AUGUSTA — There’s a chart we use at the Maine Hospital Association when we explain the financial challenges our hospitals face. It’s a color-coded comparison of Maine hospital operating margins: gray for the hospitals breaking even, blue for hospitals making more income than expenses and red for the hospitals losing money – literally, “in the red.”
That chart is a sea of red.
And Maine’s rural hospitals are suffering the most. Out of the eight Maine hospitals with five consecutive years of loss, seven of them are rural.
Maine’s rural hospitals include the state’s 16 critical access hospitals and six prospective payment system hospitals, which qualify for Medicare benefits provided to smaller, rural hospitals.
Over the past five years, Maine’s rural hospitals have lost $20 million. There are several reasons why. First are the difficult underlying economies in rural Maine. In addition, Maine’s rural communities have older residents, decreasing populations, higher poverty and chronic disease. When compared to more populous areas of Maine, rural residents are less likely to have private insurance, which provides better reimbursement than government insurance (like Medicaid). The state Medicaid program reimburses only 85 percent of the cost of rural physicians.
Already this year, one rural Maine hospital has declared bankruptcy. Others are joining larger health systems as a means of survival. And many others are barely holding on. Four hospital administrators find themselves simultaneously heading up two hospitals miles apart in an effort to reduce costs.
Rural Maine needs its hospitals. They employ the primary care and specialty physicians in remote areas. Many Mainers already live over 30 minutes away from a hospital. When a loved one spends a few nights in the hospital, it is a significant burden on family to travel over an hour to visit.
Maine’s hospitals are vital economic engines in their communities. A hospital is the largest employer in rural counties like Aroostook, Franklin and Lincoln, and is the second largest employer in rural counties like Oxford, Somerset and Washington. The local hospital, with its affiliated physician offices, nursing homes and other subsidiaries, provides a way for young people to stay and work in their hometowns and encourages other young families to relocate to rural Maine.
The solutions to this crisis are complicated and some of them are out of our control. But the Maine Legislature can take action right now to stop imposing unnecessary financial hardship on vital rural hospitals.
L.D. 1350, An Act To Improve Rural Health Care, sponsored by Senate President Troy Jackson and co-sponsored by Rep. Anne Perry, makes three changes that will help our hometown hospitals. First, it increases the MaineCare reimbursement to hospital-employed physicians so that hospitals no longer have to absorb a loss providing this service. Most doctors in Maine, both primary care providers and specialists, are employed by hospitals. This is particularly true in rural Maine, where the sparse population makes it difficult for an independent physician to earn a living.
Second, L.D. 1350 establishes a new base level for the rural health clinic reimbursement rate for the first time in over a decade. This provision would apply to all rural health clinics in Maine, not just those owned by hospitals.
Rural health clinics were created by the federal government in 1977 to address an inadequate supply of physicians serving Medicare patients in rural areas and to increase the use of non-physician practitioners in rural areas. Rural health clinics are paid a flat rate for medically necessary primary health services and qualified preventative health services furnished by a rural health clinic practitioner.
Finally, the bill would change the Maine tax code. Currently, if a hospital pays off the student loans of a new nurse it hires, that nurse has to pay income tax on that payment. This bill would exempt that loan forgiveness amount from the employee’s taxable income for doctors and nurses at any hospital in Maine, not just rural ones. Maine law already offers exemptions like this for other workers.
It’s not our legislators’ job to bail out private businesses like hospitals. However, when businesses like hospitals provide a service to the government, the government should set a fair price for the service. Please urge your legislators to support L.D. 1350 and help our hometown hospitals. Learn more at ProtectRuralMe.org.
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