FARMINGTON — Unprecedented changes in health care have resulted in an $8.4 million operating loss for Franklin Community Health Network, which includes Franklin Memorial Hospital, during this past fiscal year, an official announced Monday.

The hospital experienced challenges that produced “a negative financial position never witnessed before,” Rebecca Ryder, president and chief executive officer, reported to the community in an annual report and meeting Monday.

“We took immediate corrective action,” Ryder said in an interview Thursday. “The bottom line is we’re in good shape.”

An operating loss during the fiscal year, July 1, 2012, to June 30, 2013, was expected.

During a February state of the hospital address, Ryder announced layoffs, closing the Wilton Family Practice and other changes, an action plan intended to reduce overall expenses $6 million by June.

Contributing to the increase in operating loss, she said, were lower revenues, a loss of $9 million over the past two years, government cutbacks amounting to $1.8 million for MaineCare  services, an unexpected 2 percent sequestration on Medicare payments in April, an increase in hospital taxes paid to the state, fewer patients, fewer medical tests and charity cases increasing $2 million over two years from $10 to $12 million. Many insured patients have co-pays and are also waiting longer to seek treatment, she said.

Emergency room visits were reduced 6 percent last year through a targeted plan educating consumers to connect with primary care physicians rather than making an expensive ER visits. The number of expensive tests, such as CAT scans and MRIs, were reduced.

“It’s less revenue but it’s the right thing to do,” Ryder said about promoting wellness and keeping individuals healthy instead of treating or curing their illness.

The highest expenses, realized from staffing, employment benefits and supplies, caused actions, including layoffs, a renegotiated benefit package including employee health insurance, closure of the Wilton facility and changes in health practices.

The network, now employing about 600, has a $3 million payroll each month along with costs for utilities, oil, medical supplies and other services, Ryder said.

“It’s hard to turn the lights off,” she said of the $85,342,783 million in operating expenses supported by the $76,897,164 million net revenue.

This past Thursday morning, Sept. 19, cash for the hospital was tight until a $16.6 million check owed by the state for MaineCare services provided since 2007 arrived. 

It’s not new money. It’s on our books but it will help with cash, she said.

The hospital Board of Directors will consider paying debt on the new Livermore Falls offices or keeping cash in reserve for any future changes, she said. The hospital has held off on a number of repair issues because it didn’t have the cash to do them, she added.

The board is also researching potential partnerships with other health care organizations or hospitals versus remaining independent. Of Maine’s 39 hospitals, only about five are considered independent, such as FMH, she said. The idea will require a lot of research and time for reaching out to other entities, she added.

The changes experienced by other hospitals within the past few years caught up with FMH, Ryder said. It’s not something that could have been avoided, she said.

“We stay on top of it all the time,” she said, “but no hospital or business can sustain that type of loss each year.”

Among the accomplishments achieved during the year, Ryder reported several new providers joined the network during a time when the supply is low, making it difficult to recruit doctors, nurses and pharmacists.

New programs such as Franklin Cares, Choosing Wisely and efforts aimed at providing patient safety have started.

Federal funding for two years provides a nurse navigator under Franklin Cares to help patients, those considered charity cases or without insurance, get the services they need, she said.

Choosing Wisely, a national initiative through Consumer Reports, educates patients and promotes discussions between the physician and patient about choosing treatment, including the tests and procedures needed, based on medical evidence.

Neurologist Daniel LaLonde, M.D., provides help through radio-frequency for chronic pain and the hospital is starting a patient portal that allows patients to access their medical records and interact with their doctor online.

On Sept. 18, the hospital achieved 90 days without a patient fall due to a goal to eliminate them, she said.

FMH was also recognized for the third year as one of the most wired hospitals. About 160 hospitals out of 5,000 nationally were honored. It’s based on a longtime investment in information technology, she said.

abryant@sunjournal.com