A local look at consolidation
The topic of health care consolidation — or the coming together of hospitals, doctors and other types of providers — has been in the news quite a bit recently. In fact, early last month, the Health Reform Oversight Committee of the Vermont Legislature heard from a Stanford University economist about the role of consolidation on health care prices nationally. Those of us living and working in northern New York and Vermont are left with an important question as our own hospitals and home health care providers affiliate with each other: Has the formation of the University of Vermont Health Network caused prices to go up?
The answer is a resounding NO, and we will explain why below.
This is a particularly challenging topic. Health care costs too much in general, and health insurance costs are high and growing too fast. Those general truths make it easy to assume that a trend in other states would also apply here. However, the facts show that this one does not — and there are two primary reasons behind it.
The first reason is that, unlike other states, Vermont’s hospital budgets have been tightly regulated for decades. Currently, the Green Mountain Care Board closely scrutinizes the budget for each affiliate member of the UVM Health Network and must approve every individual hospital’s expected net patient revenue each year. That is why every dollar spent to improve the care we deliver must be carefully considered on how it will ultimately affect the people we serve.
The second reason is that our nonprofit network was formed to preserve access to rural health care, and ensure residents of Vermont and northern New York can get the highest quality care as close to home as possible. That’s why, when we create the budgets that are reviewed by the Green Mountain Care board, we focus on preserving access to care and not on increasing prices.
There are decades’ worth of studies about Vermont, and specifically about the service areas encompassing UVM Medical Center, Central Vermont Medical Center and Porter Medical Center, which illustrate over time that the UVM Medical Center, and now the UVM Health Network, has not used its market influence to drive up costs. In fact, our costs are routinely LOWER than other areas within Vermont or the region.
We have two, recent studies illustrating this point:
¯ Year over year, the Burlington Health Care Service Area’s total cost of care is lower when compared to Vermont’s other health service areas. The Burlington hospital referral region spends 18% less per beneficiary and has 7% higher quality (sources: Green Mountain Care Board’s total cost of care tool and Dartmouth Atlas).
¯ In addition, Vermont’s total cost of care is lower when compared to other areas across the country. Vermont as a whole spends 16% less per beneficiary and has 12% higher quality (source: The Commonwealth Fund’s Health Care Quality and Spending Interactive).
Provider consolidation may well be driving costs around the country in many circumstances. While we have much work to do in Vermont to make health care more affordable, this is one trend that does not apply here. The network is helping us preserve access in our rural communities, not raise prices.
That said, the fact that Vermont is a lower-cost state, and that Burlington is a lower-cost area of the state, does not mean that Vermonters do not struggle to afford health care. That is why the UVM Health Network is actively participating in the move away from fee-for-service health care, which we know drives up cost, toward a focus on per-member, per-month payments that cap our reimbursement.
By working together as an integrated system, we can more effectively address the complex problems of health care reform while preserving access in our rural communities. With the support of the network, our individual hospitals, home health providers and clinical experts can focus on what they do best — improving the lives of the people we serve.
Dr. Stephen Leffler is interim president of University of Vermont Medical Center in Burlington, Vermont, and Allie Stickney is chair of the UVM Medical Center Board of Trustees.