May 25, 2018
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Pen Bay Healthcare eyes alliance

By Abigail Curtis, BDN Staff

ROCKLAND, Maine — Midcoast Maine’s major provider of health care services is on its way to becoming a full partner with a Portland-based health care delivery network.

Last week, the Pen Bay Healthcare board of trustees unanimously agreed to pursue a partnership with MaineHealth, which includes Maine Medical Center in Portland, Waldo County General Hospital in Belfast and Miles Memorial Hospital in Damariscotta among its member organizations.

“We think we can save money,” said Pen Bay Healthcare President and Chief Executive Officer Roy Hitchings Jr. “By collaborating and cooperating more, we can save money and approach the regionalization of services.”

If the move is approved next week by Pen Bay Healthcare’s community incorporators, the regulatory process with the state of Maine and the Federal Trade Commission — which is charged with enforcing the nation’s antitrust laws — will begin.

If all goes well for the partnership, it still won’t be made final until September at the earliest, Hitchings said.

Although officials from Pen Bay Healthcare, the parent company of Penobscot Bay Medical Center in Rockport, and MaineHealth say they are hoping for a smooth journey through the regulatory process, they were surprised in December by the FTC’s unexpected scrutiny of a proposed partnership between MaineHealth and Goodall Hospital in Sanford.

MaineHealth and Goodall Hospital have since dropped their partnership plans.

“They decided to look a little bit further and ask us for more information. It was just too costly for us,” said Mark Harris, the vice president of marketing for MaineHealth.

Goodall Hospital was small enough to qualify for a special FTC exemption, but Pen Bay Healthcare is not, and so must first obtain a Certificate of Need and a Certificate of Public Advantage from the state, Harris said.

“This one’s different,” Harris said of the proposed Pen Bay Healthcare partnership. “We’re hoping that the FTC will look upon it favorably.”

Hitchings said the FTC’s decision about the Goodall partnership appeared to overturn 20 years of precedent.

“We honestly don’t understand why they made that decision. We’re trying to get more information to help understand,” he said. “On the one hand, state and federal governments are asking us to save money, collaborate and work closely together. On the other hand, they throw in antitrust.”

Harris said that formally joining Pen Bay Healthcare with his organization would help to improve health care quality.

“When you bring more people onto the team, you’re able to share that knowledge. It raises all boats,” he said.

Hitchings said his organization has undergone a yearlong period of “intensive assessment of pros and cons” about becoming a MaineHealth partner. PenBay HealthCare already has had a relationship as a “strategic affiliate” with MaineHealth for more than two years, and that has gone well, he said.

Although partnership dues would cost Pen Bay Healthcare an estimated $675,000 a year, the added purchasing power of joining a larger health care operation would save at least $800,000 a year. Hitchings said the formal cost benefit analysis showed that Pen Bay Healthcare would have a net saving of at least $250,000 a year.

Another reason to pursue the partnership is that it would give Pen Bay Healthcare more ability to plan regionally and work together with other hospitals.

“We think a lot of changes are coming in health care,” he said. “With the way the current health care system is designed, frankly, it’s not very stable.”

Because the partnership is not technically a merger, the two entities will share information and buying power but not their assets, Hitchings said. This means no layoffs are expected as a result.

Over time and attrition, Pen Bay Healthcare may find some extra savings in areas such as purchasing, information technology and human resources, Hitchings said.

“It’s more cooperation and more collaboration,” he said.


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