State regulators will vote this month on the proposed fiscal year 2026 budget for the University of Vermont Medical Center, a decision that could have big consequences for the state’s largest hospital and those burdened by health insurance premiums that are the highest in the country.
The Burlington hospital has proposed a $2.4 billion spending plan that would increase operating expenses by 3.2 percent. The growth would have been far more were it not for recent layoffs, service reductions and other “difficult decisions,” according to hospital leaders, who say the proposal reflects their commitment to curbing the growth of health care costs.
But whether the Green Mountain Care Board will be approve such an increase remains unclear ahead of a vote next week.
This week, the board heard two strong endorsements for a smaller-than-proposed budget.
The first came Monday, when an independent liaison group submitted a scathing memo about the medical center’s proposal. The group, helmed by former state Human Services secretary Mike Smith, was commissioned earlier this year as part of a settlement between regulators and the UVM Health Network stemming from budget overages.
The memo, written by Smith, accused hospital leaders of trying to “spin” the narrative by overstating the fiscal impact of their recent moves to cut costs.
“The budget narrative highlights a commercial rate decrease and ‘significant’ expense reductions by reducing administrative services and operating expenses, eliminating service duplication, and keeping care in local communities,” Smith wrote. “And yet, the 2026 budget shows increases in revenue, in FTEs, and in operating expenses, with salary increases of 4% – 5%, and some executive salaries increasing even more than that.”
Those revenue increases come even after accounting for a roughly $70 million reduction in revenue resulting from a recently passed law that caps charges for outpatient prescription drug prices, Smith wrote.
Although the hospital says its proposed budget would lower charges on commercial insurers by 8 percent, it is actually projected to bring in about $45 million more from privately insured patients next year, driven by a projected increase in expensive tests and services. That would mean yet more pressure on premiums, Smith wrote.
“The budget should be judged against simple affordability standards,” Smith wrote, a test that he said it clearly fails.
Smith’s opinion appears to be shared by the Green Mountain Care Board’s professional staff, who on Wednesday recommended the medical center to further reduce what it charges commercial insurers to lower revenues by about 3 percent, or $75 million.
Staff also encouraged the care board to cut $465,000 from the medical center’s budget, which represents the amount the hospital will pay towards a proposed 9 percent pay raise for top health network executives.
The medical center would need to either dip into its large reserve funds or find more ways to reduce expenses to cover these gaps. Stephen Leffler, the UVM Medical Center’s president and COO, told regulators on Wednesday that the hospital is still reviewing the recommendations and would submit comments before a final vote next week.
“It’s a lot to digest,” Leffler said.