Maine business owner Catherine Robbins-Halsted was trying to help the wife of one of her employees find a more convenient location for her cancer treatment that wouldn’t require her to drive over an hour away.

She found one, but there was a catch: It charged $20,000 per treatment – more than twice as much as the more distant facility.

“That’s a horrific difference with just an hour away,” Robbins-Halsted said.

This is a common story in Maine, where huge price discrepancies among health care providers exist. In many cases it’s the patient’s employer or insurance provider that is forced to absorb the difference in price. The situation has gotten so bad in Maine that several employers now require their workers to travel to Boston for major non-emergency medical procedures because the costs there are significantly lower.

High prices also affect Maine consumers – even those with health insurance – because they ultimately lead to higher insurance premiums. It’s a national problem, but it is so extreme in Maine that the state is often cited as one of the most expensive states for health care in the country.

The primary causes of inconsistent and relatively high pricing among Maine health care providers are multiple, including:

Too many areas with little or no competition

 Areas where patient volumes are too low to cover facility costs

 Inadequate government compensation to many hospitals for Medicare and Medicaid patients

A high percentage of patients in some areas who can’t pay their medical bills

Prices for medical procedures vary drastically among Maine’s 37 major hospitals, according to CompareMaine.org, a consumer-focused online database of Maine medical pricing. For example, the average cost of a gallbladder removal procedure is $10,257 at Pen Bay Medical Center in Rockport, the least expensive provider in Maine for such operations, but it costs $20,504 at The Aroostook Medical Center in Presque Isle, the most expensive provider. Arthroscopic shoulder surgery that costs $10,260 at Northern Light Mercy Hospital in Portland costs $25,567 at Waldo County General Hospital in Belfast, according to CompareMaine.

Critics of Maine’s health care system say patients are being overcharged in many cases because of regional monopolies and a lack of competition that allows hospitals to charge as much as they want. Maine hospital representatives disagree, saying the real reasons for higher prices, especially in rural communities, are a large percentage of uncompensated patient care – the term for when patients don’t pay their medical bills – and high overhead costs spread out over relatively few patients compared with hospitals in more densely populated states.

COST NO LONGER NEGOTIABLE

Robbins-Halsted, co-owner of Robbins Lumber, a family-owned business based in Searsmont, said she has witnessed firsthand the detrimental effects of regional monopolies on health care pricing in Maine.

Her employee’s wife who is being treated for cancer was driving more than an hour to Topsham every three weeks for her chemotherapy sessions. Robbins Lumber, which funds its own employee health insurance plan, was paying $9,050 per treatment to New England Cancer Specialists.

To make things easier on the employee’s gravely ill spouse, the company attempted to move her chemotherapy sessions to the much closer Waldo County General. But the hospital’s non-negotiable price for the exact same treatment was more than $20,000.

Waldo County General was purchased in 2008 by Portland-based MaineHealth, which also purchased another nearby hospital, Pen Bay Medical Center in Rockport, in 2010. MaineHealth has control over the boards of directors of both hospitals.

Robbins-Halsted said Waldo County General used to be able to negotiate prices with employers and insurers on expensive treatments such as chemotherapy but lost that ability when MaineHealth took over.

“When it was just Waldo County, we could work with the hospital,” she said. “But now that it’s all MaineHealth, they said that they’re no longer able to do that.”

MaineHealth Treasurer Albert Swallow said the health care system does not negotiate prices for individual procedures, but that it does try to help patients who are experiencing financial hardship. He said hospitals have to charge more than specialized, for-profit clinics such as New England Cancer Specialists because the hospitals’ costs are much higher and they don’t have the luxury of turning away uninsured patients.

“They are under no obligation to care for those patients in the way that we are,” Swallow said.

INPATIENT CARE EXPANDING

Arthur Jacobson was shocked when he saw the $11,000 price for a procedure he underwent in November 2017 to have a skin lesion removed from his leg.

Jacobson, who lives in Winthrop, said his primary care physician at Winthrop Family Practice referred him to MaineGeneral Health in Augusta to have the lesion removed under general anesthetic rather than doing a simpler, far less expensive removal procedure in the doctor’s office, as Jacobson said he’s had done in the past.

“I just didn’t understand why that was necessary; it wasn’t very large,” Jacobson said. “Procedures that used to be part of primary care are now being done at hospitals.”

Winthrop Family Practice is owned by MaineGeneral Health. Health care pricing website Healthcare Bluebook lists a “fair price” for malignant skin lesion removal of $1,049.

Jacobson said he is lucky that as a retired state employee, he has excellent health insurance that covered most of the $11,000 cost. Thousands of Mainers do not.

“If I didn’t have insurance, it would have been a very large bill,” he said.

As was the case with Jacobson’s lesion removal, hospitals tend to charge far higher prices when a procedure involves an inpatient recovery period. It makes sense, because a hospital stay involves additional costs such as paying for a bed, supplies, food and staffing.

But some patients said they don’t understand why Maine hospitals sometimes require admittance for procedures that can be performed on an outpatient basis. Hospitals said they determine the need to admit patients on a case-by-case basis, depending on their health conditions.

Miriam Rubin’s 90-year-old mother went to Maine Medical Center in Portland for a complete echocardiogram in June. It was an outpatient procedure, and her total bill came to $129 for the procedure plus $410 for the initial consultation.

Rubin said her mother had a follow-up echocardiogram a month later at Mercy Hospital, but this time it was treated as an inpatient procedure, and the price difference was staggering. This time, her bill came to $2,410 for the echocardiogram plus another $350 for imaging.

“I sat there and watched it, so I know that it was the same procedure,” Rubin said. “No matter which way you slice it, it went from a couple hundred dollars to a couple thousand dollars.”

Mercy Hospital spokesman Ed Gilman confirmed that Rubin’s understanding of her bill was correct, but said Mercy couldn’t comment on the care she received at Maine Medical Center or why the cost was different. He noted that Mercy is flexible with patients who are struggling to pay their hospital bills.

NO LEGAL CAP ON CHARGES

While some medical prices vary within Maine’s more population-dense southern region, the biggest cost spikes tend to occur when moving from urban to rural parts of the state, according to a Portland Press Herald/Maine Sunday Telegram analysis of CompareMaine’s database.

Health care analysts said there are two primary reasons: lack of competition and lower patient volumes outside of southern Maine.

Gary Claxton, vice president of the Kaiser Family Foundation, a nonprofit, nonpartisan health care research organization, said nothing matters more than the amount of competition in determining the prices hospitals charge for medical care.

“It tends to be a factor of how many competitors providers in the area have,” he said. “Basically, if they don’t have very many, or no competitors, they can charge more.”

There is no legal limit on what a hospital can charge to perform a certain procedure, Claxton said. Until recently, most hospitals did not disclose their prices to patients in advance, but as of Jan. 1, that has changed because of new federal rules. National rankings of states with the most expensive health care pricing consistently rank Maine at or near the top 10.

In Maine, an example of the influence of competition can be found in the pricing for knee surgery, a common procedure performed at most hospitals.

The average total cost of arthroscopic knee surgery – the simplest and least invasive type – is $6,447 in Maine, according to CompareMaine. That average is heavily influenced by lower prices charged by non-hospital providers such as InterMed in Portland ($4,329) and Central Maine Orthopaedics in Auburn ($4,823).

In areas where a lower-priced competitor exists, Maine hospitals tend to charge less than the state average for knee surgery. For example, Mercy Hospital charges $5,300, and Mid Coast Hospital in Brunswick charges $5,473.

In areas where no lower-priced competitor exists, Maine hospitals tend to charge more than the state average for knee surgery, such as LincolnHealth in Damariscotta and Boothbay Harbor ($13,503) and Waldo County General ($11,930).

The number of patients a hospital treats annually also influences pricing, Claxton said, because a higher volume allows the hospital to spread its fixed costs over a larger number of procedures.

“If you buy a machine that costs $100,000 or $1 million, depending on how many people use it per year, it’s going to take you longer to get your money back,” he said. “If you’re a rural hospital and you make that expenditure, and you don’t have as many patients, you’re going to have to charge each one more.”

The same can be said about rural hospitals that pay high salaries to retain skilled medical specialists, said Ann Woloson, executive director of Consumers for Affordable Health Care, a nonprofit advocacy group based in Augusta.

“Because you’re trying to keep a good surgeon at your hospital, for example,” she said.

FEDERAL REIMBURSEMENT POOR

Hospitals in Maine rely on government reimbursement to recoup the cost of procedures performed on patients covered by Medicare and Medicaid, also known as MaineCare. They say the reimbursement isn’t adequate, which means hospitals lose money on those patients and must make up for those losses by charging higher rates for patients with private insurance or no insurance.

Medicare and Medicaid shortfalls have the biggest impact on total expenses at small, rural hospitals in Maine, which also contributes to their higher prices.

“If they have a big (Medicare/Medicaid) shortfall, they have to find that money,” said Beth Roberts, a senior vice president at insurance provider Harvard Pilgrim Health Care.

According to a Portland Press Herald/Maine Sunday Telegram analysis of Form 990 public financial disclosures, which the Internal Revenue Service requires from most nonprofits to keep their tax-free status, Maine hospitals reported total Medicare/Medicaid reimbursement shortfalls of nearly $217 million in 2015, the most recent complete year available, and additional “bad debt” losses of nearly $161 million from patients who failed to pay their hospital bills.

Not surprisingly, the biggest hospitals in the state had the biggest Medicare/Medicaid shortfalls. Eastern Maine Medical Center in Bangor led the pack with a 2015 shortfall of $31.8 million, followed by Mercy Hospital with a shortfall of $31.2 million.

Only five hospitals in the state reported breaking even or receiving a surplus from Medicare/Medicaid reimbursement in 2015. Three hospitals – Cary Medical Center in Caribou, Mayo Regional Hospital in Dover-Foxcroft and New England Rehabilitation Hospital in Portland – are exempt from federal reporting requirements and do not file Form 990 financial statements.

The dollar amounts of Medicare/Medicaid shortfalls may be smaller at Maine’s rural hospitals, but their shortfalls as a percentage of total expenses tend to be higher than at major metropolitan hospitals in the state. That percentage represents the actual size of the bite that Medicare/Medicaid losses take out of a hospital’s bottom line.

Bad-debt losses also have been significant at some hospitals – both large and small – in Maine. The most cutting bad-debt loss incurred by a Maine hospital in 2015 was $4.1 million at Rumford Hospital in Rumford, which was more than 9 percent of the hospital’s total expenses of $44.9 million for the year.

RURAL CRISIS LOOMING

Steven Michaud, president of the Maine Hospital Association, said the No. 1 financial problem for rural hospitals in Maine is the high percentage of patients being treated who either don’t have private insurance or can’t afford to pay their hospital bills.

“A lot of our rural hospitals literally can be 80 percent dependent on Medicare and Medicaid,” he said. “Their uncompensated care – meaning free care, bad debt, charity care – is higher than average. They’ve got more poor-paying or no-paying patients than other hospitals.”

All hospitals in Maine are nonprofit institutions, but they still report annual net income or losses in their financial disclosures. Six of the 10 smallest hospitals in Maine by revenue reported net losses in 2015, including all of the four smallest hospitals: Charles A. Dean Memorial in Greenville, Calais Regional Hospital in Calais, Millinocket Regional Hospital in Millinocket and Penobscot Valley Hospital in Lincoln.

“You add those two things together, very high governmental payer mix and uncompensated care, and a lower denominator, meaning a lower number of patients, and by definition their charges are going to be higher,” Michaud said. “It’s the only way they can keep the doors open.”

In his 30 years working for Maine hospitals, Michaud said he has never seen rural facilities struggling as much as they are today.

“It is approaching crisis level,” he said. “You see signs of things getting worse. We’ve got many hospitals in precarious positions.”

A hospital closure in a rural community can be devastating to residents for a number of reasons, Michaud said. Not only does it diminish access to medical treatment, but a hospital closure also hurts the community economically.

“It’s not just health care,” he said. “They are the largest employers in rural Maine.”

J. Craig Anderson can be contacted at 791-6390 or at:

[email protected]


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