Ask the Right Questions – Peter J. Wright, CEO

Ask the Right Questions

To the Editor:

As we digest the results of Town Meeting Day, the focus on taxes and school budgets continues to be the topic at every water cooler and community store.

There is no argument that employee wages and benefits are the single largest driver of school spending and within that, health insurance premiums and healthcare costs draw the most focus and attention. The real question is: Were we asking the right "why" when it comes to school spending and how much health care accounts for those costs?

Let me start by saying that our schools, just like our hospitals, are foundations to healthy communities. Pitting one against the other is not a recipe for success. In Franklin County, we want and deserve to have great schools. We also deserve great health care close to home.

Some will have you think that healthcare costs are being driven up by "out-of-control hospital spending"; however, the facts are healthcare spending is a simple equation, rate x volume. Both are relevant, but a deeper look shows a different story. For example, no Vermont hospital was granted a rate increase more than 3.4% for the current budget year. In point of fact, while individual rate increases do vary, Northwestern Medical Center (NMC), serving Franklin and Grand Isle counties, has been granted an overall average of less that 3.87% per year dating back to 2011. This is in line with inflation and below health care inflation. Furthermore, expense growth has averaged 3.5% for the last six years demonstrating our commitment to our employees and the need to be very prudent financial stewards.

At the same time, "case mix index" (a reflection of how sick the average patient is) of Vermont patients increased by 10.8% between 2014 and 2022. Think about that for a moment, the average patient is nearly 11% sicker now than a decade ago. That is staggering. Obviously, a sicker patient is more expensive to care for.

In addition, healthcare spend ing has been impacted by equally significant increases in volume. For the last several years, many Vermont hospitals came under fire for long wait times to get an appointment, NMC being one. Pre-pandemic (2014 to 2019) outpatient visit volumes dropped nearly 3% across Vermont. The directive from the Green Mountain Care Board (GMCB) was to "open access" and shorten wait time for service. Hospitals and healthcare providers across the state heeded the call. As a result, and excluding the obvious outlying drop of 12.2% in 2020, outpatient visits surged by 7.9% when compared to pre-pandemic levels. Naturally, increasing access means more patient visits and that added volume, which was significant at all hospitals and provider locations across Vermont, is reflected in the significant increase in spending that schools and municipalities have been experiencing as well. It's undeniable that added volume and severity of illness are the main drivers of healthcare spending increases, not out-of-control hospital spending. Other questions for Vermonters to think about are, how is your insurance plan structured? Are there incentives for covered staff members to seek primary care first, then urgent care and the emergency department as a last resort? Are staff members encouraged to "price shop" services that are not urgent or emergent, i.e. diagnostic imaging, labs, therapy and specialty services? You should know that there are no such requirements and incentives for government insured patients (Medicare, Medicaid, etc.) whose low reimbursements to providers contribute significantly to increased commercial insurance premiums. Without these incentives (i.e. when price doesn't matter), human nature is to seek the easiest, most convenient location.

So, as we continue our conversations with Town Meetings behind us, I urge you to know the "why" and ask more questions. This will be more important than ever as the Legislature begins to raise questions of its own. There's no doubt that affordability is on all of our minds. For NMC's part, we'll continue to be the low-cost provider in our state and strong financial managers while still delivering the highest quality care in an ever changing landscape. Our community deserves no less.

Peter J. Wright, FACHE is the President and Chief Executive Officer of Northwestern Medical Center in St. Albans Vermont. He is board certified in healthcare management and a Fellow of the American College of Healthcare Executives. Mr. Wright received his bachelor's degree from Lyndon State College, a master's in administration from St. Michael's College and a master's in healthcare delivery science from Dartmouth College's Tuck School of Business and Geisel School of Medicine.

Peter J. Wright

St. Albans, Vt.

Note: Peter J. Wright is the President and Chief Executive Officer of Northwestern Medical Center.