A divided Green Mountain Care Board approves new UVM Medical Center surgical center — with restrictions

The Green Mountain Care Board signed off on a University of Vermont Medical Center proposal to build a South Burlington outpatient surgical center, clearing the way for construction of a nearly $130 million project.

But the 3-2 decision by the board, a powerful Vermont health care regulator, imposed a slate of restrictions on the facility, including orders to reduce its initial capacity and to limit how much it can charge for procedures.

“The board had a lot of discourse amongst ourselves to make sure we all understood everyone’s perspectives to do the best we could,” Owen Foster, the chair of the Green Mountain Care Board, said in an interview. “I’m really happy with the decision myself.”

Annie Mackin, a spokesperson for the University of Vermont Medical Center, called the board’s decision an “important milestone” but left open the possibility of appealing the conditions.

“The Board’s approval includes conditions which require careful review as they could impact multiple aspects of the plan we put forward,” Mackin said in an email. “We will spend the next several days closely reviewing the decision.”

Planning for the project dates back to at least 2021 , when UVMMC submitted its initial paperwork to the Green Mountain Care Board seeking permission to move forward with the center.

UVMMC sought a certificate of need — essentially, regulatory permission to build the facility — for eight operating rooms in a new building on South Burlington’s Tilley Drive. The project would be sited on 13.5 acres of land currently owned by Pizzagalli Properties.

The nearly 94,000-square-foot facility would include 12 prep rooms and 36 recovery spaces, as well as infrastructure for four more operating rooms to be built in the future. Roughly 107 full-time employees would staff the center and perform outpatient ophthalmological, orthopedic and ear nose and throat procedures, among others.

The proposed surgical center would replace five outpatient operating rooms at the medical center’s Fanny Allen campus, in Colchester. Those rooms are “undersized and outdated,” hospital administrators wrote in a filing with the care board last year, and air quality issues had forced temporary closures in 2019 and 2020.

What’s more, Chittenden County’s growing and aging population will require an increasing amount of surgeries, and UVMMC’s current surgical facilities cannot keep up, the hospital wrote to the care board.

“In the coming years, more patients will require a wide range of surgical procedures, many of which, in light of ongoing technological advances, can now be safely and efficiently performed on an outpatient basis,” UVMMC administrators wrote in a 2023 filing.

But that application drew concern from other hospitals, lawmakers from Lamoille and Franklin counties, and some members of the Green Mountain Care Board.

In letters early this year, senators and representatives from outside Chittenden County urged the care board to consider the impact that the new facility would have on hospitals in their districts. The new surgical facility, some feared, could draw patients away from Northwestern Medical Center, in St. Albans, and Morrisville’s Copley Hospital, which is widely recognized for its orthopedics center.

“We are concerned about the impact of increasing competition in the region, and we ask that any expansion does not exceed what is needed,” nine representatives, mostly from Lamoille County, wrote to the board in February.

The Office of the Health Care Advocate — while offering a measured endorsement of the project — also raised concerns about the possibility that procedures at the surgical center could be overly expensive for Vermonters.

To combat that, the advocate’s office urged the care board to establish a cap on how much the facility could charge for procedures — a move that “strikes an appropriate balance between allowing the hospital to earn a small margin in alignment with both the mission of a non-profit hospital and the need to reduce undue impacts on affordability,” staffers wrote in May.

The advocate’s office also recommended that the care board prohibit UVMMC from advertising its services, direct excess revenue to mental health care and study how the surgical center, once built, would impact wait times for procedures.

Ultimately, the care board opted to follow some of those recommendations.

In its decision to grant a certificate of need, released Monday, the board gave the facility a green light — but applied a set of restrictions to the project. For one thing, the new facility can only construct six operating rooms, rather than the proposed eight, at the outset. If needed, more rooms could be stood up in the future.

UVMMC is required to submit regular reports to the care board on its progress and, once open, on the facility’s effectiveness in reducing wait times for medical procedures. The hospital is also prohibited from spending on “marketing or advertising to attract patients to the (facility),” the conditions read.

Perhaps most significantly, the care board placed a cap on how much the center can charge commercial insurance for procedures: no more than 170% of what Medicare, the federally run health insurance program for people 65 years and older, would charge for the same procedure.

According to the Green Mountain Care Board, which cited data from the RAND Corporation, UVMMC prices could run over 400% of Medicare prices for outpatient procedures without an imposed cap. High costs for medical procedures, in turn, drive up insurance prices — and Vermonters’ taxes .

“Our health care system is at an inflection point, and projects that impose unwarranted costs on Vermonters and small businesses will only exacerbate the problem,” Foster, the chair of the Green Mountain Care Board, wrote in an explanation of his vote. “Vermonters have no spare dollars to give to our health care system.”

Foster said he would not have approved the project without the conditions.

Two other members of the five-member care board, Thom Walsh and David Murman, voted against awarding the project a certificate of need. In dissenting opinions, Walsh and Murman wrote that they were concerned about burdening Vermonters with more costs and unconvinced that the extra operating rooms were necessary.

“Having closely reviewed the application, I cannot conclude that UVMMC has met its burden to establish that a CON should be granted,” Walsh wrote in a dissent.

Foster said in an interview that most decisions by the board are unanimous. But the size of the proposed facility, he said, made for a difficult decision.

The split ruling “reflects the great concern we all have for our health care system right now,” Foster said.  “And I think we’re very cognizant that the system can’t really tolerate mistakes right now.”

Read the story on VTDigger here: A divided Green Mountain Care Board approves new UVM Medical Center surgical center — with restrictions .