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Grace Cottage Hospital in Townshend.

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TOWNSHEND — The Green Mountain Care Board is reviewing budgets and rate hike requests from hospitals around the state.

It has until Sept. 15 to review the proposals, which include a 5 percent rate hike request for fiscal year 2023, which begins Oct. 1, from Grace Cottage Hospital in Townshend.

That is the same increase the hospital asked for last year, said Stephen Brown, chief financial officer.

In the past few years, said Brown, the rate request has between 3 and 5 percent.

The Care Board is an independent five-member board whose members are appointed by the governor for six-year terms. Its responsibilities include reviewing and approving hospital budgets, as well as insurance premiums.

“Historically, the GMCB has approved budgets at or below medical inflation,” states a news release from the Vermont Association of Hospitals an Health Systems, which is a member-owned organization comprised of Vermont’s network of not-for-profit hospitals. “Over time, this has eroded hospital margins — the money left over after expenses that would be used to invest in staff, facilities, services and equipment. This has caused hospitals to delay repairs and new equipment purchases and made it harder to hire staff.”

“For as long as I can remember, the board has actually granted [Grace Cottage’s] actual rate increase request, though they have the last few years made minor adjustments,” said Brown.

Inflation has also hit hospitals hard, states the news release, prompting the cost of equipment and supplies to soar. That’s not different at Grace Cottage, which proposed an operating budget for FY23 at about $27 million. That’s $2.5 million more than FY22, said Brown.

“Pretty much all supply costs, no matter what you’re buying, are up anywhere between 5,10, 15, 20 percent ... If you can even get them,” he said. “Health care salaries are up, as is demand for health care personnel. So, we’ve had market adjustments to a lot of salary areas. As with all other hospitals, the need and cost of traveling nurses is astronomical.”

Brown noted that when it comes to what they pay for traveling nurses, Grace Cottage was $1 million over its budget with three months left in its fiscal year.

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“It’s such a lucrative market, travel nurses can pretty much set their price,” said Brown. “We generally don’t have a lot of travelling nurses here. Usually, we might have one or two for parts of the year. So, what we really budgeted for the current year is only around $200,000.”

Brown said with the strategies Grace Cottage has put in place to train, hire and retain nurses, he expects the cost for traveling nurses to fall back to about $240,000.

He said Grace Cottage was overbudget because the rates charged by the traveling nurse agencies skyrocketed earlier in the fiscal year.

“The presumption would be that the skyrocketing rates were a directly result of the demand due to COVID,” he said, “both due to the increased demand for staffing patient beds as a result of COVID, and as a result of healthcare professionals choosing to leave the profession as a result of not wanting to deal with COVID.”

Nonetheless, said Brown, Grace Cottage has been very fortunate to have on staff a core group of highly qualified registered nurses.

Pre-pandemic, hospitals like Grace Cottage were paying the agencies about $65 an hour, but for the better part of 2022, Grace has been paying about $200 an hour, said Brown.

“That’s a dramatic increase,” he said. “Now, that being said, it has slowly over the last two or three months started to come back down somewhat, to $140.”

Brown said Grace Cottage’s overall financial health is “relatively good,” especially having received COVID-related funds and grants it receives, as a a critical access hospital, from the Health Resources and Services Administration.

Brown also noted that because Grace Cottage doesn’t offer elective surgery, it wasn’t hit as hard as hospitals that depend on such services to subsidize primary and emergency care.

He credited Grace Cottage’s development office with doing an outstanding job of appealing to the community for financial support.

Bob Audette can be contacted at raudette@reformer.com.