Press Release

For More Information, Please Contact: Hilary Holbrook, Policy Coordinator, 622-7083

Businesses Say Hospital Costs in Maine
Are Too High!
High Hospital Costs Force Employers To Drop or Reduce Health Coverage For Employees

(Augusta) Small businesses from across Maine and a statewide consumer health organization released a report today at the State Capitol that finds Maine hospital costs to be far above the national average while the quality of care was no better than comparable hospitals with much lower costs. Small businesses from South Portland to Bar Harbor participated in the news conference and said they want to know why hospital costs in Maine have increased at much higher rates than the trend in both the nation and the northeast region over the last ten years. The report, prepared by Consumers for Affordable Health Care Foundation, entitled Off the Charts: Unsustainable Hospital Cost Growth in Maine, examines the costs and profits of hospitals in Maine and how they compare to hospitals outside the state.

The report shows that Maine hospital costs grew at more than three times the rate of hospital inflation in 2002 [the most recent year for which data is available]. The growth rate outpaced growth in personal income. The comparisons in the report demonstrate an alarming and unsustainable rate at which hospital costs are growing in the state. Hospital costs constitute the largest segment of health care costs in Maine.

In large part, growing hospital costs are being passed onto consumers in the form of higher hospital bills and health insurance costs. The extraordinary growth in costs resulted in consumers and businesses paying $332 million more in 2002 than they would have paid if cost growth was maintained at the same rate as national hospital inflation. This is equivalent to $619 for every household, $484 for every employee, or $256 for every man, woman, and child in Maine.

Many small businesses are suffering the consequences of these escalating costs. Brian Ketchen, Owner of Dave's Appliance in Winthrop, Maine, said, "Maine hospital costs are simply too high. We're paying almost $1,000 more per discharge with no better outcomes than comparable hospitals. That's stunning! Hospital costs are driving our insurance premiums up. We had to switch to a high deductible health plan for our 15 workers. We want to know why hospital care in Maine is so much more costly than other states." Randy Roberts, Owner of Chase Home Furnishings in Unity, Maine, said, "Maine hospital costs grew at three times the national average in 2002. That growth added $332 million to Maine hospital bills in one year alone. Hospital costs are gobbling up the profits of small businesses in the form of higher health insurance costs. We want to know why Maine's hospital costs are so out of line."

Gary Keilty, Owner of Tyson and Keilty Realty in Readfield, Maine, said, "I was shocked when I saw the numbers in this report. Every business owner and policymaker in Maine ought to read Off the Charts. We are paying more for our hospital care but are not getting value for our dollar." Keilty, who served on the consumer panel to the state's hospital finance commission before it was dismantled in the early 1990s, said, "Back in 1994, Maine hospitals successfully lobbied the Maine Legislature for the repeal of our hospital regulatory commission. The hospitals promised lower costs, better quality and more care for the uninsured in a deregulated environment. Ten years later, we see that exactly the opposite is true. We want to know what went wrong. Why have hospital costs grown so rapidly with no added benefit for the consumer in Maine?"

The report also shows that despite rising costs, Maine hospitals continue to generate profits, providing evidence that these costs are, indeed, being passed on to health care consumers. Julie O'Brien, Owner of Making Waves in Scarborough, Maine, said, "Overall, Maine hospitals have been in the black but their costs are rising. The numbers in this report are a real eye opener. We all need to share in shouldering the burden of growing health care costs. I'm doing my job. It's time for the hospitals to do theirs. What can be done to stabilize cost growth? As communities and as a state, we need to figure this out."

While some might think that higher hospital costs result in higher quality of care, that is not necessarily the case. The report provides data developed for the Commission to Study Maine's Hospitals by Dr. Nancy Kane of the Harvard School of Public Health illustrating this point. Dr. Kane, who specializes in hospital finance and serves as a consultant to numerous states examining hospital costs and quality, compared a variety of measures of the quality of care and compared the performance of Maine hospitals to a peer group of hospitals located in Iowa, Virginia and Washington. While the quality of care by those measures was statistically the same, this comparable group of hospitals had inpatient costs that were about $1,000 per discharge lower than Maine's.

David White, Owner of MDI Imported Car Service in Mount Desert Island, said, "My business's health insurance premiums doubled in the last two years. The $332 million in added hospital costs in 2002 alone is incredible. Think about it. Had it not been for that added cost - at no benefit to consumers - employers could have added almost $500 to the paychecks of their workers." White added, "What other industry tells you what you need and then supplies the service? In essence, hospitals control the supply and, to a great extent, the demand. No wonder their costs are so high."

"The purpose of this report is to put these issues on everyone's radar screen," said Joe Ditré, Executive Director of Consumers for Affordable Health Care Foundation. "The report raises important questions - questions that need to be answered. We hope to engage the hospitals in a meaningful dialogue about ways to reduce costs and preserve essential community services." The report concludes by asking why Maine hospital costs are so much higher than hospitals outside the state without a higher level of care and how can hospital cost growth be reduced without harming Maine's hospitals and the quality of care Mainers receive.

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