December 14, 2018
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Judge puts Dover-Foxcroft hospital’s merger with Northern Light system on hold

Stuart Hedstrom | Piscataquis Observer
Stuart Hedstrom | Piscataquis Observer
Mayo Regional Hospital in Dover-Foxcroft

A Superior Court judge has put on hold the proposed merger of Mayo Regional Hospital in Dover-Foxcroft and Brewer-based Northern Light Health, formerly known as Eastern Maine Healthcare Systems.

Justice Donald Marden issued his order on Tuesday, the same day Gerald S. Nessmann of Sebec sued Hospital Administrative District No. 4, the entity that oversees the Piscataquis County hospital. Nessmann, a member of the district’s board, asked that the proposed merger be put on hold until a hearing for a preliminary injunction seeking more information on the proposal can be held.

That hearing has not yet been scheduled but must be held within 10 calendar days of Marden’s issuing the order, according to the Piscataquis County Superior Court clerk’s office.

An attorney has not yet entered an appearance for the board in the case.

A spokesman for Northern Light Health said it would “stand aside” while the board and Nessmann work out their dispute

“We are aware that a Mayo board member has raised some issues with the Mayo board leadership concerning discussions between Mayo and Northern Light Health,” Chris Facchini said in an email. “We view those issues as internal Mayo board governance issues, and we are content to stand aside while they work these issues out.”

[Hospital in Dover-Foxcroft exploring partnership with EMHS]

Nessmann objects to the merger, the complaint said. He disagrees with hospital administrators’ contention that Mayo’s financial condition is unsustainable in the long run because the hospital has reserve funds totaling $16 million. Nessmann claims Mayo’s net equity is $28 million.

Since Hospital Administrative District No. 4 is a quasi-municipal body authorized by the state Legislature, the hospital can borrow money at a low cost in conjunction with the state because of the state’s “very good credit rating,” according to the complaint.

A document filed with the complaint on Mayo hospital stationery and signed by some district board members claims that operating expenses have outpaced patient revenue since 2010.

North Light Health, meanwhile, is in a “financially challenging situation,” the complaint said. It received a “junk bond” rating from two financial rating agencies two years in a row.

The hospital administrative district was formed by the Legislature in 1973 to oversee the hospital’s construction and its finances once the building was completed. Its member communities are Abbot, Atkinson, Bradford, Cambridge, Dexter, Dover-Foxcroft, Guilford, Milo, Monson, Parkman, Sangerville, Sebec and Willimantic.

Each town elects a representative to the board, the law states. Nessmann has represented Sebec since 2011.

The district is governed by a charter, according to the complaint. For the merger to go through, the charter would have to be amended and approved by each member community.

Nessmann sued the board seeking copies of the final merger agreement and the proposed charter amendment. He also said a confidentiality agreement concerning the merger that board members were asked to sign was illegal.

In addition, Nessmann said the merger agreement as originally proposed would deprive member towns of their property interests in the hospital’s assets because it wouldn’t require that each member community vote on dissolving the administrative district and handing over the hospital’s assets to Northern Light.

The 1973 law authorizing the hospital administrative district states that the district can dissolve only if all members towns approve the dissolution. Under the law, hospital assets are to be divided proportionally among members towns following the dissolution.

Mayo is a 25-bed critical access hospital and health system, according to its website. It has five rural health clinics throughout the region and provides emergency medical services for all of Piscataquis County along with psychiatry and counseling services, and some surgical specialties.

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