WHITE RIVER JUNCTION — The growth in health care spending in Vermont has outpaced the rest of the country over the past two decades, according to a report issued by Vermont State Auditor Doug Hoffer on Tuesday.
The report, “The Growing Cost of Healthcare in Vermont: It’s Time to Reel It In,” draws on Hoffer’s office’s previous audits of Vermont’s $6 billion health care system and shows that growth in health care costs, which rose 167% from 2000 to 2018, has outpaced cost increases in other areas such as rents, utility bills and state spending. The problems predated the fiscal impact of the COVID-19 pandemic, he said.
“The data in this report make clear that current health care cost and expenditure trends were economically unsustainable before this pandemic and are even more unsustainable today,” Hoffer wrote in the report’s introduction. “This problem appears to stem in part from convoluted systems and powerful institutions — not from the people who provide direct health care services.”
While the report indicates that hospital market consolidation and increased health care prices have contributed to cost increases, it says that more research is needed to pinpoint specific cost drivers.
Vermonters spent 16.7 cents of every dollar on health care services in 2018, well above the 13.2 cents per dollar spent across the country, according to the report. That’s excluding drug expenditures.
And Vermont per capita health care spending of $9,076 was outpaced in New England only by Massachusetts with $9,159 in 2018, even though “Vermont wages are regularly lower than other New England states,” the report said.
If health care spending had increased in Vermont at the same rate as the U.S. average, Vermont would have spent about $1 billion less on health care in 2018, Hoffer’s report said.
That amount, $1,576 per person, could have covered Vermonters’ state personal income taxes that year.
Susan Barrett, executive director of the Green Mountain Care Board that regulates the state’s hospitals and is spearheading the state’s health care reform efforts, said the board is working to slow the rate of increase in health care costs by keeping rate increases for hospitals and insurers down.
“We are doing our job,” she said.
Instead, she pointed to expenses such as pharmaceuticals and labor that are pushing costs up.
She also pointed to Vermont’s small size and its status as one of the oldest in the country as reasons for higher health costs.
“We agree Vermont is expensive for health care,” she said. But, she said, the state ranks “at the very top for the quality of our health care.”
The bulk of new health care spending in Vermont between 2011 to 2017 went to hospitals and their physician practices, Hoffer’s report said.
The percentage of physicians in the state employed by hospitals grew from 53% in 2011 to 69% in 2017, as doctors with independent practices declined in number.
“Health care services are now concentrated in the hands of fewer providers who hold greater sway over the amounts Vermonters pay for health care,” the report said.
Barrett said that consolidation, such as Mt. Ascutney Hospital and Health Center in Windsor joining Dartmouth-Hitchcock Health and Porter Medical Center in Middlebury, Vt. joining the University of Vermont Health Network, have helped save community hospitals.
“I think at the end of the day, it’s been very beneficial to Mt. Ascutney and their patients,” Barrett said. “Same for Porter.”
In a paper published this month in the journal Health Affairs, Elliott Fisher, a professor at The Dartmouth Institute for Health Policy and Clinical Practice, and several colleagues said that it’s known that consolidation in health care often leads to “decreased competition and higher prices.”
In a survey of 739 hospitals and 2,189 physician practices, Fisher and his colleagues found that “greater financial integration was not generally associated with better quality.”
The study found that independent practices scored equal to or above those owned by other systems on eight of nine quality measures.
They only had lower scores in the area of participation in payment reforms, which Fisher said is likely due to the complexity of participating in such reforms.
“Given the paucity of evidence of benefit, federal and state efforts to address provider consolidation and monopoly pricing deserve continued attention,” said the study, which Hoffer referenced in his report.
Fisher, who favors continued support for independent physician practices during the pandemic, said in a Tuesday phone interview that he couldn’t comment specifically on the effect of consolidation on health care costs in Vermont or New Hampshire.
But, he said, “I think competition is a really good and important thing … In part, because I think it’s good for consumers to have a choice.”
The Green Mountain Care Board began reviewing Vermont’s 14 hospital budgets for fiscal year 2021 on Tuesday. It is scheduled to take up budgets for Springfield (Vt.) Hospital and Mt. Ascutney on Thursday. The board will hear from Gifford Medical Center in Randolph next Wednesday.
Nora Doyle-Burr can be reached at ndoyleburr@vnews.com.