Maine Medical Center to offer buyouts to 400 workers

Posted June 28, 2013, at 5:43 p.m.
Richard Petersen
Richard Petersen

PORTLAND, Maine — Financial losses have prompted Maine Medical Center to offer voluntary buyouts to about 400 employees approaching retirement.

In an internal memo to employees Friday, provided by MMC to the Bangor Daily News, President and CEO Richard Petersen said the hospital faces a $15 million gap by the end of the 2013 fiscal year, which runs from Oct. 1 to Sept. 30, in the wake of a rising number of patients who can’t pay their medical bills.

The hospital is reviewing all of its expenses and plans to introduce incentives for voluntary early retirement to employees next week, he wrote in the memo.

“We have to talk about labor — 60 percent of our expense base is in compensation and benefits — while recognizing that it rightly makes people nervous about their futures,” Petersen wrote. “Please understand that layoffs are a last resort and we’re doing all we can to minimize reductions in our workforce.”

Petersen highlighted several challenges facing hospitals nationally and in Maine, including shrinking reimbursements, “changing regulations, tighter competition and narrowing margins.”

The buyout offer follows news in early May that MMC had declared a hiring and travel freeze in an attempt to plug a $13.4 million hole in the hospital’s operating budget. MMC attributed those losses to declining patient volumes, an increase in the number of patients who need free care, declining payments from Medicare and MaineCare, and a glitch in the launch of the hospital’s electronic health records system.

In the buyout memo, Petersen also touched on $67 million in MaineCare payments owed to MMC that the state recently agreed to repay, as well as a $40 million renovation project that includes the addition of five new operating rooms.

While the hospital is “glad to be reimbursed what we’re owed for services rendered,” the MaineCare repayment “is not a windfall for Maine Medical Center,” he wrote. “The funds will be used to strengthen our financial base.”

The renovation project is needed to update aging operating rooms that leave medical teams cramped as they work on complex procedures, particularly cardiac operations, Petersen wrote.

“I believe that we will get through these challenging times together and will be a stronger organization for our efforts,” he wrote.

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