As hospitals struggle with a deepening financial crisis, they’re trying to figure out how to provide the right amount of services and preserve access to care without going broke.
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Maine hospitals are struggling with crippling costs, plummeting revenues and aging infrastructure, resulting in reduced services, delayed critical investments and stretched resources.
That was the conclusion of a financial analysis of the state’s nonprofit hospitals’ finances, released earlier this year by Augusta nonprofit Maine Hospital Association.
“The findings of this study confirm what Maine hospitals have been experiencing firsthand — a growing financial crisis that threatens their ability to provide care to our communities,” Steven Michaud, the association’s president, has said.
Problems are being addressed by individual hospitals and hospital systems trying to figure out how to provide the right amount of services and preserve access to care without going broke.
“All of our members are actively doing that on their own,” says Michaud.
Further cutbacks can be expected.
“We’re hoping there will be no further hospital closures,” he says. “But that is far from certain. What is certain are more service cutbacks. There’s really not a lot of options. If you’ve got to stop the losses, something’s got to give.”
In March, the Maine Department of Health and Human Services began imposing temporary MaineCare payment holds to hospitals and other health care providers. The department subsequently said it would release provider payments and reinstate normal payment operations by late June.
Like the rest of the nation, Maine has been watching debates over the status of federal funding for Medicaid and non-Medicaid programs.
“We’re not asking for more money. We’re saying, stop the cutting,” says Michaud.
In early July, Northern Light Health, Maine’s second-largest health care system headquartered in Brewer, said industry headwinds include the proposed changes to Medicaid as well as increased costs for supplies, pharmaceuticals and labor, combined with reduced post-pandemic volumes, low reimbursement and high denial rates from payers, and significant costs for contract and temporary labor.
It’s not all bad news. A growing suite of training programs and facilities, with high-tech patient simulators all the buzz, are tackling workforce shortages.
There’s been a fair bit of new construction and upgrades [see sidebar].
“Not all hospitals or systems are hurting,” says Michaud. “They might be able to do other things and, in some cases, they might not have a choice. If you have a building that’s not meeting code or is no longer safe, you’ve got to do it and amortize it over time to make it more affordable.”
‘Skyrocketing’ costs
In May, Waterville’s 48-bed Northern Light Inland Hospital closed after transitioning patients to new care locations.
The health system has medical clinics in the area that remain open as part of other hospitals; as well as Northern Light Continuing Care Lakewood, a continuing care center in Waterville.
Most of the 300-plus employees were redeployed to other Northern Light hospitals and sites. Plans include selling the Waterville property.
Reasons for the closure included operating losses of $1 million to $1.5 million per month, unsustainably low reimbursement rates and a tight labor market as the reasons for the closure.
The closure was expected to allow Northern Light Health to direct Inland’s resources to its other locations.
Northern Light said it’s trying to reverse steepening financial losses across the system. Operational losses have averaged over $100 million per year over the last three years; Northern Light has debt of $620 million.
Many patients are older or economically disadvantaged; 66% are insured by Medicaid, known in Maine as MaineCare, or by Medicare. Since 2020, overall expenses increased 20%, while Medicare and Medicaid in-patient reimbursement rose only 7.5%.
Northern Light has also had to absorb the “skyrocketing” cost of clinical talent, particularly as the system relies on contract labor due to personnel shortages.
Tim Dentry, Northern Light’s president and CEO, said strategies to achieve financial sustainability will likely include evaluating the system’s workforce and leadership structure and trying to maximize revenue opportunities.
No other hospitals will be closed as a part of that work, he said, but some services at some locations could change.
ICU suspended
St. Mary’s Hospital in Lewiston decided last year to suspend its intensive care unit, based on consistently low patient volume and the availability of services at neighboring hospitals.
Lewiston’s second-largest health care provider continues to invest in areas of greatest need, including expanding access to behavioral health, primary care and emergency services. That includes the launch of a Day Hospital Program, a structured outpatient mental health service for adults who need more support than weekly therapy but do not require inpatient care; the Center for Recovery, providing same-day substance use evaluations and personalized treatment planning; and adding new primary care providers.
Layoffs
In April, MaineGeneral Health identified 148 positions where the health system could achieve cost savings or restructuring.
Of those, 54 were unfilled or open positions that weren’t filled; 60 employees were offered redeployment, 14 had a reduction in hours and 20 had their positions eliminated.
The organization cited rising costs and low Medicaid reimbursements. The nonprofit health system based in Augusta employs nearly 5,000 people across several locations.
‘Unsustainable’
Effective April 1, labor and delivery services at MaineHealth Waldo Hospital in Belfast were moved 22 miles south to the MaineHealth Pen Bay Hospital Family Birth Center in Rockport.
All other pre- and postnatal services remain available at MaineHealth Obstetrics and Gynecology Belfast.
The decision came following a months-long review of the obstetrics program and community outreach.
The hospital said a central issue making continuation of the services unsustainable was consistently low birth volume at Waldo, where deliveries fell to 109 in 2023, a 20.4% decline from 2019.
Recruiting and retaining staff were also difficult, amid a nationwide shortage of health care workers of all kinds.
MaineHealth, the state’s largest health care system, has said it sought to address staff shortages with aggressive recruiting, higher pay and investments in clinical education. But the challenges are particularly acute in rural settings, and MaineHealth Waldo Hospital has faced persistent shortages in pediatric providers, anesthesia coverage and nurses.
The changes to OB services came at a time when MaineHealth Waldo Hospital is expanding overall services, with a particular focus on the needs of a growing population of older people. Over the past two years, that’s included expanded cardiology and oncology services in Belfast.
The hospital said it worked with OB members to help them transition to other opportunities.
Inadequate reimbursements
Obstetric units have been closing throughout the U.S. in recent decades, especially in rural areas, according to a needs assessment of the obstetric workforce in Maine’s rural hospitals, commissioned by MaineHealth to the Roux Institute at Northeastern University and published in January 2024.
By 2020, half of all U.S. counties lacked a hospital offering obstetric services.
Key reasons include financial strain caused by Medicaid reimbursement rates inadequate to cover the total costs of obstetric care, challenges in recruiting and retaining medical staff and an overall decreasing volume of births.
Falling birth rates
Houlton Regional Hospital closed its inpatient labor and delivery unit in May, citing volume decline. The hospital’s OB/GYN physician’s office will remain open and continue to provide services for women’s health care.
York Hospital closed its inpatient birthing unit in 2023, citing a shortage of health care workers and falling birth rates. The hospital continues to provide pre- and post-natal care.
In 2022, St. Mary’s Regional Medical Center in Lewiston closed its maternity and women’s health unit, citing declining birth rates. It transferred patients and their medical records to Central Maine Medical Center, a mile away.
Specialized skills
Citing a “dramatic decline” in birth rates, Mount Desert Island Hospital in Bar Harbor closed its labor and delivery unit, effective July 1.
In 2024, the hospital had 32 deliveries, down from 100 average annual deliveries a decade ago.
Low volumes made maintaining the specialized skills required for safe, high-quality obstetric care increasingly difficult, the hospital said.
The decision comes after a review of patient safety, staff readiness and long-term viability.
Christina Maguire, MDI Hospital’s president and CEO, cited skyrocketing costs, a shrinking rural population and inadequate reimbursement from federal and state sources as part of the rationale.
The hospital said it was working to ensure maternal health remains a priority.
Elements of that plan include renovation to double the size of the emergency department, with one room equipped with labor and delivery equipment for emergency births; and coordination with nearby facilities to ensure smooth transfers for deliveries.
“We know how much this service has meant to our community,” Christina Maguire, MDI Hospital’s president and CEO, said in March. “But we must adapt to ensure the continued strength of our hospital and the care we provide.”
