A leadership shakeup that saw three high-level executives leave their jobs at Northern Light Health this week is the latest example of how the hospital system is struggling to recover from the downward financial spiral it’s been in for the last few years.
Like many health care systems, the Brewer-based organization struggled to pay its bills ever since the coronavirus pandemic disrupted services and forced staffing and operating challenges.
Northern Light made some progress at improving its finances last year — in part by reducing and outsourcing some of its services — but things took a turn for the worse this year.
It’s now on track to lose more than $100 million this year after doing so in 2022 as well, according to its latest quarterly financial report. Meanwhile the organization’s debt has ballooned to $620 million, according to a report that accompanied the recent downgrade of its credit rating by Moody’s Investor Services.
The continuing troubles at Northern Light are notable not just because it’s the second-largest provider of health care services in Maine, but it’s also one of the state’s biggest employers, with 10,000 workers across the state, including 4,000 just at Eastern Maine Medical Center in Bangor. Now, officials in the region are also raising the alarm about the series of cuts.
Northern Light says that the recent departure of three top executives is yet another step it’s taking to reduce its overhead. Between Wednesday and Friday, the presidents of Northern Light’s hospitals in Bangor and Waterville both resigned, and the system also eliminated the position that oversees its foundation responsible for bringing in charitable gifts.
“This action was one of several difficult but necessary decisions that have been carried
out this week as Northern Light Health works to reduce operating expenses and establish a smaller, more nimble leadership team,” Northern Light Health spokesperson Suzanne Spruce said in a statement about the termination of the foundation position.
In recent years, Northern Light has made a variety of cuts across its clinics and hospitals, such as closing primary care practices in Orono and Southwest Harbor. Among other cost-saving measures, it also outsourced 1,500 behind-the-scenes administrative jobs and sold most of its laboratory services to another company. Just this week, it also announced that it’s outsourcing around 500 cafeteria and housekeeping jobs to a company called Compass One Healthcare.
But the recent shakeup, along with the steady accumulation of other service reductions and changes over the last few years, is concerning some officials in the Bangor-area who fear more cuts could be coming.
“The concern is the fact that in the last couple of years, we’ve seen health centers across the state closed down one by one by one. We can’t afford that in Bangor. We can’t afford to lose Northern Light or see Northern Light pare back any of its systems or departments,” said state Rep. Amy Roeder of Bangor.
Northern Light has hospitals stretching from Presque Isle to Portland, and Sen. Joe Baldacci of Bangor, who chairs the Legislature’s health and human services committee, said he would like lawmakers to hold a briefing on Northern Light’s leadership and revenue once they’re back in session.
“I’m concerned about the direction of the hospital,” Baldacci said. “I hope to hear more from the leadership as to what their plans are.”
In response to questions, Spruce said that the leadership changes this week were meant to help Northern Light return to “a sustainable financial model” and that the organization is continuing to look for ways to reduce its overhead costs. The system has no plans to close any facilities, Spruce said, but its services, hours of operations and locations could continue to “evolve.”
One of the major challenges facing Northern Light and other health care systems since the start of the pandemic has been attracting and retaining workers, and Spruce also pointed to ongoing efforts by the organization to recruit more nurses and other medical staff.
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Given the ongoing financial losses that Northern Light has suffered, it’s probably a good move for it to trim its top leadership ranks, according to Nancy Kane, a professor of health policy and management at Harvard University who has evaluated financial statements from Maine health care systems. That’s because they do not directly contribute to the critical health services that the organization provides at its hospitals and clinics throughout Maine.
“You don’t want them reducing nurses and techs,” Kane said. “That’s the right direction to go in.”
But, Kane said, there is a continuing risk that the organization could make other cuts to its services to help shore up its finances. If it violates any of the covenants set by its financial lenders, it could also have to hire a consultant to step in and provide direction on how to change its services. That happened last year after Northern Light also suffered heavy financial losses in 2022.
BDN writer Marie Weidmayer contributed reporting.
