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Vermont Wields New Power Over Hospital Budgets

Vermont’s Green Mountain Care Board, established by state law in May 2011 and given new powers last spring, is taking over responsibility for virtually every aspect of health care in the state. This month’s project for the new regulatory board: How much hospital budgets should go up on an annual basis.

The board has established a cap on spending increases of no more than 3.75 percent annually. But as a group, Vermont’s 14 hospitals are seeking increases of roughly 7 percent for the coming 12 month period.

“We know there are some legitimate reasons that hospitals might need to grow higher than the 3.75 percent, most of those having to do with circumstances beyond their control,” said Anya Rader Wallack, the chairwoman of the Green Mountain Care Board.

The board may allow some increases above 3.75 percent, if the hospitals can prove that they are using the money to make investments that will lower costs in the long run.

But Wallack says the bottom line is that hospital spending needs to be kept under control: “We have a responsibility to hold down costs. So we’ll be looking at all of these requests with an eye toward how we can stay within that target, because we don’t think Vermonters can afford more than that.”

She says reviewing hospital budgets is a critical piece of the board’s efforts to help control health care costs in the state.

“I think this is significant in two senses,” Wallack said. “One is that hospital expenditures are a very significant portion of the total health care spending in Vermont.  The other is that this is the first time that the responsibility for hospital budgets and the responsibility for insurer rates has been in the same place.”

The board will hold a public hearing on the hospital requests in the middle of August. It will issue its ruling about the proposed spending increases in September.

Vermont is in the process of becoming the first state to have a single-payer health system. Gov. Peter Shumlin, a Democrat, said he would like to see the single-payer system implemented as early as 2016, a year earlier than previous estimates.

This story is part of a collaboration that includes Vermont Public Radio, NPR and Kaiser Health News.