Grants to Determine Who Survives and Dies in VT Healthcare

Vermont is learning that starting and stopping the economy is anything but easy. The most glaring issue is that when the economy does come back, many organizations (most specifically smaller healthcare providers) will have gone extinct. Vermont’s grant writing process will salvage what it can, but far more institutional change is needed.

On June 17, the House discussed H.965, a bill for “determining whether and how much to award an applicant from the Health Care Provider Stabilization Grant Program.” Rep. Heidi Scheuermann (R-Stowe) questioned Rep. Anne Donahue (R-Northfield), who helped draft the legislation.

SCHEUERMANN: “It seems as though the large portion of this money is going to public hospitals, public health care systems, entities and organizations. I’m asking now about the independent providers: the dentist’s office, the independent doctors’ offices…. I really want to understand how much is available specifically for those independent providers of our healthcare services.”

DONAHUE: “You might have a very tiny budget compared to a hospital, but if 90% of your budget is gone, you are in worse situation for survival… than a large organization that’s 50% down on its revenue. (…) We think it needs to be based on the specific needs of each of the specific providers, to ensure that the ones who are in the greatest need stay open and keep delivering their essential services.”

SCHEUERMANN: “I want to make sure we manage people’s expectations, because that’s critical right now. I don’t want people to believe that we have enough grant money going around, that they’re going to be saved because that’s just not the case.”

DONAHUE: “It’s by listing out that criteria that we tried to put the parameters in place. The specific details will be the grant process that the agency (of Human Services) has to work out.”

The five criteria the Agency would use allocating grant funds are…

  1. To sustain or improve the quality of health care services that can be used during the Covid-19 emergency
  2. Responding to anticipated surges in Covid-19 cases or to prepare to meet increased needs for specific types of services (ie mental health services)
  3. To provide support services that would otherwise have been limited as a result of business disruptions caused by Covid-19 (and/or) to enable the applicant to withstand and recover from business disruptions caused by Covid-19
  4. To assist patients hurt financially by Covid-19, especially patients on Medicaid
  5. Finally, “the applicant appears capable of making appropriate and efficient use of the grant funds.”

These criteria make as much sense as can be expected. But time and time again, we’ve seen how emergency funds tend to get spent on politically favored organizations. VPR is “in good financial shape” with a $9.5 million budget “almost $2 million in reserves available.” And yet, they received $100,000 from our legislature. ‘Free money’ as they say, money that small health care providers can only dream of getting.

While Rep. Donahue and other legislators have done their best to create an even playing field for which Vermont healthcare organizations of all sizes can compete for the right to survive on state grants, independent organizations are at a significant disadvantage.

As a large organization (healthcare nonprofit or a business) grows, it must keep asking itself if that next $100 is better spent attracting new customers or buying preferential treatment at the state or federal level. Larger organizations like the UVM health network know the ins and outs of lobbying and grant writing that the smaller Vermont healthcare providers can only dream of.

And while Vermont’s Agency of Human Services will do their due diligence, there are very real limits to what the Agency’s 57 people can do with $250 million before the deadline for spending the federal funds of January 1, 2021. As both Rep. Donahue and Rep. Scheuermann stated, there isn’t enough grant money to save every healthcare provider. The best small healthcare providers can hope for is that they will get a shot at funding to save their businesses. But of the 5 criteria, only the third and fifth criteria are tangentially related to preventing a small healthcare provider from going under.

It appears that each provider will have to justify its survival by an impersonal grant writing process. In such an increasingly centralized healthcare sector, the casualties will be those who know how to provide personalized care to patients but don’t know the first thing about how to compete in the bureaucratic arena of grant writing. The victors of this political game gain more the freedom to dictate healthcare, unimpeded by competition.

Unfortunately, alternatives to such grants are few and far between- the House voted unanimously to pass the legislation. As soon as the Covid-19 emergency order hit, too many small providers (already weakened by the state’s preferential treatment to those in the UVM health network) stood ready to fall. Even a perfect grant process would not save them. When the crisis abates, the only way to ensure that the next crisis does not kill more Vermont small providers is to reduce the unnecessary regulations that cocoon Big Healthcare from innovative competitors, such as Certificate of Need (CON) laws. It is far easier for the government to destroy than to protect.

To watch the discussion in the House, click here

David Flemming is a policy analyst at the Ethan Allen Institute.

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