Brattleboro Memorial Hospital announced Thursday it is now projected to lose $14.5 million this fiscal year. The news came as the hospital resubmitted its budget this week to state regulators, who rejected the hospital’s prior spending plan earlier this year on the grounds that its numbers didn’t add up.
If Brattleboro’s new estimates come to fruition, the 61-bed nonprofit facility will lose about as much money as all other Vermont hospitals operating in the red combined. It’s also facing turbulence in its leadership ranks: Its CEO, Chris Dougherty, recently departed after an unexplained leave of absence.
Two doctors from the hospital, Dr. Elizabeth McLarney and Dr. Tony Blofson, are acting as interim co-CEOs while the board of trustees looks for a new leader.
“This is not the budget outcome we had hoped for,” McLarney said in a statement. “We know this is discouraging news. We appreciate your understanding as we work to stabilize our finances and keep our doors open to provide care to our community.”
Most of the state’s rural hospitals are financially precarious. Owen Foster, the chair of the Green Mountain Care Board, which regulates hospitals, says Brattleboro’s position, however acute, speaks to a much larger trend.
“This is just a great example that our system is not sustainable, which we've all known for a period of time,” he said.
The Brattleboro hospital did not make anyone available for an interview Thursday. Details of its updated budget, which is being reviewed by GMCB staff, are not yet public. But in a press release, the hospital said its losses were being driven primarily by federal and state changes to drug pricing.
BMH officials said they expect to lose eligibility for the federal government’s 340B program, which requires pharmaceutical companies to sell certain drugs at a discount to providers that serve a large number of low-income and uninsured patients. They also argued that Act 55, a new state law that caps the prices some hospitals can charge for certain drugs, will also have a significant impact. The law does allow hospitals to petition regulators for relief if they believe the price caps are too onerous.
Regulators and state lawmakers face a difficult balancing act. In order to reduce insurance premiums that are among the highest in the nation, they must lower prices at hospitals and transition care to less expensive settings. But they must accomplish this in a way that doesn’t collapse Vermont’s fragile hospital system.
Foster said he still thinks the Legislature and governor made the correct call on drug pricing. What the system needs is structural reform, he argued, not practices that keep hospitals afloat by allowing them to “price gouge really sick patients.”
People won’t access care they can’t afford, he said, which means that services that are too expensive ultimately threaten hospital solvency anyway.
“Everyone knew (the law) would have ramifications. But the alternative is actually not an alternative, because we can't pay it,” he said.
