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State regulators have cleared the way for Mayo Regional Hospital in Dover-Foxcroft to join Northern Light Health, the Brewer-based health system that includes nine other hospitals stretching from Portland to Presque Isle.
On Thursday, the Maine Department of Health and Human Services said on its website that it had granted the necessary certificate for the merger, which also received final approval last month from the boards of both Northern Light Health and Mayo Regional Hospital.
But the two organizations must still do additional work before the merger can be completed, according to Northern Light spokesman Chris Facchini. It was not immediately clear when the merger would actually take effect.
The state approval was granted despite a lawsuit seeking to block the merger filed Dec. 20 by the town of Cambridge and nearly three dozen residents from the other communities that collectively own the 25-bed hospital and its associated medical practices.
The lawsuit also attempted to block the state from authorizing the merger, but last month, a spokesman at Maine DHHS, Robert Long, said that the legal action would not affect the department’s review.
The review process, which is required by law, is meant to ensure that major changes among the state’s health care providers do not negatively affect the availability and quality of care in the state. The state approval included the conditions that Northern Light file annual reports about Mayo’s quality improvements and finances for the first three years after the merger.
Leaders of Mayo Regional Hospital have said that merging with a larger organization is critical to keeping the rural hospital afloat after it suffered operating losses every year since 2010. They have said that it would allow the hospital to cut its operating costs and bring in new sources of revenue.
But a merger agreement between the quasi-municipal group that runs Mayo and Northern Light Health would only require Northern Light to keep operating the hospital in its current form for five years after the merger is complete. Also, research from around the country suggests that the merger could help to drive up the prices of health care in the region by giving Mayo more leverage in its negotiations with insurance companies.
The hospital is now owned by a group of 13 communities that collectively form Hospital Administrative District 4: Abbot, Atkinson, Bradford, Cambridge, Dexter, Dover-Foxcroft, Guilford, Milo, Monson, Parkman, Sangerville, Sebec and Willimantic. But under state legislation authorizing the merger, the hospital’s ownership would transfer into a subsidiary of Northern Light Health, and the district would dissolve.
In the recently filed lawsuit seeking to halt the merger, residents of those towns argued that the state legislation was unconstitutional and that HAD 4 violated its charter by pursuing the deal without first holding votes in all of its 13 member communities.
It’s not clear how the lawsuit could affect the merger at this stage. A Northern Light Health spokesman declined to comment on the litigation. Last week, Gerald Nessmann, a Sebec resident who is one of the plaintiffs, said that Somerset County Superior Court had given the Maine attorney general’s office until Jan. 31 to file an answer to the lawsuit.