UVM Health Network CEO grapples with how to make health care affordable in Vermont

Dan D’Ambrosio, July 31, 2025

In September 2024, UVM Health Network's top executives fired a shot across the bow of the Green Mountain Care Board, the regulatory body that approves hospital budgets in Vermont.

The executives sent an email to patients and community leaders, warning that major reductions by the board to the Network's budget for the coming year would result in cuts to care, directly affecting patients.

The email was signed by Dr. Sunny Eappen, president and CEO of the UVM Health Network; Anna Noonan, president and chief operating officer of Central Vermont Medical Center in Berlin; Bob Ortmyer, president of Porter Medical Center in Middlebury; and Dr. Stephen Leffler, president and chief operating officer of UVM Medical Center in Burlington − all of the top executives in Vermont. The UVM Network also has three hospitals across Lake Champlain in New York.

A month later, in October 2024, UVM Medical Center filed a motion with the Green Mountain Care Board to delay the board's decision to penalize the hospital for, as UVMMC put it, "delivering necessary care to patients in fiscal year 2023." UVMMC had exceeded its patient revenue cap, set by the Green Mountain Care Board in an effort to control health care costs in Vermont.

The hospital also appealed the board's decision to require major reductions in UVM Medical Center's 2025 budget, saying it would force the hospital to cut $122 million of patient care revenue for the current fiscal year.

In November 2024, UVM Health Network did cut $122 million in jobs and patient services, including closing its primary care practice in Waitsfield, shutting down its dialysis clinics in St. Albans, Rutland and Newport, and closing the inpatient psychiatric unit at Central Vermont Medical Center. The decision brought a strong backlash of disapproval from both the public and the network's own employees.

The Green Mountain Care Board quickly responded to the cuts, saying it had not been consulted and did not approve of the reductions.

"The GMCB approved a $1.9 billion budget for UVMMC for FY25, an increase of $64 million over UVMMC's FY 24 budget," the board's statement said. "As set forth in its budget order, the GMCB found that compared to other hospitals UVMMC has significant opportunity to improve its expense management and control the excessively high prices it charges commercially insured Vermonters."

What a difference a year makes.

UVM Health Network submits compliant budgets to the Green Mountain Care Board

In a recent interview with the Burlington Free Press, Eappen said that for the first time since he became CEO of the network in 2022 − and perhaps for the first time ever − the Vermont hospitals have submitted compliant budgets to the board, in terms of both revenue and expenses.

"This year for the first time we said, 'OK, we're going to do whatever we can to get to that compliant budget, which meant reducing our commercial rates by 7.9% for UVMMC," Eappen said. "For CVMC it was 3.3% negative. At Porter it stayed at a 3% increase, which is the smallest of our three (hospitals) as far as revenue goes."

Eappen said the network is also compliant on the expense side, keeping the increase to 3.5% as mandated by the Green Mountain Care Board, even though the network has already committed to significant wage increases for frontline staff.

"So that meant we had to reduce other expenses in some way and reduce the number of people by eliminating the open positions," he said. "Eventually it will mean some people's jobs are going to be changed as well. They're going to lose them or they're going to have to take another position that's more in the clinical space."

On July 29, Eappen announced UVM Health Network would be cutting 146 positions, including 77 jobs that were currently filled, resulting in layoffs. The other cuts were for open positions that won't be filled. Eappen said most of the cuts were in administrative jobs and jobs that don't involve direct patient care.

"I'm sorry for the disruption and uncertainty these actions create for our colleagues who are impacted," he said in a news release. "I want to thank them for their dedication to our patients and for their work in supporting our health system."

Compliant budgets are nice, but there is still a problem

Owen Foster, chair of the Green Mountain Care Board, provided a statement to the Free Press prior to Eappen's announcement of job cuts, saying more needs to be done to reduce costs, because the network's cost structure, like the entire state's health care cost structure, is not sustainable.

"We have some of the highest healthcare costs in the country, and people simply cannot afford to pay more," Foster said. "These healthcare costs hurt our access to care, are contrary to our State's demographic goals, and are unfair. We will need to see system-wide transformation in the very near term so that we can protect essential services and ensure Vermonters have access to critical services in their communities."

The Green Mountain Care Board is working with a team from the UVM Health Network to "evaluate and address these realities," according to Foster.

Variable pay does not equal a bonus. Here's an explanation:

One of the realities the network has already addressed is the money it paid its top executives and other hospital leaders in 2024 in the form of variable pay, which most people would understand as bonuses. It was not a good look juxtaposed to the hospital's insistence that it had to cut services and jobs because of what the Green Mountain Care Board was demanding of it.

Eappen explained how variable pay differs from bonuses. Bonuses are paid on top of a person's regular salary. Variable pay is part of a person's regular salary, bringing that salary to the level the employee expects if their performance meets certain goals. In 2023, those goals were met, triggering the variable pay for network leaders in 2024. Even then, Eappen said, most people don't receive 100% of their variable pay.

Eappen said the nearly $600,000 in variable pay he received in 2024, bringing his total salary to about $1.9 million, represented 85% of what he could have earned in variable pay. It's an amount most Vermonters can't imagine making, and Eappen did himself no favors when he told legislators he thought his variable pay in 2024 was about $400,000, later correcting the record to say he actually received $596,073.

Even with their big paychecks, UVM Network executives make less than half of their counterparts in the country

To put these eye-watering salaries in context, Eappen said the network strives to pay its executives and other leaders at the 50th percentile, meaning that 50% of executives and hospital leaders in similarly sized organizations across the nation earn less than what the network is paying, and 50% earn more. This is an important number to understand in terms of recruiting and retaining top talent, according to Eappen.

"So the challenge for us on the recruitment piece is people come in with the understanding you're paying at the 50th percentile," Eappen said. "If you get 100% of your variable pay you will reach the 50th percentile. That's our goal."

In Eappen's case, he was in the 35th percentile in 2024 after receiving his variable pay, according to Annie Mackin, spokesperson for the network.

Eappen said some network leaders and executives were upset when they learned there would be no variable pay in 2025.

"It's because people come in with the expectation there's an opportunity to get your full compensation," Eappen said. "People think about variable pay and bonuses as the same thing, but they're really not."

The difference makes Eappen worry about recruiting and keeping top talent in the future.

"Recruiting people and saying, 'Hey, we'd love you to come here, we want to get the best people and we're going to pay you at the 30th percentile,' makes it challenging," Eappen said. "That's the fear. Even at the 50th percentile you're just down the middle. You hope you can make it up by saying what a great place (Vermont) is."

The network's board will make a decision in October about whether or not to reinstate variable pay for FY26.

"No one has said anything about restoring it," Eappen said. "They just said they'll make a decision. They have an amazing amount of flexibility. They can do a small amount, a lot smaller than before. I think they're going to be very deliberate because they don't want to put something out there and pull it back."

Would you take the job of fixing Vermont's health care crisis for a $400,000 salary?

Chris Pearson, a former state legislator and current board member of VT Healthcare 911, has a very different perspective from Eappen's on executive pay in the UVM Health Network, pointing out that Eappen would have made about $1.3 million in 2024 even without his $600,000 in variable pay.

"Where do we get off this train?" Pearson asked. "We pay the governor just over $200,000. We pay Bernie and Welch maybe $175,000. We pay Owen Foster something like $180,000. These are not poverty wages, but you attract people who have some experience, who certainly are well paid, but not paid that every month. I don't know. Do we really not believe there are Vermont leaders who would relish the challenge of right-sizing our health care system, and would do it for $400,000, what we pay the president of the United States?"

VT Healthcare 911 is a nonprofit organization that formed soon after the network announced its cuts in 2024, bringing together political, health care and business leaders to "begin a conversation" to reduce health care costs in Vermont and improve access. The organization has been very critical of the UVM Health Network, using data from various sources to point out the network's shortcomings, particularly on controlling expenses.

Full story at https://www.burlingtonfreepress.com