Maine Healthcare Costs Soar as Competition Dwindles

Healthcare costs in Maine, already higher than most other states, are continuing to increase, and a D.C.-based center-left think tanks says hospital consolidation is to blame for rising prices.

“A leading cause of the high prices in Maine comes from consolidation, where one hospital system has acquired enough other providers to dominate the market,” said Third Way Health Policy Advisor Darbin Wofford.

“MaineHealth, the state’s largest hospital system, owns a quarter of Maine hospitals and 145 clinics. This consolidation gives it leverage to demand higher prices from insurance plans and employers,” Wofford said.

But the hospitals — and the companies behind the consolidations — disagree, pointing instead toward Maine’s aging population as the cause of elevated healthcare spending.

Wofford, the primary author on Third Way’s Jan. 4 report, said Maine’s hospital prices exceed the national average by 25 percent. To mitigate these costs, he offers three solutions to lawmakers to bring down healthcare costs in Maine, including increased pricing and billing transparency, increased competition among healthcare providers, and limits to add-on fees that often get tacked on patients’ bills.

According to the report, Mainers with private insurance pay an average of 275 percent of what Medicare pays for the same services, higher than the national average of 224 percent.

This disparity, Wofford argues, is caused by the hospital consolidation in Maine, primarily driven by MaineHealth.

“MaineHealth is the largest hospital system in the state, with two-thirds of Portland and Southern Maine’s hospital patients going through their doors,” Wofford writes. “Additionally, MaineHealth is the state’s largest employer, with about 22,000 employees. It is especially dominant in Portland, Maine’s largest city, ranking as the 21st most consolidated metro center out of 183.”

This consolidation has the effect of limiting competition and the downward pressure on prices that competition for business creates.

“[C]onsolidated hospital systems prevent that competition because insurers often have no choice but to include that hospital chain in its network—no matter how expensive it is,” the report states.

Perhaps unsurprisingly, MaineHealth CEO Dr. Andy Mueller disagrees that his hospital is preventing competition and causing healthcare costs to increase.

In a recent interview with a Portland newspaper, Mueller disputed the findings of the study.

Mueller said that he felt Maine hospital prices were higher than average due to the high percentage of the population on Medicare, noting that Maine is the state with the highest percentage of people on Medicare, at 26 percent.

Mueller pointed out that Mainers with private insurance have to pay more for hospital services to make up for the over one fourth of Mainers on Medicare, as Medicare bills less than what hospitals would prefer to charge for services.

As a non-profit, MaineHealth enjoys tax exempt status.

According to the hospital’s 2021 Form 990, Mueller made more than $1.2 million that year.

In the same year, the hospital received more than $130 million in government grants.