Cutting the medicine, not the management

The three cuts, and what they add up to

In the space of five weeks this summer, the University of Vermont Health Network announced three cost-cutting measures, each aimed at a system its new chief executive concedes is bleeding cash faster than it can sustain.

On June 9 it eliminated 142 positions — 76 cut outright, 66 restructured — for an estimated $9.5 million a year. On June 29 it confirmed a productivity mandate on its 1,000-plus employed physicians: less administrative time, less control over their own calendars, time-off requests three months in advance, and shorter appointments — a Central Vermont rheumatologist, Teresa Fama, described being told to cut follow-ups from 30 minutes to 20 for patients she has treated for close to 20 years. And on July 2 it disclosed that in September it will stop covering GLP-1 weight-loss drugs — Zepbound, Wegovy and the like — for the more than 10,000 employees and dependents on its own health plan, saving a projected $19 million a year. Coverage continues only for diabetes. A network nurse who lost 70 pounds on Zepbound told reporters the prospect of paying the roughly $1,086 monthly list price made her "sick to her stomach."

Set against the hole they are meant to fill, the arithmetic is unforgiving.

The headline sum the network's critics reach for — $19M + $55M + $50M ≈ $124 million — is misleading, and worth pulling apart honestly. The ">$50 million" in the FY2027 budget filed with regulators on July 1 is itself built from "stricter doctor schedules, no executive bonuses and further staffing cuts" — meaning it already contains the physician-scheduling savings counted in the $55 million line, and the June layoffs' $9.5 million besides. Strip out the double-counting and the genuinely distinct new savings come to something closer to $70 million a year. And the $55 million is not money in the bank: it is the state-appointed liaison team's estimate of how much the outpatient group's losses might shrink if productivity improves, not audited savings.

Now the hole. An independent liaison team appointed under the network's 2025 settlement with regulators concluded in May that UVM Health must cut expenses by at least $300 million over three years — roughly $100 million a year — or face a projected $414 million operating deficit by 2030. UVM Medical Center, the Burlington flagship, is losing about $460,000 every day, which its chief executive told lawmakers in April works out to roughly $160 million a year for that one hospital alone. On top of this comes a further squeeze in 2027, when the Medicaid cuts in last summer's federal reconciliation law begin to bite — the network has warned of a scenario with up to $100 million in additional lost revenue.

So the three cuts, de-duplicated, cover roughly three-quarters of a single year of a three-year problem, and less than half of the Burlington flagship's annual cash loss. They are a down payment. What matters more is where the knife is pointed — and it is pointed almost entirely at workers and patients. Of the distinct savings, everything but the $7–10 million pause on executive bonuses falls on employees, on the clinical frontline, or on patients who will wait the same 96 days for an appointment and then get 20 minutes instead of 30. Only that one line — the bonus pause, for about 200 leadership staff — lands on the administration.

Which is a problem, because the administration is precisely where the state says the money is.

The diagnosis the network is ignoring

Vermont is one of the few states that still rate-regulates its hospitals, and its Green Mountain Care Board has spent two years putting on the record, in audited budget orders, where UVM Medical Center's costs are out of line. The finding is consistent, and it is not about doctors or nurses.

In its FY2025 budget order, the board measured UVMMC's ratio of administrative and general salaries to clinical salaries — a standard efficiency gauge, where lower is leaner — and found it at 31.0 percent, higher than its comparator hospitals. In the same order it noted that of the new positions UVMMC had budgeted, 43 percent were non-clinical. It found the hospital's Medicare payment-to-cost ratio had fallen to 72 percent — the worst among its peers, whose median was 103 percent — and drew the pointed conclusion that "cost inefficiencies exist at UVMMC which, if successfully managed, would decrease expenses." That reframes the network's favorite defense: its Medicare losses are less a story of stingy federal payment than of a high cost base. Roughly a fifth of UVMMC's budget is administrative expense.

The consultant the board hired under Act 167 — Dr. Bruce Hamory of Oliver Wyman, on a roughly $1 million contract — reached the same place by a different route. His report states plainly that UVMMC's "total administrative costs significantly exceed academic medical center benchmarks," and that 203 of the hospital's 654 physician full-time-equivalents — nearly a third — are dedicated to non-patient care. His single top recommendation for the flagship was to "reduce administrative costs (including admin and providers supporting non-patient care)" — not to cut bedside staff. He told the board, per Seven Days, that UVMMC "is among the more expensive in the country and has one of the highest administrative-to-clinical costs," and estimated his recommendations could save Vermont upward of $400 million over five years.

The regulator's language has grown blunter as the network has resisted. In September 2025, announcing the deepest cuts in the board's history, chair Owen Foster described the network itself as "essentially an expensive and ineffective layer of overpriced and unnecessary corporate bureaucracy," one that "does not provide health care." He said UVMMC was "paying tens of millions of dollars of health network expenditures that have not been shown as necessary," and singled out "large and unnecessary health network executive compensation and bonuses."

The executive numbers give that gap a shape. On the network's IRS filings, then-chief executive Sunny Eappen was reported at about $2.15 million in total compensation for the year ending September 2024 (base salary near $1.3 million, plus a bonus). His predecessor, John Brumsted, was paid more than $2 million in his final years running the network, and the filings continued to report $2.2 million (fiscal 2023) and $1.9 million (fiscal 2024) in compensation to him after his November 2022 departure. In January 2025, the network confirmed it had paid its top 19 executives about $3 million in bonuses for 2024 — the same fiscal year it announced it would close inpatient psychiatric beds and end its kidney-transplant program.

Perhaps the most damaging finding is that UVMMC has already demonstrated it can cut overhead without cutting care — and mostly hasn't. When the board enforced UVMMC's $80.3 million overrun of its FY2023 budget cap, its order noted the hospital had found savings "mainly driven by lower shared service expenses within finance administration and revenue cycle" — administrative savings, achieved without reducing patient care. And when the liaison team looked at the 2026 budget in May, it found the opposite of belt-tightening: the network's spending "shows increases in revenue, in FTEs, and in operating expenses, with salary increases of 4 to 5 percent, and some executive salaries increasing even more than that." The team's instruction was explicit — cut administrative and nonclinical costs first.

The network is doing very nearly the reverse.

Priced like a Ferrari

Why is UVM Health so expensive in the first place? Not because Vermont is rural and old — the usual defense — but because of price, and price is a function of market power.

UVM Medical Center holds roughly 85 percent of the Burlington-area hospital market, a concentration nearly three times the federal threshold for "highly concentrated," and the network as a whole accounts for more than half of Vermont's hospital discharges and about two-thirds of its hospital spending. On RAND's national price data (2020–2022), UVMMC's outpatient prices ran about 40 percent above the national benchmark, and an earlier RAND round put its overall prices at 358 percent of Medicare — the most expensive of the seven Vermont hospitals studied. The decisive comparison is Dartmouth-Hitchcock: a comparable rural academic medical center 90 minutes away, with the same teaching, research and standby costs, whose prices sit slightly below that same national benchmark. Rurality does not explain a 40-plus-point gap between two rural academic medical centers on the same river.

And the price is not matched by measured quality. When RAND first flagged UVMMC as Vermont's most expensive hospital, its researcher offered a line that has followed the institution since: it "may be priced like a Ferrari, but there isn't enough information yet to know if it drives more like a Ford." In 2024, Medicare's overall star rating for the hospital slipped from five stars to four.

The money, in other words, came in through price. It went out through two channels the front line does not control: overhead, and a subsidy that crosses a state line.

The subsidy across the lake

The University of Vermont Health Network is not only a Vermont enterprise. Its six hospitals include three in upstate New York — Champlain Valley Physicians Hospital in Plattsburgh, Alice Hyde Medical Center in Malone, and Elizabethtown Community Hospital — and those hospitals lose money, year after year, while the Vermont hospitals generate the surpluses that keep the lights on.

Start with the regulator's own figures, which are the most solid. In its FY2026 order, the board removed a $16 million line item from UVMMC's proposed budget — "funds the health network was going to take out of Vermont and send to the New York hospitals." Separately, Foster noted that in the same year the network shuttered dialysis programs in St. Albans, Rutland and Newport, it "moved $10 million from UVM Medical Center to its New York hospitals." The board's own liaison team found UVMMC had made a net $68.9 million in loans to the New York hospitals, plus roughly $20 million more in affiliation agreements and capital, leading Foster to estimate the network had deprived the flagship of "over a hundred million dollars." He called the whole arrangement a "corporate shell game." This is not new: back in 2017, UVMMC's own chief financial officer confirmed the hospital had made "a variety of cash transfers to our NY hospital affiliates," including a $7.5 million infusion to Plattsburgh "without expectation of repayment."

The larger cumulative estimates come from the advocacy group VT Healthcare 911, computed from federal cost-report data rather than audited books, and should be read as directional: over 2014–2023, the three New York hospitals lost about $62.9 million while the three Vermont hospitals ran a cumulative surplus near $601.6 million. Treat the exact figures with caution; the direction — Vermont surpluses funding New York deficits — is corroborated by the regulator, by the liaison team, and by the network's own past disclosures.

The network's defense, offered by Eappen, is that the New York hospitals "serve older, poorer populations with high Medicaid and Medicare volumes, and reimbursement doesn't cover the cost of care." That is true. It is also, on inspection, an argument for the opposite conclusion — because the entity responsible for that reimbursement is not Vermont. It is New York.

And New York can far more easily afford it. One statistic gets waved around in this debate and should be dismissed at the outset: median household income, which sits near $85,000 in both states and seems to say New York is no richer. It is the wrong measure. A state's capacity to fund a hospital is not set by its middle household; it is set by the aggregate, and above all by the tax base, and New York's is concentrated at a top the median cannot see. New York's top 1 percent of earners — roughly 92,000 households with an average income above $3 million — pay about 46 percent of the state's personal income tax. Vermont, a flatter and more equal state, has no comparable engine.

By the measures that actually bear on fiscal capacity, New York dwarfs Vermont. Its economy is near $2 trillion — about 50 times Vermont's; its enacted budget runs about $237 billion, some 27 times Vermont's $8.5 billion; and its Medicaid program alone, well over $100 billion a year, is larger than Vermont's entire gross domestic product. New York sets its own Medicaid rates: it is New York's choice how fully those rates cover the cost of care in Plattsburgh and Malone. It has also built, and funds, programs designed for exactly this kind of hospital — its Vital Access Provider Assurance Program is a multibillion-dollar Medicaid pool for distressed safety-net hospitals, financed by precisely the high earners the median obscures. Vermont has neither the mechanism nor any business sustaining another state's rural hospitals through the highest commercial insurance premiums in the United States.

Why the three cuts miss

Lay the three summer measures against that diagnosis and the mismatch is complete.

The GLP-1 cut ($19 million) falls entirely on 10,000 employees and their families. It touches neither the administrative overhead the regulator flagged nor the New York subsidy. It is a benefit takeaway dressed as a structural fix.

The productivity mandate (up to $55 million of loss reduction) squeezes the clinical frontline — shorter visits, less scheduling control — and, through it, patients. The outpatient group's $280 million deficit is real, but the liaison team that identified it also said the network's costs should be cut on the administrative side first. Asking rheumatologists to see patients in 20 minutes does not shrink the corporate layer above them; it shrinks the appointment.

The layoffs ($9.5 million, 142 jobs) are described by the network as largely administrative, and some are. But about a third of the UVMMC positions cut were unionized — lab technicians, patient-support staff — 30 of the cuts fell on the New York hospitals, and Porter Medical Center in Middlebury lost four nurses, three of them in primary care and one in OB/GYN.

The one clearly administrative measure — pausing executive bonuses, worth $7–10 million — is the smallest of the lot, and it pauses variable pay while leaving base salaries "in the millions."

Meanwhile the two drivers the state actually named are being addressed — but by the state, not the network. It was the Green Mountain Care Board that stripped the $16 million bound for New York, cut UVMMC's revenue request by $88.5 million, and forced a 16.7 percent commercial-rate reduction. It was the legislature that passed Act 68, which will cap hospital prices against a percentage of Medicare beginning in fiscal 2027. It was a recovered Blue Cross Blue Shield of Vermont that negotiated a 12.3 percent cut in UVM Health's reimbursement rates, the single largest cause of the network's 2026 cash squeeze.

That is the through-line. The overhead and the New York subsidy are being squeezed by regulators, insurers and lawmakers, over the network's objections. The clinical frontline and the network's own employees are being squeezed by the network itself.

The bottom line

UVM Health's problems are real, and 2026 is genuinely painful: $460,000 a day in losses at the flagship, a $300 million three-year gap, and a fresh Medicaid shock arriving in 2027. Some of what the network is doing is unavoidable, and a system this large will not close a gap this size without touching staffing. An honest account concedes that the productivity numbers are poor — new patients wait 96 days on average against a 23-day national benchmark — and that improving them is worth doing on its own merits.

But the network has been told, by the state regulator that sets its budget and by the consultant it partly funded, that its distinguishing cost problem is the management layer between the money and the medicine, and that its New York hospitals are being carried on Vermont premiums that ought to be New York's responsibility. Both findings are on the record, in audited orders and a $1 million report. The measures announced this summer answer neither. They cut the medicine, defer the management, and leave the subsidy across the lake for the regulator to pry loose $16 million at a time.

A serious plan would invert the priority: bring the administrative-to-clinical ratio and the 203 non-patient-care physician roles toward benchmark before compressing appointment slots; restructure or return the New York hospitals to New York's own well-funded safety-net apparatus rather than to Vermont ratepayers; and let reference-based pricing finish the work on the price side. The tools exist. What the summer's announcements reveal is a network still reaching, first, for the cuts its patients and its own staff will feel — and last, if at all, for the ones its executives would.

This piece draws on the network's June–July 2026 announcements as reported by VTDigger, Vermont Public and Seven Days; on Green Mountain Care Board budget orders and the Act 167 Oliver Wyman report; on IRS Form 990 filings via ProPublica; on RAND hospital-price data; and on the cross-subsidy analysis by VT Healthcare 911, with advocacy-computed figures flagged as such. Every factual claim links to its source.