By EMERSON LYNN
Nurses for the University of Vermont Medical Center are set to go on a 48-hour strike Thursday if their demands for a 24 percent pay increase over three years are not met. Their contract expired on Monday; a negotiating session is scheduled for this afternoon.
It is everyone’s hope that the strike is averted and that the hospital can return to its routine of taking care of patients.
But it’s also an issue that extends beyond the medical center and its nurses. There are roughly 1,800 nurses at the medical center and a 24 percent increase will have an impact far beyond the hospital itself. The hospital has increased its offer from seven percent over three years to 13 percent, which would result in an additional $12,000 over three years for each nurse. A 24 percent increase would be roughly a $20,000 increase by the end of the three-year contract.
A $20,000 increase for 1,800 nurses is an additional $36 million in costs.
That’s a rough estimate, and there are other factors involved in the negotiations, but it’s a useful perspective when considering the overall picture of health care in Vermont and how it will be financed. In August, Vermont’s hospitals begin the process of defending their budgets to the Green Mountain Care Board, a five-person group that tells our hospitals what they can spend and what they can’t. The board sets limits based on a net revenue per patient figure. Hospitals are not allowed to drive more business through the door just to meet their budgets. It’s the board’s way of controlling costs. If the revenue is limited, hospitals have to manage their budgets to that figure.
Hospitals are also being penalized if the board believes they have raised their labor costs more than what they think the market warrants.
Medical inflation is already running at about five percent annually. Even with UVM Medical Center’s 13 percent offer, that will push the hospital’s budgeted costs to the limit, which begs the question: How does the Green Mountain Care Board respond?
No one knows.
The concerns don’t stop with the Green Mountain Care Board. Vermont is mid-step in its move to an all-payer health care system. The system is a dramatic switch from the fee-for-service that currently exists to a capitated system in which
hospitals are paid in blockgrant form according to the populations they serve.
If, for example, the UVM Medical Center is paid a lump sum each month for the population it serves, and if a portion of the payments comes from Medicaid, Medicare and private insurance is there a guarantee that the capitated amount takes into account large increases in a hospital’s labor costs?
No one knows.
UVM Medical Center is also a part of the Accountable Care Organization that includes a good share of Vermont’s health care system, and the group guiding the move to the all-payer system, how do the increased costs of one provider affect other hospitals?
The concern is this: Typically, it’s a given that when a block-grant approach to funding is used the tendency is to restrict it; it’s easier to tie a block grant approach to inflation, or less, than if budgets are considered individually and in the traditional manner common to the health care system. We’re also talking about the federal government, and Congress, and the political world of Washington D.C.
If it’s the Green Mountain Care Board’s responsibility to guide our health care system, and to manage its costs, then it would be useful if the board were to weigh in as to the potential effects of the on-going negotiations between the UVM Medical Center and its nurses. It would be useful if the board would begin guiding the discussion as to what Vermonters can anticipate happening as the all payer system begins to unfold. The all payer model’s goal is for 70 percent of the market to be covered by 2020, which is like tomorrow.
If you were to talk a walk down Main Street and you asked the first 100 people to explain what the all payer health care model involved, you’d be lucky to find a single individual able to do so.
All of these issues – payment reform, budgets, contract negotiations, health care outcomes, population health – are related. One affects the other. But no one, and no group, is assuming responsibility for engaging the public in a way that makes any of this understandable.
That’s ridiculous. More to the point, it’s dangerous.
Emerson Lynn is co-publisher of The Essex Reporter and the St. Albans Messenger, where this editorial first appeared.