BRATTLEBORO-State regulators expressed both concern and support as acting administrators at Brattleboro Memorial Hospital outlined plans at a Aug. 14 online hearing to curb deficit spending caused by past administrative and accounting problems.
“I do think the Brattleboro community is suffering the consequences of mismanagement at this hospital,” Sara Teachout, one of five members of Vermont’s Green Mountain Care Board (GMCB), told the facility’s new leaders. “I appreciate what you all are doing to change that.”
BMH, now operating on a $130 million annual budget, is forecasting a $7.1 million shortfall for the coming fiscal year that begins Oct. 1. That would follow operating losses of $33.6 million from fiscal years 2017 through 2025 and an estimated $9.5 million for FY 2026, according to a report discussed by regulators Aug. 14.
To cover the deficit spending, the hospital is tapping its reserves of cash, investments, and unrestricted assets, the new leaders said. But that has depleted the facility’s collective accounts from $53.3 million in FY 2021 to a projected $19.7 million for FY 2027.
“The losses have been mounting,” said Elizabeth McLarney, acting co-CEO with fellow doctor Tony Blofson. “We need to recover financially.”
The 61-bed hospital has operated with acting administrators since its former president Christopher Dougherty exited without explanation in November and former chief financial officer Laura Bruno departed amid similar silence in December.
In their report to regulators, Blofson and McLarney said consultants had discovered “significant deficiencies” in the hospital’s financial systems. Those, in turn, led to accounting assessments that were “unhelpful and inaccurate in most cases” and the need to tap into savings to pay staff, taxes, and loans.
“It’s kind of death by 1,000 paper cuts — it’s no one thing or one person,” said David Sanville, the hospital’s financial consultant.
The deficit spending has depleted not only the hospital’s savings but also its “days cash on hand,” which is an estimate of how many days it could stay open if it didn’t reap any outside revenue and had to cover expenses strictly with its own reserves.
Regulators consider a figure of 205 days or more to be “very strong” and one of 80 days or less to be “highly vulnerable.” According to its report, BMH has seen its number decrease from 220 days in FY 2021 to 60 days this summer.
“Our first job is to get back to breaking even,” Sanville told reporters in an interview earlier in the week, “and our second job is to start building up that savings.”
To cut costs, the hospital — one of Brattleboro’s three largest employers — laid off nine support staffers this month to reduce its annual payroll by about $840,000. After eliminating several long-vacant positions, leaders anticipate the number of employees dropping from 528 full-time equivalents in the current budget to 457 in the coming one.
BMH also plans to save money by closing its birthing center by Dec. 31 if it can’t find a long-term way to cover an estimated annual unit loss of $4.8 million — half of the hospital’s projected overall FY 2026 deficit.
Declining the suggestion of a municipal subsidy, leaders are hoping to receive a Rural Health Transformation government grant or approval of a recent clinicians’ call to raise Medicaid obstetric reimbursement rates — both now under review by the state Agency of Human Services.
Even with such measures, the hospital is projecting a seventh consecutive year of deficit spending in FY 2027 and doesn’t anticipate breaking even on an overall annual budget until FY 2028 at the earliest.
“We’ve been making steady progress,” Sanville said, “but there’s a lot to address.”
BMH’s review came on the last day of the care board’s annual budget hearing process for Vermont’s 14 community hospitals. Regulators have spent two weeks listening to administrators from the Burlington-based University of Vermont Health and smaller facilities statewide elaborate on the challenges of balancing rising expenses with revenue.
GMCB is expected to rule on whether to approve, modify, or deny spending plans by Sept. 15.
This is the second year that regulators have expressed worry about the Brattleboro hospital’s finances.
“Stated as directly as possible, we are deeply concerned about BMH’s solvency,” the care board wrote after last year’s review process.
Regulators last fall ordered the hospital to recalculate its current budget or risk becoming the first to receive a state-appointed monitor under a new law adopted to control costs. After seeing the revisions over the winter, regulators limited their response to a warning, although they can still call for some sort of intervention.
This story was republished with permission from VTDigger, which offers its reporting at no cost to local news organizations through its Community News Sharing Project. To support this work, please visit vtdigger.org/donate.
This News item by Kevin O'Connor originally appeared in VTDigger and was republished in The Commons with permission.