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Porter looks to a tough year ahead

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Posted on March 29, 2010 |
By Andrea Suozzo



MIDDLEBURY — In the wake of the federal health care law enacted last week, many are touting the reforms it will introduce as a victory for individual access to health coverage. At the Porter Medical Center annual meeting last Thursday evening, however, the question at the tip of many tongues was, “What will it do for us?”

Though the answer to that was not terribly clear only days after the law was signed by President Obama, Porter administrators and the head of a statewide hospital trade group agreed that health care providers like the hospital were not likely to bring in larger financial surpluses as a result of the law.

And, although Porter Medical Center reported positive financial returns for 2009, President Jim Daily said that Porter was unlikely to do as well in the coming years.

“It’s a challenging time in Vermont,” Daily said.

Looking ahead at the potential effects the health care reform law will have in the coming years, Bea Grause, president and CEO of the Vermont Association of Hospitals and Health Systems, told those at the Porter annual meeting that Vermont is well off because it lately has been on the cutting edge of health reform. In fact, the state’s progressive health care laws served as models for parts of the federal law.

“I love Vermont because Vermont doesn’t know it’s small,” Grause said of the state’s role in the legislation.

She added that because of the state’s current system, and because the state is already only a couple percentage points off of the goal of insuring 94 percent of Americans over the next decade — she said 92 percent of Vermonters are already covered by health insurance — the state isn’t likely to see a great deal of change.

But this doesn’t mean that the law won’t take a toll on the state’s purse. As a state, she said, “we have no money to pay for reforms.” And health care costs already put a significant strain on Vermont’s budget.

One change in the health care law is that the number of people on Medicaid would grow, though Grause said that number would be limited because Vermont has a high rate of residents who already qualify for Medicaid.

Nevertheless, any increase in Medicaid participants would have an impact on hospitals — in a separate interview last week, Daily said Medicaid reimbursed only 19 cents per dollar for some of the outpatient services that Porter hospital provided in December.

When Medicaid underpays hospital bills, hospitals are sometimes forced to raise prices all around in order to compensate for these losses, but piece of legislation currently on the table in the house would restrict the amount of these underpayments that hospitals can cost shift to non-government payors. Under the current system, said Grause, rate inflation can serve as an escape valve for struggling hospital budgets.

But even though it is unclear exactly what results the new federal law will have, Grause was optimistic that it would not drastically change the health care system in Vermont.

“We, as a state, are not going to see a great sea change,” Grause assured the meeting’s attendees.

When Daily took the podium, he added that the hospital’s size would come into play as the law’s changes traveled down to the statewide and individual levels.

“It’s hard to stay on the cutting edge of health reform when you’re as small as we are,” he said.

Financially, the medical center did well for the fiscal year of 2009 — “about as well as we can expect to do,” said Daily. According to the preliminary statement of operations, the hospital had a profit for the year ended Sept. 30, 2009, of $1,807,024 before taxes, while the Helen Porter Nursing Home had a net loss of $9,106 before taxes.

In 2008, Porter Hospital reported a profit of $486,000, while the nursing home reported a loss of $283,000.

But Daily had concerns about future finances.

“We’ll probably do this well — not — next year,” said Daily, which drew a chuckle from the crowd.

Porter Medical Center spokesman Ron Hallman in an interview reiterated that projections for the upcoming years are looking less favorable. He cited a number of reasons for this projection. One is the struggling economy — few businesses are seeing overwhelming profits.

Daily also spoke of the hospital’s financial losses due to the Champlain Bridge closure. After the bridge across Lake Champlain closed on Oct. 16, Porter Medical Center spent roughly $40,000 in per diem payments to employees whose commutes from New York state lengthened dramatically.

“There’s some chance we’ll be compensated,” Daily said. “We deserve it.”

But the hospital’s administration expects to take a more lasting hit solely because of the changing demographic of patients. According to projections on Vermont’s aging population and patient records in the first months of fiscal year 2010, it is clear that Porter Hospital will be dealing with a higher percentage of patients on Medicaid in the future, meaning that the hospital will see smaller profits coming in for each patient.

And it is likely that the state’s budgetary pinch will hurt hospitals around the state as well. According to Hallman, each hospital in Vermont pays a provider tax to the state each year, which the federal government then matches.

“It’s a method used to draw down federal dollars to support state programs,” Hallman said.

In the past, hospitals have gotten back close to the amount they paid in provider taxes, but in recent years, the state has kept more of that money. Though he won’t know the final numbers until the legislative session ends and the numbers can be analyzed,

“It could be as much as $1.1 million less that we’re getting back,” he said.

Reporter Andrea Suozzo is at andreas@addisonindependent.com.

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