UVM Medical Center Earns Approval for New Surgical Facility 

State regulators on Monday ruled that the University of Vermont Medical Center can build a new $130 million surgical center if it agrees to a few conditions meant to control costs and reduce the impact on other hospitals.

UVM Medical Center must cap what it charges for surgeries at the new center and can only open six operating rooms to start — two fewer than it had proposed.

The hospital is also prohibited from spending money to advertise the new facility. And it will be required to provide the Green Mountain Care Board with regular updates on wait times, staffing levels and physician productivity, among other data.

The decision landed 3-2, with care board members Owen Foster, Robin Lunge and Jessica Holmes in the majority.

“The path to reaching a decision in this case was not easy,” the three regulators wrote. “UVMMC’s proposal has the potential to significantly impact health care in Vermont for decades.”

The approval will allow Vermont’s largest hospital to expand its surgical capacity and potentially gain a bigger market share.

In a statement, the hospital called the center a critical piece of its long-term planning and said the regulatory approval was an important milestone for the years-in-the-making project. But it said the conditions could impact “multiple aspects” of the plan.

“We will spend the next several days closely reviewing the decision,” the hospital said.

The ruling comes as part of the "certificate of need" process, which requires the Green Mountain Care Board to sign off on any major health care investments. Applicants must demonstrate that their projects further Vermont’s goal of improving health care access while also containing costs.

Making their pitch this spring, UVM Medical Center executives said the project would allow them to shift procedures away from the outdated Fanny Allen campus and into a new state-of-the-art facility better equipped to handle the many complex procedures now performed on an outpatient basis. They asked for permission to start with eight operating rooms and said they would have enough space to accommodate four more should they become needed.

The five Fanny Allen ORs would be repurposed, officials said. Last week, the care board approved the hospital's request to purchase the Colchester campus for $17.3 million.
The expanded surgical capacity would help the hospital chip away at existing backlogs and prepare for future demand, officials said, pointing to internal projections that showed the medical center will soon need to perform 4,000 more surgeries annually than it can currently handle.

Another selling point, officials said, was that the center would generate at least $10 million in annual profit by 2030, money that could be used to bolster hospital services that operate at a loss.

The hospital's desire to run the new center as a profit generator didn't sit well with Foster, the care board chair. "Our health care system is at an inflection point," he wrote in a concurring opinion, "and projects that impose unwarranted costs on Vermonters and small businesses will only exacerbate the problem."

The imposed conditions, which include a requirement that UVM charge private insurers no more than 170 percent of what Medicare will pay for the same service, were enough for Foster to overcome his concerns. But the same couldn't be said for board members Thom Walsh and David Murman, who, in a pair of dissenting opinions, appeared unconvinced that the project was necessary.

They questioned UVM’s efficiency and said they believed it could find cheaper ways to conduct more surgeries, such as expanding operating hours or referring more cases elsewhere.

They also worried about the impact on Vermont’s struggling rural hospitals.

There is a "significant risk" that the new center will draw surgical patients away from Northwestern Medical Center in St. Albans and Copley Hospital in Morrisville, Walsh wrote.

That would lead to a greater statewide dependence on UVM, "a high-priced hospital that already has a monopolistic healthcare market position and demonstrates inefficient systems, stagnating quality, and long wait times for primary and secondary care," Walsh wrote.

“This proposal is an example of the type of consolidation that we are actively trying to move away from,” Walsh added.

The hospital has said the center could open in the next two years.