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With no Medicaid boost, Maine hospitals face financial pressure

MaineGeneral Health anticipates a combination of higher Medicare reimbursement cuts this year along with no Medicaid expansion

Hospitals in the state of Maine are bracing for an uncertain future in 2014. Maine is one of 23 states not planning on expanding Medicaid this year.

[See also: Maine hospital lowers costs by design]

The Alfond Center for Health, a part of MaineGeneral Health, is located in Augusta, Maine, a rural area of the state that has historically had a relatively high Medicaid population and a large number of hospital charity care patients. Michael Koziol, senior vice president and CFO of MaineGeneral, anticipates a combination of higher Medicare reimbursement cuts this year along with no Medicaid expansion makes a for a difficult, uncertain road ahead for many Maine hospitals.

“In fiscal year 2013 we had $39 million in charity care. Without the expansion, we expect that trend to continue, so it’ll grow at least another $2.5 million in 2014,” said Koziol. “Some reimbursement is better than none at all, with some patients now covered on some form of insurance [due to the new healthcare law], but without [Medicaid] expansion, we just anticipate free care going up.”

Despite the unfortunate Medicaid situation, Chuck Hays, president and CEO of MaineGeneral, said that in many other ways MaineGeneral is faring well heading into the new year.

[See also: Maine community deliberates proposed hospital merger]

For instance, Hays said MaineGeneral has consistently seen avoidable 30-day readmission rates for certain conditions, like pneumonia and heart failure, fall below 13.8 percent, the cutoff point that the Centers for Medicare & Medicaid Services (CMS) has mandated hospitals not exceed or else receive reimbursement penalties. The new readmission rules took effect in October 2013.

“We have been below the national average, so even though CMS has mandated fines, it doesn’t affect us,” Hays said.

When it comes to hospital and physician alignment, an issue many U.S. hospitals are dealing with as the healthcare industry evolves, Hays said MaineGeneral has "great relationships" with its medical staff and physicians, whether they are employed by the hospital or work in an independent practice.

“We’re fine either way. Whether physicians want to be in private practice or employed – we try not to push one model or the other,” said Hays. “Typically, as we’ve been recruiting physicians [to the new Alfond Center for Health], we find they want to be employed even though we’d be more than happy if they wanted to open a private practice. It’s just not economically feasible right now for most.”

Hays doesn’t see many independent private practices staying afloat in the current economic climate, particularly as the payer mix continues to change.

“Administrative costs for an independent practice are crazy,” he said. “Many can’t afford all the red tape and compliance.”

When asked if MaineGeneral plans to incorporate any new regional partnerships or joint ventures with other hospitals or health systems this year, Hays said MaineGeneral is constantly assessing the market, but don’t anticipate anything in the immediate future.

“We have a lot of great relationships with hospitals affiliated with Maine Health and other nearby hospitals, and we are always evaluating our situation and how we can keep our population healthy,” he said. “Unlike urban areas, we tend to not be fighting for business in this area. It’s not as competitive.”

[See also: Maine budget proposal to pay hospitals for old Medicaid bills]

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