For Immediate Release
CONTACT: Megan Castonguay / VAHHS / (802) 223-3461 x107 / Megan@VAHHS.org
Hospitals Budgets
Show Second Year of Reduced Expenses and Restrained Growth
Montpelier, VT -- During this week’s annual hospital budget review, hospitals demonstrated measurable progress for the second consecutive year in their efforts to reduce expenses and stay within new revenue targets set by the state legislature. These collective efforts have enabled hospitals to reduce requested price increases to commercial insurance carriers, maintain financial stability and preserve needed services for patients in their communities.
The Banking Insurance Securities and Health Care Administration (BISHCA) conducted their annual hospital budget reviews in Montpelier and South Burlington this week. While hospital budget reviews have been in place for fifteen years, this year hospitals had to comply with additional requirements created by the legislature last session. This new law, Act 128 of 2010, is intended to slow the rate of hospital budgets through setting targets for net revenue growth at 4.5% in 2011 and 4% in 2012. Hospitals met this target and the additional target that BISHCA established for aggregate rate requests to be no higher than 5.9%. The average rate request is 5.7%.
Since 2009,
hospitals have decreased operating expense growth by an average of 2.9%.
These efforts have saved an estimated $83 million in total hospital expenses.
For the same time period, hospitals have decreased net revenue growth by an
average of 2.8%. This reduction in the revenue growth trend has reduced the
need for additional hospital revenues by $74 million. Hospitals reported
taking steps such as: changing salary and benefit costs; reducing
workforce through attrition; increasing operational efficiencies; and delaying
capital investments in order to reduce expenses and revenue growth.
Beatrice Grause, President and CEO of the Vermont Association of Hospitals and Health Systems stated that “Vermont hospitals have again stepped up to the plate. All of our member hospitals have made tough choices this year in an effort to balance the need to keep costs down while preserving access to care and jobs in their communities Every hospital in Vermont is a non-profit organization. They are mission driven, financially complex organizations. They must be financially stable to satisfy creditors, but their “profits” are reinvested back into the communities they serve.”
The three day hospital budget process will be completed on September 2nd. BISHCA will review the testimony and Commissioner Bertrand will provide a final decision by September 15th, with written decisions provided by October 1st.
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