AUGUSTA – Many of Maine’s small community hospitals are on the endangered list, struggling to offer a comprehensive menu of services, stay up-to-date on emerging technologies, maintain their facilities and pay their workers.

But as a state government committee heard earlier this week, eight of those small hospitals have adopted “critical access hospital” status, which limits the services they provide and boosts revenues. These changes – though not without drawbacks – enable them to survive in the communities they serve, providing important frontline medical care, jobs that pay well and the social cachet of a local professional work force.

“When we went into this program, we had 13 days’ worth of cash on hand,” John Welsh told Gov. John Baldacci’s Commission to Study Maine Hospitals, a branch of the governor’s Dirigo Health reform team. Welsh, the chief executive officer of Rumford Hospital, said the hospital’s need for money drove the decision to go with the “critical access” designation, but the transition has yielded many benefits.

“You begin to define who you are and what you can do well,” Welsh said. “For years, we kept asking ourselves if we should add services, bring in specialists or invest in new technologies. Since the conversion, we can say it’s OK to do some things and not others.”

For example, Welsh said, Rumford-area residents can count on their local hospital for low-risk obstetrics, certain diagnostic procedures and straightforward surgeries. For more complex services or procedures that require longer hospital stays, they’ll have to make the 43-mile trek to Central Maine Medical Center in Lewiston.

Critical access designation is an element of the 1997 Medicare Rural Hospital Flexibility Program. Under the federal program, hospitals that limit their acute-care beds to 15 or fewer, keep patients for no longer than 96 hours per visit and meet other guidelines can qualify for a substantial increase in Medicare funding.

In Maine, Medicare pays most hospitals about 80 percent of the cost of providing care to Medicare patients based on government cost “allowability” regulations. But critical access hospitals get paid 101 percent of the allowable cost. Nearly half of Maine’s hospital visits are Medicare-reimbursable.

States can decide to increase Medicaid reimbursements to critical access facilities as well. Maine’s Medicaid plan follows the Medicare 101 percent rate, another incentive for hospitals to convert, especially in lower-income areas where many residents qualify for the public programs.

Steven Michaud, president of the Maine Hospital Association, said all the critical access hospitals in Maine are more financially stable than they were before converting, and that some of them might have gone out of business had they not made the change.

“This is one of the few times you can point to a piece of government policy that works the way it’s supposed to,” Michaud said. “They actually provide a meaningful incentive for these institutions to change instead of sitting around wishing they would change.”

But Michaud said the decision to switch to critical access status always is contentious. Physicians are especially reluctant to support a change that limits their practices, he said, and recruiting new doctors to a community served by a critical access hospital might be difficult. Some hospitals must lay off medical, nursing and support staff when they decrease their capacity.

Still, most hospital boards and administrators are “reluctantly receptive” to the idea if it means the difference between keeping the facility or losing it altogether, Michaud said.

Critical access hospitals must be at least 35 miles from the next nearest hospital. They must maintain 24-hour emergency services and have a formal “transfer agreement” with a larger facility that automatically will accept their patients if they go over the 96-hour limit or require specialized care.

A provision in the recently enacted Medicare Modernization Act increases allowable acute-bed capacity to 25 in critical access hospitals, which Michaud said will encourage slightly larger hospitals to make the change. Michaud expects there are a “handful” of Maine hospitals that will apply for critical access status in the near future, including Houlton Regional Hospital and Mayo Hospital in Dover-Foxcroft.

The Medicare Rural Hospital Flexibility Program supports medical facilities that are vital to rural communities, both for the services they provide and for their role as economic drivers. There are almost 900 critical access hospitals in the United States.

The Commission to Study Maine Hospitals is charged with making recommendations for a viable and evenly distributed network of hospital services throughout the state. The group, led by former Bath Iron Works CEO William Haggett, will report to the governor and the Legislature in November.

8 critical access Maine hospitals

There are 39 hospitals in Maine; of these, 25 have 75 beds or fewer, making them most likely to be able to qualify for “critical access hospital” status and the enhanced Medicare and Medicaid reimbursements provided under the federal Medicare Rural Hospital Flexibility Program.

The following Maine hospitals already are designated critical access hospitals:

. Millinocket Regional Hospital

. Penobscot Valley Hospital, Lincoln

. Calais Regional Hospital

. C.A. Dean Hospital, Greenville

. Rumford Hospital

. Mount Desert Island Hospital, Bar Harbor

. St. Andrew’s Hospital, Boothbay

. Blue Hill Memorial Hospital

Source: Maine Hospital Association