LEWISTON — Prime Healthcare Foundation’s acquisition of Central Maine Healthcare will benefit communities in central and western Maine by injecting new funds into the system, improving care and saving costs, the California-based organization said in a Certificate of Need application filed May 16.

Under state law, a hospital must get approval for any significant changes  — such as a switch of ownership — through the Certificate of Need process filed with the Maine Department of Health and Human Services.

The foundation announced in January it is acquiring Central Maine Healthcare and its three hospitals: Central Maine Medical Center in Lewiston, Rumford Hospital and Bridgton Hospital.

It is affiliated with Prime Healthcare, a large for-profit health care system that owns 51 hospitals in 14 states, including 18 operated by the foundation. The company and the foundation are operated by Dr. Prem Reddy.

If the foundation takes ownership of the hospital, it will be the sole owner. A new board of directors will be created but the hospital system will remain a nonprofit. In return, it will invest $150 million in the health care system over the next five years for upgrades to its facilities, staff and equipment.

The foundation controls more than $2.1 billion in assets, the Certificate of Need application said. Among its 18 hospitals, it has about 2,742 acute care beds and about 11,000 employees and affiliated physicians.

All of that is proof, the foundation argues, of its ability to operate a hospital system the size of Central Maine Healthcare, which serves 400,000 people in central, western and midcoast Maine, and employs more than 600 physicians and advanced practice professionals in its more than 40 locations, according to the application.

In January, Central Maine Healthcare announced the acquisition, with a closing deadline of this summer. However, that closing date has since been pushed back to January 2026, Central Maine CEO Steve Littleson said at an LA Metro Chamber breakfast last Thursday.

Some critics of the acquisition have expressed reservations, citing Prime Healthcare’s previous settlements with the federal government for accusations of overbilling Medicare and giving provider kickbacks.

Prime Healthcare did not respond to requests for comment on its Certificate of Need application.

A Prime spokesperson previously noted that the organization fulfilled the terms of both settlements and that in both cases there were “no findings of fault and a complete release of liability.”

It argues that the settlements do not call into question the care and quality Prime is known for among its patients, the spokesperson said in a previous statement.

In its application to the state, the foundation outlined its areas of focus for Central Maine Healthcare, including addressing chronic conditions, provider availability, adult screenings and preventive visits, poverty and cardiovascular disease, along with cancer care.

Each of Central Maine’s health care facilities will stay open, the application said. There will be no significant changes to its facilities or services and the acquisition is not expected to negatively impact quality of care, costs or providers’ volume of services. It also intends to keep Central Maine’s services “financially accessible.”

All employees will stay employed with comparable wages and benefits, including Central Maine CEO Steve Littleson, the application said.

“(Prime Healthcare Foundation) does not bring in outsiders to lead hospitals that become new members of (the foundation),” the application said. “Rather, (the foundation) typically retains the local hospital CEO who will report to a (foundation) Region leader.

“(The foundation) provides training and education to the local hospital leaders and local physicians to support their success, as well as compliance oversight to facilitate compliance with local regulatory frameworks.”

Information in the application also gives some details about how the foundation aims to help Central Maine claw its way out of crushing financial losses impacting the hospital going back several years.

FINANCIAL HELP

Central Maine Healthcare has incurred operating losses that average $32.5 million in the past five years, the application said. Its average plant age, about 22 years old, is also significantly older than that of two other health systems in the state, MaineHealth and Northern Light.

The foundation will spend $150 million over the next five years of its money on Central Maine’s system as terms of the acquisition.

With those funds it will renovate and expand the emergency departments at Bridgton and Rumford hospitals; purchase and implement the Epic electronic medical record system; and upgrade imaging equipment, operating rooms and patient rooms across the system, according to the application.

If acquired by the foundation, Central Maine’s operating margin is projected to increase by 1.77% in the first year, 2.14% in the second year and 3.26% in the third year.

To help Central Maine achieve these financial goals, the foundation will convert the supply chain contracting to the Health Trust Group; implement Epic; insource biomedical engineering services, environmental and dietary services, laboratory services and various imaging services; and implement better clinical documentation and medical record coding to ensure care provided meets the criteria established by insurance companies.

“Studies show larger health systems can lower costs by 15 to 30 percent and improve quality if organized to capture the efficiencies of scale and the benefits of standardization,” the application said. “(Prime Healthcare Foundation) has a proven methodology for turning around and successfully operating hospitals with a high government payor mix which is expected to assist CMH to improve its operating margin.”

If the acquisition falls through, Central Maine is estimated to have a -0.75% operating margin in the fiscal year after the foundation would have taken over the hospital system, then decline further the year after that, the application said.

DIRE PROGNOSIS

The foundation also paints a dire picture of Central Maine Healthcare if its acquisition is not approved.

Central Maine has been looking for a larger “health system partner” since 2016, the application said. It has considered “partnering” with larger health systems in Maine and New England, such as MaineHealth, Northern Light and Covenant Health LLC, but none of the endeavors worked out.

“Multiple attempts to join larger systems in Maine and New England have failed for a variety of reasons including the continued deterioration of certain systems’ financial conditions,” the application said.

In the application, the foundation argues that out-of-market acquisitions result in larger cost savings.

The application said the Central Maine Healthcare board of directors also has considered selling to a private equity firm, which have a reputation of cutting workforce, resources and selling off property in the companies it buys to draw a profit for investors. In many cases in recent years companies held by private equity firms have ended up in bankruptcy, the application said.

“The health systems acquired by private equity firms are generally cash light and highly levered because excess cash and debt capacity are utilized to fund periodic distributions to shareholders,” the application states.

“The mission of the private equity firm is to maximize the return on investment for its investors. The CMH Board of Directors rejected this option due to the potential for these types of transactions to affect patient care, increase costs for patients and further impair bottom line performance over the long-term.”

If the acquisition does not go through and Central Maine Healthcare continues to operate independently, the application said, it will need to downsize or eliminate a significant range of clinical services.