The top administrator at Blue Hill Memorial Hospital has announced an undetermined number of staff layoffs in an effort to stave off bankruptcy.
In a letter released to employees and news outlets Wednesday, interim administrator Dr. Erik Steele said a number of belt-tightening measures, including staff reductions, must be undertaken if the hospital is to continue serving the people of the Blue Hill peninsula.
In the letter, Steele said some cost-saving measures were put in place a few weeks ago, including a hiring freeze, a ban on unnecessary travel and other steps. But in order to avoid financial disaster, he said, staff reductions are unavoidable and will be announced Jan. 19 or 20. About 340 people are employed at the hospital.
“We have not yet decided whose positions and how many, but if we don’t cut positions we will drive off the financial cliff,” Steele said in the letter. One position already has been eliminated, that of Chief Financial Officer Jeff Provenzano, who left the hospital about two weeks ago and will not be replaced, Steele said. He esti-mated Provenzano’s salary at about $100,000.
In recent weeks, the hospital has sold off investment stocks in order to make its payroll, according to the letter.
“If we don’t turn things around, in a few more weeks we will have burned through all of our unrestricted investments, used every penny we can borrow from banks and [parent corporation Eastern Maine Healthcare Systems], and have put off companies as long as we can to whom we owe money. We will basically be bankrupt. We — all of us, in this together — cannot allow this to happen,” Steele said.
Steele said the immediate goal is to increase cash flow by about $250,000 a month by cutting costs without negatively affecting patient care. But among measures under consideration is the elimination of obstetrical services at the hospital. About 120 babies were delivered at Blue Hill Memorial in 2008.
Steele was named interim chief executive officer last month, replacing former CEO Tim Garrity, who had been in the position for about five years. Blue Hill Memorial Hospital is an affiliate of Brewer-based EMHS, where Steele serves as chief medical officer.
Steven Michaud, president of the Maine Hospital Association, said Wednesday that he is not aware of any other Maine hospitals in such perilous financial straits as Blue Hill Memorial. But Michaud said virtually every hospital in the state is reporting a sudden drop in business, driving down revenues while most costs remain fixed.
“We assume it’s the economy — people are putting off the procedures they can put off,” he said. Many people with private health insurance have experienced an increase in their deductibles and other out-of-pocket costs, he said, and as the national economy spirals downward they are less willing or less able to share the cost of their care.
Meanwhile, Michaud said, the state’s recent increase in Medicaid recipients — currently about one in every five Mainers is covered by MaineCare, as the program is called here — continues to drive up the percentage of care delivered to that population. But MaineCare reimbursements are significantly lower than private insur-ers’, and the program still owes Maine hospitals an estimated $400 million in backlogged payments dating to 2005, Michaud said.
Blue Hill Memorial Hospital is owed about $3 million in back payments. Brenda Harvey, commissioner of the Maine Department of Health and Human Services, said the hospital is scheduled to receive a payment of slightly more than $300,000 at the end of this week, the balance of what is owed from 2005. The remaining $2.7 million owed from 2006, 2007 and 2008 could be paid off over the next two years if the Legislature approves the biennial budget to be submitted by Gov. John Baldacci, she said.
But even if all payments were current, Harvey said, Blue Hill Memorial Hospital must develop a sustainable business plan to assure its long-term viability, including determining the needs of the community it serves and which of those needs it can afford to meet.
Steele said in an interview Wednesday afternoon that the layoffs will come from clinical, administrative and support positions. He emphasized that he is not eager to eliminate obstetrical services.
“OB is a core service at Blue Hill and we won’t cut it unless we absolutely can’t survive otherwise,” he said.
Beyond that, he said, he remains confident that the hospital will survive this crisis. “We’re not going away,” Steele said. “This is all about saving this hospital and making sure it is viable for the long run.”