According to a Sun Journal article published in the March 18 Portland Press Herald, St. Mary’s hospital (owned by non-profit Covenant Health) and Central Maine Medical Center (owned by non-profit Central Maine Healthcare) are under tremendous financial pressures. The article lists three main causes: federal and state reimbursements that lag millions of dollars behind inflation every month and pay only part of the actual cost of care; a labor shortage that is forcing hospitals to spend additional millions of dollars every month for traveling doctors and nurses willing to work temporarily for higher pay; and inflation.

The hospitals are considering, recommending or actually pursuing a variety of remedies to respond to these pressures:

1. Raise taxes on hospitals that are not “rural critical access” to leverage more federal Medicare money that would then be returned to the hospitals, though rural critical access hospitals’ reimbursement rate would decrease.

2. Increase MaineCare (Medicaid) rates toward Medicare’s though, “[e]ven if the federal government and state government funded health services at full cost it would not solve all of the funding issues most hospitals face.”

3. Cut staff and services

4. Postpone investments in equipment and buildings and selling assets

5. Access money from other areas of their integrated health care systems

6. Access other investments

7. Seek payments from the state through special legislation. Earlier this month, the Legislature’s Health and Human Services Committee voted in favor of St. Mary’s request for almost $9 million of state funding to cover last year’s financial losses in its behavioral health services.

Not mentioned were facility fees much in the news recently.

Many of these remedies have negative effects on patients, staff and taxpayers. In addition, despite the print-version headline, “Hospitals look at all options in struggle to meet costs,” hospitals are not looking at all the options. Overlooked is the approach to hospital funding that publicly funded universal health care plans like Medicare for All and many state-based universal health care plans propose: global hospital budgets negotiated regularly between individual hospitals and a public payer (state or federal government entity), based on the hospitals’ and their communities’ needs, not the business plans of the integrated systems that own them.

Hospital operating costs would likely be less in such plans for several reasons: there would be no charity care and bad debt to cover; billing and insurance-related costs (bookkeeping), representing 82% of hospitals’ administrative costs, would be approximately halved; health benefits for employees (about 7% of hospitals’ total labor cost) would be eliminated; drug and device prices would be reduced through negotiation; and capital expenses would be negotiated separately from operating expenses.

Using Central Maine Medical Center’s 2022 financial data from the National Academy for State Health Policy as an example, and applying these savings, I’ve calculated that, in such a plan, their annual operating costs would be about $22 million less than they are currently, or just $3 million less than the $25 million shortfall quoted in the article. To balance CMMC’s books, then, the public payer would have to come up with some $3 million annually. Whether those books are balanced through a public plan’s simple, transparent, income-based health care tax replacing current premiums and cost-sharing and eliminating point-of-service charges, or through the seven remedies listed above, it’s ultimately going to be the people who pay.

Question: should they do that by paying top price to prop up the failing system we’ve got — workers paying through reduced wages and increasing cost sharing; employers through health benefit brakes on expansion and hiring; taxpayers through property, sales and other taxes hiding health care funding; home and car owners through insurance hiding another part of that funding — or by paying a lower price in a better system?

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