SWH clinic owner leaves trail of financial questions after credit downgrades

OTHER NEWS: Maine high court to air Bar Harbor's 'other' lawsuit

SOUTHWEST HARBOR, May 5, 2024 - Only five weeks ago, the nation’s two largest bond rating agencies downgraded Northern Light, the second largest health care system in Maine, and questioned its geographical footprint - the largest in the state.

Was the announced closing last week of the Herrick Road clinic here a sop to Moody’s and Standard & Poor’s so that Northern Light Health may salvage its credit rating?

Northern Light executives did not return two calls for comment. The QSJ wanted to know whether the local clinic was a victim of enterprise-wide cost cutting to prop up Northern Light’s overly ambitious expansion goals.

“Labor remains a challenge given NLH's rural locations and at the flagship hospital, where continued agency usage and wage increases for union nurses have driven up expenses,” Moody’s stated in its downgrade report.

S&P Global Ratings credit analyst Cynthia Keller added, "The downgrade reflects underlying operating performance and balance sheet metrics that did not meet expectations in fiscal 2023 coupled with a weak financial start to fiscal 2024."

Both agencies said the only reason the company reported a profit last year was from one-time federal grants for subsidized drugs and FEMA materials.

“Without NLH demonstrating a trend of underlying financial improvement, absent one-time benefits, we view a further downgrade as possible,” Keller wrote.

The downgrades will translate into higher borrowing cost for Northern Light, which has been on a building binge in hospitals in Greenville, Blue Hill and Bangor.

Northern Light operates 10 hospitals in Maine. During the pandemic it was a copious spender to hire “travel nurses” who often cost two to three times that of local nurses, according to the bond rating agencies.

In FY22, it reported paying $116 million in professional fees and predominantly for temporary staffing agency costs above the previous year.

In its annual report, Northern Light stated, “We have been working hard to recruit and retain staff and have relationships with Maine colleges and universities and with recruiting firms around the globe. We also note systemic changes in healthcare expenses. Supply chain costs, including medicines and other supplies all rose due to the pandemic.”

In 2022, prodded by the ratings companies, Northern Light began to sell operations to shave cost. A total of 1,400 employees were eliminated by selling revenue cycle management, information systems, inpatient care management, analytics, project management office and supply chain personnel to Optum, a large health care operator.

Last Wednesday, Northern Light Health shocked the Quietside when it announced it would close its primary care practice on Herrick Road on Aug. 30.

The practice will relocate and combine with a larger full-service primary care practice on Resort Way in Ellsworth, according to the Islander.

“Because of continued staffing challenges and the high cost of facility maintenance and improvements, combining our current Southwest Harbor services with Ellsworth makes the most sense,” said Joe Gaetano, vice president operations for Northern Light Blue Hill and Maine Coast Hospitals. “In order to offer continued excellent high quality primary care and ancillary services to our community, moving this care is the best option.”

Nine employees currently work at the clinic, said Kelley Columber, director of communications at Northern Light for Blue Hill and Ellsworth. She said that they will be offered positions in Ellsworth or at other Northern Light facilities.

Northern Light informed the staff about the closure on Monday and said it will be notifying the clinic’s 1,600 patients in the coming days.

A nearby clinic operated by Mount Desert Island Hospital in the village across from the Ridge apartments were accepting new patients as late as Friday afternoon. That clinic opened in 1997.

The closing of a small-town clinic stirs profound memories and emotions which are permanent and life-affirming.

“That’s where I got my first polio vaccination.”

“My daughter learned she needed glasses during a checkup there.”

Or something more prosaic.

Like when Dr. Clarke Baxter pulled a fish hook out of my index finger and he taught me that you pull the hook with the pointed end out instead of the other way around.

I had at least two hooks pulled out since Dr. Baxter started practicing here in 2016.

One time - I think it was when I needed my ears irrigated after a long swim in Long Pond - I noticed there was a young woman trailing Baxter in the office. She said she was a student at the School of Rural Medicine at the University of New England.

Did you know there are medical schools that teach nothing but “rural medicine?”

How many medical students today want to be a country doctor?

The young woman in Baxter’s office did.

And so did Baxter.

According to a profile in the Islander on Jan. 28, 2016, Baxter and his wife owned a home in Tremont for a number of years and decided to relocate to Maine full time.

“Drawn to the area by their love of the outdoors, Baxter and his wife are avid hikers, cross-country skiers and kayak enthusiast. They have an adult son. Baxter also enjoys playing the bagpipes with Maine St. Andrews Pipes and Drums.

“Born in Carbondale, Ill., Baxter grew up in Cincinnati, Ohio, and earned his bachelor’s degree at Harvard University before completing his doctoral studies at Ohio State University.”

Baxter ended up on MDI like many of us. We built our reputations elsewhere. But as some point the magic of MDI drew us in, and we decided to call this island home.

Which speaks to why Northern Light Health’s decision to close the venerated medical clinic on Herrick Road last week was so devastating.

One octogenarian reader called it a “disgrace,” as many of the clinic’s patients are elderly and traveling the 19 miles to another facility in Ellsworth is no easy task.

Another citizens lawsuit against Bar Harbor gets airing on Maine’s highest court

BAR HARBOR - Maine’s Supreme Judicial Court - also known as the Law Court - will hear oral arguments Monday in a lawsuit brought by citizens challenging the way the town implemented its charter changes in 2020.

The plaintiffs do not include citizen Charles Sidman, who has a separate lawsuit against the town for its failure to implement a citizens ordinance capping cruise ship visitation.

The lawsuits share one common theme - the town’s failure to implement judicial rulings in a speedy fashion.

The oral arguments are scheduled for 10:40 this morning for only 50 minutes and will be streamed on video.

The Law Court is being asked by the town to overturn rulings by two judges at the Superior Court Level striking down the town’s 2020 charter changes.

Oct. 24, 2022 Superior Court Judge William Anderson agreed with the plaintiffs that the town’s 2020 charter changes were implemented illegally because the nine questions were presented individually in an a la carte manner when they should have been presented as one.

The plaintiffs used the technicality to stop two major charter changes which they claimed robbed citizens of a more democratic representation - reducing the Warrant Committee from 22 to 15 members and disallowing Warrant members to run collectively as a slate.

Michael Good, the lead plaintiff who sued the town, said, “The entire charter thing was to gut the Warrant Committee … the townspeople lost representation.

The charter change also eliminated the practice of having residents run for the Warrant Committee as a slate, forcing them to run as individuals. In a town which struggled to find candidates, this was seen by Good and others as discouraging participation.

The charter changes also weakened the Warrant Committee’s influence over land use, Good said. The judge ruled the nine charter changes were not minor modifications as claimed by the town and required a more rigorous process.

“Even when viewed in the light most favorable to the Defendant, the facts show that, as a matter of law, the Town of Bar Harbor did not follow the proper procedures when enacting the changes, that the use of improper procedures materially and substantially affected the changes, and the changes should be invalidated. Therefore, Plaintiffs are entitled to summary judgment as a matter of law, their Motion is GRANTED, and Defendant Town of Bar Harbor's Cross-Motion is DENIED.” 

Anderson retired shortly after his decision and then on Sept. 7, 2023, another Superior Court judge, Patrick Larson, rejected the town’s appeal for “Reconsideration or to Alter or Amend Judgment"of Anderson’s decision.

The ruling by Larson was a second “clean win for the plaintiffs,” said their lawyer Max Coolidge of Ellsworth.

Larson wrote in his order, “Because the Court is not persuaded by the Town's motion that the Court's Order granting summary judgment to Plaintiffs and denying summary judgment to the Town was in error, the Court denies the Town's motion to the extent it seeks reversal of the Court's ruling.”

The original lawsuit, Michael Good v. the Town of Bar Harbor, had 10 plaintiffs, each with a specific area of interest in the nine questions being considered on the ballot in 2020.

One of the nine questions was rejected by citizens, prompting Anderson to declare that by separating all the questions as individual votes, the town violated the state’ Home Rule Act which stated revisions to the town charter had to be bundled as a single vote.

In seeking to reverse the ruling, the town attempted several gimmicks, including asking to resubmit the proposal as a single question but without Article 2, the only question to fail, which stated:

“Clarify the recording of recommendations on Town Warrants and Ballots, change the Warrant Committee’s responsibilities to consideration of the Municipal Budget and Land Use Ordinance amendments and remove review and recommendations of Citizen Initiative and Referendum from the Town Council, Warrant Committee, School Committee and Planning Board, as presented in the Town Meeting Warrant.” The vote to reject was 1729 to 1527.

Coolidge wrote in his rebuttal Dec. 29, 2022, “This result - a piecemeal adoption of the charter commission's recommended changes - is precisely what this Court found to be the material and substantial effect on the outcome of the process due to the improper submission of a charter revision as separate ballot questions.”

Coolidge also successfully rebuffed an argument made by then town manager Kevin Sutherland that he wouldn’t have time to bring the town back into compliance with state law mandating the easing of zoning laws by the summer of 2023.

This was a common tactic used by Sutherland, who successfully staved off implementation of the citizens ordinance to cap cruise ship visitation in November of 2022, which gave local businesses time to file a lawsuit seeking to reverse the ordinance. Sutherland was let go in January 2023.

The citizens cruise ship petition was filed on March 17, 2022, giving the town plenty of time to develop enforcement. Yet, Sutherland did nothing.

In February U.S. District Judge Lance Walker ruled that the town had the right to use home rule to place a cap on cruise ship visitation after citizens voted overwhelming on Nov. 8, 2022 to place a 1,000-passenger per day limit.

But the Town Council subsequently announced it would not implement that ruling even though it never took a vote on the matter publicly. That prompted Sidman to file an appeal with the town’s appeals board which is scheduled to review the matter on May 14. He also is seeking court judgements to compel the town to enforce the visitation cap.

A toe dip by Peekytoe in Southwest Harbor

SOUTHWEST HARBOR - The sign is up, but details still need to be firmed up for the planned opening of the seafood purveyor which is sharing space with Rogue Cafe while its Bar Harbor location is under construction.

On Facebook, Peekytoe Provisions is taking orders for Friday pickup at its new SWH location up the road from the Smuggler’s Den campground. The owners said they do not have an exact date for opening.

They also said while the site is temporary, they are open to the possibility of a more permanent presence on the Quietside if business is good.