February 23, 2013

GOP legislators attach Farmington hospital's woes to budget fight over MaineCare

By Michael Shepherd mshepherd@centralmaine.com
Staff Writer

AUGUSTA -- As lawmakers finished the job of closing a $153 million state budget gap last week, partisan tensions deepened over a key piece of the next two-year budget: Gov. Paul LePage's plan for paying hospital debt with money from a new state liquor contract.

Sparking the debate was an announcement Wednesday by Franklin Memorial Hospital in Farmington that it was cutting 35 to 40 jobs, mostly through layoffs.

President and CEO Rebecca Ryder said the move was prompted by a 13 percent decline in revenue, driven by several factors, such as fewer patients, more spending on charitable care and reduced government funding. Ryder said those factors were compounded by a $15.4 million debt the state of Maine owes the hospital for care under the MaineCare program, which is the state's version of Medicaid.

The Maine Republican Party pounced on the hospital's announcement Thursday, blasting Democrats, who control the Legislature, for not scheduling hearings on LePage's hospital debt plan, which was introduced Jan. 15. The committee scheduled a hearing late last week for March 11 on the governor's plan and on several bills on related topics, according to House Democrats.

"It's very clear that the new Democratic majority is either lacking leadership or putting politics before good public policy," party Chairman Richard Cebra said in a written statement.

House Minority Leader Ken Fredette, R-Newport, likewise criticized Democratic inaction on LePage's plan in a television news interview Friday.

Sen. John Tuttle, D-Sanford, chairman of the Veterans and Legal Affairs Committee, which will hold hearings on LePage's plan, said in an interview Friday that there's no partisan delay. He said he agrees with the governor's concept and "Republicans know I'm nonpartisan to a fault."

"It's fair to the public if you have bills on two, three, four issues, you have the hearings on the same day," Tuttle said. "I've always done things in a fair manner, and I assure you I'm going to do that here."

The partisan tensions underscore the stakes in the hospital proposal and foreshadow the debates that lie ahead as lawmakers shoulder the task of forging a new state budget.

Maine hospitals are owed $484 million in MaineCare debt. If the state paid its $186 million share, it would unlock $298 million in federal funds to fully pay down the debt. That's been a top priority of LePage since his 2010 campaign for office.

But Democrats have been noncommittal toward his proposal to pay the debt with the proceeds of a new contract for the exclusive right to wholesale liquor in Maine.

LePage wants the state to control the proceeds from liquor sales, with "a private-sector person to provide administration, trade marketing and distribution and warehousing activities."

On Thursday, Senate Majority Leader Seth Goodall, D-Richmond, introduced a bill that would get the state out of the liquor business entirely and establish payment systems for private bidders. No liquor money would be allocated to any programs -- including hospital debt.

LePage argues that paying off the hospital debt is an obligation the state should meet, as well as a good economic development move. He said hospitals would use the money to provide jobs through new construction, renovations, expansions or other capital investments.

Ryder, the Farmington hospital CEO, said in an interview Friday that having the $15.4 million owed by the state would not have prevented the layoffs, because a decline in patient volume of some 6 to 7 percent effectively dictated a reduction in staffing.

However, she said if the state paid off its MaineCare debt, the hospital would have cash to pay bills and make capital improvements, such as buying new medical equipment and upgrading facilities.

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