Brattleboro hospital projects more deficit spending as it reveals ‘significant deficiencies’

BRATTLEBORO — Brattleboro Memorial Hospital is projecting a seventh consecutive year of deficit spending in its fiscal 2027 budget, even with the proposed closure of its financially ailing birthing center.

“We are not financially stable at this time, but we are stabilizing,” a team of new hospital leaders wrote this week in a required state filing they said was a month late due to recent administrative and accounting upheaval.

The hospital, now operating on a $130 million annual budget, is forecasting a $7.1 million shortfall for the coming fiscal year that begins Oct. 1. That would follow operating losses of $33.6 million from 2017 through 2025 and an estimated $9.5 million for 2026, its report shows.

Even if the hospital shuts down its money-losing birthing center — scheduled in the submission for Dec. 31 — it doesn’t anticipate breaking even on an overall annual budget until fiscal year 2028 at the earliest.

“BMH recognizes the gravity of its hospital-wide financial position,” its leaders wrote in their filing to state regulators at the Green Mountain Care Board, which assesses and must approve budgets. “As we work through the turn-around at BMH, we are cleaning up as we go.”

The filing marks the first time the hospital has publicly specified its problems. But it leaves many unanswered questions for regulators, who are set to review the report at an online public hearing Aug. 14.

Last fall, regulators said they were “deeply concerned about BMH’s solvency” and ordered the hospital to recalculate its current budget or risk becoming the first to receive a state-appointed monitor under a new law adopted to control costs. After seeing the revisions over the winter, regulators limited their response to a warning, although they can still call for some sort of intervention.

The hospital has operated with acting administrators since former president Christopher Dougherty exited without explanation in November and former chief financial officer Laura Bruno departed amid similar silence in December.

“The current situation,” acting co-CEOs Tony Blofson and Elizabeth McLarney wrote in their submission to the state, “did not happen overnight.”

In its filing, the hospital reports operating losses of $2.4 million in 2017, $1.9 million in 2018, $1.59 million in 2021, $3.8 million in 2022, $1.89 million in 2023, $6.16 million in 2024 and $15.77 million in 2025.

The acting co-CEOs and financial advisor David Sanville wrote that they initially found the hospital “non-compliant with required filings and data submissions with any number of state agencies, federal agencies and regional healthcare entities,” months behind in paying its state provider tax and “in default with its bond financing and making payroll.”

The new leaders said they hired consultants who discovered “significant deficiencies” in “processes, workflows, financial platforms and the electronic medical record.”

“As a result, all internal and external reporting was unhelpful and inaccurate in most cases,” wrote the leaders, who requested and received more than $1 million in state grants to start fixing the systems.

The filing doesn’t elaborate further on past errors, present efforts or future effects.

The hospital recently sparked public rallies and calls for municipal subsidies when it announced it would shutter its obstetric services if it can’t find a way to cover an estimated annual unit loss of $4.8 million — half of the southeastern Vermont healthcare hub’s overall projected 2026 deficit.

In its filing, the hospital said it had allocated money to keep the birthing center open until the end of the calendar year.

“BMH does not want to end this service,” leaders wrote. “We continue to seek alternatives.”

But administrators said rising costs and declining birth rates made closure by Dec. 31 “a necessary decision” without a long-term plan such as a recent clinicians’ call to raise Medicaid obstetric reimbursement rates — a suggestion under review by the state Agency of Human Services.

Regulators are scheduled to comment on the overall hospital situation Aug. 14 when they review a list of other reported challenges ranging from higher operating costs to lower insurance reimbursements to the retirement of several longtime cardiology, oncology and urology specialists.

Administrators, for their part, expect to have to answer for their predecessors.

“Years of non-responsiveness to agencies, regulators and other external entities are an ongoing and often surprising complication to day-to-day activities and progress,” they wrote in their submission. “We continue to mend fences.”

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