Maine’s hospitals are in a precarious financial position compared to most of the nation, according to a report released by the Maine Hospital Association on Wednesday.

The analysis, conducted by PYA, a national health care consulting firm, shows that Maine’s PPS, “prospective payment system” hospitals, which include all of the major hospitals in Maine — such as those affiliated with MaineHealth, Northern Light Health and Central Maine Healthcare — are collectively in dire financial shape.

“Maine’s hospitals are at a breaking point,” said Katie Fullam Harris, chief government affairs officer for MaineHealth, the largest health care network in Maine and the operator of nine hospitals in the state.

PPS hospitals are those that are reimbursed a certain way by Medicare, and are separate from rural hospitals or hospitals that primarily serve lower-income and underserved residents, called “critical access hospitals.” Maine has 17 PPS hospitals and 16 CAH hospitals.

The PPS hospitals in Maine rank among the worst in the nation in three financial metrics: operating margin, debt burden and age of facilities, according to the analysis, which looked at hospital finances pre- and post-pandemic, with the most recent year the 2022-23 fiscal year.

Maine’s PPS hospitals — which include MaineHealth Maine Medical Center in Portland and Northern Light Eastern Maine Medical Center in Bangor — ranked 46th out of the 50 states in operating margin, 49th in debt burden, and had the 46th oldest facilities.

The state’s Critical Access Hospitals fared somewhat better in the report, with their operating margins 17th and debt burden 24th, but having the 40th oldest facilities.

Hospitals are “grappling with crippling costs, plummeting revenues and aging infrastructure,” according to a Maine Hospital Association news release.

Northern Light Health Inland Hospital in Waterville is closing, while birthing centers are closing or have already shuttered this year at Mount Desert Island Hospital, Houlton Regional Hospital and MaineHealth Waldo Hospital. Several other maternity wards have also closed in recent years, including at Calais Community Hospital, York Hospital and Rumford Hospital.

James Rohrbaugh, Northern Light’s chief financial officer, said the report “does a really good job quantifying” what health care providers have known and felt for years. Increases to labor and material costs accelerated after the COVID-19 pandemic, he said, but federal reimbursements have not kept pace, and service volumes are recovering slower than expected.

He added that Maine has a high number of government payers, including those on Medicare, and a low population density.

“You’ve got pretty high fixed costs,” Rohrbaugh said. “In a state like Maine where the population is smaller, you’re having to spread those costs.”

Compared to Vermont and New Hampshire, Maine’s hospitals are most at financial risk, according to the study, with 76% of its hospitals at medium to high risk of severe financial problems, compared to 71% in Vermont and 40% in New Hampshire.

“The findings of this study confirm what Maine hospitals have been experiencing firsthand — a growing financial crisis that threatens their ability to provide care to our communities,” Steven Michaud, president of the Maine Hospital Association, said in a written statement. “We urge policymakers, health care leaders, and the public to take these challenges seriously and work toward sustainable solutions to ensure Maine residents have access to quality hospital care.”

Harris said a number of factors are contributing to Maine hospitals facing financial difficulties, including having the oldest median age in the nation as well as a large rural population

“We have a large geography to cover that requires a lot of infrastructure, and infrastructure is expensive,” Harris said. “We have a large percentage of our population whose insurance is government payers (Medicare and Medicaid). Government payers have not kept pace with escalating costs.”

Harris said with an acute workforce shortage, Maine also relies on traveling nurses and traveling doctors, who are paid at about three to four times what a regular full-time employee would earn. Maine’s high cost of housing is also driving up wage costs, Harris said.

The Maine Legislature is considering a number of bills that would impact hospital finances, including one that would protect access to a federal discount drug program used by hospital systems.

Rohrbaugh, Northern Light’s CFO, said he hopes the report will trigger an expanded conversation between providers, policymakers and other stakeholders about the future of Maine’s health care systems.

Keeping Maine’s hospitals sustainable may require more cooperation and less competition between firms, he said.

“To me, the biggest message out of the report is that we’re at an important crossroads and we’ve got to all work together in a collaborative way to figure out how to tackle the situation,” Rohrbaugh said. “In the absence of that (new plan), we’re going to continue to see hospitals close, services eliminated.”