February 20, 2013

Farmington hospital to layoff 35-40 citing financial trouble

By Kaitlin Schroeder kschroeder@centralmaine.com
Staff Writer

FARMINGTON -- Franklin Community Health Network will eliminate 35 to 40 positions because of mounting losses, according to its president and CEO, Rebecca Ryder.

click image to enlarge

President and CEO of Franklin Memorial Hospital/Franklin Community Health Network, Rebecca Ryder, explains to area community and organization leaders the financial status of the institutions and how to reduce expenses on Wednesday in Farmington.

Staff photo by David Leaming

click image to enlarge

Gary McGrane, a Franklin County Commissioner, makes a point in reaction to measures to reduce expenses offered by Franklin Memorial Hospital/ Franklin Community Health Network President and CEO Rebecca Ryder on Wednesday.

Staff photo by David Leaming

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The cuts will come mostly from nonclinical and other positions in the 850-employee nonprofit organization, which operates Franklin Memorial Hospital, Ryder said during one of two talks she gave to community leaders Wednesday.

Overall, Ryder said, the network lost about $500,000 a month for the last seven months, which will add up to $5.9 million for the year if the pattern continues.

The layoffs are part of a plan to reduce the organization's expenses by $6 million by June in reaction to the shortfall, Ryder said.

The health network's revenue so far this fiscal year is down 13.3 percent, she said. Its revenue last fiscal year was $90.7 million.

Factors leading to the decline include an increase in charity care, unpaid bills from patients, a decrease in patients and a decrease in government funding, she said.

There has been a 6 percent decline in patients this fiscal year, and Ryder said research indicates the decrease is not a result of less illness or people seeking health care in other hospitals.

The financial setbacks are compounded by the $15.4 million it is owed from the state in payments for MaineCare, Maine's Medicaid program, she said. The debt dates back to 2009.

Ryder said the board of trustees and the financial committee still are discussing what changes will be made by June.

They are deciding whether any of the 11 open positions at the health network can be eliminated, but most of the staff cuts are expected to come from layoffs, she said. The network will make decisions about staff cuts by early March and cut the positions throughout the month, she said.

Last year the network eliminated 52 positions through retirement incentive packages, but that option won't be offered in the coming months, Ryder said.

Between March and May, she and the board plan to research how many physician practices and primary care providers are needed. Ryder and the board also will consider how the health network can treat more patients.

The rest of the cuts will come from trying to restructure the way they provide health care, including deciding whether the network has any unnecessary expenses or service contracts, she said. Ryder and the board still are discussing what those specifics might be.

The rest of the cuts will come from trying to restructure the way they provide health care, including deciding whether the network has any unnecessary expenses or service contracts, she said. Ryder and the board still are discussing what those specifics might be.

The network also is considering charging area towns for NorthStar ambulance, the regional service of greater Franklin County and an affiliate of the network.

The services makes 5,000 calls a year in area towns. It received some federal funding, but that subsidy expires in October, she said.

Ryder said she knows town budgets are stretched thin but said the network may be forced to seek funding from them.

Selectmen from Franklin County towns and the county commissioners were among the leaders who attended the session.

County Commissioner Gary McGrane said he is concerned that the cuts could harm the quality of care.

Ryder said when she and the network staff discuss possible changes and cuts, they focus on retaining quality of service and their ability to provide care.

"Embedded in the very complex legislation are those principles of health and wellness. How we get from where we have an illness system to that wellness focus is the million-dollar -- no, wait, trillion-dollar -- question," she said.

The hospital is among the largest employers in the county. The Verso Paper operation in Jay is the largest, according to Maine's Department of Labor. The paper maker had 1,000 to 1,500 employees in late 2012, the latest data available.

Gov. Paul LePage also made an unrelated visit to the hospital Wednesday to tour the facility. LePage was shown Farmington Family Practice, a primary-care practice in the hospital.

LePage said he is working to pay back the $186 million in Medicaid debt to the state's 39 hospitals, adding he hopes that by mid-May, the Legislature will have passed a budget that will allow the state to pay the debt.

Kaitlin Schroeder -- 861-9252

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