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5/22/2013 2:00:00 PM
Miles Executives Explain Decision To Stop In Lieu Payments
By J.W. Oliver

Lincoln County Healthcare will not continue to make a $10,000 annual payment to Damariscotta in lieu of taxes on almost $30 million of exempt property.

Lincoln County Healthcare executives explained the nonprofit's decision at the May 17 meeting of the Damariscotta Board of Selectmen.

"I have a very strong philosophical bent against payments in lieu of taxes for a 501(c)(3) nonprofit organization," said Lincoln County Healthcare President and CEO Jim Donovan. "By the very nature of our organization, we have a charitable purpose."

"It's certainly not the amount of the [payment in lieu of taxes], which I know was $10,000 a year for many years, but it's what it represents that was our cause for the discontinuation of it well over a year ago," Donovan said.

"I will say, and with apologies, we did not communicate that well to the town at that time and that was our mistake," he said.

Damariscotta officials expressed disappointment about the decision upon discovering the $10,000 revenue loss in March, during the annual budget review process. The organization had been making the payments since the early 1990s.

A Lincoln County Healthcare spokesman, in response, said Lincoln County Healthcare remains the top taxpayer in Damariscotta and provides valuable charity care to Damariscotta residents.

Lincoln County Healthcare Chief Financial Officer Wayne Printy provided data on tax payments and charity care to the selectmen.

Lincoln County Healthcare pays $50,611.54 in property taxes on four office buildings and $14,012.76 in property taxes for three undeveloped properties. The organization indirectly pays another $10,053.50 for two rental properties.

Schooner Cove pays $83,211.14 in property taxes. "Although not directly paid by us, it wouldn't exist if not for the Miles organization ... that made that investment for the community," Printy said.

Lincoln County Healthcare also provided $119,955 in charity care to Damariscotta residents in fiscal year 2011, the most recent year for which data was available.

"We take care of all people, regardless of their ability to pay, and have from the beginning of our existence in the communities," Donovan said.

Lincoln County Healthcare also benefits the town as a major employer, with 770 full-time equivalent positions and a total of 1200 employees. About two-thirds of those employees work at the Miles campus, Donovan said.

The executives also talked about the challenges facing the health care industry in general and the local industry in particular.

"Nobody believes the percentage of health care as it relates to the gross national product of the nation is sustainable," Donovan said. "It's so out of whack with other countries."

The health care system is adapting to a new "accountable care" system wherein the government and insurance companies make a single payment to a health care organization in exchange for health care for a group of people.

Accountable care is part of the Affordable Care Act.

"We have to shift our thinking from taking care of people and providing care to people when they need it, to really focusing on what's in the best interest of the health care needs of the community," Donovan said.

Lincoln County Healthcare's two hospitals, Miles Memorial Hospital in Damariscotta and St. Andrews Hospital in Boothbay Harbor, are the first and second most expensive hospitals in the state.

According to Printy, 70 percent of patients at the two hospitals are either charity care, Medicaid or Medicare patients. "That leaves 30 percent to pay for their own costs, plus make up the difference for the 70, which drives up prices," he said.

Although Boothbay Harbor and Damariscotta have high populations of wealthy retirees, this does not translate to an advantage, as Medicare pays for retirees.

The executives also talked about their top priority for capital improvements.

"We need a modern physician office building on the Miles campus," Donovan said.

"We need a facility that helps the doctors do the very best they can," he said. "We really don't believe we have that right now with buildings we have. They're okay, they work fine, but as we look to the future, they're not going to meet our needs, so the planning process is underway for a new building on our campus."

The organization has been working with an architectural firm to develop a plan for the building, which would stand in the present location of The Women's Center and connect to the hospital.

The Women's Center and the Miles Professional Building "would go away" and the organization would "re-purpose" the Webster Van Winkle Medical Building, Donovan said.

The organization expects to proceed with the project in 2-3 years, he said.

Dick McLean, a Damariscotta Budget Committee member who has publicly criticized Lincoln County Healthcare for halting the payment in lieu of taxes, said the meeting was important to help Damariscotta officials understand the other side of the situation.

"This meeting, to my perspective, is marvelous, and this is what has to happen," McLean said. "The two groups cannot be strangers. You're such a vital part of this community."

Lincoln County Healthcare wants to collaborate with the town in the future, said Vice President of Development, Marketing and Community Relations Scott Shott.

Shott said he wrote a grant for the town to replace a Main Street water main some years ago, a project that was necessary to boost water supply to the Miles campus.

"That's the sort of thing we want to be able to do," Shott said. "If we have expertise or we have resources that can help the town with something, we're happy to do it."

The organization also wants to involve residents in important conversations about the future of health care in the area.

"We don't just want to talk to the community," Donovan said. "We want to engage the community in discussions."

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