When autumn arrives, Vermont hospital administrators are usually busy determining what rate increases they will seek from state regulators in efforts to collect more money from patients and insurers.
That scene was played out again last week at the state's 14 hospitals when administrators addressed the state's Public Oversight Commission in one of the last remaining state regulatory processes in the country.
Administrators made rate increase requests ranging from 2.5% to 16% to help address issues such as employee salary increases and the growing cost of employee health insurance. The seven-member panel now will make recommendations to the commissioner of the Department of Banking, Insurance, Securities and Health Care Administration.
Commissioner Elizabeth Costle will announce her decision on rate increases in the middle of this month as hospital administrators prepare for their fiscal years beginning Oct. 1.
"Nobody has a process like ours," said Susan Gretkowski, the department's deputy commissioner. "Ours is a unique process. This was never a widely grown concept."
At 132-bed Rutland (Vt.) Regional Medical Center, President Thomas Huebner asked the panel for an 8% rate increase to help offset salary increases for staff members, higher pension costs and rising health insurance costs. Last year, Huebner requested a 5% rate increase and walked away with a 4% boost.
The rate increase would help Rutland increase salaries 3.5% for nurses, technicians, therapists and other healthcare employees, he said. "We are committed to having market-competitive salaries for all of our staff," he said. "Some years we haven't had a rate increase."
An increase also would help fund the hospital's pension plan, which took a hit when investment income dropped. Also, Medicare and Medicaid are not paying the full costs of care for patients covered by the programs, Huebner said.
The commissioner takes into account each hospital's financial performance before making a decision. In 2001, the commissioner approved rate increases ranging from 2% to 12%. "We look at everything that affects the bottom line," Gretkowski said. "It all comes down to the financial health of the hospital."
Rutland Regional had a difficult 2001, reporting a $3.2 million net loss. The hospital's net revenue increased 8% to $94.9 million.
Peter Hofstetter, chief executive officer of Northwestern Medical Center in St. Albans, is requesting a 2.5% increase for his 70-bed hospital. The increase would help pay for employee salary increases and maintenance of hospital equipment, he said. A 2.5% increase would bring in approximately $500,000 in gross revenue.
"We are trying to create a stable organization," Hofstetter said. "This is the rate increase we need to keep up."
Vermont is the only state that approves rate increases on a case-by-case basis. Maryland is the only other state that regulates rate increases. In that state, the Health Services Cost Review Commission awards rate increases on a collective basis. Hospital administrators that want a higher rate then can apply for a full rate review. Hospitals in most states have the freedom to set their own rates based on the competition in the local marketplace, a Maryland Hospital Association spokeswoman said.
Hofstetter said he would not mind an easier way to receive a rate increase for his hospital. "I am not a big fan of regulation," he said. "I don't mind accountability."