UVM Health is taking a financial hit owing to steep cuts in insurance reimbursements and rising expenses, forcing the hospital system to absorb sustained losses. The health network’s flagship hospital, University of Vermont Medical Center, is losing $460,000 each day, UVM Health CEO Dr. Stephen Leffler, told lawmakers on Tuesday.
The finances are prompting a wave of cost-saving measures, which state regulators describe as long-expected consequences of Vermont’s health care cost containment strategy.
Leffler, who is also the chief operating officer of the UVM Medical Center, shared that update with members of the House Health Care Committee days after he presented similar figures at a quarterly staff town hall.
The medical center lost roughly $48 million in the first quarter of 2026, partly because a new Blue Cross Blue Shield of Vermont contract that took effect January 1 reduced what it can charge for services by an average of 12 percent. Cuts were steeper for some services. Payments for MRIs, CT scans and routine blood tests, for instance, are down by 25 percent or more.
While the financial losses were stark, Leffler and state regulators said the changes were not unexpected, pointing to the new contract and broader constraints on hospital pricing in Vermont’s regulated health care system.
“It’s not surprising to me,” Leffler said, citing the recent changes. “But it is more than we can sustain at this pace, and it’s driving urgency to make changes quicker than we might do otherwise.”
UVM Health had cut more than $8 million in administrative costs through position consolidations before 2026. Leffler, appointed CEO in January by the UVM Health board following last fall’s departure of Sunny Eappen, said the organization now has fewer senior leaders.
Leffler has said he does not plan to cut patient services in 2026.
The system has about 128 days of cash on hand, down from 148 in October, Leffler said. He warned that continued reductions in reimbursement could result in another $100 million in lost revenue in 2027, which would require equivalent expense cuts to avoid additional losses.
The latest cost-saving efforts focus on boosting provider productivity and trimming administrative costs, including reducing staffing redundancies. Scheduling changes were made to increase patient volume and reduce cancellations.
UVM Medical Center began negotiating a new contract on Wednesday with a union representing roughly 3,000 support staff and technical workers. Leffler cautioned that the agreement could exceed the hospital’s expense cap, though the potential consequences of that outcome were not immediately clear to Leffler or lawmakers.
Sophia Simkins, a member of the Vermont Federation of Nurses and Health Professionals, which represents unionized nurses, said that UVM Health could do more to create a sustainable financial outlook “without risking patient safety by asking already overworked health care workers to take on larger and larger patient loads.” The nurses’ union has called on hospital and state leaders to tax the ultra wealthy to fund universal health care in Vermont.
“The question is, do our leaders have the guts to do it?” Simkins asked.
Leffler said the cost-saving measures are being implemented urgently but described it as “a tight balance” to cut expenses while maintaining high-quality care.
A newly formed Sustainability Council has been tasked with identifying $100 million in additional savings by October, focusing on productivity, staffing efficiency and systemwide operations. Leffler acknowledged that the changes carry risk, saying the system must reduce spending “without breaking things,” but added current conditions leave little choice.
Owen Foster, chair of the Green Mountain Care Board, the independent state panel that regulates Vermont’s health care system, said he was encouraged to see UVM Health focusing on both provider productivity and administrative costs.
“We have to get a grip on the cost of our care. We just have to, or the system’s not going to survive,” Foster said. “Frankly, I think the system’s a little delayed in starting that earnest effort.”
The revenue losses did not surprise him. “This is the reckoning that we’ve all known was coming,” Foster said, ever since a 2024 report warned that urgent transformation of Vermont’s health care system was needed.
The same dynamic applies to insurance rates, Foster said.
“No one wants to see a 10 or 20 percent commercial rate increase, right? That’s not acceptable to people,” Foster said. “But then, at the same time, people don’t want to see a change at their hospital. You can’t have it both ways.”
Foster likened the tension to debates over education reform and school consolidation, where there is broad support for lowering costs but resistance when changes such as consolidation affect local schools.
Rep. Alyssa Black (D-Essex), chair of the House Health Care Committee, agreed that revenue pressures are “to be expected, and they will continue” as policymakers push to shift more care out of hospital settings to reduce costs.
“I hope that our hospital system, and the boards, directors and CEOs of all of our hospitals, take this as a challenge to rein in costs, find efficiencies and transform,” she said.
Black said said she was encouraged by Leffler’s candor and the evidence that UVM Health is taking serious measures to address the ongoing financial challenges.
“I really do believe that he will rise to the challenge,” she said.
Mike Fisher, chief health care advocate, said a clearer picture of UVM Health’s finances and Vermonters’ use of health care services is unlikely to emerge until later this year, as demand for care changes over time. He added that this year may be harder to read than usual, as coverage patterns have shifted following the expiration of enhanced Affordable Care Act subsidies, which left many people facing significantly higher premiums. Fisher noted that Leffler’s update coincided with the House Health Care Committee preparing to take up a bill that could further reduce hospital revenue.
On Tuesday, Black said that the committee will soon consider a bill that would give the Green Mountain Care Board new authority to cap hospital charges using a reference-based pricing model tied to benchmark rates rather than hospital-set prices. Black said she hopes the bill will help smooth the transition to the broader reference-based pricing system scheduled to take effect in 2029.
“Maybe this is a good way to dip a toe in the water so it won’t be such a shock to the system,” she said.
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