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Changes in Reimbursement, Other Factors Lead to Financial Shortfall at Eastern Maine Medical Center


3/13/2014

Lower reimbursement from government payors, an increase in free care and bad debt, and lower than expected volume in some service areas are contributing to a significant financial shortfall at Eastern Maine Medical Center.

“We’re five months into our fiscal year, and we haven’t met our targets,” says Deborah Carey Johnson, RN, EMMC president and CEO. “As the only provider of many healthcare services for the northern two-thirds of the state, it’s important that we are able to quickly adapt to today’s rapidly-changing healthcare environment. The flexibility we show today will help ensure that we’re strong in the future.”

The hospital has been challenged by an estimated $10 million annual decrease in Medicaid and Medicare reimbursement compared to last year. Additionally, EMMC expected to see a reduction in free care and bad debt as a result of the Affordable Care Act. Not only has this decrease not materialized, EMMC has experienced $27 million in free care and bad debt through the first five months of this fiscal year; an $8 million increase from the same timeframe last year.

In response, EMMC is reviewing its operations, and refocusing its efforts to improve efficiency and reduce expenses. Hospital employees are being asked to reduce discretionary expenses and open positions will be carefully reviewed before being filled.

“We know that we have a lot of work to do, and we expect to see changes both in the short term and in the coming months,” adds Johnson. “It’s a continuous process. We’re confident we have a strong team at EMMC and EMHS to see us through this challenging time.”

 

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