. And I will take coverage a little bit with sort of a dismissive tone about things being symbolic. There's actual money that could be rescued to the plan that I laid out. And I refer you to a memo from the state auditor who wrote a couple of months ago a very brief analysis that he did. And I hope that perhaps you will see some counsel from the state on the issue and the possible role that the court should have in examining the relationship between salaries, conversation, and the role of the court in some control infection. So, you know, what I do see is that the growth of the hostile industry continues unabated between corporate and salaries, and never growing lobbying for health care providers. And again, enormous sums of money, which I have no idea how much, but this is going on under your watch, and I think that you should be asking questions. Who's paying for the lobbying that's being done on health care, and it's particularly not surprising from the hospital yet. So, in short, I guess I'd say, yes, maybe it's symbolic. There would be money saved in the petition.  The consumer's the one to pay the bill in the end, and it's no great secret that it has become a way to stress every year, despite lots of good attempts and continued attempts to bend the curve. The curve has been bent to it, but it's still moving in the direction that makes health care either unapportable or really not attainable because of co-plot co-pay is deductible and other related problems. So, I think, you know, I would say that on this issue of petition, silence is not golden. I think there is an enormous problem in the fact that the balance between allowing hospitals to have their sovereignty, which they should have, but it reaches a point and it has done beyond that point. It is imperative to take a stand. And the proposal I laid out, which seemingly is rejected, to put a freeze one year on those making more than $500,000 in hospital administration work. And the second part, which is related, is to ask the board to conduct an analysis to look at over the five-year period of what the percentage increase has been between a hospital administrative staff, particularly at the University Center and other areas of a service delivery system, including but not limited to doctors, surgeons, nurses, and the folks that make hospitals work. And let that be a guide and let the board provide guidance to the hospitals and to the boards of hospitals as to a certain level of common sense decision making. So I do feel badly that seemingly the proposal has only gotten a little long response, but I will tell you that the time will come when this issue will receive a more favorable. There are two components to what I propose, even if, frankly, there isn't a summit for putting a freeze on so-called installments. One could take a look at the percentage increases as I have outlined and report to the public and let the public have a better sense of where the money is being invested or what we all worry about precious health care dollars for us. So I appreciate the opportunity to share with you what this means. This issue won't go away. This issue will return. And I'd be happy to be a part of it, to do a part where we get closer to a point of saying there's an argument made that there's a perfect logical