A car drives along the entrance road to Calais Regional Hospital on Aug. 21, 2019. Credit: Bill Trotter

Calais Regional Hospital filed for Chapter 11 bankruptcy protection on Tuesday, but hospital officials promised that the 25-bed facility would stay open as the bankruptcy case proceeds.

The hospital blamed the bankruptcy filing in U.S. Bankruptcy Court in Bangor on a number of factors, including a drop in paying and insured patients; increased levels of care the hospital has had to provide for free; inadequate reimbursement from MaineCare, the state’s Medicaid program; and increasing regulatory requirements.

The hospital has lost money every year since 2007, according to its annual tax filings, though officials said Tuesday the size of the hospital’s losses shrank to $574,600 last year from $2.64 million in 2014.

Serving much of Washington County and employing about 275 workers, the Calais hospital is the second rural Maine hospital to file for bankruptcy protection this year.

Penobscot Valley Hospital in Lincoln, another 25-bed hospital that had shed some services and positions in recent years, filed for Chapter 11 bankruptcy protection in January.

The Calais filing comes 11 days after the hospital’s nursing staff voted to put the option of a strike on the table in contract negotiations that have dragged on for almost a year. Todd Ricker, a labor representative for the Maine State Nurses Association who has been leading negotiations for the nurse, said the timing of the bankruptcy filing is no coincidence.

Hospital managers told the union during negotiations that the hospital was having its “best financial year in a decade” and they repeatedly denied any intention of seeking bankruptcy protection, Ricker said.

“This just follows their pattern of doing business in recent years. None of them take responsibility for how they have mismanaged the place for years,” Ricker said. “It’s all about external factors. We are looking for them to take responsibility for their own mistakes.”

Hospital spokeswoman DeeDee Travis said the hospital’s decision to file for bankruptcy protection had nothing to do with ongoing negotiations but “everything to do with keeping the doors open at Calais Regional Hospital.”

“We appreciate our nurses and they play a critical part in providing care, but we have a responsibility to our 275 employees and our community to keep health care accessible in the region and jobs in this community,” Travis said.

“We have worked hard over the past few years to get to the point where Chapter 11 is an option, and it’s a healthy step for us at this point,” she added. “Restructuring strengthens the hospital’s long-term financial position.”

Calais Regional Hospital’s bankruptcy filing comes even after the state implemented an expansion of its Medicaid program, giving more low-income adults a means to pay for their health care. Enrollment, however, has happened more slowly than some projected.

Some 37,000 low-income adults have gained coverage through the expansion since the start of the year, according to the state Department of Health and Human Services. In Washington County, nearly 1,500 people have enrolled.

The U.S. Government Accountability Office found last year that fewer rural hospitals closed in states that expanded Medicaid under the federal Affordable Care Act from 2013 to 2017. Those that closed often had previous financial struggles.

The Calais bankruptcy also follows a few years during which the hospital cut services to rein in expenses. It closed its obstetrics department in 2017 and ended outpatient cancer care last year. The hospital had also contracted with a Tennessee company, Quorum Health Resources, to manage the hospital. It ended that arrangement last year.

Organizations seek Chapter 11 protection to gain time so they can reorganize their operations and eventually pay off debts.

Officials in Calais expect the hospital to emerge from bankruptcy protection in a stronger financial position, Boula said in a statement.

“We remain committed to providing exceptional patient care during the Chapter 11 process,” Boula said. “All departments are operating as usual, and our talented team is focused on delivering high-quality health care services to our community.”

The nurses union has said that its members are not asking for any new concessions because the hospital has struggled financially for years. In 2017, the most recent year for which hospital tax data are available, Calais Regional Hospital took in $34.2 million in revenue and had $36.3 million in expenses, resulting in a $2.2 million loss.

But the union has objected to proposed changes the hospital has proposed to their health insurance and paid-time-off policy. Administrators have said the changes are modest and meant to give the union members the same level of benefits as other hospital employees.