April 19, 2018
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EMHS on budget as other Maine hospitals struggle financially

Tim Greenway | BDN
Tim Greenway | BDN
Michelle Hood
By Jackie Farwell, BDN Staff

BREWER, Maine — About 60 percent of Maine hospitals are operating at a loss, but Eastern Maine Healthcare Systems isn’t among them, according to EMHS President and CEO Michelle Hood.

Hood, citing 2012 figures compiled by the Maine Hospital Association, laid out the system’s financial picture Wednesday at an annual meeting of EMHS corporators, a group of volunteer community members who provide oversight of the health organization.

The tough economic climate has contributed to financial struggles at some hospitals in Maine, and many are likely to respond by downsizing, joining bigger systems and looking for new business models, Hood said.

The Maine Hospital Association described the 60 percent figure as “an unusually high number of hospitals” operating at a loss last year.

“We are very proud of the fact, and a lot of hard work has gone into this, that as a system at mid-year of our current fiscal year that we are close to our budget and producing a nice, healthy bottom line,” Hood said.

During the last fiscal year, EMHS brought in revenues of just more than $1 billion, up from $954 million in 2011. The system’s operating margin, an indicator of how efficiently its hospitals are run, totaled 5.65 percent, meaning the system made, on average, just under 6 cents for every dollar in patient revenue it collected. That’s a jump from a 2.03 percent operating margin in 2011.

The national average is 5.5 percent, according to the American Hospital Association.

EMHS officials attributed much of the increase to one-time income, including $16.7 million in federal money the system was awarded for implementing electronic health records and a $25 million settlement with the state over MaineCare reimbursements. The settlement, which involved costs due to the system through MaineCare, is separate from the MaineCare money owed to hospitals now being hotly debated in the state Legislature.

Hood also updated the corporators on the system’s proposed merger with Portland’s Mercy Health System of Maine. EMHS hopes the deal, which won federal approval in late February, will win a greenlight from state regulators in August, she said.

Dr. Philip Caper of Brooklin, an EMHS corporator and Bangor Daily News columnist, asked Hood how the merger could affect care as EMHS seeks to keep patients within its network of providers. EMHS has informed both Mercy and its Portland competitor, MaineHealth, that patients aren’t expected to travel from southern Maine to Bangor for treatment, she said.

“It does call on us to have difficult discussions with the Portland market providers as to how a patient experiences care in that community in a less competitive and more collaborative fashion,” she said. “Not easy.”

In outlining EMHS’ broader goals, Hood described the system’s efforts to adapt to a changing health care landscape nationally. The federal health reform law has ushered in an era of experimentation aimed at improving how health care is paid for and delivered, she said. EMHS is responding by working to better patients’ experiences, improve care for vulnerable and chronically ill patients, and “bend the cost curve,” she said.

Much of that work means moving away from the existing model that pays doctors for each test and procedure and instead rewards providers for improving patients’ overall health, Hood said.

“I’m a firm believer that there’s plenty of money in our health system, we just don’t spend it very wisely, that there are lots of opportunities to better use resources that we have and I think we’re beginning to see some evidence of that as we tackle [this] within EMHS,” Hood said.

The annual meeting also included an election of EMHS corporators and directors.

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