FARMINGTON — A significant loss in revenue, amounting to $500,000 per month, prompted leaders of Franklin Memorial Hospital to cut 35 to 40 positions.
In a state of the hospital address Wednesday, Rebecca Ryder, president and chief executive officer, told a community gathering that the staff reduction is part of an action plan designed to reduce overall expenses by $6 million by June.
It involves staff reductions that could include doctors, changes in health practices, including closing the Wilton Family Practice building and moving providers to other sites, and providing more efficient care.
Eleven open positions will not be filled. The rest of the job cuts will be layoffs, Ryder said.
Last year, 52 positions were eliminated through a resignation package offered to employees. The hospital isn't prepared to do that again, she said.
She said some family doctor positions were being considered as part of the reduction, to be completed in the next two weeks. The hospital employs 85 percent of the doctors in the area. Other staff providing direct care to patients is not expected to change.
With 652 employees, FMH is one of the area's largest employers. Salaries and benefits amount to $58 million for the local economy, according to hospital information.
During the past fiscal year, net revenues amounted to $90.8 million, with expenses totaling $91 million. Accounting for other expenses, the bottom line was a loss of $644,540 to operate the health network to which FMH belongs.
Over the current fiscal year that began July 1, 2012, net revenue is down 13 percent, Ryder said. She attributed it to several things, including significantly fewer patients in just one year. The hospital is seeing a decline of 6 percent to 7 percent, overall, and a 17 percent decline in emergency-room visits.
The hospital's reduction in patient costs for procedures to meet state averages this past summer amounted to a decrease of $1 million, she said. FMH also saw a decrease of $1.2 million from MaineCare, the state's health insurance program for low-income and disabled people.
From federal legislative action in December, the hospital realized a $2 million loss overnight when special program funding from Medicare was reduced.
Operational costs have averaged a monthly loss of about $500,000, and charity care and bad debt have amounted to $6.5 million, an increase of $500,000 over last year at this time, she said. Charity care is up 338 percent in the past five years, she said.
While the state owes FMH $15.4 million for care provided to MaineCare patients since 2009, payment would not solve the problem, Ryder said. It would provide cash to pay bills, but that money is already included in the hospital's accounts. Of the 38 hospitals in Maine, FMH ranks ninth in the amount owed from service to MaineCare patients over the past four years.
A potential change in federal special funding for rural ambulance service could amount to another $120,000 loss. Ryder expects the funds to continue through October, and she's keeping her fingers crossed, she said. If the funds go away, it could affect the amount local communities are asked to contribute for ambulance service.
The state of health care is a challenge that goes beyond FMH, Ryder said. She attributed it to the current method of delivery of health care not being right or financially sustainable. A focus on keeping people healthy and well is included in Obamacare, but the federal government doesn't pay for it, Ryder said.
The current focus is on treating sickness, "and we're good at it," she said, but it's expensive. Across the state, 75 percent of health care is funded by state and federal programs, Medicare and Medicaid, which pay 68 percent locally, she said. What these programs don't pay is shifted to businesses through the amount paid on health insurance premiums for employees.
Locally, a shift to health and wellness likely didn't affect the patient numbers in one year. Ryder suggested the drop in patients seeking hospital care might be because of a reluctance to pay out of pocket.
Ryder assured the group that the hospital was in good hands with the board of directors and financial board, who are all community members, brainstorming ideas to overcome the issues.
"The hospital belongs to the community," she said. "We're not here for profit."