Colodny announces more FAHC expenses

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(Host) The state’s largest hospital says the cost of its major renovation project has gone up by tens of millions of dollars. The disclosure shocked state regulators. They said hospital administrators had apparently deliberately deceived the state about the project’s costs. Fletcher Allen Health Care is asking the state for permission to spend an additional $98 million on the project.

VPR’s John Dillon has more:

(Dillon) This is the third time the state has learned that the Renaissance Project at Fletcher Allen Health Care in Burlington will cost more than what the hospital promised. First, there was a $55 million parking garage that the hospital kept off the books in an apparent attempt to avoid state oversight. Then, in October the hospital revealed it spent $26 million in additional, unapproved project costs. On Friday, there was more bad news.

(Colodny) “In my letter to Commissioner Costle, I state that Fletcher Allen should have sought approval for the $81.3 million in planned expenses for the Renaissance project.”

(Dillon) Interim hospital CEO Ed Colodny went before reporters on Friday and detailed the latest disclosures. He says the $81 million that the hospital failed to get approval to spend includes the October disclosure. Colodny says he’s pledged to work with state Banking and Insurance Commissioner Elizabeth Costle:

(Colodny) “…and I apologize to her on behalf of the organization for the failure to seek this approval. Today, I also extend that apology to the community at large and to all the employees at Fletcher Allen.”

(Dillon) Colodny is a former airline executive who was hired in October to replace Fletcher Allen President William Boettcher, who quit this fall. Since he was hired, Colodny has been plowing through the hospital’s books to get a handle on the entire project.

He told Costle this week that the Renaissance development will cost $326 million- that’s $153 million more than what the hospital originally got approval to spend.

Colodny says the numbers he announced Friday are accurate – but that he can’t guarantee there won’t be additional disclosures:

(Colodny) “I can’t answer the question of how you should believe me. Um, you’ll have to take my word for it at the moment, until…. If I find we’re wrong, I will be standing here again and telling you. But right now I believe the facts, to the best of our knowledge, are what I’ve represented to you.”

(Dillon) Vermont law requires hospitals to get state approval before spending more than $1.5 million on major budget items. The process is called a “certificate of need” review and it’s designed so the hospital can show the project is justified on a cost-benefit basis.

Susan Gretkowski, the deputy Banking and Insurance commissioner, says the system works on trust to some degree. She says Fletcher Allen misled regulators:

(Gretkowski) “Well, it’s clearly troubling and a little, you know, insulting I would think, to have been treated this way – especially when we were assured all along that we were being given all the information that they had in order to make the decisions on the application that we had to make.”

(Dillon) Fletcher Allen has assured the state that it has borrowed enough money to do the Renaissance work. But Colodny says the hospital will now have to differ or eliminate almost $78 million in other expenditures over the next five years.

The hospital also faces state and federal criminal investigations related to its finances.

For Vermont Public Radio, I’m John Dillon.

(Host) VPR’s Patti Daniels contributed to this story.

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