Pen Bay blames economy, unpaid bills for staff cuts

Posted Feb. 15, 2010, at 9:13 p.m.

ROCKLAND, Maine — Pen Bay Healthcare, parent organization of Penobscot Bay Medical Center, blamed the slack economy and a sharp increase in bills unpaid by patients for the need to cut 10 positions and reduce hours for seven employees.

The Maine Hospital Association said those jobs are the latest of more than 300 health care positions eliminated in Maine in the past year, including more than 100 last month at Eastern Maine Medical Center in Bangor.

In an internal memo to employees last week, Pen Bay Healthcare CEO Roy Hitchings said the situation could worsen as soon as next month.

“We cannot rule out the possibility of additional layoffs, reductions in work hours, wage freezes and even benefit reductions,” wrote Hitchings in the Feb. 11 memo. “If any of these changes are necessary, they will be implemented some time in March.”

Departments affected by last week’s cuts include cardiology, cancer care, nurse staffing, the medical-surgical unit, utilization review, Health Connections, administration, information technology and development.

Pen Bay Healthcare is not alone in its financial woes. In the past 12 months, 34 of Maine’s 39 hospitals have had employment reductions, including layoffs, elimination of empty positions and hiring freezes, according to the Maine Hospital Association.

Those measures added up to more than 300 health care jobs cut in Maine since last February.

“The economy is playing a significant role in what hospitals are challenged by,” association spokeswoman Mary Mayhew said Monday. “It’s a combination of the realities of a recession and what challenges it has brought to hospitals in terms of increasing bad debt and charity care.”

Bad debt, which is medical bills left unpaid by patients, increased by 21 percent in Maine between 2007 and 2009, Mayhew said. Charity care, which is given to eligible patients who apply for it, increased by 22 percent in that time period. All told, costs to Maine hospitals for uncompensated care equaled about $255 million in 2009.

The statewide numbers mirror what is happening at Pen Bay Healthcare, said spokesman Christopher Burke. Free care and bad debt have increased by 43 percent, which Burke said is projected to equal $3.3 million by the end of the fiscal year. That’s up from about $2.6 million in 2009. Pen Bay Healthcare’s 2010 budget is about $185 million, which supports some 1,700 employees.

Pen Bay Healthcare includes Penobscot Bay Medical Center in Rockport, the Knox Center for Long-term Care in Rockland, Quarry Hill extended care facility in Camden, Kno-Wal-Lin Home Care and Hospice in Rockland, Midcoast Mental Health in Rockland and various physicians and associates.

On top of the bad debt, many cash-strapped patients are using the system less, hurting revenues from admissions, elective procedures, hospice and skilled nursing home care.

With the fiscal year ending next month, Hitchings said, he and his executive team are preparing next year’s budget with trepidation. With falling revenues from local sources, the Legislature is considering reducing reimbursements to Maine hospitals that will cost Pen Bay more than $2.5 million in 2011.

“Other health care systems across the state and throughout the country are experiencing these same challenges,” Burke said. “We know these cuts will cause stress on people’s lives in our community. It’s a big deal and we don’t take it lightly.”

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