Tuesday, March 11, 2014
AUGUSTA -- People are using MaineGeneral Medical Center facilities less than the company had predicted, so the central Maine hospital system has fewer patients to treat and less money coming in.
Scott B. Bullock, MaineGeneral Health president
That means people are either healthier, managing their health better or simply not going to the local hospital for needed care, MaineGeneral officials say.
Whatever the reason, the trend has put a dent in the hospital system's finances as it continues an expensive project to consolidate its in-patient services at a new regional hospital.
The system's operating income has been almost halved for the first five months of its fiscal year. The hospital system expected $4.75 million and brought in $2.4 million, according to MaineGeneral Health President Scott Bullock.
Despite the financial letdown, MaineGeneral's plans to construct a $310 million regional hospital near Interstate 95's Exit 113 in north Augusta haven't been affected, Bullock said.
"The amount borrowed (for the new hospital) is sufficient to build and to pay interest until it opens," Bullock said. "The people who loaned us the money want to be absolutely certain that the hospital is built."
The regional hospital will have 192 patient beds, each in private rooms, and replace in-patient hospitals at the Thayer Campus in Waterville and South Chestnut Street in Augusta.
Part of the plan to make up the revenue shortfall is a loss of "earned time" for two pay periods for all MaineGeneral workers, and three pay periods for senior management and administrators. That cost-cutting measure is estimated to reduce expenses by $1.5 million.
Those details are outlined in a recent memo Bullock sent to the 3,800-plus workers at MaineGeneral facilities. At MaineGeneral and its affiliates, earned time comprises hours that can be used for vacation, holiday and sick time.
In addition, hospital administrators have carved another $3.5 million from the budget.
Four years ago, MaineGeneral took similar action to plug a $500,000 hole, suspending earned time for one pay period for all employees and two pay periods for senior vice presidents.
But the circumstances were far different, Bullock said.
"Now we're trying to maintain a very strong financial position," Bullock said. "Four years ago we were trying to dig out of significant hole. Having a new hospital under construction and changes in environment make it important for us to act quickly rather than wait. We need to keep our current healthy financial performance, making sure each year we achieve our budgeted operating margins."
In the memo, Bullock listed reasons for the recent decrease in income:
• the impact of a struggling economy;
• changes in treatment protocol, primarily in cancer treatment; and
• efforts to improve health care treatment, reduce re-admissions and redirect some patients to primary or urgent care facilities, instead of the more expensive emergency departments.
Tough times for hospitals
Steven Michaud, president of the Maine Hospital Association, said hospitals across the state and the country are still reeling from "very substantial reductions in the use of hospital services," since the Great Recession.
"We thought it must be people struggling financially, and we figured it would come back at some point, but we've never really seen it come back," Michaud said. "It's an interesting and puzzling thing we've seen. We think it's a combination of things, with the economic climate -- you're going to put it (care) off, if you can."
In addition, hospitals are increasingly working to keep people healthier through disease management and preventative measures, he said.
"It's certainly a good thing, but it means (Maine hospitals') volume is down," Michaud said. "So, they (MaineGeneral) are not alone. It's a nationwide effect."
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