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September 18, 2017 Focus: Health care

As rural health care providers struggle, employers eye wider implications

File Photo / Amber Waterman Steven Michaud, president of the Maine Hospital Association, says he's 'never seen it as difficult as it is right now for all hospitals, but in particular with rural hospitals.'

The obstetric department at Calais Regional Hospital had 64 births in 2016, but needs close to 300 births per year to break even.

It's a quick statistic that hints at a world of difficulty for health care providers trying to remain viable in rural Maine.

Due to low patient volume, Calais Regional closed its obstetric unit in August — a reflection of the challenges rural health care providers are grappling with throughout Maine. Those challenges — occurring on various fronts that include financial issues, remote geography and shifting demographics — are threatening services within facilities or the existence of facilities themselves. Yet health care, like schools and housing, is one of the pillars of an economically vibrant community — capable of being the make-or-break point for employers deciding on locations and employees looking for jobs.

So say health care and economic development experts, as well as rural employers, who agree the situation could get worse before it gets better, given policy uncertainties at both the national and state levels. But they also agree it's important for all interests to work together to ensure future sustainability of the rural health care sector.

“The community has to invest in its hospital, and that's by using it,” says Calais Regional CEO Rod Boula. “It's basically 'use it or lose it.'”

Cutbacks are trending

Calais Regional is just one provider forced to look at cutbacks or mergers in recent years. Other examples include the closure of obstetrics at Blue Hill Memorial Hospital in 2009 and Penobscot Valley Hospital in Lincoln in 2014; cessation of overnight emergency care in Jackman, and the closure of the emergency room at St. Andrews Hospital and Health Care Center in Boothbay Harbor, in 2012, followed by the end of in-patient services.

Experts say things could worsen.

Maine's health care sector has been relatively stable until recently, says Steven Michaud, president of the Maine Hospital Association in Augusta.

“However,” he continues, “I've never seen it as difficult as it is right now for all hospitals, but in particular with rural hospitals.” He cites financial losses and difficulties recruiting physicians and other practitioners as top challenges.

“Calais is an example,” he says. “They're not only eliminating OB, but they're a payroll-to-payroll hospital with no reserves.” That's not necessarily the case throughout Maine hospitals, he says. But the situation is trending up — “unlike anything we've seen.”

Why the acceleration? It has to do with the money mechanisms funding the Affordable Care Act, including cuts to Medicare in order to pay for exchange subsidies and Medicaid expansion.

“The theory was, although these were payment cuts to hospitals, hospitals should be able to absorb the cuts because they'd see more revenue with more people covered by insurance,” including Medicaid, he says. “The reality is that those cuts, over time, have really taken hold.”

The advent of high-deductible, high co-pay insurance plans are also contributing to shortfalls, Michaud says: “People can't pay those co-pays, but they still get care. That's a lot of bad debt to hospitals.”

And the aging population, with greater medical needs, is another contributor, he says.

Although Maine hasn't seen any hospital closures for years, he says, “I fear that, in the next five to 10 years, we'll see a significant dislocation in rural Maine — meaning service reductions and even losing providers. Unless something changes, and I just don't see what that is. It's hard to see how there's going to be significant bipartisan consensus on fixing Obamacare, and we are every year fighting Medicaid cuts on the state level.”

Risks for community health centers

All of Maine's community health centers are also at risk, says Darcy Shargo, interim CEO at the Maine Primary Care Association in Augusta.

Community health centers are officially called Federally Qualified Health Centers and are administered by the U.S. Department of Health and Human Services' Centers for Medicare & Medicaid Services. Shargo's association provides education, advocacy, and improvement initiatives for Maine's FQHCs. The number of FQHC sites has slowly increased over the last few years, in part due to investments made through the ACA.

But delays in federal funding are expected to threaten the FQHC system. Shargo has been watching Congress's progress on its appropriations bill, which needs to pass by Sept. 30 to avoid a government shutdown. Without that funding, she says, at least 25 of Maine's 70 health center sites could close down, and the FQHC system as a whole could suffer a 70% decrease in funding, with 394 layoffs of clinicians and other personnel, loss of access for more than 29,000 patients across the state, and further impacts like loss of individual services for the 210,000 patients that go to Maine's FQHCs.

“I don't think it's an exaggeration to say it would be devastating” to whole communities, says Shargo. “If a health center's funding is cut, how is it going to be able to recruit providers to its area, even if the cuts are short-term? Even though we've been encouraging many health centers, and they do this by nature, to partner with community groups and educational institutions to come up to with creative ways to recruit and retain providers, the reality is, it's difficult to get doctors to come to rural areas. I would imagine this cut would only exacerbate that.”

Employees ask about health services

Asked whether these circumstances impact the ability of employers in general to recruit and retain employees, the consensus in the economic development and business communities is — absolutely.

Shawn Yardley, CEO of Community Concepts in Lewiston, grew up in Washington County and has watched the Calais Regional Hospital debate with interest.

“You've got a rural hospital where the next nearest hospital is 45 miles away, in Machias,” he says. “When you've got a community that no longer has the ability to deliver babies, what does that say to people, who are considering moving there, about the health of that community? I think it will have a chilling effect on the ability to market that region, particularly to families of childbearing age. As the state gets older and older, I think that's something we have to be very aware of as we do our planning and hoping for Maine.”

Lou Esposito, vice president at First National Bank in Calais and a Calais Regional finance committee member, agrees. By email, he said health care joins education as primary factors in the decision of employers or employees to relocate.

“Think how critical health care is to a small, isolated town with typically 'risky' jobs such as timber or fishing, like we have in Maine,” Esposito wrote. “A guy gets hurt in the woods with a chainsaw, he can't wait a couple hours for treatment. In Calais, the nearest tertiary hospital is Bangor, two hours away; in winter, it could be unreachable. A treatable heart attack or stroke suddenly becomes a fatality ... What new business would want to be part of all that?”

At Woodland Pulp LLC in Baileyville — the region's largest employer with 300 to 310 people, plus 80 at its sister facility, St. Croix Tissue — Environmental Manager Scott Beal echoes those thoughts.

“As we're trying to attract and retain talent in our business, depending on where you are on life's path, the question is always one of two from prospective candidates,” Beal says. “If they're younger, with children, the first question is, 'What can you tell me about the educational opportunities here?' If you're a junior geezer, like me, you might be more interested in the health care facilities. So it's always education or health care. Those are some of our concerns, as an employer, and some of my concerns as someone who lives in Baileyville.”

Sustaining the future

These challenges occur throughout rural Maine.

At Mayo Regional Hospital in Dover-Foxcroft, which also runs numerous off-campus facilities in the region's small communities, CEO Marie Vienneau echoes Calais Regional's situation when she explains that cuts in Medicare reimbursements, the lack of Medicaid expansion, increased free care for people with no insurance, and bad debt from insured people who can't pay high deductibles have created a worrisome situation. That's topped by increased care for an aging and impoverished demographic; and difficulties recruiting new practitioners, resulting in premium pay for temporary staff. Over the past year, two positions were left unfilled to cut expenses.

Mayo is examining revenue boosters like improved charge-capture, new service lines, and grants to purchase telemedicine equipment, which could help retain patients in certain units rather than transferring them elsewhere. A collaboration or merger with Eastern Maine Healthcare Systems is in discussion, as a way to lower costs.

“So far, we've been able to retain our services,” Vienneau says. “But we need to find other ways to operate more efficiently. I won't be able to sustain all our specialty services into the future unless I have a lot more patient volume or a lot more reimbursement.”

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