Hospitals wait for state to pay bills

By Jen Lynds, BDN Staff
Posted Oct. 08, 2010, at 9:50 p.m.

HOULTON, Maine — When patients walk into Houlton Regional Hospital, they do so thinking that they are going to get the care they need from the medical team at the facility.

Few of those patients think about the hospital’s financial situation, how it pays its bills or the fact that the state owes the facility $4 million for the care it has extended to patients covered by the MaineCare program since 2007.

But it is something that people should be thinking about, said Tom Moakler, the hospital’s CEO, as it is quickly becoming more of a problem for the facility that is staffed by 450 employees.

Moakler said on Thursday that the hospital has just put together its 2011 hospital budget. For the first time in 14 years, he noted, the $44 million budget contains no wage increases.

“We just simply can’t afford to do it,” said the CEO. “We also are in for a line of credit for $1 million. If we had the $4 million that we are owed by the state, that line of credit would not exist, we would have more money on hand and we would have more money to keep our equipment up-to-date. Right now, the average bill here is paid in 100 days. In the past, the average bill was paid in around 60 days. Some of our vendors have been waiting six months for payment.”

The state’s outstanding payments are the biggest issue, he said, but other factors also have affected the hospital’s bottom line in the past year.

Moakler said that the Houlton hospital has seen a decline in the number of patients it usually sees, mainly because of the economy. In some areas, the volume of patients is down 4 or 5 percent. The hospital has seen a decline in emergency room visits and inpatient stays. Because inpatient stays are down, so are the number of tests, such as X-rays and blood work.

“This is concerning to us, but we are not alone in this,” he said. “This is something other hospitals across the state are seeing. The economy is bad, so people have lost their jobs and their benefits, and they are not as apt to seek medical treatment unless they absolutely have to. They are putting off tests and procedures.”

Steve Michaud, president of the Maine Hospital Association, agreed. He said Friday that most hospitals are seeing a decline in patient activity right now, which leads to a reduction in revenue and sends administrators scrambling to “reduce expenses rapidly” in other areas.

But the state’s debt to hospitals remains a critical issue, he said.

Right now, the state will owe Maine hospitals close to $400 million in MaineCare reimbursements by the end of the year, according to Michaud. The state has to come up with one-third of it, he said, and the federal government will cover the rest. The federal government won’t pay the bill until the state comes up with its share, Michaud said.

This has been a problem in the state for some time. In 2006, the past-due bill to hospitals was more than $330 million, but Gov. John Baldacci made good on an agreement he signed with the Maine Hospital Association and paid off the debt.

But the outstanding bills have continued to mount at the rate of about $2 million a week ever since, Michaud said Friday.

“The old debt was settled, but the core problem has not been corrected,” he said. “The state isn’t making timely payments, so it is just taking a big problem and making it worse.”

Officials at The Aroostook Medical Center in Presque Isle are in a similar situation. The state owes that hospital close to $8 million for the care it has extended to MaineCare patients. Dr. Jay Reynolds, senior vice president, chief operating officer and chief medical officer at TAMC, said Friday that the debt has been building since 2005 and increased by $1.4 million during the last fiscal year. The debt is accumulating at the rate of about $100,000 a month at that facility, according to Reynolds.

Like Houlton, the Presque Isle hospital also has seen a reduction in patient volume. Financial issues led to the hospital recently instituting a “targeted force reduction,” Reynolds said, and close to 30 employees were offered early retirement packages and related incentives. There are no plans for additional reductions at this time, Joy Barressi Saucier, vice president of organizational advancement at TAMC, said Friday. The hospital employs more than 1,000 people.

Back at HRH, Moakler said layoffs are not on the horizon and there have been no cuts in services. Besides freezing wages, the hospital is cutting back on matches to employee 403(b) retirement savings plans. He said that some of the hospital’s vendors are “understanding” about less than timely payments, but others are not.

“They are running a business, just like we are,” he said.

“Sometimes, I just sit with our staff and say, ‘Who do we pay and who can wait awhile?’” he said. “It is like plugging one hole and having another one leak on you. The thing is, our vendors can cut us off, but we can’t cut our patients off, nor would we. The decline in patient volume seems to have bottomed out, but we are keeping an eye on it. We are treading water here, and I am wondering how long we can do it. At some point, the dam is going to break. The dam has broken at other hospitals.”

Both Moakler and Barressi-Saucier said they have been working with the Maine Hospital Association to address the problem with the state. They also have been speaking to local legislators.

The MHA’s Michaud said Friday that the organization is asking every candidate for governor and the State House who is elected to go to Augusta in January “and make MaineCare reimbursement their highest priority.”

“The response has been varied,” he acknowledged. “But we feel we are making progress and this is something we are addressing every day. The state is making their problem our problem. They only need to find one-third of that close to $400 million, and we believe they can do it.”

http://bangordailynews.com/2010/10/08/news/hospitals-wait-for-state-to-pay-bills/ printed on December 18, 2014