Image by ngoc202020 from PixabayVermont’s health care system is in crisis.
The state’s largest insurer, Blue Cross Blue Shield of Vermont, is facing insolvency after four consecutive years of losses, and rural hospitals are posting negative margins and hemorrhaging cash.
The ripple effect could upend care delivery across the state, with deep implications for outpatient surgical centers, particularly the state’s sole remaining multi-specialty ambulatory surgery center, Green Mountain Surgery Center.
“That’s a majority of people’s health care coverage,” Liz Hunt, director of finance and operations at Green Mountain Surgery Center, told ASC News. “And right now, you know, in Vermont, we have the exchange, which is a way to go on and purchase your own health care insurance. Those costs are outrageous.”
According to Hunt, escalating premiums, driven largely by the rising reimbursement rates paid to hospitals, have made insurance unaffordable for many Vermonters.
“I know some people are paying upwards of $5,000, $6,000 a month for health care,” she said. “And really, it’s because of the continued increase in reimbursement to hospitals, and then, of course, that falls back onto the insurers.”
What’s happening in Vermont is not just a pricing problem; it’s a structural one, Hunt said. Years of consolidation in the hospital and insurance markets have created a fragile ecosystem where independent providers struggle to survive.
It’s also a trend happening in other states, as most markets have seen a steady consolidation of hospitals and payers over the years.
“And so, 10 to 15 years ago, really, what happened was this consolidation of our health care system,” she said. “As we see with the independents, they’re getting less and less [reimbursement]. It’s quite literally getting to the point of it’s no longer a viable option to not be eaten up by the hospital.”
The consequences are fewer choices for patients, less leverage for independent ASCs and a shrinking path for physician entrepreneurship, Hunt added.
And while the quality of care at independent practices remains high, those providers are often on the verge of financial collapse, Hunt said. Meanwhile, larger systems are less efficient, leading to long referral delays and more patients ending up in emergency rooms.
“It’s that trickle-down effect of you having people waiting a long time because efficiencies aren’t well managed by such a large entity, and people are getting sick, they’re ending up in the ER,” Hunt said. “That’s costing health care payer dollars.”
Blue Cross Blue Shield of Vermont ended 2024 with a $62 million loss. If the insurer fails, 70,000 Vermonters would be left without coverage, and the state’s fragile network of providers would likely follow.
“I don’t want to be hyperbolic, but it would be devastating,” Owen Foster, chair of the Green Mountain Care Board, told ASC News.
A spokesperson for Blue Cross Blue Shield of Vermont told ASC News that premiums, and expenses for medical care and pharmaceuticals, are unaffordable for many Vermont families and local businesses.
“Health care costs charged to commercial payers in Vermont are growing at an astounding rate, with claims paid for Blue Cross VT members increasing by 17% per year since 2020,” Sara Teachout, corporate director of government and media relations for Blue Cross Blue Shield Vermont, told ASC News via email.
Blue Cross VT’s spend is 33.5% higher than the average for Blues plans in the Northeast and 42.7% higher than the national average, she added.
“Charges from Vermont hospitals and the health care system account for most of the difference,” she said. “These affordability challenges now threaten the viability of our entire health care system and are challenging our economy.”
The bigger picture
Michael McClain, managing partner at LeftCoast Healthcare Advisors, told ASC News he sees Vermont as a preview of broader national trends.
“What our ASC colleagues in Vermont are experiencing is exactly what the problem is,” McClain said. “This is not just a rate problem; it’s a systemic failure to recognize the realities faced by physicians and small ASCs.”
McClain pointed to the hidden labor that often goes uncompensated in outpatient settings: pre-op screening, coordinating diagnostics and navigating prior authorizations.
“The ASC doesn’t get compensated. Neither does the physician practice,” he said. “In a hospital setting, hospitals get paid to do that work.”
Historically, physicians who owned stakes in ASCs had financial incentives that made the inconvenience and risk worthwhile. But that equation has shifted.
“Physicians are no longer incentivized in any way for that level of risk and inconvenience,” McClain said. “So it’s become a race to the bottom.”
Vermont’s certificate-of-need (CON) laws have long made it difficult for new ASCs to open, limiting competition and alternative care options. That’s slowly changing. A new law poised for the governor’s signature would increase the spending threshold that triggers CON review from roughly $3 million to $10 million.
Even so, Foster said the damage is already done.
“We’ve had CON laws and a culture that has not historically been that open minded or favorable to those kinds of providers,” he said.
When Green Mountain Surgery Center tried to open in 2018, there was a battle, he said.
“[There was] behemoth opposition,” Foster said. “And in hindsight, that opposition was wrong.”
Yet the ASC has since proven its value, offering high-quality care that is cost-effective, he said.
“They provide good care, have high quality, they’re quite a bit more affordable, they’re accessible, and they run a good operation,” Foster said. “And they’ve required others to compete.”
The role of ASCs in the solution
ASCs could be positioned as a potential stabilizing force in a system teetering on collapse, Foster said.
“ASCs can play an important role in the sustainability of affordable health care,” he said. “There was a gap in care [before Green Mountain],” he said. “You couldn’t get access to a lot of those services, or you couldn’t get access to them very timely.”
Hunt echoed that sentiment.
“The care is phenomenal,” she said of independent outpatient providers. “It’s timely.”
As Vermont officials scramble to reimagine care delivery, ASCs are increasingly being discussed not as competitors to hospitals, but as essential partners in a system that needs more access points – not fewer.
“They could be a real positive adjunct to a hospital system,” Foster said. “If there is a hospital closure, an ASC can really fill part of that void. In rural or underserved areas especially, ASCs could help fill widening gaps in access without the cost burden of hospital-based care.”
And Vermont’s descent into crisis is not an anomaly, it’s a warning, Foster said.
“A lot of what’s happening in Vermont has already happened in other states, and is happening in other states,” Foster said. “Insurer depletion, … rural hospital closures, … they’re happening all the time.”
For ASCs across the country, there are lessons. Inflexible regulation and failure to support physician alignment can collapse entire systems.
“Vermont, unfortunately, can become a pretty good but sad example of what happens when policies don’t keep up with economic and financial drivers,” Hunt said.
