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Governor LePage to pay hospitals, issue $205 million in bonds

Because the State of Maine is addressing its hospital debt, Governor Paul R. LePage said he will support $205 million in bonds, including issuing all those authorized by Maine voters.

Governor LePage said the state’s hospitals will be paid the $484 million they are owed. By issuing $205 million in bonds, that is a total direct investment of nearly $700 million into Maine’s economy in 2013.

The state owes Central Maine Medical Center in Lewiston $50.2 million, and it owes $28.8 million to St. Mary’s Medical Center in Lewiston.

The Governor announced Tuesday he has submitted emergency legislation to the Revisor’s Office that will authorize the state to immediately issue a revenue bond on its future liquor sales when enacted. The state will retain operational control over liquor sales starting in the summer of 2014 when the current 10-year private contract expires.

That revenue bond would cover the $186 million the state owes its hospitals for MaineCare services dating back to 2009 and will immediately trigger a $298 million federal match.

“Maine people work hard to pay their medical bills. This plan puts Maine on the right track to do the same,” said Governor LePage. “By paying the state’s bills, we strengthen our economy and the hospitals that care for and employ Maine people. Hospitals will now be able to pay new and existing employees and local vendors, pursue capital improvements and maintain the high level of service that has earned the state national recognition for quality care.”

With that debt erased, the Governor said he will issue voter-authorized bonds, including $51.5 million for transportation infrastructure improvements and $53.5 million for conservation, clean water upgrades and construction and energy efficiency at post-secondary educational institutions.

The Governor has also proposed a $100 million facilities bond for the construction of new corrections facilities in Windham, which would be paid for by savings generated by more efficient operations.

Governor LePage has consistently said that it is irresponsible to issue new debt without a credible plan to pay the state’s outstanding debts.

Dozens of representatives from nearly all Maine hospitals and other members of the Maine business community joined the Governor Tuesday for his announcement. The announcement was made at the construction site of what will soon be the University of New England’s College of Dental Medicine Patient Care Center, which is set to receive $3.5 million when the bonds are sold.

The state’s first dental school will open this fall in Portland, a city with three hospitals that will receive $94 million when the bills are paid, accounting for a substantial portion of the debt.

Bangor’s three hospitals will be reimbursed $90 million of which $71.9 million will go to Eastern Maine Medical Center. Lewiston will see more than $79 million between the $50.2 million that would be paid to Central Maine Medical Center and the $28.85 million to St. Mary’s Medical Center.

A total of 30 other Maine communities from Belfast to Biddeford and Fort Kent to Farmington will get back a combined $230 million their hospitals are owed.

As the bills have gone unpaid, many of the state’s hospitals have had to lay off employees and reduce benefits; borrow against lines of credit to meet payroll and other obligations; dip into savings and forgo interest; delay payments to local vendors like oil dealers and waste haulers; and eliminate services, including in one case, closing a maternity ward.

Hospitals around the state are quickly lining up in support of the Governor’s proposal, saying it will have an instant impact creating jobs, spurring millions of dollars in improvement projects, expanding care and allowing healthcare workers to put this issue behind them and focus on caring for Mainers.

Kris A. Doody, an RN and CEO of Caribou’s Cary Medical Center, was one of many Maine hospital heads lauding the Governor’s leadership Tuesday. “Your persistence in dealing with this debt issue and payments going forward not only shows your support for Maine’s hospitals, but your understanding of the economic engine we are for our communities and our entire state,” she said.

“We have had selective layoffs, deferred hiring people, frozen wages and delayed needed capital projects due in part to our tenuous cash situation,” said R. David Frum, who serves as president of both Rumford and Bridgton hospitals. “Our lack of cash is the direct result of this enormous MaineCare receivable. Payment of the MaineCare debt is the single most effective way to improve the stability of our organizationYou can count on our support.”

“I applaud the ethical responsibility in your decision,” said Mercy Hospital President and CEO Eileen F. Skinner. “For the state to honor its prior obligations and pay for services already rendered is an important principle—not only for hospitals, but for all businesses in Maine and those who do businesses with our state government. It is the right message to send. Mercy will support this effort through to its conclusion.”

With Governor LePage’s leadership, the state has already settled $248 million of the debt to hospitals he inherited when taking office. Working with the 125th Legislature, the Administration implemented a news system paying hospitals for services as they are incurred.

Governor LePage said he aims to get his legislation enacted quickly to ensure the state capitalizes on the current federal matching rate before it falls further. “With the full support of the Legislature, I intend to pay the hospitals and issue general bonds in a matter of months,” he said.


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