Vermont hospitals are responding to months of dire warnings about a health care affordability crisis in the state by proposing more modest budget proposals than in previous years.
Hospitals presented plans for the 2026 fiscal year, starting in October, to state regulators at the Green Mountain Care Board this month as part of an annual review process. Most proposed raising the prices they charge commercial insurance companies by less than 3% from last year.
It’s a big departure from recent years, when many of the state’s hospitals requested commercial rate increases of nearly double that amount, or more. Vermont has among the most expensive health insurance premiums in the country, driven in part by disproportionately high hospital prices. This year’s budget process is an attempt to change course.
For the most part, hospitals limited increases to their budgeted operating expenses to less than 3% or less, and proposed less than 3.5% increases in the total revenue they expect to receive from seeing patients, which state regulators requested. Most hospitals are planning to just break even next year or lose money, with a few notable exceptions, according to a summary compiled by the state.
“This is probably the toughest budget that we had to deal with in my 45-year career,” said Thomas Dee, the president of Southwestern Vermont Medical Center in Bennington, which is projected to lose $1 million next year providing patient care.
Most hospitals will see a significant drop in revenue because of a new state law that limits how much they can charge for specialty drugs starting at the beginning of next year. Prices charged by Vermont hospitals for the drugs, often used to treat certain cancers and autoimmune diseases, are currently the highest in the nation.
Several hospitals have not yet modeled how the law will impact their commercial insurance rates, and the policy does not apply to most of the state’s smallest rural hospitals, also called critical access hospitals.
Proposals for cutting costs
Hospitals have proposed a range of cost-cutting measures to meet the budget guidelines, including reducing the number of traveling medical workers and administrative roles, and limiting patient services.
“Many of our hospitals are already putting into motion plans to realign services and reduce staffing where they can do so responsibly,” said Michael Del Trecco, president of the Vermont Association of Hospitals and Health Systems, a trade group that advocates for the state’s hospitals.
- At Southwestern in Bennington, leaders said they plan to reduce the size of their executive team, and not provide any bonuses this year or next.
- Brattleboro Memorial Hospital has had a hiring freeze since April. The hospital also cut six administrative roles this summer after losing nearly $9 million over the past year.
- Northeastern Vermont Regional Hospital in St. Johnsbury announced it would close their occupational medicine office after September, and end a contract for ENT services with a New Hampshire provider.
- Morrisville’s Copley Hospital is closing its birthing center later this year and laying off six midwives currently employed there, according to a hospital spokesperson.
- The University of Vermont Health Network announced it would lay off nearly 80 staffers, not provide bonuses to hospital executives this year, and delay new construction projects as part of a plan to save about $185 million over the next year.
- The University of Vermont Medical Center in Burlington is also working to reduce the number of patients admitted for overnight care and discharge patients more quickly, when appropriate.
Some hospitals still project profits
Despite recent cuts, UVM Medical Center is projected to make $72 million in profit, or a 3% operating margin. That’s the highest margin requested of any other hospital in the state, outside of Porter Medical Center, also a UVM Health Network hospital.
“I understand it's a big number,” Dr. Stephen Leffler, the hospital’s president, told state regulators last week. “I understand the size of the impact when your budget is $2 billion. But the margin we submitted is the margin we believe we need.”
Morrisville’s Copley Hospital is also projected to make $3.5 million in profits, and requested a 4.2% increase in commercial rates for next year, in part to build a fourth operating room at the hospital.
Some of these plans met pushback during public hearings.
Several Lamoille County residents called on state regulators to conduct a review of the decision to close the labor and delivery unit at Copley, which will leave families in Morrisville and surrounding towns without any alternatives to care within a 50-minute drive.
State Representative David Yacovone, of Morrisville, cited higher commercial prices for deliveries at other hospitals in the region — including at UVM Medical Center and Central Vermont Medical Center.
“The decision to dismantle the birthing center will increase health care spending," he said. "It may lower costs for Copley. It will not lower costs for the state of Vermont.”
Regulators also criticized leaders at the UVM Health Network for providing tens of millions of dollars from UVM Medical Center to support three New York hospitals over the past several years and failing to receive adequate commercial reimbursement in New York.
“I strongly support excellent care in those communities and wouldn't want that care to be eroded,” said board member Dr. David Murman. “But it's very hard for Vermonters, who have some of the lowest median incomes in the United States, to subsidize that care.”
State regulators will announce their decisions on hospital budgets in mid September.
