Report: Hospital profits a ‘surprise’ Maine facilities top N.E. average

AUGUSTA – A few Maine hospitals are “surprisingly profitable,” according to a Harvard-based independent analyst. Others sustain a more modest profitability, and some are “just hanging on.”

But according to Nancy Kane of the Harvard School of Public Health, as a group, Maine hospitals in the past decade have maintained a profit margin well above the regional New England average and also above the United States average.

Kane was in Augusta Monday presenting statistical information to Gov. John Baldacci’s Commission to Study Maine’s Hospitals.

Kane’s report, while it did not look at individual hospitals, contained some other surprises. While the “two Maines” divide might predict that hospitals in the more affluent south would be in better fiscal shape, Kane found a geographic spread of both profitable and financially strapped facilities throughout the state.

Financial health is more related to capacity and the severity of the cases treated than a facility’s geographic location within the state, she reported. On the whole, the larger the facility and the sicker the patients, the more likely the hospital is to be making a significant profit.

Kane also found that hospitals whose patients are covered by Medicare and Medicaid are likely to be in better financial shape than those who rely more on private insurers and self-pay patients.

The Maine Hospital Association has maintained that these public payers reimburse at such low rates that in many cases they lose money for each patient, but Kane’s numbers seem to indicate the opposite is true.

She alleged that the hospital association has had “a tendency to protect the status quo” and has resisted working with the commission. The organization “has sometimes twisted what’s being accomplished here [by the commission],” she said.

Kane said she would provide hospital-specific financial information to the commission and post it on the state’s Dirigo Health Web site in the near future, but not before giving the hospital association a chance to examine the data.

“I may miss something, or they may want to prepare a statement for the media,” she said.

Mary Mayhew, vice president for governmental affairs and communications for the Maine Hospital Association, said the organization is protecting Mainers’ access to health care services and has been straightforward in providing information as requested by the commission.

Kane’s analysis of public Maine hospital data distorts the issue of Medicare and Medicaid reimbursements, according to Mayhew. These public health care payers chronically under-reimburse, she said, forcing hospitals to charge higher costs to private insurance carriers and self-paying customers.

The hospital association cannot respond in more detail until it understands how Kane is “manipulating” hospital data, Mayhew said.

As part of Baldacci’s Dirigo Health reform initiative, the nine-member hospital commission is looking for ways to control hospital costs while improving the quality of care and making it easier for Mainers to get the services they need.

Members representing physicians, hospitals, consumers and the business community have spent the past year wrangling with issues such as the medical, cultural and economic roles hospitals play within their communities; the nature of competition between hospitals; how hospitals make capital investment decisions; how they report their financial information; and to what degree the state should regulate hospital operations.

The commission will present its report and recommendations to the governor prior to the beginning of the coming legislative session. The report is expected to support a three-region statewide network of administratively linked large and small hospitals. Such a system would likely entail some job losses through clinical and administrative consolidation.

An early draft report written by committee chair William Haggett raised concerns that the commission may target specific hospitals to be closed or merged.

Haggett, a former CEO of Bath Iron Works, has maintained the document was intended only to focus discussion between commission members and not as a precursor of the final report.

At Monday’s meeting, Haggett confirmed that the final set of recommendations would reflect a majority viewpoint of the commission members.

Haggett and others agreed that it would be inappropriate for the report to recommend the closure or consolidation of any specific hospitals, but that it should instead create a system for evaluating the overall performance of each facility and how it “fits” within its health care region.

More information on the Maine Hospital Commission can be found online at www.dirigohealth.maine.gov.

The Maine Hospital Association’s Web site is www.themha.org.