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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.
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.
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.
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.
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.
“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.
Maine Medical did not reply to an interview request by deadline. The Maine Hospital Association declined to comment for this story.
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.
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.
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.
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.
1. Thou shall know what you want to do
2. Thou shall construct modular systems - given chaotic nature of hospitals
3. Thou shall build a computer system that can evolve in a graceful fashion
4. Thou shall build a system that allows easy and rapid programming development and modification
5. Thou shall build a system that has consistently rapid response time and is easy for the non-computernik to use
6. Thou shall have duplicate hardware systems
7. Thou shall build and implement your system in a joint effort with real users in a real situation with real problems
8. Thou shall be concerned with realities of the cost and projected benefit of the computer system
9. Innovation in computer technology is not enough; there must be a commitment to the potentials of radical change in other aspects of healthcare delivery, particularly those having to do with organization and manpower utilization
10. Be optimistic about the future, supportive of good work that is being done, passionate in your commitment, but always guided by a fundamental skepticism.
1. Health IT in 2012 remains experimental, not proven effective or safe, with actual results conflicting.
2. Health IT is costly, not money-saving, diverting scarce healthcare resources away from actual healthcare provision to the IT industry.
3. "EHR" is an anachronistic term (that disarms the uninformed, who "see" an innocuous file system) for what is now an enterprise medical resource and workflow control system.
4. The proper framework in which to view "resistance" to health IT is not Luddite clinicians vs. IT modernists. It's pragmatist clinicians (with ethical and legal obligations and responsibilities), vs. IT hyper-enthusiasts who ignore or are blinded to the ethical considerations and downsides, and whose actions are based not on science, but on faith in technology and self interest.
5. HIT can be partitioned into good health IT (GHIT) and bad HIT (BHIT) - see definitions at the introduction to http://www.ischool.drexel.edu/faculty/ssilverstein/cases.
6. BHIT prevails due to its being far cheaper to produce than GHIT and due to lack of meaningful industry regulation of quality, usability and safety.
7. The lack of HIT regulation, post-market surveillance, formal validation and accountability is a special accommodation that is unprecedented in modern medicine.
8. Underlying HITECH and "Meaningful use" is the assumption that all HIT is good HIT.
9. A good or even average paper system is better for patients than a bad health IT system.
10. The incentives and coercive aspects of HITECH would not be needed if GHIT prevailed.
11. The coercive force of government should have been directed not at users, but at sellers, to produce GHIT and to abolish BHIT.
12. The term "meaningful use" is political rhetoric whose criteria were decided by committee and industry influence; nobody knows if meeting the criteria will prove truly "meaningful" or not. (That medical informaticists placidly accepted the term is a disgrace to a field that strives for terminological precision; "good faith use" would have been precise.)
13. Human research protections are given the blind eye with respect to commercial health IT.
14. Health IT being used safely is currently by happenstance and via compensation for flaws by clinicians who improvise (which itself introduces risk and is stressful), not by design.
15. Business IT a/k/a MIS personnel have far too narrow an education and experience to make pronouncements about health IT "transforming" medicine.
16. IT personnel should be part of the medical team, including liability for IT-related failure.
17. The commercial health IT sector is not an evidence-based domain.
18. A cybernetic "Libby Zion" catastrophe is unavoidable, and probably the only way to "transform" the health IT industry into an evidence-based industry - essential before that industry can even begin to "transform" (i.e., facilitate improvement of) medicine.
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