Editorial: Of hospitals, taxes and the holy grail

Porter Hospital officials posed a legitimate beef with Gov. Peter Shumlin’s proposed provider tax on hospitals in a front page story in today’s Addison Independent: “These reductions will clearly impair our ability to be an effective partner in the way reform is occurring in this state, in the way that Gov. Shumlin and Gov. Douglas were imagining,” said Porter CEO James Daily, who then added: “If you are going to sap the hospitals’ financial vitality and they (the state) start to reduce the workforce — and a number of the people who can carry out these reform activities — it seems like it’s going to impair reform, or it won’t work.”

He has a point. Raising the proposed provider tax by a half percent, from 5.5 percent of net revenues to 6 percent, said Daily, would of itself cost the hospital about $660,000 annually. Add to that an increasing shift in business from those with private insurance to patients on Medicaid (which pays about 34 cents on every dollar of medical expense) and state hospitals could find themselves in deep trouble in short order.

But the story is not about Porter hospital officials, or others around the state, protesting the governor’s call for reform.

On the contrary, these leaders of our medical community embrace calls for reform with matter-of-fact practicality: “We don’t disagree that things have to change; we’re not trying to sit here and say that ‘the status quo needs to be maintained,’” said Ron Hallman, vice-president for public relations at Porter. “Reform is necessary and the current system is unsustainable,” he said, then added, “paying hospitals less is not reform. There has got to be a more comprehensive approach than simply ratcheting down provider payments, because that’s not health care reform.”

We couldn’t agree more. Health care reform will be a dismal failure if state legislators and the administration go after providers (hospitals and the medical community) to cut ever more and more without adequate reform and shared sacrifice in as broad a spectrum as possible.

But upping the provider tax a half percent is not about health care reform. It’s about balancing the state’s budget. It’s about increasing taxes from a dozen or so quasi-public institutions which have budgets big enough to survive for another day while the governor makes up for a projected $176 million deficit he has inherited. The governor has to find the money some place and he’s going where the money is: Porter’s annual budget last year was $62.3 million. Raising $660,000 on additional taxes is no small deal, but — to put it in perspective — it represents an increased tax burden of 1 percent of gross revenues.

Now, in a business that’s already losing money that can be a tough nut to swallow. But is it possible to trim back with a staff of 404 people and survive? They are one of the few local businesses that could.

In the meantime, Shumlin is promising them better days at the end of the health-care reform rainbow. Those better days may not mean finding a huge pot of gold, but it will hopefully mean achieving a system that is sustainable, fair and infinitely more cost effective and one in which our community hospitals will be increasingly vital players in wellness as well as caring for the sick and injured. Surprisingly, even that sounds like a holy grail worth pursuing compared to the train wreck coming our way if reform fails.

Angelo S. Lynn


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Addison County Independent

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Middlebury, VT 05753

Phone: 802.388.4944
Fax: 802.388.3100