Budget shortfall leads to cost-cutting at UVM Health Network

By  | 

BURLINGTON, Vt. (WCAX) The hospital network that provides care across much of our region is facing financial troubles. That's just for the first quarter of the fiscal year.

The University of Vermont Health Network says it's making cuts across its eight hospitals after coming up $15 million short of its first-quarter budget target.

Our Ike Bendavid spoke with UVM officials and has been going through the numbers.

The health network expected a slight dip. But after seeing softness for two straight quarters, they are making some changes.

"We have had a dip in our financial performance," said John Brumsted, the CEO of the UVM Health Network.

Brumsted says that dip started last fiscal year-- 2019 which ended in September-- and continued into the first quarter of fiscal 2020, with a $15 million shortfall.

"That is problematic for us," Brumsted.

The hospital says part of the problem is higher costs like the Miller inpatient building, a new electronic medical records system and the unexpected closing of the operating room at Fanny Allen.

"We knew we were going to have some dip," Brumsted said, "we have dipped further than that."

Brumsted also points to soaring pharmaceutical costs and says a workforce shortage, specifically in rural communities, has been an extra expense.

"We can't find all of the people we need to care for folks and so we are paying extra for temporary help," Brumsted said.

To address the financial pressures, the UVM Health Network plans to develop a network approach to pharmacy services, increase savings through group purchasing of supplies and reduce capital spending.

Brumsted says there will be no job cuts or pay cuts and no hospitals will be shut down, but there will be some changes to how the hospitals operate around the clock. One example is not keeping emergency operating rooms open 24-7.

"If somebody in the middle of the night has a surgical emergency, we can we have one place we have those folks get that service," Brumsted said.

"These things can happen and it shows you the fragility of the health care system," said Kevin Mullin, the chair of the Green Mountain Care Board.

The Green Mountain Care Board approves the budget that UVM and its hospitals run on. Mullin says approving the budget was the right decision with the information that they had and they commend the network for addressing the issue.

"By addressing the problem upfront and facing it and being transparent and bringing it forward to the public's attention so nobody is caught off guard by it-- I think it was the right thing to do," Mullin said.

Brumsted promises they will get back out of the hole.

"We will turn this around," he said. "We will get back on a firm financial footing."

The hospital expected to see a small dip in 2019, 2020 and 2021. They plan to be back to normal in 2022.