Northern Light Mercy Hospital in Portland is the largest hospital in the Northern Light Health network, which has had to cut costs in other parts of the state. Gregory Rec/Staff Photographer

Maine hospitals face significant financial challenges in the coming years – much of these problems are due to the ongoing labor shortage, hospital officials said.

Northern Light Health, the state’s second-largest system, is among those in Maine facing the strongest economic headwinds and has had to cut costs as a result.

James Rohrbaugh, senior vice president and chief financial officer at Northern Light Health, expects the system to have a deficit in 2024. However, the exact amount of the deficit is not yet known.

“We are going through a period of rapid and disturbing change,” Rohrbaugh said. “We will continue to face significant pressures. We must reinvent ourselves.”

Steven Michaud, president of the Maine Hospital Association, said hospitals across the state have run into financial difficulties because of labor shortages, requiring them to rely on traveling nurses and doctors, and because labor costs have risen overall.

“We’ve come out of the pandemic and many of our problems have gotten worse,” Michaud said. “It’s pretty grim.”

According to federal labor statistics, the number of healthcare workers in Maine – including doctors, nurses, registered nurses and other health care professionals – has declined from 42,390 in 2019 to 40,670 in 2023. At the same time, demand for services is increasing.

In part to address growing financial problems, the state legislature and Governor Janet Mills this year approved a $60 million increase in federal and state taxes on Maine hospitals through a reform of reimbursement rates.

Northern Light Health, which includes Northern Light Eastern Maine Medical Center in Bangor and Northern Light Mercy Hospital in Portland, as well as seven other hospitals, had a deficit of $36 million in 2023, up from a deficit of $131 million in 2022. Northern Light officials had no forecast for the deficit in 2024. Annual revenue is about $400 million, according to the nonprofit system’s tax filings.

Recent cuts at Northern Light Health include the closure of its internal medicine practice in Dexter, as well as the closure of clinics in Orono and Southwest Harbor. Rohrbaugh and other Northern Light officials have made no further announcements about closures or service cuts. However, hospital officials said they do not expect any cuts at Northern Light Mercy Hospital in Portland.

Michaud said Northern Light faces greater financial challenges than other health systems because it has more locations in rural areas, including hospitals in Greenville, Presque Isle and Blue Hill.

“That’s a big disadvantage,” says Michaud. “All rural areas make things more difficult, including recruiting and retaining doctors and nurses.”

MaineGeneral Medical Center in Augusta is expected to end the year with a deficit, but the amount of that deficit is still being determined, said Joy McKenna, a spokeswoman for MaineGeneral.

“MaineGeneral, like all hospitals in Maine, operates in a system of rising costs and reimbursement pressure,” McKenna said.

Meanwhile, the state’s largest health network, MaineHealth, which includes its flagship hospital Maine Medical Center in Portland, is looking to break even financially in 2024. MaineHealth had a $45 million deficit in 2022 and an $18 million deficit in 2023. MaineHealth’s annual revenue is about $3.4 billion, according to the nonprofit’s tax filings.

Dr. Andy Mueller, CEO of MaineHealth, said financial challenges remain formidable despite an expected break-even year in 2024. The goal is a 3% operating margin so the system can invest in improving technology and other system improvements.

“We will continue to have a dramatic shortage of health care workers for the foreseeable future,” said Mueller, who pointed out that health care costs have also risen significantly. “We have experienced dramatic inflation and our reimbursements, particularly from government payers, have not been able to keep pace with the rate of inflation.”

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