This is Vermont edition.

I'm Mikayla LeFrak.

It is expensive to get health care in Vermont.

The state has some of the highest health insurance costs in the country, and some of the biggest players in our health care system are in financial disarray.

Last month, Copley Hospital in Lamoille County announced it's closing its birthing center and the state's largest health insurance organization, Blue Cross Blue Shield of Vermont, has had to drain its reserves over the past few years.

It's asking state regulators to increase health insurance premiums so that it has the money to keep covering claims.

If you zoom out, the national health care landscape is also in flux.

President Donald Trump's big tax and spending bill will cut federal funding for Medicaid to the tune of more than $1 trillion over a decade.

So all this is happening, and meanwhile, people are still getting sick and going to the hospital every day.

Our guest today is at the helm of the largest hospital system in the state.

Doctor Sunny Ethan is the president and CEO of the University of Vermont Health Network.

It provides health care to more than a million people in Vermont and northern New York.

It includes UVM Medical Center, Central Vermont Medical Center, Porter Medical Center, the Visiting Nurse Association of Chittenden, and Grand Isle, and three locations in northern New York Champlain Valley Physicians Hospital, Alice Hyde Medical Center, and Elizabethtown Community Hospital.

Doctor even previously held positions at Brigham and Women's in Boston and is also a trained anesthesiologist.

Welcome back to Vermont Edition.

Thank you for having me.

Yeah, we're so glad to have you with us today.

doctor, even bear with me here for a second for this first conversation, because I'm going to set the stage for some of us who are newer to these issues.

Great.

So far.

Okay, so last year, the Green Mountain Care Board, this big regulatory board in Vermont ordered the University of Vermont Medical Center and Central Vermont Medical Center to cut revenue from seeing patients.

And the GMC also issued a penalty after the University of Vermont Medical Center got more revenue from patient care than it had expected.

The hospital was ordered to reduce rates by 1%.

Now, in a vtdigger op ed published in December, you wrote that you quote, cannot simply lower prices to comply with budget orders without also cutting patient services.

But looking at the budget submitted by the hospitals in your network for next year, it does seem like you are doing just that.

You're lowering prices without cutting patient services and commercial health insurance rates would be cut by 7.9% at UVM in Burlington and 3.3% at Cmmc in Berlin.

So what changed?

Yeah.

So it's I think it's a really great question, I think.

First of all, we've acknowledged and understand that we've got an affordability crisis in Vermont.

So I think the idea of us recognizing that and the idea of us totally committing to doing everything possible to make health care more affordable for Vermonters and northern New Yorkers is priority number one.

So I think understanding that and moving forward was a really big goal.

The the sequence of events that happened as a result of the FY 23 overage that killed us in 25, was very, very rapid and we had to make some decisions really quickly about how we were going to reduce our expenses.

And I think if we had more time at that, in that in that time period, we would have done things differently.

But we were presented quite rapidly to reduce our expenses.

And we did what we thought we could manage across our, our state, which included, you're right, cutting some services that I think if we could go back, we'd say, was that the right thing to do or not?

Are you referring to the date, the proposed cuts to dialysis in three?

Yeah, I think we did a number of things.

So the proposed cuts to dialysis were very deliberately done, because that was a space where we thought and others in the regulatory space, I think, believed that others could do it more efficiently and less costly than we could.

And so we were open to that because we provide dialysis for many places, all of the places in Vermont, including inside of three other hospitals.

And so those hospitals and their presidents were very interested in actually taking over dialysis in those places.

So we said, look, if you can do it better than we can and less costly, then we can, we're open to that idea.

And we said, we'll let go of that.

And we brought that forward to our regulators.

We told them about it in advance Unfortunately, I think when those hospitals looked at that, they saw that it was going to cost them even more to do that.

And this was with us giving them all of the equipment, the personnel, if they wanted it to be able to do that.

So I think we took that back and we asked the Remount Care Board for permission to be able to have the revenue to be able to continue to run those services, even though we continue to lose money, of course, doing that.

Right.

So so that happened.

Those dialysis clinics are still open and being run by the health network.

There were though, also a number of cuts to patient services, like the closure of the inpatient psych unit at Cmmc and primary care clinics in waits field.

Are those some of the reasons why the the rates are now able to be lowered?

I think I think that's part of it.

I think when you look back on those, those closures again were done very carefully and deliberately looking at are there alternatives to be able to get that care?

And we knew that there were we had gone down to Brattleboro.

We had gone down to other places to say, do you have the capacity to take care of those patients?

We looked at our emergency rooms, and quite frankly, as we look back on it, we have not seen an influx of those patients coming.

We were worried that our emergency rooms would get loaded.

That actually hasn't been the case.

Again, these are the difficult types of decisions I think that we are going to have to make for the greater good of the entire state and region.

We're going to have to make some really difficult decisions.

So you highlighted Copley closing there.

Birthing center, an incredibly unpopular decision in that community.

But I understand the difficult decision that board and the and the hospital management had to make because for sustainability, they were continuing to lose money on a relatively low volume.

For, line of care.

And so they have to make these difficult decisions about the greater good of their community in that, in that area.

And that made made sense.

And it was similar to that when we were making those decisions.

The big change, though, I think and I think you alluded to it and I'll just own it, is that we took a longer, deeper look at how our organization has come together and how we've continued to provide these non-clinical services that provide, and support the clinical services.

So if you remember, our organization's come together over the last 10 to 12 years, piece by piece.

And those non-clinical services, these are things like HR, it revenue cycle, if you can, if you can, put your head around those, those pieces, those came together piecemeal and they were kind of, you know, bucket hat on.

And we challenged our leaders in those spaces to say, if we were starting today, can you reimagine how we would deliver those services to our providers and to our employees?

And so that was the challenge that we put in.

And a couple of things needed to happen.

And sometimes necessity is the mother of invention.

And and the couple things that had to happen was that local control had to be given up a little bit in that space.

And that's a challenge in Vermont.

And we see it in our educational system, where our communities have to back up a little bit and say, can we take a step back and lose a little bit of our autonomy in order for the greater good of the community that we're serving?

And so, so to be clear, are you talking about cutting administrative jobs, cutting administrative services and jobs?

Yeah.

Jobs positions, looking at how we can do the work differently if we look at it as a whole, instead of eight loosely federated partnerships, can we look at it as one unified integrated health care system?

And if you could put that space to our HR into it, can we do it differently than we're doing it today?

That was the challenge that was put out, and our leadership really answered, there are some difficult decisions that were made, around how we're going to get there in FY 26.

Like what the difficult decisions that were made were like, I'll give you a let me give you a couple of tangible examples.

So if you call, I'm going to make these up.

But you'll get the idea.

If you call HR today because you need something.

Maybe our turnaround time was 24 hours.

Is 72 hours okay.

Is five days okay to do that?

Right.

If you call in to book an appointment, is it okay if our our call drop rate drops from 2% to 5% where we don't answer the phone quick enough, right.

Those decisions where we those are non-clinical services, those are administrative services that we book is are those going to be acceptable to do that?

And can we look at it as a whole that was the different piece.

Like instead of use the same example of the call center or HR, do we need to have somebody or people that sit in each one of our organizations, or can we centralize that function?

Are you okay losing control of your HR person or your call center?

And we move it to the center because we can get greater efficiency.

We can do it with fewer resources in order to do that.

And then we've also looked at how technology can help us.

And we've moved some positions, as a result of being able to better use technology for our compliance, for our billing.

So we've done all of those together.

We had greater time to do it, and we challenged our our non-clinical administrative services to do that, understanding that there is a price at the other end of that, some of it, we'll see how it plays out.

Some of it, we know that it's going to have these kinds of reductions in that space.

According to the nonprofit Vermont Health Care 911, labor costs attributed to administration and management at UVM, MSK in particular, are 73% higher than at more than 100 other academic medical centers across the country.

You're discussing some of the ways to reduce those costs.

Do you have data yet on the number of jobs that have been cut?

Yes.

So, let me just take take a couple of those things.

I first of all, I really appreciate Vermont 911 and all of the different community groups that have come forward because we're aligned in the same goal is how do we deliver accessible, affordable care to our communities.

And so we're aligned in that space.

We may differ on the data and the sources of the data and how you look at that.

And so that's part of the challenge there, with all of these different groups.

But we from Vermont 911 is a great example of I have met personally with them, 3 or 4 times.

They have met with our data folks even more.

They've met with our board, and had positive meetings with our board.

So I think, I think the important piece there is that we're committed to working together with anyone that wants to come forward and share in that space, even though we may have some disagreements at the end of that.

So regardless, our goal is how can we cut our administrative expenses and still maintain the clinical care services that we're delivering?

And that's what we're trying to do.

And I think we've we've accomplished that.

As we move forward for FY 26.

We hope we'll find out as we go.

A budget is a plan, and we hope now we have to execute on that plan.

Oh, correct me if I'm wrong here, but one of the other changes that you've made for the for next year's budget is that executives won't receive any bonuses.

And the hospital, all the hospital systems are included in that.

So that includes you.

It does.

Well, it does, in the last fiscal year, you received a $600,000 bonus in addition to your $1.3 million yearly salary.

That was what you were recruited on.

And, that's, salary selected by the board.

But I can imagine that lots of listeners hearing that and hearing about these financial struggles say, hey, this guy's getting a $600,000 bonus.

He accepted that bonus on top of his salary.

What's up with that?

Yeah.

So you're going back to last year, and I guess I changed the story a little bit in the narrative.

So first of all, it's variable pay and the way that our board sets our pay and what I was recruited for.

And like I said, I didn't actually negotiate the salary.

It was that was the salary that was given.

Is that we have the goal.

Our board has the goal of paying at the 50th percentile to reach the 50th percentile.

They take a chunk of that salary, they call it variable pay and say for you to be able to reach the 50th percentile, roughly, of other people who have similar jobs with similar organizations and similar places, similar size and complexity.

The goal is to reach the 50th if you get 100% of your variable pay, you'll be able to do that.

And so that is the structure of our system as it is for 90% of health care systems in the country.

And so, yes, because in FY 24 we had a successful year.

We met the mark I did receive.

The variable pay to reach close to was at the 45th percentile of our goal this year.

Because of the affordability piece, us as a management team came back and said, hey, let's not go down this path.

That was clearly very unpopular and it didn't feel like we were sending the right message to our community in that space.

And the board, which ultimately makes those decisions, came back and said, we're going to hold on variable pay.

And that impacts the top 300, 350 of our employees.

And I think it's a challenge because when you're trying to recruit very good people and you say that we are not going to have that as part of our compensation, it hurts us in our ability to recruit folks.

And that's that's part of the challenge that we're balancing in that space, because we want to do the very best for our community and our patients.

And so it has an impact.

Yeah.

Speaking of pay, we just got a question from a listener named Mike who identified themselves as a nurse in the area and says, I love Vermont and I don't want to leave, but I'm planning on leaving because I can get paid more at hospitals in other New England states, as you could, cause how are you going to pay competitive salaries for nurses to attract and keep nurses and other health care workers here?

Yeah.

So our nurses actually, have a very competitive salary, and we've we're proud of the fact that we actually probably offer them somewhere in the 65th, the 75th percentile pay overall in the region.

And so our, our retention rate for our nurses has never been better.

I'm talking about pre-COVID numbers.

And I think part of that is both the culture that we've created there, where we really value our nurses and paying them that competitive salary.

So, and that's been evidenced by the drop in our travelers as a result of that, of that retention.

So, I hope that person will reconsider and come look at our, one of our roles.

We have we still have plenty of roles in our nursing space, but it is a real challenge for us because we have an expense cap, and we know that if we need to be able to have really good nurses, not just nurses, but surgical techs, radiology techs, you name it, we have to pay competitively in this marketplace to be able to do it.

And at the same time that increases health care costs.

And so that's the balance that we have.

Oh, the last time you were on Vermont Edition, Doctor Ethan, you were.

It was March of last year.

And we spoke extensively about the the struggle to hire qualified health care workers in a number of different sectors in the hospitals, at the UVM Health Network.

Are you still struggling to hire for certain jobs?

We are.

We're still struggling.

I would say that in the provider space, we have worked really hard.

During that time, from last year to through now, we've done a lot better in our clinical space, both with physicians, nurse practitioners and Pas, Northern New York and in Vermont.

As an example, I think we have about 150 new providers that we've hired that will start in FY 26.

So far we're still working on it.

And last year, all of last year we about hired about 115.

So we're doing a lot better in that space.

And we need to continue to do that.

Part of that is a little bit of a shift where we are going to rely more on physician assistants and nurse practitioners more than physicians.

We want everyone to work at the top of their license.

And again, this goes back to that creativity around.

We have to do things differently, and this is one of the places that we have opportunities to do things differently.

Let's go to the phones.

Here.

We have Ellie calling in from Middlebury with a question for Doctor Ethan.

Ellie, go ahead.

Hi, doctor.

Ethan.

My name is Ellie.

My question is, why has the UVM Health Network, which you oversee and one of the most profitable 340 B programs in the country, especially when considering that revenue is generated from high price markups on infused prescription drugs, which are used to treat cancers.

Thank you.

Ellie, thanks for your question.

So the 340 B program, if you remember the whole goal, is that it gives federal permission to buy drugs at a certain price and then sell them at the market price.

And we do exactly that.

And then take those dollars and put them right back into our Medicaid patient population, our low income patient population.

That's the purpose of that program.

And that's what we exactly use it for.

And so a number of valuable services, including allowing folks to purchase medications that they wouldn't be able to otherwise afford and get care in the care at home, sometimes a visiting nurse.

All of those things that are we are able to do with those dollars, go right back in.

So I think it's really important that our listeners appreciate that.

When we make a margin, when we make a profit, it goes right back into our patients, our communities and our employees so we can continue to deliver care, equitably across all of our sites.

So thanks for the question.

Thank you, Ellie and Doctor, I'm glad you brought up the low income patients that the UVM, the health networks, hospitals see, Medicaid and Medicare account for about two thirds of your revenue, and they, they pay a set amount.

Regardless, the federal government pays a set amount, regardless of your set prices for care.

So, I'm curious to hear from you how you've been thinking about President Trump's tax and spending law, the so-called one Big Beautiful Bill act now at law, which you signed to earlier this month, which includes about $1 trillion in cuts to Medicaid, not immediately, but over the next decade as it's currently planned out.

Yeah.

So it's definitely gonna have a huge impact, both here in Vermont and in New York.

You know, it's early for us to tell, but we estimate that about 45,000 patients in Vermont will lose their medical insurance, probably at a million and a half in New York will lose their medical insurance as a result of it.

The the quickest impact that we're probably that we're going to see is in 2026 actually because of the ability to the expansion of the Affordable Care Act, where people were able to get funds from the federal government in order to buy insurance on the exchange.

That expansion is going to go away.

So some people who are working will make deliberate decisions not to participate in buy insurance.

That's where we're going to see the quickest impact.

The reality is all of our hospitals in Vermont continue to take care of everyone that shows up.

It doesn't matter when they show up.

The patients that lose that insurance will still need health care, and so we will continue to provide it.

Unfortunately, we will provide it at the most expensive place, which is the emergency room and in the hospital, because they will not be able to see the providers outside of that space because they don't have insurance.

And so they'll come in later in that stage of the disease.

And so it will be more costly, more dangerous for them.

This is, unfortunate.

We've worked hard.

We worked hard before the bill was passed with our colleagues from Dartmouth and MaineHealth, where we partner quite frequently.

But we were down in D.C. we were talking to every, senator and congressman that would congressperson that would listen to us.

We certainly had all of our delegations in that space, because we know what the impact is going to be to, to, to our patients all over the country and particularly in our areas.

And you hit a bit about my next question, which was going to be about the impact of having more people going to emergency rooms who don't have insurance.

Now, previously, in Vermont and specifically at UVM Medical Center in Burlington.

There have been very long wait times at the E.R.

already.

And it's just simply not an efficient way to get care, no matter way how you shake it.

I'm curious if the those wait times have improved at the E.R.. Before all this, you know, these federal changes are going to hit.

Yeah.

I'll have to get back to you on the details, but overall, our wait times have improved.

And the biggest reason for that improvement is actually the movement of our patients from our inpatient floors out.

And so we've had a concerted efforts in all of our hospitals on that length of stay work, which is how do you move patients out from the hospital when they don't need hospital care anymore?

The challenge there, of course, is that our nursing homes are the numbers have gone down.

The beds that we manage, we've been working really hard to be as efficient as we can.

And so we've seen a decrease in that length of stay across our system and at UVM, MSK and as a result of that, patients are moving more rapidly from the emergency room up when they need to get admitted.

But certainly, I think the challenge here is that as more patients come in because they're not getting the care on the outpatient side, there will be greater waits in all of our emergency rooms across the state.

And so last year, the University of Vermont Medical Center said it was going to reduce that number of patients who are admitted overnight from 450 patients to 400.

Do you know if that's happened?

Yeah.

So our, our census, our inpatient census has dropped by about 40 beds.

So I don't think we've quite at the 50.

But we've, we've dropped by about 40.

And the goal is to continue to bring that down.

Doctor, but I want to ask you about a different kind of bed space and that is housing.

Now UVM Health Network has kind of moved into the the real estate development space just a bit.

Last time you were on last March on Vermont Edition, we spoke about your partnership with local developers to build housing for employees to help attract a workforce, which we were talking about before the break.

You told us that you opened 60 apartment units in South Burlington in 2023, and you had plans to open another 150, along with childcare spaces last year.

There are also plans to build more housing in central Vermont and in northern New York.

Where do those plans stand now?

Yeah, so great questions.

And so we've gone up to about 180, units in South Burlington with 80 childcare spots that have actually opened up.

They're open and active right now.

So the childcare spots for from three months to preschool, we'll cover them.

And those are filled.

And there's a waiting list for all of those.

We have one more, building that were already in the planning stages in South Burlington with our developer partners, and we are looking at, central Vermont as well.

We've started the conversations to see if there's an opportunity to partner for there.

I think we would need to partner, with more than just our hospital and the developer, we would need a couple of other partnerships that come with us and work together in that space to come together.

Because the the development plan in central Vermont, is a little bit bigger than, than we can handle.

We've done all of those in partnership.

It's a drop in the bucket, I would say 180, 220, housing units.

But it's been incredibly helpful for our employees.

The goal there is for employees to come in and live there for a year and find a place or two years if they need to extend it out and then have that cycle.

So that gives people an opportunity to to see the neighborhood, understand it, and then keep looking while they do that.

That's been very successful.

There's a waiting list for those for those positions.

We've, subsidized the housing as, at a little higher rate than Vermont would would recommend, depending on the income level, to encourage a wide and diverse group of people to live in there.

It's been very successful.

Quite frankly, we need housing in general.

You remember I probably brought this up last time I was here, but our our regulators and our HHS had gone out and got a consulting company to look at health care and what our health care needs are in Vermont and what we need to do.

The number one thing they came back with for health care was to get more housing.

And so we know what what that is.

We need the infrastructure here.

That would make the biggest difference for health care in Vermont is economic development, economic growth.

That's what would drive lower cost, more efficient health care.

So is that something the you spoke about lobbying?

On Capitol Hill earlier?

Have you also been working with state legislators or the governor about housing locally?

Very much everywhere I go, I would say, what can we do to grow and develop businesses in Vermont?

Because what we need are working people that come into the state and contribute to our health care insurance plan.

So when I say working people, it's 20 to 60, right?

People that are working and contributing to our commercial insurance plans because it might have lower, preexisting conditions or healthier and thus healthier working.

Yeah, the healthier working population is going to have lower to typically it's going to have a lower cost.

Right.

And you want that insurance pool to be as big as we possibly can have it, because that's what lowers risk and lowers costs for us.

The challenge that we have here is that we have a very small state and a small state that whose population hasn't changed other than getting older over the last 20, 30, even 40 years, probably.

That's particularly challenging in health care.

Yeah.

Let's shift focus a bit towards medical research, which, is a big point of focus at UVM Medical Center and other places as part of the health network.

How federal funding cuts affected medical research at UVM.

Can you describe that for us now?

Sure.

So the big change that happened in in federally funded research is the indirect rate.

And so typically when you get $100, it comes with another 40 or 50%, another 40 to $50 to cover your infrastructure costs.

Electric, city building, lab supplies, etc.

to do that.

What the federal government has said that they're going to do is drop that down to 15%.

That may not sound like a big deal, but it's a really big deal for research institutions.

It hasn't changed this year because of, a group of states, including Vermont, that has fought that, but it will probably change in the future.

And so what UVM and UVM has done is frozen those positions.

So we're not going to add more until we know what's going to happen there.

That will have an impact as it moves forward in medical research and the infrastructure behind it, which is like research assistants, PhD students, master's students that are doing that work today.

It hasn't had significant impact yet because most of the grants have come through.

A few of them have not.

They've already been pulled back and that has had impact to folks.

But not yet.

Okay, let's take another caller here.

We have Jim calling in from New Haven.

Jim, you're on the air.

Go ahead.

Thank you.

Hi, doctor.

Ethan, I had a question.

You had mentioned that, nurses are being paid competitive salaries regionally.

I'm curious as to as to what the comparisons are there.

So that's the first part of the question.

The second part is that when you were asked about your administrative salaries and you said that the board is benchmarked marking them to the 15th percentile and your salary was $600,000 bonus plus your 3 million base.

And so my 1.3 part of the question is, I'm sorry, 1.3 million I'm sorry.

Yeah.

3 million.

That's that's a little excessive even for that.

But is that, is that is that based on, national or regional benchmarks?

So the brief question is, are nurses salaries based on regional comparisons and the administration based on national comparisons?

Yeah.

No.

So we have we so let me go back one step and say our salaries are based and set by our community board which works with an outside consultant.

That outside consultant brings in both national and northeast specific benchmarks to put the comparisons.

And they do that both for the nursing as well, for the administrative expenses.

And I just want to just want to make sure it was 50th percentile, not 15th.

I don't want to, misspoke, speak there.

So the goal is for us on the administrative side is to reach the 50th percentile on average.

And I can tell you that we haven't reached that.

And I know the salaries sound really high, but that is the competitive marketplace that's out there.

If we want to recruit and attract really good people to serve Vermonters, we need to pay at that for our nurses.

We've had to go a little bit higher than that.

Again, that's northeast, benchmarking that we use because it's been incredibly competitive.

And we want to get really good nurses.

And we want, the nurses that are committed to working here and staying here.

So in the challenging space of where housing is difficult, childcare is difficult.

We've had to pay a little bit more to get that.

But we know that also on the other side increases health care costs.

Yeah.

Thanks for your question, Jim.

Jim, thank you for calling in.

We have just a couple more minutes left with Doctor Sonny.

Yep.

And, no.

So you have, the hospitals in your health network have submitted their budgets.

The Green Mountain Care Board is reviewing them, and they'll get back to you all in sometime in August.

With what they think.

Oh, thou.

There have been tensions between the UVM Health Network and the Green Mountain Care Board in the past on how to reduce costs for Vermonters.

Overall, it's a common goal with many different, stakeholders and strategies.

How would you characterize the health network, the administration's current relationship with leadership at the Green Mountain Care Board?

Yeah.

So I'd I'd go back and say that again.

What we realize, and I realize in particular, is that we have the same goal.

Our regulators are trying to do the same thing that we are, which is how do we deliver high quality, equitable care that's accessible and affordable to everyone in Vermont.

And so having that common goal, I think helps us a lot right now.

I don't think our relationship could be any better in a way.

And I'll say I'll explain that a little bit.

We have a management group that's made up of two of the Green Mountain Care Board members and two of our board members, one from University of Vermont Medical Center and one from the network who are working together to look at expenses inside of the organization.

They have unfettered and full access to whatever data they need, and they want to look at in order to help us to find opportunities to cut expenses.

I am a total advocate in that space.

If there are opportunities for us to do better in the way that we can reduce costs and serve Vermonters, we want to be there.

And so we're we're really actively working in that space.

We also have a liaison who's inside of our organization, who's able to look even beyond that more broadly for opportunities for us to save expenses.

And I've worked very closely with him as well.

So, in a lot of ways, I don't think it's been better in a long, long, long time.

I think there's always going to be a little bit of tension between a regulator and the regulated.

It's probably a healthy tension from my point of view.

I think it makes us as efficient and as lean as possible.

And I think the challenges is really agreeing upon the data sources.

That's been the biggest challenge that I've seen since I've gotten here.

And I think we're actually making progress in this management group that's working with us in that space.

Is the whole goal is to actually agree upon that.

So I think we're going to get, really far along in that space.

It'll probably take us a year.

And so we'll see the benefit of that in FY 27, probably more than in FY 26.

But I think it's all positive.

Well, we're all rooting for you all to figure it out.

Doctor study if it is the president and CEO of the university of Vermont Health Network, we really appreciate your time today.

Thank you.

Thank you.

Any time