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MaineHealth looks at way to stop Pen Bay financial bleeding

By Stephen Betts | Dec 20, 2016
Photo by: Stephen Betts A feasibility study has been commissioned on whether to continue operating the Knox Center for Long-Term Care.

Rockport — Pen Bay Medical Center is bleeding money and MaineHealth is looking at ways to reduce the financial drain, including studying the feasibility of continuing to provide long-term care services.

MaineHealth is also looking at whether reducing the number of inpatient beds at Pen Bay would help deal with the annual multi-million-dollar operational losses.

A draft financial recovery plan for Pen Bay was issued in November by the administration of Coastal Healthcare Alliance. That document, obtained by the Courier-Gazette, includes a list of options.

One step already taken is engaging "a consultant to perform a study of the healthcare needs of seniors in the Knox County area to determine the feasibility of providing long-term care services in the future. The Knox Center for Long-Term Care incurred an operating loss of $1.2 million in FY 16," the memo states.

The closure of the Knox Center is not being contemplated as part of this review, said MaineHealth Director of Marketing and Communications John Porter.

Porter said that the review is aimed to look at what demand will be for long-term care services in the future and whether there are more efficient ways to provide it.

The Knox Center has been operated by Pen Bay Medical Center since 1976, when the hospital was built in Rockport and the former Knox Hospital in Rockland was converted into a nursing home. The center has 84 beds.

The Knox Center was eyed for possible closure back in 1983, when it was also losing money. A community group formed and came up with proposals that led to the nursing home's remaining open.

Porter said MaineHealth is committed to providing services in the community and reiterated that the closure of the Knox Center is not being contemplated. He said the consultant is expected to provide information to the administration in February or March.

Another initiative listed in the administration's PBMC financial recovery plan was fewer beds at the hospital.

"We are pursuing the reduction of hospital licensed beds to qualify for improved reimbursement under the RCH (Rural Community Hospital) program. Preliminary consultant analysis estimates improved reimbursement for inpatient services amount to $1 million," the memo states.

Pen Bay is licensed for 99 inpatient beds, according to its website.

Porter said to be eligible for the RCH program, Pen Bay would have to have 50 or fewer licensed beds. He said that the average daily census at Pen Bay is less than 50, and that if the beds were reduced by half, it would not affect the services provided to the community.

He said that the trend in hospitals across the country is for declining census and reduced reimbursement. He said that is why MaineHealth is studying the possibility of unification within the system to prepare for those changes.

The administration also points out in the memo that Pen Bay and Waldo County are collaborating on 70 services, and that is projected to increase to 100, which should increase savings. The two hospitals already share many administrative services, as well as health services such as mental health, obstetrics and gynecology, nephrology, oncology, ophthalmology, urology, and vascular surgery.

Another option listed to save money was the possible sale of the office building on Pleasant Street in Rockland and the Old County Road building where its information technology equipment is located.

The amount of the annual financial losses at Pen Bay has not been publicly released.

Coastal Healthcare Alliance -- which is the corporation that oversees Pen Bay Medical Center, Waldo County General Hospital, the Knox Center, Quarry Hill, Kno-Wal-Lin and nearly all the physician offices in the region -- reported a $3,266,152 operating loss in the 12 months ending Sept. 30. A source told the Courier-Gazette that the loss by Coastal Healthcare was due to Pen Bay, and that the corporate loss would have been greater if not for a surplus at Waldo County.

Coastal Healthcare is a member of MaineHealth, which operates hospitals and related health care organizations in western, central and southern Maine.

Porter confirmed that Pen Bay lost money in the most recently completed fiscal year, but said the final numbers had not been audited and a bottomline figure was not available.

Waldo County became a member of MaineHealth in 2009 and Pen Bay became a member in 2012. Pen Bay and Waldo County's boards of directors merged into a single board in 2015, named Coastal Healthcare Alliance.

MaineHealth Chief Executive Officer William Caron met Thursday, Dec. 15, with physicians at Pen Bay Medical Center to unveil a proposal to merge Coastal Healthcare's board and other regional boards into one statewide board. Physicians at Waldo County General Hospital voiced opposition to the unification in a letter last month, citing the potential loss of control on major decision-making authority.

A Courier reporter went to the meeting, held at the physicians building on the Pen Bay campus, but was asked at the start to leave, since it was a private meeting and the first opportunity for doctors to hear MaineHealth's presentation.

A source said after the meeting that MaineHealth executives reported that Pen Bay owes MaineHealth $30 million to $40 million for unpaid employee health insurance premiums that have built up since the Rockport-based health care system became a member in 2012. The MaineHealth executives also said that Pen Bay would not have to repay the money if unification occurred, the source reported.

On behalf of MaineHealth, Porter declined comment on whether Pen Bay owed that amount to the parent corporation or whether it would not have to be repaid if unification occurred.

He released a general statement on the unification talks.

"MaineHealth member organizations, including Coastal Healthcare Alliance, continue to evaluate their fiscal and governance structure, as they have on a regular basis since the organization was founded in 1997. As always, the discussions center on how we can provide the best possible care, promote healthy communities and mitigate costs. The goal of these conversations is to address the growing, industry-wide pressures on community hospitals and rural health systems so that each member can achieve its mission backed by the strength of the entire MaineHealth system. These discussions remain in the early stages with participants sharing the goals of better positioning our members for the future while maintaining a substantial and appropriate role for community members in the governance of our organization.”

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Comments (1)
Posted by: Mary A McKeever | Dec 31, 2016 14:57

Back before this started to be Pen-Bay, Camden had its own small hospital and it was free and clear when they built and moved  to Route 1 from Mountain street. It was free and clear until it was joining the Pen-Bay Hospital Administration. Somehow thrown into the hierarchy of joining, the debts compounded. Has anyone looked into the costs of Non-Hospital expense? The Administration heads and secretarial entourage, etc. It has mushroomed and now compare the Salaries of these heads to the local citizens in private service jobs. This is a growing bureaucracy!

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