The hospital merger that wasn’t: CMHC sought partner

Central Maine Healthcare reached out last year to five other hospital organizations in the state to explore a partnership, the Sun Journal reports today.

The system — which includes the flagship Central Maine Medical Center in Lewiston, along with Rumford Hospital and Bridgton Hospital — sought to gauge the other organizations’ interest in taking on CMHC as a member and investing capital to boost its flagging bottom line.

None took CMHC up on its offer.

Hospital mergers are nothing new. Beginning in the late 1990s, health care consolidations swept across Maine and the rest of the country, cementing hospitals’ market power and, many would argue, freedom to charge higher prices. More than a dozen health care mergers have been proposed or completed in Maine over the last decade.

But CMHC’s move is interesting for several reasons.

Among them, the system reached out to MaineHealth, a competitor it has clashed with in the past. Most recently, CMHC slammed the Portland health system, Maine’s largest, for joining forces with health insurer Anthem to offer new policies that excluded CMHC’s hospitals. CMHC spokesman Chuck Gill publicly labeled the move a “backroom deal” that would strip patients in western and southern Maine of their choice of doctors.

CMHC reached out to Eastern Maine Healthcare Systems last summer. If the system approached the other potential suitors at the same time, it would have been courting MaineHealth even as the dispute was playing out in the press and in hearings hosted by the state insurance bureau.

CMHC and MaineHealth also butted heads in the late 1990s, over the Lewiston hospital’s decision to launch an emergency helicopter service and, a bit later, its plan to establish a heart center.

Second, Gill declined to comment to the Sun Journal about whether the system’s troubled balance sheet prompted its search for a partner. It was almost certainly a factor. CMMC lost nearly $13 million in fiscal year 2013, following several previous years in the red.

Financial losses would turn off potential partners unable to absorb CMHC’s red ink. But a health system with significant size and resources might view a financially wobbly hospital as ripe for the picking — an opportunity to expand service area or eliminate a competitor.

EMHS scooped up Mercy Health System of Maine last year, despite the Portland organization’s financial woes. The deal gave Brewer-based EMHS its first foothold in southern Maine, including Mercy Hospital and a strong network of primary care providers throughout greater Portland. It seems the potential benefits of a deal with CMHC weren’t so clear.

Health providers often argue that consolidation can lead to more efficient operations, and some research has found that it can eliminate duplicated activities and staff, and foster better care and improved quality through more coordination.

Health care economists also broadly agree that health care consolidation is a major reason for rising prices in the U.S. Consumers feel the brunt of those higher health care costs in the form of rising insurance premiums, stripped down benefits and lower wages.

 

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Jackie Farwell

About Jackie Farwell

I'm the health editor for the Bangor Daily News, a Bangor native, a UMaine grad, and a weekend crossword warrior. I never get sick of writing about Maine people, geeking out over health care data, and finding new ways to help you stay well. I live in Gorham with my husband Nick and our hound dog Riley.