Franklin Community Health Network has become the 13th member of the state’s largest hospital system, following a state approval issued Wednesday.
The independent health network, parent to the 65-bed Franklin Memorial Hospital in Farmington, will join Portland-based MaineHealth effective Oct. 1, both organizations announced Thursday.
MaineHealth, the parent organization to Maine Medical Center and a dozen other health care entities, plans to invest at least $2.25 million into FCHN, according to documents filed with the state’s certificate of need unit, which regulates the expansion of health care facilities in Maine. Over the next four years, the money will fund implementation of an outpatient electronic medical records system also adopted by MaineHealth.
The certificate of need unit recommended approval of the deal, which Maine Department of Health and Human Services Commissioner Mary Mayhew granted Wednesday. She noted several conditions, including the organization’s report on the success of their efforts to improve health in the community. They also must report to the state on referral patterns, which will reflect where patients in FCHN’s service area seek care after the deal.
Neighboring Central Maine Healthcare, based in Lewiston, expressed concern to state regulators about where local doctors will refer patients following the acquisition.
The Franklin health network will pay MaineHealth an annual membership fee of $375,000. Those dues are expected to be offset by savings in lab services, insurance premiums and legal fees FCHN will realize by joining the system, according to the documents.
FCHN reported an operating loss of $7.6 million in fiscal year 2013. MaineHealth expects the network’s operating costs to drop by about $523,000 within three years of becoming a member.
“Our health system has enjoyed a long-standing clinical collaboration with Franklin and its providers,” MaineHealth President Bill Caron said in a news release. “Welcoming Franklin Community Health Network as a member of the MaineHealth family is a natural next step, and we look forward to working together to care for the greater Franklin County community.”
Last December, after a year-long process to “evaluate options for the network’s future,” FCHN’s board of directors unanimously approved joining MaineHealth, the news release states.
“MaineHealth and Franklin Community Health Network share the same values and mission, and by joining MaineHealth, we will be able to partner with the system and other members to improve healthcare in our community,” Rebecca Arsenault, president and CEO of the network, said.
Central Maine Healthcare has a stake in the deal because its service area overlaps with FCHN’s. About 30 percent of FCHN’s patients receive care at Central Maine Medical Center, CMHC’s flagship hospital in Lewiston. Only about 9 percent visit Maine Medical Center in Portland, MaineHealth’s largest hospital.
CMHC questioned several of the financial projections presented by the network and MaineHealth, including the lower operating expenses and reductions in salaries and benefits, according to the documents. CMHC also noted FCHN expects supply costs to remain flat while anticipating serving more patients.
MaineHealth countered that full-time staff has been reduced from 655 to 602 and said more costly contract labor and purchased services have dropped. Supply expenses should remain consistent because of better management of supply chains, MaineHealth told regulators, according to the documents.
CMHC also wanted the state to prohibit referral patterns from changing as a result of the deal. To be approved, health care organizations must demonstrate their plans won’t negatively affect the cost or quality of care provided by other hospitals and physician practices in the same area.
MaineHealth noted it doesn’t expect the deal to affect referral patterns, which are based on patients’ and physicians’ preferences, the accessibility of health services and insurance benefits.
Formed in 1991, FCHN also includes physician practices in Farmington and Livermore Falls; Evergreen Behavioral Services, an emergency mental health service; NorthStar, a regional ambulance service; and Healthy Community Coalition of Greater Franklin County.
MaineHealth’s other members include Lincoln County Healthcare in Damariscotta and Boothbay Harbor; Pen Bay Healthcare in Rockport; Southern Maine Health Care in Biddeford and Sanford; Waldo County Healthcare in Belfast; Western Maine Health/Stephens Memorial Hospital in Norway; Memorial Hospital in North Conway, New Hampshire; a Saco visiting nurses agency, NorDx lab in Scarborough; and Maine Behavioral Healthcare in South Portland.