The budget stalemate is of particular significance to hospitals in Maine. The state has said that it will cap MaineCare payments to hospitals in the face of a $118 million shortfall. Jeffrey Austin with the Maine Hospital Association said that has raised real questions about whether hospitals have the cash on hand to continue operating through the turbulence.
All Things Considered host Nicole Ogrysko spoke with Austin.
Austin: We have a handful of members that have such a short supply of cash on hand that if they lose any incoming revenue for whatever reason, they can face some significant hardship. Overall our operating margins in Maine, that's another word for our profit margin, but our operating margins in Maine are essentially zero, which means the money that flows into the hospital immediately flows back out. So if there's a disruption in the money flowing in, you need a reserve of cash to be able to pay all the bills where the money goes out, and we have a handful of members where that's going to be very, very difficult.
Ogrysko: You know, we learned this week that Northern Light health is closing Inland Hospital in Waterville. What do you make of this announcement? You know, why are we seeing this hospital close now?
The macro level, that world that Inland lives in, and all of our members live in, is just tough right now, and has been ever since COVID. You know, the record skipped during COVID, and it just doesn't seem to have ever gotten back on track. So cost structures dramatically changed, inflation then hit following COVID. Relationships with payers has just gotten increasingly difficult. Simply, just getting paid for care that's been rendered. So there's a confluence of factors. They're not unique to Maine, but things have just gotten more difficult. While this is probably the most dramatic version of what can happen in our world. They're not alone at looking at some really difficult decisions or opportunities, you know, trying to figure out a way to turn the hardship into an opportunity where you can rethink something and do something differently. It doesn't all have to be doom and gloom, but whatever it is, our members are looking at a variety of ways of getting through
You know, I think this news comes as a bit of a surprise. I mean, Inland, while not the largest hospital in the state, is certainly not the smallest either, and this news comes before the real major impacts of the state budget situation are being felt. So how concerned should people be given the Inland news, and should we be prepared for more hospital closures around the state?
You know, one of the challenges always with a big organization is not wanting to create a run on a bank too soon, because then you can become a self fulfilling prophecy. So a lot of hospitals can can limp by for a long time, but if they ever panic publicly, your clinical staff might leave, your patients might change. So there's always a fear of not showing too much fear publicly and in my 15 years, and in talking with people that have a longer history with hospitals, we're just in a seemingly in a different place right now. And all the tricks and all the ways you get by, we sort of run out of them for many people. So I don't know if we have any more closure announcements, that's fairly dramatic. I hope not. I do believe we are. We are in a turbulent state. There's going to be some realignments and some adjustments. That's bigger than the state budget. I don't want to lay this all at the feet of the supplemental budget or the state budget. Nevertheless, the state is a big payer for hospitals, and the better they can do, the more stable we can be, and the worse they do, the less stable we're going to be. But there are just a lot of forces at play that I think we're in for a little bit of turbulence here, and there are going to be some realignments and adjustments beyond it.
Jeffrey Austin is vice president of government affairs and communications at the Maine Hospital Association.
