MaineCare payments to help hospitals

Posted Jan. 21, 2011, at 11:39 p.m.
Last modified Jan. 28, 2011, at 12:27 p.m.

ELLSWORTH, Maine — Hospital officials in Hancock County say back payments from the MaineCare program that are included in a revised state budget will provide a big boost to the area’s three hospitals.

In the supplemental budget that he proposed earlier this month, Gov. Paul LePage included about $70 million for the program, which in turn would leverage federal matching funds for a total of $248 million to pay back to Maine hospitals statewide. That would represent more than half of the $400 million the state owes in back MaineCare payments to hospitals.

Collectively, the state owes the three Hancock County hospitals — Maine Coast Memorial Hospital in Ellsworth, Blue Hill Memorial Hospital and Mount Desert Island Hospital in Bar Harbor — about $22 million in back payments. Maine Coast is owed about $15 million; Blue Hill, just shy of $5 million; and MDI, an estimated $2.7 million.

If the budget proposal makes it through committee and is approved by the Legislature intact, the Ellsworth hospital expects to receive about $9 million. Blue Hill would get close to $3 million, about 60 percent of what it is owed; and MDI would receive an estimated $2.3 million.

“We’ll get back almost all of what we’re owed,” said Art Blank, president and CEO at Mount Desert Island Hospital.

“We don’t want to count on anything too soon,” said Charles Therrien, president and CEO at Maine Coast Memorial Hospital in Ellsworth. “But assuming it does work its way through, this will be a tremendous boost.”

According to previous reports, the supplemental budget for the fiscal year that ends on June 30 also accounts for increased enrollments in MaineCare, the state’s Medicaid program. And it draws sufficient federal funding to sustain payments to 4,000 providers who offer services to 300,000 MaineCare recipients.

The lack of regular reimbursements through the state’s MaineCare program for services provided by the hospitals to Medicaid patients, has disrupted the normal cash flow of hospitals throughout the state.

“Like any other business with a cash flow problem, there are an awful lot of dysfunctions when your cash flow is stressed,” Blank said this week. “We’ve had to make some business decisions regarding leasing equipment versus buying it that we would have made differently. And we’ve had to borrow a great deal in terms of operating cash in order to continue operating.”

Blank said most of the hospital’s reimbursements will go to reducing debt incurred to maintain operating funds. He noted, however, that the interest on those debts has never been reimbursable.

At Blue Hill, the lack of reimbursement payments also has forced the hospital to borrow and to put off capital improvements on its physical plant. Although President and CEO Greg Roraff noted that BHMH’s affiliation with Eastern Maine Health Care Systems has helped to maintain patient services while that cash flow was low, the hospital’s infrastructure has suffered in recent years.

The financial “shot in the arm” he said, will help the hospital to pay back any borrowing that is still outstanding and to make some capital investments.

“That’s going to be a real benefit,” he said. “The age of our physical plant is getting up there and we need to start putting some capital improvements in place. This will certainly help us to make some of the changes we need to make.”

The benefit will be more than financial, he said, noting that as the town’s largest employer, its struggles have had an effect on the community.

“We’re looked at as a resource,” Roraff said. “If that resource is not as strong as it should be, the whole community suffers.”

“The community will be a little stronger because of this,” he added.

Maine Coast Memorial Hospital also has tightened capital spending in recent years due to the lack of cash flow and has delayed spending both on facilities and equipment, according to Therrien. The state payback, if it goes through, will end that drought.

“This will allow us to do a lot of the things we haven’t been able to do,” he said.

Therrien also noted that the hospital has had a wage freeze in place for close to three years.

“This will allow us to put more money into raises for our staff,” he said.

All three said they did not expect to use the funds to restore positions that have been eliminated in recent years, although they indicated that they regularly look for ways to improve services to patients.

Blank said the payback would eliminate some debt and “free up some operating cash so that we can continue to develop services the community needs.”

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