MaineHealth expands state dominance with Franklin acquisition

Maine's health department approved MaineHealth's acquisition of Franklin Community Health Network this week, giving the largest system in the state 10 acute-care hospital campuses.

MaineHealth's deal with Franklin, which includes 48-bed Franklin Memorial Hospital in Farmington, Maine, goes into effect Oct. 1, but includes some stipulations. Mary Mayhew, the state's Department of Health and Human Services commissioner, said in a letter (PDF) that MaineHealth will be required to report referral patterns and clinical outcomes for the area. For example, MaineHealth will have to demonstrate what it has done to help reduce local obesity rates and colorectal cancer cases. The system will have to file the reports annually for the next three years.

MaineHealth also will make nearly $22 million in network capital investments, according to health department documents (PDF). Franklin will pay $375,000 next year to MaineHealth for membership dues, since MaineHealth charges annual fees to its hospital members. Fees typically cost a member organization about 0.5% of its net operating revenue. Franklin officials said in May they expect those dues will be offset by savings from partnering with MaineHealth on laboratory services, insurance premiums and legal fees.

In 2013, Franklin posted an $8.4 million loss from operations (PDF) on about $76.9 million in revenue. Its total loss was $7.3 million after factoring in investment gains. MaineHealth's annual revenue is roughly $2 billion.

“MaineHealth and Franklin Community Health Network share the same values and mission, and by joining MaineHealth, we will be able to partner with the system and other members to improve healthcare in our community,” said Rebecca Arsenault, the network's CEO in a release.

Follow Bob Herman on Twitter: @MHbherman