In Maine, 7 Hospitals Merge to Create $3 Billion Nonprofit

Katy Warner / merge

October 30, 2018; Becker’s Hospital Review

Beginning on January 1, according to The Nonprofit Times, MaineHealth will become a single nonprofit entity and will have nearly 19,000 employees and over $3 billion in annual revenue. Hospitals that make up MaineHealth join a long list of independent hospitals around the nation merging with other entities to form large healthcare systems. Of the over 5,500 hospitals in the United States, nearly 60 percent are part of a health system, according to the American Hospital Association.

Portland-based Maine Medical Center; Biddeford-based Southern Maine Health Care; LincolnHealth in Damariscotta and Boothbay Harbor; Coastal Healthcare Alliance in Rockport; Norway-based Western Maine Health; Farmington-based Franklin Community Health Network; and Maine Behavioral Healthcare in South Portland will be governed by a single board of trustees, though other local boards will have some input.

At a recent Boothbay Harbor town meeting, LincolnHealth President and CEO Jim Donovan explained the rational for the merger to residents. Two-thirds of LincolnHealth’s gross revenue of about $100 million is from Medicare and Medicaid. Donovan said, “Both pay us less than what it costs to actually provide care, so essentially two-thirds of our care starts off at less than cost, so we have to try to make up that elsewhere. And with the realities of the demographics of Lincoln County, which we all know, that is very difficult.”

The problem is compounded by the threat of an insufficient number of future healthcare workers. Donovan explains that 41 percent of the MaineHealth workforce is 50 years or older, and about 23 percent of nurses employed by LincolnHealth are 60 years or older. While Lincoln County and Maine as a whole are having difficulty attracting a new and younger workforce, healthcare education programs are experiencing retirements and shortages that make it difficult to grow independent of a larger system.

Successful large healthcare systems are able to reach economies of scale, sharing resources, reducing cost, and leveraging their increased revenue to attract physicians and purchase the latest medical technology. Without capital, independent hospitals have a tough time staying competitive.

“Unification strengthens Southern Maine Health Care from a healthcare delivery, financial and sustainable perspective,” said Nate Howell, CEO of Southern Maine Health Care. “By bringing the members together, resources can now flow more easily between various parts of the healthcare system. We are proud to be part of a system that can provide all levels of care to our patients.”

There are both pros and cons for the trending consolidation. The unifying theme? Access to healthcare. Large healthcare systems in urban and suburban areas offer consumers more choice and access to specialty care. Do the same benefits apply to residents in rural Maine, especially in a region where a disproportionate number of patients represent the poor and the elderly?

Some Boothbay residents are not convinced that the merger is a good thing for them and are voicing their disappointment about the transformation of St. Andrews Hospital, once an inpatient campus providing overnight care, into an urgent care center and an outpatient campus operating from 8 am to 8 pm.

“The last time you folks came to us and said ‘Oh, this is going to be great for our community, we’re going to come in and…take care of the whole Lincoln County area,’ a month and a half later we lost our hospital,” said Corey Tibbetts. “Now we have an urgent care center and you can only get sick from 8 to 8. So, now you tell me what guarantee we have that if we go along with this we’re even going to have an urgent care center?”

In September, NPQ’s Debby Warren reported on the growing financial trouble rural hospitals face. She wrote,

Of these troubled nonprofit health systems, rural hospitals face the greatest challenges. Since 2010, the University of North Carolina’s Cecil G. Sheps Center for Health Service Research has recorded 87 rural hospital closures in more than 20 states. According to one study, an additional 673 hospitals are vulnerable to closing, located across 42 states, with an estimated 99,000 jobs at stake. Nearly 12 million patients could lose direct access to care.

Last week, the Bangor Daily News reported that a superior court judge in Maine put a hold on the proposed merger of Mayo Regional Hospital in Dover-Foxcroft and Northern Light Health in Brewer. This follows a lawsuit initiated by one of Mayo Regional Hospital’s board of directors against Hospital Administrative District No. 4, which oversees the 25-bed hospital. Healthcare Dive contributor Meg Bryant says the hold will “allow time for a hearing for a temporary injunction seeking more information about the proposed deal.”

Bryant suggests that this hold “reflects a growing trend among state and local officials to question [mergers and acquisitions], particularly if access to services may be affected.”

—Meredith Betz