AUGUSTA — MaineGeneral Health’s new hospital is busy but overstaffed, CEO Chuck Hays said in announcing Thursday that the organization will lay off 16 people this summer.
The budget that MaineGeneral officials are developing for the fiscal year that starts in July eliminates 128 full-time positions, 16 of which are filled.
Hays said only two of the positions involve direct interaction with patients, and most are in management. Some departments will be consolidated under the supervision of one manager.
MaineGeneral has about 4,300 employees and a budget of $456 million for this year. The organization opened its $312 million north Augusta hospital, the Alfond Center for Health, in November and is making $10 million in improvements at the Thayer Center for Health in Waterville, which will consist of outpatient care offices.
The Alfond Center for Health’s occupancy rate for medical and surgical beds is high, at 88 percent. In its first four months, the hospital was full to capacity one-quarter of the time, requiring patients to wait on hospital beds placed in emergency department rooms until beds open in private patient rooms.
Those full beds, however, do not necessarily generate reimbursements that cover the cost of the care the hospital is providing. Hays said the patients are sicker, reimbursement rates for Medicare are lower and the hospital can’t charge inpatient rates for all the patients in the beds.
In addition, inpatient volume is expected to be lower going forward because MaineCare — the state’s Medicaid program — was not expanded, and new ways of managing care for high-cost patients can reduce their overall need for health care. Changes to a diabetic’s care, for example, might mean they will be admitted to hospitals or treated in emergency rooms less often.
Finally, the transition from two inpatient hospitals to one has left the new one overstaffed.
“The new hospital is more efficient, so as you get used to the building and give people time to acclimate, now it’s time to go back and right-size the staffing,” Hays said.
Employees affected by the job cuts are being notified this week.
Hays said the budget also will make reductions in discretionary accounts, such as travel expenses, which is where officials look first, before personnel.
Hays said he expects the size of the budget to remain about the same. MaineGeneral officials did not have a projected revenue figure ready on Thursday.
The patients being admitted to the Alfond Center for Health have more acute needs and are staying longer, Hays said, but reimbursements are per patient.
“So whether you stay here three days or you stay here nine days, we get the same reimbursement,” Hays said.
Jeffrey Austin, vice president for governmental affairs at the Maine Hospital Association, said MaineGeneral is not the only provider treating sicker patients in its hospital.
“People face higher deductibles, the economy is soft, people are delaying care,” Austin said. “That means you’re seeing the people who absolutely cannot avoid it, and those are going to be the sickest people.”
Another factor that belies high occupancy rates is the growth of “observation” status, patients who are treated in the hospital and may stay overnight without being officially admitted. Kaiser Health News reported last year that the number of Medicare patients receiving observation care rose 69 percent in the five years leading up to 2011.
Austin said the hospital staff doesn’t want to admit a patient whose injury or illness might not merit inpatient care in the eyes of a federal auditor, but they also might think the patient is not ready to go home. That’s especially common with older patients who might live alone or be at risk of falling.
Care for patients on observation status must be billed at outpatient rates. Austin said the hospital industry wants the federal government to create a reimbursement rate for observation stays.
“We’re expending some inpatient-type resources on patients that we’re getting outpatient reimbursements on,” Austin said.
Austin said there’s a sliver of good news in lower inpatient volumes, but the payment system needs to catch up with new approaches to health care.
“I think we’re accomplishing a lot of the goals people want, in terms of keeping people healthy,” he said. “We’re not really being reimbursed for the quality we’re delivering.”