Lincoln County Healthcare CEO James Donovan minces no words when he talks about the position in which Lincoln County’s largest employer finds itself.
If the state follows through on Gov. John Baldacci’s proposal to restructure state reimbursement formulas to Maine healthcare providers, the results could prove disastrous to sole community hospitals like Miles Memorial Hospital in Damariscotta and critical access hospitals St. Andrew’s Hospital in Boothbay Harbor.
Facing a $438 million shortfall, the governor has twice asked for additional reductions in the current bi-annual budget, the work is still not done, and schools, transportation, state agencies and social services are all feeling the squeeze.
“We are not myopic enough to not understand the state legislature is dealing with a whole bunch of issues,” Donovan said. “It’s like squeezing a balloon. The legislature squeezes it in one place and it pops out in another.”
However, according to Donovan, Lincoln County Healthcare has already made all the easy cuts, and several of the hard ones, too – to date slicing $1.8 million from the total budget as a result of restructuring Lincoln County’s formerly two separate hospitals under Lincoln County Healthcare’s single umbrella.
“We have already sliced through the skin,” Donovan said. “We have sliced through the muscle and now we are scraping bone. The kinds of cuts we are faced with are really going to affect programs and services. We are going to be facing a significant access issue. We believe that is going in the opposite direction from what we are trying to do. We have cuts on the table right now that are going to be devastating.”
According to Donovan and Lincoln County Healthcare Chief Financial Officer Wayne Printy, as currently proposed, the cuts could dramatically impact rural healthcare providers.
Items under consideration from the legislature for cuts include reducing reimbursement rates for MaineCare, for long term patient care, and home health and hospice care.
Inpatient and outpatient reimbursement would be limited to a maximum of five visits in a given year and the state proposes increasing taxes on the hospital, based on 2008 figures.
If all the cuts are approved as proposed, the budget reduction for Lincoln County Healthcare totals $1,273,000, meaning a $954,000 loss for Miles Memorial Hospital and a $319,000 loss for St. Andrews.
The near $1.3 million budget impact is on top of $800,000 in budget cuts Lincoln County Healthcare has already made to its 2010-11 fiscal year budget.
Further complications include the fact that the uncompensated care, the amount of money spent providing care for individuals who have no means to pay, rose 28 percent in fiscal 2008-09 to $5,550,000.
Then there is this: MaineCare currently owes Lincoln County Healthcare almost $2.5 million for services already rendered.
According to Printy, the worst the state could do is the exact thing under consideration: Legislate some arbitrary percentage of reimbursement based on an untried, untested formula. A better thing to do might be to work together to find a dollar figure that made sense, he said.
According to the state, these changes will save Maine $3.2 million. According to Printy and his fellow CFOs around the state, the damage to healthcare providers will far outstrip that. Based on current projections, Maine Medical Center in Portland will likely lose $4 million alone, Printy said.
“The issue with the state is their numbers and when Wayne and his fellow CFOs calculate those, they come up with $28 million,” Donovan said. “These are devastating cuts.”
Printy said Lincoln County Healthcare knows cuts are coming, everybody is in the same boat; schools in particular are feeling the pinch, but the difference with healthcare is that the obligation to provide care does not go away when the money dries up.
“When they cut the highway budget, they can stop building roads,” Printy said. “We can’t do that… We understand times are tight, but sit down with us and let’s try to figure where we can find the money.”
The bottom line is that like any business, Lincoln County Healthcare needs to maintain an operating margin in order to remain viable. Lincoln County Healthcare is a nonprofit organization but it is also not a charity, Donovan said.
“We have to generate a profit at the end of the year,” Donovan said. “No margin, no mission.”
Ultimately it comes down to access, Donovan said; access to doctors and programs that will provide Lincoln County’s aging populations with the support they need. “Not to get philosophical here, but this healthcare reform debate is ultimately all about access,” he said.
According Lincoln County Healthcare vice president in charge of development and community relations Scott Shott, cutting a program is not as simple as eliminating one program. The immediate impact of not offering a given service in Lincoln County, for example, will have the effect of forcing local residents to travel outside Lincoln County for services.
Then there is the related effect that hospital programs frequently work in conjunction with others. Removing one program isn’t as simple as removing a service. Consideration has to be given to the impact on related remaining services. Reducing any program could be a disincentive for doctors to come to work in Lincoln County when they already have the option of working elsewhere for more money.
“We are going to have to make the decision to stop certain services,” Shott said. “The problem with that is, services are often related. They are intertwined so it is going to affect other things.”
Shott pointed out in other countries with national health services, citing Great Britain for example, health officials control costs by curtailing services. “They have had to control access,” Shott said. “It might be, ‘so you’re a smoker, sorry you don’t get a heart transplant.'”
According to Donovan, LCH hopes to avoid a worse case scenario by making its case with Lincoln County legislators in the near future.
“The next few weeks are going to be critical to all of us,” Donovan said. “We are talking jobs and programs. We are not going to talk about X-Y-Z because we don’t know that yet. We know there is going to be an X-Y-Z, but we don’t know what is going to go into those blanks.”
