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Porter spending plan reflects new programs, raises

MIDDLEBURY — The Green Mountain Care Board is considering a fiscal year 2019 budget proposal for Porter Medical Center that reflects a 3.2-percent increase in net patient revenue, a 4.9-percent boost in expenses and — for the second year in a row — no increase in its charges for medical services.
The proposed spending plan — and recent affiliation with the University of Vermont Health Network — will also allow Porter to give its staff a 2.5-percent cost-of-living salary adjustment and improve programming in several areas, including at its new ExpressCare clinic.
Dr. Fred Kniffin, PMC president, said the budget will allow the hospital to continue its transition to a new system through which medical institutions are financially rewarded based on having a healthy constituency versus the number of expensive procedures they can deliver on an annual basis.
“Our mission for the last several years has been to improve the health of our community,” Kniffin said. “But honestly we’ve been stuck in a fee-for-service mentality. It’s time for us to walk the walk… We want Addison County to be the healthiest place you could ever want to raise a family, and we want it to be a great place to grow old.”
With this paradigm shift, PMC administrators are able to pitch new amenities without always surrendering to the ledger.
“The litmus test for starting a new service here used to be, ‘Will it make money?’” Kniffin said. “Now, the litmus test is, ‘Will it bring value?’”
In total, PMC is asking the Green Mountain Care Board for permission to pursue $89,485,024 in revenues, up from the $84,100,459 it requested for the current year. Porter officials are forecasting $86,193,572 in expenses in fiscal 2019. The institution is banking on roughly $3.3 million in profit that would be invested in capital improvements and wage increases, according to Porter spokesman Ron Hallman.
The proposed 4.9 percent increase in expenses is attributable to wage increases and upgrades in several categories of services, according to Porter CFO Jenn Bertrand.
Specifically, the Porter budget reflects a greater financial commitment to palliative care services for terminally ill patients ($135,000), the addition of 1.8 full-time-equivalent (FTE) positions ($100,000) to help supervise mental health patients who must now be accommodated at the hospital due to a lack of beds statewide, and the allocation of another 1.2 FTE positions ($100,000) to the hospital’s increasingly popular ExpressCare clinic.
Kniffin noted PMC next year might add cardiac rehabilitation care, a service area patients have historically had to find outside Addison County.
Porter Medical Center staff will see a 2.5-percent cost of living adjustment in their pay next year as part of the fiscal year 2019 budget.
“That’s actually half of a percent higher than we’ve normally done,” Bertrand said of the pay raise. “That’s the biggest driver of the expense change.”
If approved by state regulators, the PMC budget would result in a 5-percent decrease in professional services fees (such as for doctor’s office visits) to patients paying out of pocket, and a 2.8-percent increase in the commercial rate charged to insurance companies. That’s the lowest commercial rate increase in more than a decade, according to Hallman.
Through its affiliation with UVM Health Network, Porter has benefitted from some economies of scale that will allow it to eliminate, through attrition, an administrative position each in human resources, materials management and nutrition, according to Bertrand.
“As directors leave, we now make sure we assess whether we need to replace that person,” Hallman said. “Having shared resources gives us a chance to think differently about our management structure when we’re talking about an area where there could be a resource in Chittenden County that could back-stop us.”
Affiliation has also resulted in Porter having fewer legal and insurance expenses, Bertrand said. And PMC will save an estimated $300,000 by converting from fuel oil to natural gas, according to Bertrand.
BETTER FISCAL HEALTH
Porter now finds itself in substantially stronger financial health than it was just two years ago. At that time, the organization was facing a budget crisis that precipitated some very unpopular layoffs. Several Porter physicians left for other job opportunities.
In 2011, Porter had 30 days of cash on hand, which is the way hospitals measure their savings cushion. PMC now has 134 days of cash on hand. The “safe zone” for hospitals is approximately 70-75 days, according to Hallman.
“I think we were ‘red lights flashing’ several years ago, and now we’re amber,” Hallman said in metaphorically describing PMC’s financial renaissance.
But the news is not all good, PMC officials acknowledged. For example, Porter has been relying heavily on expensive temporary labor to fill nursing positions that have gone unfilled at the hospital and at Helen Porter Healthcare & rehabilitation. The organization is budgeting $850,000 for temporary help in fiscal year 2019. That equates to four FTE positions occupied by temporary nurses at any one time during the year. That’s considerably less that the $2.5 million PMC paid for temporary workers in 2016, but the $850,000 is still a sign that Porter needs to do a better job recruiting and retaining employees, officials conceded.
“And it’s not just for Porter, it’s for the entire state of Vermont,” Bertrand said of the general dearth of Registered Nurse and LNA candidates.
Reporter John Flowers is at johnf@addisonindependent.com.

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