In advance of possible reductions to the state’s MaineCare program, Pen Bay Healthcare is eliminating some positions, delaying building projects, and not soliciting contract or consultant work.

On Tuesday, Feb. 21, Pen Bay administrators circulated a letter to staff explaining why eight employee positions — three at Mid Coast Mental Health and five at Pen Bay Medical Center — had been eliminated.

“In order to continue to move Pen Bay Healthcare and its family of organizations in a positive direction and respond to continued low patient volumes and impending MaineCare reductions, Pen Bay is implementing some cost reduction measures that affect staff,” wrote the organization’s executive team, with signatures of Tom Girard, vice president of human resources, and Eric Waters, chief operating officer.

They said Pen Bay is working with the affected employees to find them other positions inside the organization, or outside.

“No more layoffs are planned at this time, but we are constantly evaluating as we anticipate the MaineCare reductions,” said Megan Williams, director of communications for Pen Bay. “We are constantly evaluating our business plan to see what makes sense.”

The decisions follow a fiscally healthy 2011, at the end of which Pen Bay Healthcare reported that operating revenues exceeded expenses by $767,000 for the six months ending Sept. 30. Pen Bay also reported it had non-operating revenues of $535,000, bringing total net income over expenses to $1.3 million. In December, salaries, wages and benefits comprised 62 percent of Pen Bay’s expenses.

MaineCare, which is the state’s version of Medicaid, assists low-income patients with health care costs. Currently, the Legislature is addressing proposals by Gov. Paul LePage to reduce MaineCare’s budget. In December, former Pen Bay CEO Roy Hitchings (who has subsequently retired, with Wade Johnson assuming his position) wrote to Midcoast legislators outlining a $5 million effect on Pen Bay with LePage’s December proposals.

Since then, the MaineCare proposals have come under debate, and Pen Bay is estimating a $2 to $3 million negative impact on its budget. Still, the effects are the same: Reimbursements to Pen Bay are anticipated to decrease, free care and bad debts at Pen Bay will likely increase, and prevention programs and immunizations will be reduced or cut.

Pen Bay Healthcare is the largest employer in the Midcoast with more than 1,500 employees as well as more than 100 physicians. It comprises Pen Bay Medical Center, Quarry Hill retirement complex, Knox Center, Kno-Wal-Lin home health services, and a majority of physician offices in the Midcoast. It falls under the bigger umbrella of MaineHealth, which manages Miles Memorial Hospital, St. Andrews Hospital, Maine Medical Center, Spring Harbor Hospital, Pen Bay Healthcare, Southern Maine Medical Center, Waldo County General Hospital, and a series of other Maine hospitals and health care systems.

The savings last year were attributed to efforts to keep costs down, and joining MaineHealth, resulting in economic efficiencies. At the end of its fiscal year, ending Sept. 30, Pen Bay approved a $146 million budget, representing a 1.5 increase. That included pay increases of 2 to 3 percent, and 4 percent increases for insurance.

Williams said the cost-cutting measures enacted last week are part of a business process to keep the doors open at Pen Bay. While some positions have been eliminated, the organization is also looking at creating new ones, such as adding pharmacy technicians. That decision could save $80,000 annually as they could be logistically valuable in simply finding cheaper medicine, she said.

“It’s a dynamic process, not just how can we slice the budget,” she said.

On Feb. 23, Pen Bay’s pharmacy director, Jeff Kubel, elaborated: “I have had a couple of questions from staff asking ‘how hiring more pharmacy technicians will enable us to simply finding cheaper medicine. Aren’t we already purchasing medications at the lowest prices possible?’

“The answer to that is yes. The PBMC pharmacy is already purchasing medications for its patients that are of the lowest prices available. Our membership in a national hospital pharmacy purchasing group provides us volume discounts that guarantee lowest pricing for medications.

The savings mentioned in the article is more in reference to a possible expansion in hospital pharmacy services that will provide us with a more efficient and cost savings process than we have at present.”