May 27, 2018
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Down East Community Hospital struggling with red ink and labor relations

By Tom Walsh, BDN Staff

MACHAIS, Maine — Down East Community Hospital in Machias finished its last budget year with losses of $2.3 million, and facility President and CEO Douglas Jones is predicting harder times ahead given state cutbacks in reimbursements.

In a recent in-house memo to the staff of the 25-bed facility, Jones said that in 2011 operational expenses exceeded the $35 million budget by $500,000. Investment losses and an adjustment for pension fund liability for a defined benefit program that has since been phased out pushed the red ink to $2.3 million. That compares to losses in 2010 and 2009 of $885,991 and $623,371, respectively.

Jones says in his grim financial analysis that plans now being made in Augusta to lower the state’s hefty deficit will reduce the hospital’s state reimbursement by $180,000 this year and by $240,000 in 2013.

“Along with radical changes in MaineCare enrollment, coverage for opioids capped at 45 days and limitations on Suboxone therapy, I can see our county and our hospital struggling even more than this year,” Jones said.

“As you can see,” Jones said, “there is no room for the unbudgeted loss of revenue planned by the state. I have communicated with our entire legislative delegation and personally met with Senate President Kevin Raye. I am not expecting much help there.”

Jones said the hospital has implemented “financial turnaround” initiatives announced last summer with a goal of saving $1.8 million.

“Postponing salary adjustments was NOT part of that plan,” he wrote, “but became essential when we heard the Governor’s plans.”

Beyond fiscal headaches, Jones is dealing with strained labor relations.

Sixty-two nurses and technical employees at the hospital have been working without a contract since it expired on Jan. 12, 2012. Bargaining sessions for workers represented by the Maine State Nurses Association/National Nurses United began in November, but no agreement was reached. The process now involves a federal mediator, with the next bargaining session scheduled for March 27.

In a statement released this week by the bargaining unit, the union claims that the hospital’s administration “has proposed cuts that would risk staffing shortages as well as other proposals that have been divisive and harmful to the relationship between staff and the administration.”

Nurses and technical employees plan to hold a candlelight vigil at the hospital on Friday, Feb. 17, at 5 p.m. “in support of patient safety and staff commitment.”

Jones says in his analysis of the 2011 financial results that cost cutting and revenue expansion are required to stop the fiscal bleeding.

“My goals place the highest priority on preserving employment, and we must focus on revenue generation,” he wrote. “One such idea will be pulmonary rehab services that some of our staff are beginning to look at. With new leadership in Cardiac Rehab, I am excited about expansion there. Also, the establishment of some new ideas in our [ear, nose and throat] clinic and in the Women’s Center. These are bright spots, and we need to find more of them.”

The hospital currently employs 268 full-time-equivalent workers.

Correction: An early version of this story misquoted a statement by President and CEO Douglas Jones. The statement should have reflected that the hospital has already implemented financial turnaround initiatives.

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