MILLINOCKET – Millinocket Regional Hospital hopes to become a critical access hospital by fall.

The change in its operating status – from an acute care facility to a critical access hospital – will make the small, financially troubled hospital eligible for higher Medicare and Medicaid reimbursements.

Maine hospitals are among the lowest-paid in the nation for Medicare reimbursements, ranking 46 according to information from officials at the Maine Hospital Association.

Small rural hospitals like MRH, which serve a large number of Medicare and Medicaid patients, are the hardest hit. MRH is reimbursed about 85 cents for every dollar it spends treating Medicare patients.

Richard Waller, MRH’s chief executive officer, said the change is expected to provide full-cost reimbursements for the Medicare and Medicaid inpatients and outpatients treated at the hospital. He said the change could translate into $1 million more in Medicare reimbursements alone.

Waller said the reimbursements that will come from the critical access hospital designation would be a tremendous tool to help the hospital become a much healthier organization.

Earlier, MRH was forced to cut about 7 percent of its work force as the result of a $1 million operating loss during the first six months of its fiscal year, since last July.

The equivalent of 15 full-time positions out of about 210 were cut. Admissions at the 42-bed hospital have dropped by about 25 percent, from a daily average of 11 to about eight per day. The average length a patient stays at the hospital has dropped to four days.

Waller said the hospital’s finances have improved. “In March, April and May, through a combination of changes in our expenses, improvements in our reimbursements and increased demand for services, we have seen the financial position of the hospital improve,” he said. He expects the hospital will end the fiscal year on June 30 with a deficit, but the exact amount has yet to be determined.

After hospital officials presented information to a variety of local groups about changing the hospital’s operating status, the hospital board of trustees on May 23 approved seeking the change.

Waller said the process would take several months. He said the hospital expects to complete its application later this month and hopes to receive the new designation by September.

The hospital’s application will be reviewed by the State of Maine Office of Rural Health and Primary Care and then will be approved by the State of Maine Licensing and Certification Division.