Pen Bay Medical Center needs to move quickly to focus more on outpatient services in order to heal its ailing financial condition.

Dr. Mark Fourre, the president and chief executive officer of Pen Bay Medical Center in Rockport and Waldo County General Hospital in Belfast, discussed the hospital's financial woes, as well as the changing nature of health care, July 28.

Pen Bay had an operating loss of $7.4 million for the fiscal year that ended Sept. 30, 2016. The hospital also lost $3.5 million in 2015.

And it has accumulated a debt of about $20 million since 2012 to MaineHealth, the parent corporation of which PBMC is an affiliate.

Fourre said PenĀ  Bay is not alone in having money problems, saying Southern Maine Medical Center in Biddeford and Franklin Memorial Hospital in Farmington were in similar situations. Many hospitals across the country also face this situation, he said.

A comparison of Pen Bay to 54 medium-sized, rural nonprofit hospitals across the country shows the median financial loss or gain in 2016 was a positive balance of less than 2 percent to a loss of 3 percent. Pen Bay had a nearly 6 percent loss.

The reasons for the financial problems are several, he said. In terms of government reimbursement, MaineCare has not kept up with the cost of services. And many patients with private insurance and higher deductibles are not able to pay their deductibles.

Forty-four percent of Pen Bay inpatients are insured by Medicare, which covers people 65 years old and older, and 22 percent of PBMC patients are insured by Medicaid, which serves low-income citizens.

The hospital has provided care totaling $5 million to $6 million annually during the past few years for which it was not paid.

Fourre said Pen Bay has been designed to focus more on inpatient care, while the national trend is a major shift to outpatient services. This means that Pen Bay has greater expenses than the average facility, but is not able to generate the revenues to offset those costs.

He said procedures such as removing an appendix are now day surgery in which patients go home on the same day, while for the removal of a gallbladder, patients stay overnight, rather than days in the hospital.

He said the goal is to make the transition to a more outpatient-based health center at Pen Bay. He said this can be achieved by hiring more primary care physicians, physician assistants and nurse practitioners, so that patients can go to their physicians' offices, rather than to the hospital. The hospital would provide the outpatient services, such as X-rays, laboratory tests and day procedures like colonoscopies.

Pen Bay is licensed for 99 beds, he said ,but only staffed for 87.

The average daily census at the hospital in Rockport for 2016 was just under 50, according to Medicare statistics.

This is a significant change from less than a decade ago. In January 2009, Pen Bay had a week when it had to send some patients to other hospitals because of an overflow of inpatients. At that time, there were 114 beds being used.

"Building up the ambulatory side (outpatient services) is key," Fourre said of returning Pen Bay to a firm financial footing. He said it will also provide better care and meet the changing needs of the community.

He said Coastal Healthcare Alliance (which oversees Pen Bay and Waldo County) is working to recruit new physicians. He said ideally four new primary care physicians, along with additional physician assistants and nurse practitioners, would meet the demand.

Otherwise, patients will go elsewhere for services and Pen Bay will lose that revenue, he said.

Medicare statistics show that Pen Bay's share of the market within 10 miles of the hospital declined from 67 percent in 2013 to 59 percent in 2016.

One physician is scheduled to join the staff this fall and two more have been hired to start next summer (those two currently have a year of residency to complete).

Pen Bay's financial situation is also aggravated by losses at the Knox Center, which provides both rehabilitation services and long-term care. The Knox Center incurred a $1.6 million operating loss in 2016.

Coastal Healthcare Alliance hired a consultant last year to perform a study of the health care needs of seniors in Knox County to determine the feasibility of providing long-term care services in the future.

Fourre said in terms of the skilled nursing unit of the Knox Center, the trend is toward much shorter stays. He said skilled nursing is used to provide rehabilitation for patients. Fewer of these beds are needed, he said, because research shows the key to rehabilitation for patients with hip or knee replacements is for them to move around within hours, not days, as was the case in years past. Their stays are then shorter.

The goal of the consulting study is to take a comprehensive look at all services for the elderly, including adult daycare or more services at home, Fourre said.

The consultants are putting together the information and Coastal Healthcare will review their recommendations, likely in the fall.

As the hospital and nursing home await the transition, a major decision is facing the Coastal Healthcare Board, perhaps as early as November. That issue is whether to approve a unification with MaineHealth in which there would be one overall board that would make the financial and other key decisions for the member hospitals.

Pen Bay is one of the largest employers in the region, with about $60 million in wages and benefits annually to its staff. Fourre acknowledged there would be changes with the shift to a more outpatient focus.

Coastal Healthcare has seen cuts in administrative staff since Pen Bay and Waldo County administration merged, with savings totaling $4 million, Fourre said.

That merger has been met with concern by the medical staffs at both Pen Bay and Waldo County.

While Pen Bay is bleeding red ink in terms of its financial balance sheet, Waldo County has been strongly in the black.

Fourre said Waldo County is in good financial shape, both because of the strong leadership of Mark Biscone for 33 years, who retired in December, as well as the Belfast hospital's being designated a critical access hospital. That is reserved for hospitals of 25 beds or fewer in an area where there are no other hospitals.

The benefit of that designation is that those hospitals receive higher rates of reimbursement from Medicare and MaineCare.

Fourre said the critical access reimbursement system, however, could be eliminated by Congress, noting that there are bills filed each year to eliminate the system.

If that occurs, he said, Waldo County would benefit from being part of a larger network, as is envisioned in the MaineHealth unification. He said Waldo County already benefits from its affiliation with MaineHealth by having access to efficiencies of purchasing and services.

Physicians at Pen Bay have expressed concern about meaningful differences between health care in the urban/suburban environment of Portland and in the vast bulk of rural Maine. The Portland area would dominate a single MaineHealth Board, local doctors have stated.

"The floated governance model of a single board, of which 50 percent is Portland-based, raises real concerns about preserving a rural voice, as only one small hospital would have to vote with Portland to create a majority on any issue," the president of the medical association said in a January email concerning the sentiment of doctors. "Moreover, as PBMC is now rolled into CHA, it appears there would be only one board member for both PBMC and Waldo, meaning in essence that PBMC, one of the largest smaller hospitals, would have a half vote on the proposed new board. How could this half person adequately and fully represent all of the needs/nuances of our hospital is not clear."

Fourre since then MaineHealth has changed the proposal so that both Pen Bay and Waldo County would have a full representative on the Board.

The physicians at Waldo County voted unanimously in November to oppose unification and urged the Coastal Healthcare Board to vote against the merger.

"We fear that further loss of the independence of our hospital will lead to decisions by others who are not a part of, nor equally concerned about our community as those of us who live and work here — and that 'something special' will be lost," the letter from the Waldo County doctors stated.

MaineHealth has scheduled meetings for the public concerning the proposed unification.

Waldo County became an affiliate member of MaineHealth in 2009 and Pen Bay became an affiliate member at the end of 2010. Pen Bay and Waldo County's boards of directors merged into a single board, named Coastal Healthcare Alliance, in 2015.

The Knox County unification community forum will take place Tuesday, Aug. 22, from 11:30 a.m. to 12:30 p.m. at the Camden Public Library, 55 Main St.

The Waldo County unification community forum will take place Thursday, Aug. 24, from 4:30 p.m. to 6 p.m. at the United Farmers Market of Maine, 18 Spring St., Belfast.

MaineHealth states in a news release that the unification proposal will be discussed and there will be an opportunity for the public "to engage in a conversation with leaders from PBMC and WCGH."

Information on the forums can also be viewed at PBMC ( and WCGH ( websites for more information.