Despite improvements, hospital in Blue Hill still faces challenges

Posted Aug. 20, 2009, at 7:04 p.m.
Last modified Jan. 30, 2011, at 11:58 a.m.

BLUE HILL, Maine — Blue Hill Memorial Hospital has made some significant improvements to its financial condition since a major shake-up last December, according to hospital officials.

Despite those improvements, however, the facility faces significant challenges.

The hospital posted a $4.3 million loss in the 2009 fiscal year which ended on March 31, according to its annual financial report which was released last week. Since the end of the fiscal year, the hospital has made significant cuts to its expenses and improved revenues enough for officials to be cautiously optimistic.

The question, according to Dr. Erik Steele, the hospital’s interim administrator, is whether the hospital can continue to generate sufficient revenues to keep it functioning satisfactorily. “I believe we can turn around this institution; if I didn’t, I wouldn’t be here,” Steele said. “But, I can’t promise that.”

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Steele, who is on loan from Eastern Maine Healthcare Systems, the hospital’s parent company, took over as the hospital’s administrator in December in the face of what he called a “perfect storm” that hit the facility’s operations. The storm included a poor economy and shaky stock market that hit the hospital’s investments, a de-cline in patient visits to the hospital and lagging MaineCare payments from the state.

Steele replaced former CEO Tim Garrity. In January, the hospital eliminated 34 positions, about 10 percent of its staff, a move that included laying off 15 employees. In May, it closed the obstetrics department, despite a fundraising effort and an effort to restructure it.

Although Steele said hospital administrators continue to look at ways to cut costs daily, the major cost-cutting measures, for the most part, have been done. The hospital has made changes that will cut close to $2 million in expenses in the current fiscal year, and has added services in an effort to generate more volume and more income.

“We’ve figured out what we need to do — we need to grow what we do well and can get paid for. I believe we’re doing that. With dogged work over time and a little bit of luck, we can turn this organization around. But it will take a little bit of luck. There are no guarantees,” Steele said.

The current economic conditions and the existing health care environment make the hospital’s comeback more difficult, he said.

Although the revenue stream is improving, the hospital is still behind budget, in part, due to a one-month loss of $300,000 recently, stemming from a staffing problem in the oncology department, Steele said. That issue has been resolved, he said, and the revenues are coming back.

The improvement in the revenue stream comes from a focus on new services, Steele said. Since the end of the fiscal year, the hospital has added bone density testing and soon will add nuclear medicine testing to help to diagnose heart disease, he said.

In addition, two new physicians who joined the staff in the past year, an orthopedic surgeon and a gynecologist, are becoming established and their practices are growing.

Partial repayment of the funds the state owes the hospital for MaineCare reimbursements also has helped the financial picture. The state’s debt to the hospital runs between $700,000 and $800,000 a year, according to Steele.

This year, the hospital has received more than $800,000 in state payments for 2006 and 2007, and anticipates another payment for 2008 in September. Those payments have come from federal stimulus funds allocated to the state of Maine, he said.

“That has been extremely helpful,” he said. “But on the downside, I’m anxious about what will happen if the state financial picture doesn’t turn around and the stimulus money runs out.”

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