FAHC admits $26 million in additional cost overruns

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(Host) Vermont’s largest hospital has reported another $26 million in cost overruns for its massive redevelopment project. The disclosure shocked state regulators, who are continuing to investigate Fletcher Allen Health care in Burlington.

VPR’s John Dillon reports.

(Dillon) The Renaissance Project at Fletcher Allen Health Care in Burlington was already going to cost $228 million. Now the price has ballooned another $26 million. State regulators say that includes both cost overruns and money that the hospital knew it would have to spend but failed to include in its cost estimates.

Banking and Insurance Commissioner Betsy Costle says the hospital knew two years ago that part of the project would be more expensive than it had disclosed.

(Costle) “Ohh…. They should have told us when they came in, in 2000. The statute’s quite clear.”

(Dillon) Fletcher Allen has already settled a case with the state over its $55 million parking garage. The hospital’s former chief financial officer has testified that the garage was kept off the books in order to mislead regulators.

The new overruns involve the Education Center at the hospital, which will cost $12.6 million more than planned. The hospital will also spend more money than it had disclosed on temporary parking lots, temporary buildings and other infrastructure work.

Costle says the Renaisance Project budget just kept growing and growing but regulators were kept in the dark.

(Costle) “I don’t think the board understood the scope of the project. I don’t think they knew. I think it became sort of a stealth project and there were obviously people in management who did. I think it grew and its growth was not brought to regulators who needed to look at it and I don’t think it was brought to their board. It was just sort of hidden.”

(Dillon) The hospital’s chief executive, William Boettcher, resigned last month. The revelations about the overruns came as former University of Vermont President Ed Colodny took over the institution.

The hospital late last week also got rid of its law firm that worked on the Rennaissance project with regulators. Costle says she’s impressed by Colodny and the team he’s brought in.

(Costle) “We’re going to be working with them to make sure we do get the whole truth. And frankly I think that Ed Colodny and the board really want to get at the whole truth. They don’t want things coming out like this month and next month. Everybody has an interest in finding out what the whole story is and then finding a strategy to go forward.”

(Dillon) Costle says she’s concerned that Fletcher Allen has set the wrong priorities and has chosen to invest in bricks and mortar rather than on improvements directly related to patient care.

Meanwhile, federal authorities are also pursuing a criminal investigation involving Fletcher Allen Health Care.

For Vermont Public Radio, I’m John Dillon.

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