News Feature

Blue Hill
Originally published in The Weekly Packet, February 7, 2013
Possible budget cuts to hospitals feared by BHMH administrators

by Faith DeAmbrose

With a staff of more than 320 people and an annual payroll that tops $17 million, Blue Hill Memorial Hospital has had to make some tough choices in recent years to keep operating in the black.

The loss of a full-service obstetrics department, deep cuts to its budget, the implementation of cost saving measures and staff layoffs and buyouts seemed to get the organization back on track, according to financial statements given at the hospital’s annual meeting in August. But, it’s the future, says Chief Executive Officer and President Greg Roraff that again could be in jeopardy because of proposed budget cuts at the state level.

In Augusta, the Legislature is currently grappling with how to close a budgetary shortfall in order to end its fiscal year (June 30) in the black, as is required by the state constitution—and hospitals could stand to lose a lot. According to BHMH Chief Financial Officer Edward Olivier, the hospital stands to lose about $80,000 this year and close to $550,000 next year if cuts—as currently proposed by Governor Paul LePage—are made, both in the supplemental bill and in the next biennial budget.

The budgetary process is complex, even for legislators, explained state Representative Ralph Chapman (D-Brooksville) in a recent interview from the state’s capital. Presently, the Appropriations Committee is reviewing the governor’s proposed supplemental budget that aims to close a roughly $35 million shortfall and balance the budget to close out the year. The total 540-page fiscal year 2012-13 budget of $6.1 billion was signed into law by LePage in June 2011.

The Appropriations Committee takes the LePage proposal and drafts its own budget, which it then brings to the floor for a vote. Because this is considered emergency legislation, explained Chapman, the measure must pass through both houses of the legislature with a two-thirds vote. The governor could choose to veto the budget as an option available to him, forcing both houses to override that veto, again with a two-thirds vote.

Chapman said he expects the supplemental budget to come out of the Appropriations Committee by the “end of next week,” but was not all too optimistic that there would be enough time for legislators to fully digest the document before a vote is taken.

While Olivier says that the organization is well represented by the Maine Hospital Association and its lobbying efforts, he is not confident that all the proposed cuts would be restored in the budgets going forward. “If we don’t actively oppose these cuts, they have a better chance of going through,” he said.

Blue Hill Memorial Hospital potentially faces cuts from three sources, said Olivier: a general tax increase for hospitals, a reduction in reimbursement rates, and a reduction in what is called “cross over payments” that affect those covered primarily by Medicare with qualifying MaineCare supplemental benefits.

So what does that mean for BHMH and its primary care clinics?

The effect of a possible loss of revenue around $80,000 this year would be difficult, but not impossible to overcome, said CEO Roraff, but sustained cuts would slow the hospital’s progress in achieving its mission to provide quality healthcare to the community. Cuts could also cause changes to the hospital’s “services and staffing patterns,” he said, adding, “There are only a few ways to balance the [hospital] budget, and none of them would be popular.”

As a healthcare institution, BHMH is working to shift the way it treats patients, especially those with chronic illness, and believes that approach will reduce costs in the long term, said Olivier. Moving to a patient-centered model of primary care, the hospital will assign Care Coordinators to those with high risks for disease and those with existing chronic disease to help manage the care in a cost effective way. Evidence shows that this works, said Olivier, but if we face funding cuts, “we may be forced to take our foot off the accelerator,” on the program.

What about the money owed to hospitals?

Also making headlines across the state is the governor’s proposed plan to pay debt owed to hospitals dating back to at least 2009. For Blue Hill Memorial Hospital, that sum is about $1.7 million.

However, while BHMH would be happy to receive that money, says Olivier, it stands to lose far more over time if the governor’s above mentioned proposals are adopted.

The plan to pay back hospitals has yet to materialize in a form that is actionable, said Representative Chapman, and therefore is considered a “non-issue” at this point in time.

A trip to Augusta

The Maine Hospital Association will continue to lobby for its hospitals, said Roraff, with plans to host an event for legislators on Tuesday, February 5. Roraff planned traveled to Augusta with hospital board members, including Blue Hill Selectman and former House District 37 representative Jim Schatz. As of press time no additional information was available.