Health systems are reducing expenses, restructuring leadership teams, reevaluating employee benefits and eliminating jobs as financial pressures mount. At Burlington, Vt.-based UVM Health, those efforts accelerated after state policy changes reduced annual revenue at the system’s flagship academic medical center by about $220 million beginning Jan. 1.
When Stephen Leffler, MD, took the helm at Burlington-based University of Vermont Health in October, he assessed the health system’s financial future and found what he called a “very clear” need to become much more efficient and control expenses.
Vermont has adopted policies aimed at slowing healthcare spending, including a cap on commercial hospital prices for administered drugs that took effect in January 2026 and a broader commercial hospital price cap scheduled for 2027. The state also uses hospital budget oversight through the Green Mountain Care Board.
For UVM Medical Center, the health system’s flagship academic medical center, legislation affecting home infusion pricing, combined with the state’s fiscal 2026 budget guidance, reduced annual revenue by about $220 million beginning Jan. 1. The reduction represented roughly 10% of the medical center’s total revenue.
“The revenue came out quickly, essentially all at once,” Dr. Leffler told Becker’s.
Rather than treating the revenue loss as a temporary setback, Dr. Leffler said UVM Health used it to rethink how the organization operates. The work extended beyond traditional cost cutting to administrative structure, data, staffing, access and benefit design while preserving clinical services whenever possible.
Since January, UVM Health has announced a series of cost reduction measures. The system eliminated 76 positions and restructured 66 others in June. In July, it said it would suspend insurance coverage of GLP-1 medications prescribed for weight loss for employees and their families beginning Sept. 1. Those actions are part of roughly $300 million in expense reductions over three years as UVM Health works to align spending with lower revenue. Dr. Leffler, who initially served as interim CEO, was named permanent CEO in January.
“For most of my career, we never said affordability was our responsibility,” Dr. Leffler said. “Our responsibility was to provide care to people, to get them the care they needed, and to provide high quality care. We still have to do that, and it’s still job No. 1. But I really think in Vermont, affordability has to be part of everyone’s commitment to be able to deliver care as efficiently as possible, so that our patients can afford it and so that our employers can afford health insurance for them.”
Because about 65% of UVM Health’s budget is tied to salaries and benefits, many of the savings involved workforce and benefit changes. At the same time, the system standardized operational reporting across its hospitals, introducing common definitions and metrics for quality, finances and wait times. It also began tracking affordability measures, including cost per day at the medical center, cost per service, cost per admission and cost per visit.
Dr. Leffler said UVM decided early not to spend its energy trying to reverse the policy changes. He said that approach allowed the organization to concentrate on lowering costs for patients instead of fighting the legislation.
“That actually wouldn’t help anyone,” he said. “That wouldn’t help Vermonters who can’t afford healthcare. That wouldn’t help our staff who are here.”
Patients have already seen some of the changes, Dr. Leffler said. Commercial insurance rates for UVM patients dropped by an average of 12% in 2026. Costs for MRIs and CT scans fell 25%. Dr. Leffler said a patient he knew from his community told him his copay for a CT scan had dropped significantly at a time when fuel was expensive, making a real difference in his monthly budget.
His advice to other CEOs watching similar pressure build: Start now.
“If you have more time to work on this, if you can feel it coming, if it’s one year out, 18 months out, two or three years out, start thinking now about how to be as efficient as possible,” Dr. Leffler said. “Make affordability part of your responsibility. Try to find places you can take costs out, because it takes longer to bring expenses down than it does for revenue to come out, and revenue can come out pretty quickly.”
The budget UVM Health submitted to its state regulator for fiscal 2027 brings in less revenue than the system generated a couple of years ago. Dr. Leffler described that as intentional.
“We believe that’s doing our part to make care more affordable,” he said. “But that only works if you get your expenses down to match it, or you’re not going to be sustainable. The hard part is getting expenses down, and we’re completely focused on that. Literally every day.”
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