Faced with fines of $1,000 per day, Fletcher Allen Health Care plans to file a new financial report with state regulators in Vermont this week in connection with its controversial $367 million expansion project.
The 529-bed hospital in Burlington, Vt., has received state approval to build a 28-bed psychiatric facility, and the state is also weighing whether to grant the hospital its request for a 10% rate increase.
The threat of the fine stems from an April quarterly report filed with the state that failed to include the hospital's updated debt projections. The reports are among 34 conditions the state set when it approved the hospital's expansion, known as the Renaissance Project, in 2003.
Despite having filed the necessary reports twice before, "(Fletcher Allen's) last submission ... does not meet the requirements ... and constitutes a violation that must be remedied," the Vermont Department of Banking, Insurance, Securities & Health Care Administration said in a June 4 letter to the hospital. The state gave the hospital until Aug. 17 to file a new report, after which Fletcher Allen will have to pay $1,000 per day in fines if it does not comply.
A spokesman for Fletcher Allen said hospital executives had incorrectly assumed it did not have to file a debt report as part of its April report. Such reports are meant to show how much money a hospital can afford to borrow.
"We had just borrowed money so we didn't submit another debt report," Fletcher Allen spokesman Mike Noble said. "The commissioner wants us to follow exactly the conditions" as set forth by the state's permit for the Renaissance Project.
State regulators set the 34 conditions after they determined former hospital executives had lied about the cost of the project, pegging it at $173 million, less than half of the actual final cost. As a result of the ensuing scandal, more than a dozen hospital executives and board directors resigned. The hospital has already paid more than $1 million in earlier imposed state and federal fines.
In spite of the flap over the financial report, last week the state granted approval for the addition of a new $12 million psychiatric unit to the hospital, which Fletcher Allen officials say they hope to open in 18 months. The unit will be an expansion of an existing building and will replace the current psychiatric facility, which was built in 1952. Hospital officials had originally asked to build a separate facility at the hospital's Fanny Allen campus in Colchester, but mental health advocates objected, saying psychiatric patients would be marginalized by the proposal.
Meanwhile, the hospital has asked the state for a 10% increase to its rates for next year, saying the boost is needed to maintain a 3.1% surplus, up from 1.9% last year. The greater surplus is needed, Noble said, for the hospital to invest in staff and the physical facility. The request is the highest of any Vermont hospital.