November 06, 2024
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EMMC to reduce operating budget 5% Lower reimbursements from insurers key factor

BANGOR – Eastern Maine Medical Center will cut $15 million from its operating budget to meet rising costs and lower revenues as a result of fewer patients using the regional hospital.

In a newsletter to employees dated Wednesday, Chief Operating Officer Deborah Carey Johnson said the 5 percent cut is necessary because the hospital is in a “serious, but manageable” position.

“The situation will require us to make some hard choices and will demand that each of us remains open to change,” she wrote.

“Our priority is to keep as much of the staff as we can,” Johnson wrote. She said belt tightening would be uncomfortable for many, but she didn’t offer specific examples of where the cutting would be done.

Many of the financial problems cited by Johnson have been hitting hospitals across the state: rising medical costs, insurers demanding deeper discounts to reimbursements and rising costs to attract a limited supply of medical workers. In addition, recent layoffs are increasing the number of uninsured in the general population.

Franklin Memorial Hospital in Farmington and Penobscot Bay Medical Center in Rockport are among the hospitals that already have gone public with financial problems.

Despite the announced budget cut, Eastern Maine Healthcare, the parent corporation of EMMC and other hospitals, nursing homes and for-profit businesses, enjoys a strong financial position, according Kenneth Rodgers of Standard and Poor’s, a bond rating agency. He said a June analysis of the company’s financial information found its debt levels were moderate and the outlook was good, with the expectation that management will keep costs low and produce strong profitability.

As of last September, EMH had $136 million available in unrestricted cash and investments, Rodgers said in an interview Friday.

“Overall they are doing very well compared to the industry as a whole,” he said. Standard & Poor’s gave the company an A+ rating.

EMMC officials were unavailable for comment Friday, said Jill McDonald, a hospital spokeswoman. She said officials would be available next week to respond to reporters’ questions.

Nurses have not been told where EMMC plans to cut, said Judith Brown, president of the Maine State Nurses Association’s unit for EMMC. But cost-cutting measures, such as reductions in nurse-to-patient ratios, already are evident, she said.

The hospital’s cafeteria hours have been cut back and there has been a reshuffling of administrative assistants, she said. Daily, nurses scheduled to work are told not to come in to save money, she said.

Brown said she believes a growing number of uninsured people is a key driver in the reduced number of patients coming to EMMC.

With the news of the impending cuts, she said, nurses are still questioning administrators’ need to build new buildings. Just this summer, the hospital announced it would build an $11.5 million, five-story structure adjacent to EMMC in order to get business new doctors would bring to the hospital.

Also under way is a multimillion-dollar project in Brewer that will create administrative and medical services buildings.

The building campaign “just doesn’t make any sense at all,” Brown said.

Johnson acknowledged in the newsletter the apparent contradiction between buildings and new technology and the financial problems. But, she wrote, “administration is carefully spending the dollars we have, moving us toward the future.”

Last fall, several doctors went public with concerns about the administration’s priorities, suggesting the administration was bent on expanding EMH at the financial expense of EMMC. They said core patient care issues were being swept under the carpet by top administration. Several called for the resignation of Chief Executive Officer Norman Ledwin.

Trustees quickly responded by giving Ledwin a vote of confidence without inviting the doctors to present their concerns. Then, for the first time in 20 years, a joint conference committee of trustees and doctors was convened to study the complaints. The commission has made no public report in the 10 months since it was formed.

Attempts to reach John Woodcock, chairman of the EMMC board of trustees, were unsuccessful Friday.

The debate over priorities may be having some effect on hospital admissions, according to Johnson.

Research before the debate began showed that a year ago April, “health care consumers'” preference for EMMC had risen. By this April, the perception of EMMC’s commitment to the well-being of the community had dropped slightly, she wrote.

But, she said, while nurses have heard the complaints, “nurse managers rounding with patients are hearing them wonder why they were so concerned. That’s a very good thing.”


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