More than half of hospital spending is driven by more patients, not by the prices we pay for goods and services.

Gov. Baldacci’s Dirigo Health plan has many ideas that could increase efficiency, reduce cost and broaden health-care insurance coverage for Maine people. He deserves credit for tackling the issue, and much of the plan deserves our support. But, parts of the plan will do serious harm to patients served by Central Maine Medical Center and St. Mary’s Regional Medical Center, if enacted in its present form.

The Legislature has been asked to pass Dirigo Health on a fast track, before adjourning on June 1. We believe both the public and policymakers need to look carefully at what is being proposed for such hurried enactment. This plan should improve people’s access to health care, not reduce it.

We are concerned about the plan’s global budget for hospitals. It requires hospitals to observe price caps and a total spending cap based on actual 1999 spending with an inflation adjustment through 2005.

This inflation adjustment won’t reflect the rising costs Maine hospitals must actually pay for the skilled workers, the technology and the medications needed to serve people in our region. Maine residents, as a whole, also tend to be older and sicker than the national average. Medicare and Medicaid also do not pay hospitals the actual costs of caring for their enrollees. These costs are passed on to other insurance plans and this cost shifting is one of the major reasons for higher hospital costs in Maine.

More important, though, the global budget completely fails to recognize that more than half of hospital spending is driven by caring for more patients, not by the prices we pay for goods and services.

That’s like drawing up next year’s grocery budget by adding 3 percent for inflation to this year’s total spending, while ignoring the fact that you’re expecting twins and Aunt Sara will be moving in with you. Even if grocery prices were stable, you’d wind up short in covering your household demand.

The global budget for hospitals has the same problem.

As Maine’s population ages and as more patients with chronic disease need more intense treatment, we face extra costs to meet the rising demand for our hospital services.

Reviewing the original version of the Dirigo Health plan, financial analysts estimate that Maine hospitals could be short in covering their 2005 costs by as much as $750 million. Coming on top of the state’s recent $58 million cut in Medicaid reimbursement to hospitals, the projected 2005 shortfall is equivalent to the entire budgets of Maine’s 24 smallest hospitals.

Who loses in this plan? Our patients, our employees and the local economy.

If assigned to hospitals strictly in proportion to their budgets, such a shortfall would leave CMMC and St. Mary’s scrambling to cut roughly $52 million in costs.

There would be no way to make such cuts painlessly, or without harm to our patients. Inevitably, hospital workers would have to be laid off, patient beds reduced, services restricted and programs canceled.

Where would you go, what would you do if CMMC had to eliminate its trauma center or St. Mary’s had to close its behavioral program? What would happen to this community if 20 percent of our hospital jobs and local purchases disappeared? With almost 4,000 employees between the two medical centers, this will impact hundreds of people in our local communities.

Local primary care physicians provide care for a substantial number of MaineCare (Medicaid) patients and also provide free or discounted care to other needy patients. These physicians are only able to provide this care and remain in operation because the practices are subsidized by our local hospitals. If the hospitals don’t have the resources to continue to subsidize these practices, access to care for all their patients, regardless of the type of their health plan, will be jeopardized.

We are not a business pleading to protect our profits. Like other Maine hospitals, we are nonprofit institutions. If operations produce a surplus, that money goes to improve our hospitals and to better serve our community. Our governing boards are based in the community we serve. We are here to care for people 24 hours a day, seven days a week. We treat people who need help and, if they can’t pay, we write off millions of dollars each year.

Both hospitals have served the residents of this community for over 100 years. We want to go on serving you for as long you need us. But the current draft of the Dirigo Health plan (LD 1611) could cripple or end our ability to do that.

If you think these concerns are reasonable, ask your legislators to drop the global budget and price caps part of the Dirigo Health plan. Even if you’re skeptical, at least urge lawmakers to take the time to study the real consequences of adopting this plan.

As we said, there is much to commend in the Dirigo Health plan. But hurrying passage to meet an arbitrary calendar target is not a recipe for good policy, especially when the plan could inflict huge damage on patient services at CMMC, St. Mary’s and the communities we both serve.

Jim Cassidy is president of St. Mary’s Regional Medical Center and Peter Chalke is president of Central Maine Medical Center.

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