Financial woes at Maine Medical Center
New England health system facing $13 million loss, initiates plan to save $15 million
NEW GLOUCESTER, ME | May 2, 2013
In a memo to its employees last week, one of Maine’s largest health systems said it has suffered an operating loss of $13.4 million in the first half of its fiscal year.
“Through March (six months of our fiscal year), Maine Medical Center experienced a negative financial position that it has not witnessed in recent memory,” Richard Petersen, president and CEO of the medical center, wrote in the memo to employees. A copy of the memo was sent to MedTech Media, publisher of Healthcare Finance News.
A "negative financial position" (translation: we lost big money) that it has not witnessed in recent memory? What are the reasons?
In order to bring the medical center to breakeven by year’s end, the health system’s leadership has determined $15 million needs to be saved.
In the memo, Petersen said the operating loss is due to declines in inpatient and outpatient volumes because of the hospital’s efforts to reduce readmissions and infections; “unintended financial consequences” due to the roll out of the health system’s Epic electronic health record and problems associated with being unable to accurately charge for services provided; an increase in free care and bad debt cases; and continued declining reimbursement from Medicare and MaineCare, the state’s Medicaid program.
That rings a familiar tune - from the mid 1990's at Yale, as well as more recently.
Many of the reasons for Maine Medical’s financial woes are similar to those hospitals across the country are facing.
A recovering national economy, continued budget restrictions and restraint and the realization that, while electronic health records may have efficiencies and cost savings over time, the costly transition to EHRs may take years to recoup.
Especially when not done well.
In his memo to employees, Petersen said the hospital has identified many of the hiccups contributing to the charge capture problems and a team of hospital employees and Epic technicians are working to resolve those issues. In the meantime, the remaining roll out of the Epic EHR to the rest of the health system is on hold.
Hiccups? Health IT has a euphemistic language all its own. Only apostates would dare to call the "hiccups" for what they really are, in medical parlance: IT malpractice.
To save $15 million by year’s end, Maine Medical is immediately instituting a number of cost-saving initiatives including selective travel and hiring freezes, putting the operating contingency budget on hold and reducing overtime. Petersen appealed to employees to curb discretionary spending and contact management with any cost-saving ideas.
All, of course, will have no impact on patient care....
“I’m confident that we’ll confront this test, beat back the issues we face, and reverse this negative financial picture,” Petersen wrote in the conclusion to the memo.
Test? Test of what, IT competence?
Of course, "C" officers would never write that "I'm not confident we'll confront our screwups."
Maine Medical did not reply to an interview request by deadline. The Maine Hospital Association declined to comment for this story.
Silence is golden.
A newspaper letter from Stuart Smith, Selectman, Town of Edgecomb, St. Andrews Regional Task Force (a software developer himself) tells more:
STUART SMITH'S LETTER TO THE REGISTER
Wednesday, May 1, 2013 - 7:30pm
Save St. Andrews Hospital
As the Boothbay Peninsula moves forward with the effects of a MaineHealth/Lincoln County HealthCare decision to close St. Andrews Hospital, I have served on the 4 Town Regional Task Force. This has been an unprecedented cooperation between 4 towns in this region that has generated many continuing activities that will benefit all towns in our region.
Apparently an entire hospital is closing as a result of these debacles.
[May 8, 2013 addendum: a family physician in Lincoln County where St. Andrews hospital is located and a member of the Board of Trustees, Dan Friedland, M.D., writes me that the EHR had nothing to do with the hospital closing - ed.]
But let me get back to the MH/LCH decision. We are told that MaineHealth has spent over $150 million on an Electronic Medical Records (EMR) system that helps all of its “subsidiaries.” I can appreciate this because my work is in software development.
I do question the $150 million figure. I think it is extremely high and Portland has had a real failure in its implementation. So much so that it looks like LCH will not have a real integrated EMR until 2015 and financial software problems exemplify a major failure of MH to create any real benefit to the State. Millions of dollars have been charged to member hospitals and staff time (salaries and mileage) over the past 2-3 years with no benefit.
I'd questioned the high cost of these commercial EHR systems as far back as 2006 ("Yet another clinical IT controversy: UC Davis" and "External oversight needed for hospital EMR implementation?" - Lancaster General Hospital and "$70 million for an Electronic Medical Records system [quasi endpoint]?- Geisinger).
One might think healthcare systems have money to burn ...
The system failure also adds operational costs going forward that were not planned for and regional consolidation of finance will now be delayed. The cost to Maine Health Center is huge in improper service and supply charges. Information Technology leadership has been fired, but MH administration is truly accountable.
For once, someone in IT leadership did not get a a promotion for failure. It is true that MH administration is accountable, however - they had the fiduciary responsibility to hire the best talent, and to oversee that talent as needed to assure success. If "C" leadership didn't understand IT, that's their failure as well. In my view in 2013 everyone in a position of organizational responsibility should have a good understanding of IT, which is now, after all, a commodity.
I'm hopeful EPIC, with its apparently revolutionary hiring practices akin to the hiring of physicians, will have the "hiccups" fixed in no time. From this link at the "Histalk" site on staffing of health IT projects, Aug. 16, 2010. Emphases mine:
Epic Staffing Guide
A reader sent over a copy of the staffing guide that Epic provides to its customers. I thought it was interesting, first and foremost in that Epic is so specific in its implementation plan that it sends customers an 18-page document on how staff their part of the project.
Epic emphasizes that many hospitals can staff their projects internally, choosing people who know the organization. However, they emphasize choosing the best and brightest, not those with time to spare. Epic advocates the same approach it takes in its own hiring: don’t worry about relevant experience, choose people with the right traits, qualities, and skills, they say. The guide suggests hiring recent college graduates for analyst roles. Ability is more important than experience, it says. That includes reviewing a candidate’s college GPA and standardized test scores.
I am forwarding links to this post, blog, my teaching site (begun in 1998) and additional material to Selectman Smith.
I'd offer to help, but the management of the organization would likely find, as did management at this one (a major denominational chain), that I have too much experience for the organization.
-- SS
