We serve as volunteer trustees of MaineHealth who take seriously our fiduciary duty to support access to quality care for our patients and the care teams who serve them. We write because buried in the governor’s proposed budget is a provision with minor impact in Augusta but one that would inflict major damage across Maine’s health care landscape: a reduction in Medicaid reimbursement for hospital-based physician services.

On paper, the impact to the state is $6.8 million in FY 2027, a tiny fraction of the state’s total Medicaid budget. But when federal matching funds are factored in, Maine’s hospitals stand to lose $24 million in the first year and an ongoing $75 million per year starting in 2031. That will cause real pain for our struggling hospitals and the communities they serve.

This is a real cut that would hit our hospitals at a moment of deep fragility. A recent analysis warns that Maine’s hospitals are among the most financially vulnerable in the nation. Northern Light Health recently shut down Inland Hospital in Waterville. Central Maine Healthcare is exploring acquisition by the nonprofit affiliate of a large for-profit system. And MaineHealth, the state’s largest health system, remains well short of the 3% operating margin set out in state law for long-term sustainability.

This cut would take us in the wrong direction at precisely the wrong time.

The strain on hospitals isn’t just financial, it’s structural. We’re grappling with soaring labor costs, shortages of skilled staff and increased demand driven by an aging population. Older adults require more complex care, much of it delivered in hospitals and reimbursed by public programs that don’t fully cover its cost.

Physician services are the backbone of health care. Cutting reimbursement for those services will undercut our ability to retain and recruit the very physicians we need. National projections show a shortage of 120,000 doctors by 2030. Maine is already feeling the squeeze, especially in rural areas. Reduced reimbursement means fewer resources to sustain our network of caregivers.

Maine hospitals’ financial metrics are among the worst in the nation. Our nursing homes are also closing at a rapid rate. Our behavioral health services for children have crumbled to the point where Maine spent $32 million sending children out of state for treatment in 2023. Despite significant investments in compensation, we are facing serious provider and caregiver shortages as our workforce shifts.

At the same time, we are the oldest state in the country and have the second-highest percentage of residents living in rural areas. The demand for health care exceeds our capacity to provide it.

When hospitals can’t afford to staff emergency departments or specialty clinics, care becomes harder to access. Wait times grow. Outcomes worsen. A reduction in Medicaid physician reimbursement doesn’t just hit hospitals, it hits patients too.

Maine’s hospitals are doing their part. They’re innovating to provide care differently, investing in telehealth to help patients stay at home and developing alternative care sites that are less costly to operate. And they continue to care for all patients, regardless of ability to pay. Our hospitals preserve access by employing physicians at a higher rate than any other state, at a significant financial loss. Mainers should be proud that our system is mission-based, focused on patients and communities first.

We urge lawmakers to reject this cut. It may look modest on the state’s balance sheet, but it would deliver a disproportionate hit to hospitals just as they are fighting to recover. Let’s not sacrifice long-term stability for short-term budget optics. Let’s work together, as we have before, to ensure high-quality, affordable care remains within reach for every Mainer.