HOULTON, Maine — In these tough economic times, many residents need to take a closer look at their budget and make some tough choices when it comes to cutting back on expenses.
Hospitals are no exception. And when a yearly budget runs about $46 million, as it does at Houlton Regional Hospital, a bad year can result in an operating loss of more than $1 million.
The Houlton Regional Hospital is currently in the midst of some “significant changes” to its facility, according to CEO Tom Moakler. Those changes include closing its 28-bed, separately licensed nursing home facility located on the third floor and relocating the Positive Steps physical therapy division to that space.
Positive Steps is currently located in the Houlton Shopping plaza. That facility will be closed once the transition takes place. The residents of the nursing home division will be transferred to other facilities in town such as Madigan Estates or Gardiner Health Care Facility.
“We will no longer be licensed to see nursing home patients,” Moakler said.
The transition has been in the works for about four months.
The hospital CEO stressed that no employees were going to lose their jobs as a result of the changes. About 11 employees are affected, with some having already transferred to other positions at the hospital and having found employment elsewhere.
“The last thing I want to do is give anyone a pink slip,” Moakler said. “We are down to about three people. We will figure out something to accommodate those people.”
Another factor prompting the hospital’s financial redesign concerns the amount of free care that HRH is legally obligated to provide and which has doubled in the past five years, he said. That expense has cost the hospital nearly $1.4 million during those five years. The hospital also had about $1.8 million in bad debt expenses that it had to write off, Moakler said.
Through attrition, HRH has been able to reduce its staff by 35 positions over the past few years.
Houlton Regional Hospital is licensed for 25 acute beds and is one of 16 hospitals in Maine designated as a “Critical Access Hospital,” a designation it received in 2001. There are 39 hospitals in the state.
According to the U.S. Department of Health and Human Services, “a Critical Access Hospital (CAH) is a hospital certified under a set of Medicare Conditions of Participation (CoP), which are structured differently than the acute care hospital CoP. Some of the requirements for CAH certification include having no more than 25 inpatient beds; maintaining an annual average length of stay of no more than 96 hours for acute inpatient care; offering 24-hour, 7-day-a-week emergency care; and being located in a rural area, at least 35 miles drive away from any other hospital or CAH (fewer in some circumstances). The limited size and short stay length allowed to CAHs encourage a focus on providing care for common conditions and outpatient care, while referring other conditions to larger hospitals. Certification allows CAHs to receive cost-based reimbursement from Medicare, instead of standard fixed reimbursement rates. This reimbursement has been shown to enhance the financial performance of small rural hospitals that were losing money prior to CAH conversion and thus reduce hospital closures.”
Moakler explained that the “program is designed to help small rural hospitals survive. Prior to receiving that [designation], we struggled financially. We have a very high Medicare/Medicaid mix here.”
HRH is one of the top three hospitals in the state with patients on Medicare or Medicaid, which is a reflection of the socioeconomic conditions of the area, he added.
As a Critical Access Hospital, HRH receives more reimbursement for its Medicare and Medicaid patients than the Aroostook Medical Center in Presque Isle, for example.
To maintain its designation as a Critical Access Hospital, HRH is only allowed to have 25 acute patients in the hospital at one time. An acute patient includes someone who has a medical condition such as heart failure, pneumonia, a mom who has delivered a baby or someone who is having a scheduled surgery.
“Basically it is a patient who has to stay overnight,” he explained.
HRH has an acute care wing on the third floor of the hospital that used to average 18-20 patients a day. Over the past five to seven years, those patients have dropped to about 10-11 per day, Moakler said. Some of the reasons for such a sharp decline in acute patients is that insurance companies make it more difficult to have a patient admitted overnight. HRH also transfers most patients who have suffered a heart attack to Bangor for treatment.
Because of the decline, the hospital was able to explore other ways it could utilize its space.
“There will be no void in the community for skilled level care,” Moakler said. “But in giving up the nursing home piece, there is potentially a loss of nursing home availability [at Madigan and Gardiner].”
Several months ago, Moakler said he met with representatives from both Madigan Estates and Gardiner Health Care to apprise them of the hospital’s plan.
Moakler said he anticipates the hospital obtaining its state license to see “swing” patients by Oct. 1.
“The result, in the end, we feel will be positive for the hospital and the community,” Moakler said. “We will still be seeing acute patients, but we will be more efficient, saving some money and it will put us on a better footing financially.”