FARMINGTON — Lawmakers’ decision this session to pay millions in MaineCare debt to the state’s 39 hospitals is expected to have a big effect on the Franklin Community Health Network, which is struggling with job cuts and a deficit.

Franklin is being paid $15.4 million the state of Maine owes the hospital for MaineCare, meaning it can pay about one-third of its $25 million mortgage and invest in new technology.

“It’s a real feeling of relief,” Chief Financial Officer Wayne Bennett said. “Running a hospital these days is like walking on a tight wire.”

The health agency, which has been operating at a loss for the first time in more than a decade, announced in February it would eliminate 35 to 40 full-time positions as part of a $6 million reduction in spending to offset a $5.9 million deficit.

In February, when President and Chief Executive Officer Rebecca Ryder announced the layoffs, the news sparked debate in the Legislature about the lack of action on the proposal to pay the MaineCare debt. Gov. Paul LePage made paying the hospitals a key goal of his administration, and he wrangled with Democrat legislators for months about the legislation.

Even though LePage and others pointed to Franklin’s financial woes during the debt debate, Bennett said revenue at the hospital system was declining for a variety of reasons and not just because of the MaineCare debt. As a result, the hospital system still will need to cut $6 million in the coming fiscal year to avoid an operating loss.

The hospital ultimately laid off the equivalent of 30 full-time positions and left 17 positions unfilled, Bennett said.

The move was prompted by a 13 percent decline in revenue, driven by fewer patients, more spending on charitable care and reduced government funding. Those factors were compounded by the $15.4 million debt, hospital officials said.

With the state repaying the MaineCare debt, Bennett said, the hospital now has the cash to pay bills and make capital improvements such as buying new medical equipment and upgrading the buildings.
LePage signed the debt payback bill on June 14. The bill calls for borrowing to pay off the state’s hospital debt, which will be paid off with revenue from a new wholesale liquor contract.

Maine hospitals are owed $484 million in MaineCare debt. Now that the state has agreed to pay its $183.5 million share, it has unlocked $298 million in federal funds to fully pay down the debt.

The hospitals are anticipating receiving the lump-sum payment in late September or early October, around the deadline for the federal match.

Bennett said the only specific plan the hospital system has is to pay off one-third of its $25 million mortgage on its buildings, including the main Farmington-based campus, Franklin Memorial Hospital, and a new $4 million building in Livermore Falls. 

He said the amount the government and businesses are willing to pay hospitals is decreasing while they still need to provide basic services, leading to the need to trim where they can.

The rest of the cuts that made up the $6 million reduction came from restructuring and consolidating throughout the network.

A handful of physicians were moved and offices were closed, including Wilton Family Practice, which was closed the first week of May. The providers there were moved to other practices within the network, including Livermore Falls Family Practice, Farmington Family Practice and Franklin Community Health Network Women’s Care Practice.

Franklin Ear, Nose and Throat and its lead physician, Michael Joseph, were moved from Farmington to the Androscoggin Valley Medical Arts Center in Livermore Falls. The last day of the Farmington operation was March 28.

The hospital also is switching from oil to propane to save on heating and cooling, Bennett said.
He said the network still is considering increasing the amount charged to area towns for NorthStar ambulance, the regional service of the Franklin County area and an affiliate of the network.

Under Medicare reimbursement rules for ambulance services, additional reimbursement is available for “super-rural” areas such as Franklin County. If the rules expire, that would reduce NorthStar’s annual reimbursement by up to $200,000. 

The rules were set to expire in October but were extended to the end of the year. Bennett said hospital officials don’t know yet if Medicare will extend them further. If they do expire, he said, the town may have to increase its subsidy.

Kaitlin Schroeder — 861-9252
[email protected]

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