Cost-saving project at EMMC

Recent articles in the Bangor Daily News describing the debate between Bangor Hydro and Eastern Maine Medical Center provide an interesting view of the differences between companies with different missions and distinctly different regulatory environments.

EMMC, a nonprofit community hospital, wants to build a cogeneration facility which will reduce the cost of fulfilling its mission of providing health care services to patients and to increase the safety of those patients by avoiding potential future disruptions of its electrical service by ice storms or power grid blackouts.

Consulting engineers have advised EMMC that this project will save approximately $1 million a year thus reducing the cost of a hospital stay to patients. Furthermore, the federal government has already earmarked a $3 million grant to offset nearly half of the construction cost of the project because it desires to have this demonstration for other health care organizations to adopt.

EMMC has applied to the state for a Certificate of Need to allow this cost-saving project to move ahead. The CON process is intended to regulate hospital spending on new clinical technologies and patient care facilities. This cogeneration project is atypical of the proposals usually considered by CON review. If approved as a positive for health care payors, it will admittedly be a negative for Bangor Hydro to lose EMMC as a customer.

Bangor Hydro’s mission is to distribute electricity, generated by someone else, to consumers in most of the same counties served by EMMC. Its mission is also to generate profits for its stockholders. The Maine Public Utilities Commission regulates the charges Bangor Hydro can levy on its customers with due consideration for fairness to consumers and reasonable returns for stockholders.

If the PUC should determine that Bangor Hydro is entitled to cushion its loss of income from EMMC, it could approve a modest rate increase. (EMMC consultants predict the increase might be 75 cents on a $100 monthly bill.) But only part of the lost revenue could be passed through to consumers. The Nova Scotia-based parent (EMERA) of Bangor Hydro would be required to absorb the remainder.

The new Dirigo Health Plan expects hospitals to maintain and improve the quality of services to patients while limiting cost increases. The proposed cogeneration project directly addresses these objectives. It adapts a technology, already proven effective in other industries for producing environmentally friendly electricity and steam, to a health care setting. The annual savings will go directly to reducing the cost of a hospital stay.

The startup cost of the project to EMMC is significantly reduced by the $3 million federal grant. How-ever, the grant must be accepted and utilized in the near future or it might be withdrawn.

The CON unit should proceed with all deliberate speed to complete its assessment of the health care merits of this proposal. Its decision should not be delayed by involvement of a different regulatory agency for a different industry in which the mission includes profit-making for shareholders.

Stanley L. Freeman, of Orono, is a member of the EMMC board of trustees.