MaineHealth announced Thursday that its 10 member organizations, including 8 hospitals, are uniting under a single board and a $2.5 billion budget.
Unification has been touted as a way to more easily share resources between hospitals and preserve services. But some experts say consolidation leads to higher prices.
The idea was first pitched about a year ago to address a challenge in health care, says MaineHealth president Bill Caron. That is, the increasing financial pressure on smaller, rural hospitals as more profitable services shift to larger health centers.
“The challenge here is how you maintain the level of services that we want in each one of our communities that are appropriate in local communities, yet may not be paid for as well by other payers,” he says.
The answer, Caron says, is to unite under a single budget that amounts to $2.5 billion.
“It allows us to transfer resources across the system in a way that we can’t do today in our decentralized, shared governance model,” he says.
All of MaineHealth’s members, which include eight hospitals that stretch from Biddeford and Farmington to Belfast, have approved unification. But the idea initially faced opposition because some hospitals feared a loss of local control.
Member boards contacted for this story were not available for comment.
Caron says after holding several community forums, the unification plan includes provisions to ensure individual members maintain a voice.
“Local community boards will continue to oversee quality, patient safety,” he says.
Each member organization will also have a seat at the MaineHealth board for the first five years. After that, the board will likely shrink to a more manageable size, Caron says, but still maintain geographic diversity.
Overall, Caron says, unification is all about protecting appropriate access to care. But some experts say there are downsides.
“There’s a pretty thick dossier of good research at this point that all points to the same thing,” says Kathy Hempstead, a senior advisor at the Robert Wood Johnson Foundation. “When systems combine, it’s more often associated with higher prices for consumers.”
With fewer competitors, Hempstead says, providers have more negotiating power with insurers over reimbursement rates, which can drive prices up. But she says for a rural state like Maine, higher prices may be a trade-off worth the alternative.
“It would also be bad for consumers if there were even fewer providers and you had to drive even further to get to a hospital,” she says.
Hempstead says she doesn’t think consolidation is the final stage of evolution for the health care market. As technology is used more and more to provide care in a variety of settings, she says it will likely increase competition.
In the meantime, Caron says unification will take about a year to fully implement.