State OKs conservative Porter budget with 0.7 percent spending increase
MIDDLEBURY — The Green Mountain Care Board (GMCB) has approved Porter Medical Center’s proposed fiscal year 2017 budget of $76,094,920, which represents a 0.7-percent increase compared to last year’s spending plan and places the organization on a more solid financial path following a few years of financial turmoil.
Porter officials said the new budget will allow the hospital to realize a total operating margin of 4.9 percent, sufficient to support capital re-investment of approximately $4 million. They said it will also produce a “modest increase” of 3.8 days cash on hand (savings) for the PMC system as the organization makes incremental progress toward strengthening its balance sheet.
Porter Hospital was granted a price increase of 5.3 percent on most services. Services not affected by the price increase include chargeable supplies and drugs, contract laboratory and professional physician fees. All other services are proposed to increase uniformly by 5.3 percent.
Maureen McLaughlin, chairwoman of the PMC board, acknowledged the challenge of building a fiscal year 2017 spending plan following a 2016 that Porter officials are happy to put in the rearview mirror.
In its recent presentation to the GMCB, Porter officials noted the organization had to weather the following events during the past year:
• The unanticipated departure of both its president/CEO and chief nursing officer. Dr. Fred Kniffin succeeded as interim CEO after PMC President and CEO Lynn Boggs left last spring following her controversial eight-month tenure.
• The departure of approximately 20 percent of its providers, most notably in its primary care network.
• Higher than anticipated nursing staff turnover (approximately 40 percent).
• Increased expenses for overtime/temporary labor and severance packages.
• A deficit of 18 percent in in-patient (hospital) volume and related revenue in the first quarter of fiscal year 2016.
“We in leadership at Porter Hospital must include in our explanation of this variance, in all appropriate candor, that the internal disruptions in operations and staffing during this period of time contributed significantly to this financial underperformance,” reads a PMC narrative on the first quarter of 2016. “As we emerge from that period with new clinical and administrative leadership and a significantly improved operating and collaborative environment, we are experiencing improved clinical and financial performance in both our inpatient and outpatient operations.”
It should be noted that PMC — which includes the hospital, Helen Porter Healthcare and Rehabilitation and 12 affiliated physicians’ practices — has made a substantial rebound during the past six months. Under Kniffin’s interim leadership, PMC has filled virtually all its provider vacancies and stabilized a staff that in February was reduced by 17 positions.
The PMC board will soon decide on the organization’s possible affiliation with the University of Vermont Health Network.
But with the lessons of 2016 in mind, Porter officials said they took a careful and conservative approach in crafting the 2017 spending plan.
“I think the consensus among the board and hospital leadership … is that we were not going to be aggressive, that we were going to basically say, ‘How do we keep our focus on the mission — which is taking care of the community,” McLaughlin said.
PMC’s main objectives for 2017, as stated in its budget narrative, are to:
• Continue to rebuild its network of primary care providers and employee morale, with a goal of returning to a more “normal” rate of provider turnover.
• Continue to improve the financial performance of its affiliated medical practices.
• Ensure all patient care areas are staffed and equipped to provide the highest quality patient care, thus mitigating PMC’s current dependence on temporary nursing labor.
• Address the declining financial performance at Helen Porter Nursing and Rehabilitation Center, including right sizing, reviewing services and payer mix, and improving the efficiency of operations. The current impacts on Porter Hospital of that financial stress will require a draw of approximately nine days of cash on hand for both FY 2016 and FY 2017, according to Porter officials.
“It is Porter’s intent to carefully and thoughtfully improve our financial position over time,” reads the PMC budget narrative. “This budget represents our initial steps in that direction. Based on this approach, our FY 2017 budget contains modest assumptions for volume growth and a price increase proposal which is consistent with our requests over the past few years.”
Kniffin said Green Mountain Care Board officials were very receptive of the Porter budget proposal, which provides a 2-percent salary bump for PMC employees.
“I think it’s affirmation that we and (the GMCB) are on the same page,” Kniffin said. “Our job is to take care of our people and the GMCB looked at our budget and said, ‘It looks like you’re taking care of your people.’ I’m going to take that as a win.”
Reporter John Flowers is at [email protected].