This story was published with the assistance of the Journalism & Women Symposium (JAWS) Health Journalism Fellowship, supported by The Commonwealth Fund.
Maine’s second-largest health system, Northern Light Health, has been in a downward financial spiral, losing money four years in a row while continuing to try to serve the northern two-thirds of the state.
The health system operates nine different hospitals, including those in the smaller service centers of Presque Isle, Blue Hill, Greenville, Ellsworth and Dover-Foxcroft. But since 2022, the system’s flagship hospital in Bangor, Northern Light Eastern Maine Medical Center, has been losing more money than its more rural counterparts, leading to difficult questions about its future.
Interviews with Northern Light Health executives, state and national health policy experts, and reviews of financial statements all point to a troubling paradox: Northern Light Eastern Maine Medical Center, often referred to as EMMC, has become a weight pulling down the larger health system in recent years, but it also remains essential to the system’s survival. The system and EMMC rise and fall together.
“It’s critical to our mission, and it’s a critical part of everything we do,” said James Rohrbaugh, executive vice president and chief financial officer of Northern Light Health.
One number in particular stands out. EMMC’s operating margin — the revenue remaining after it covered its operating expenses — was -8.4 percent in 2024, according to reports from the Maine Health Data Organization. The only other Northern Light Health hospital with a worse operating margin that year was Northern Light Inland Hospital in Waterville, which closed last June. In comparison, operating margins for rural hospitals nationally were 3.1 percent, according to KFF, a health policy research organization.
Considering a longer view, Northern Light Health as a whole lost $332 million from operations between 2019 and 2025, and EMMC’s net losses made up 19 percent of that total, according to a Maine Monitor analysis of audited financial statements. The financial picture became particularly dire in 2024 when EMMC’s losses made up half of the health system’s losses, which that year alone totaled $156 million. (All financial numbers are from the system’s fiscal year, which ends Sept. 30.)
“Eastern Maine Medical Center is one of the very big problems, there’s no question about that,” Steven Michaud, the former president of the Maine Hospital Association, who worked with the association for nearly four decades, said in early March. “That’s where the patients are, where the people are. That’s where the money is. That’s why it’s such a big deal.”
The financial pictures of both EMMC and the health system overall improved last year, showing it is possible to reduce losses, but it remains unclear if the changes will be enough to pull the system back from the brink as it continues to face other financial headwinds.
While Northern Light Health likely will have to make more difficult decisions to address financial losses, three policy experts emphasized that there is little risk of EMMC closing because the hospital is too big to fail.
“I don’t mean ‘too big to fail’ like they can’t fail. I mean they’re too big for all of us to let them fail. We can’t let that happen,” Michaud said. “They will have to make very painful changes like so many of our hospitals are having to, but we can’t afford to let them go away.”
‘We’re not for sale’
Large, systemic changes have wrought havoc on Northern Light Health’s bottom line. Inflation has been the primary driver of the system’s financial woes, Rohrbaugh said, as costs related to drugs, supplies and labor have all increased nearly twice as much as reimbursement from Medicare and Medicaid, which covers two-thirds of the system’s patients.
Compounding the problem is the lack of available staffing, which drives up costs by forcing the system to use expensive, temporary contract workers and make investments in recruitment, Rohrbaugh said.
In addition, Maine hospitals have been hamstrung by health care closures, including the loss of a fourth of the state’s nursing homes in the last decade. A hospital doesn’t get reimbursed for its labor and supplies when patients are stuck at the hospital because there are no long-term care facility beds available for them to be discharged to, Rohrbaugh said.
As a result, the health system has weathered a string of bad news. Since 2023, the system’s debt has increased by $80 million; its credit rating plummeted three grades; and three hospital presidents — including the president of EMMC — stepped down, as did the CEO of the health system.
At the center has been EMMC. In a recent notice, S&P Global said EMMC’s underlying operating losses played a large role in it downgrading Northern Light Health’s bond rating three notches.
“Given EMMC’s importance to the system, we view improvement in earnings to be critical to future rating maintenance,” the notice said.
While many major challenges are outside the health system’s control, “the things that we can control, we’re controlling,” Rohrbaugh said.
Last year, the system closed two walk-in clinics in Waterville and Bangor; cut 300 positions; cut $30 million from contracts with OptumInsight Inc., which provides management services; and got a boost from $52 million in funds from the Federal Emergency Management Agency as reimbursement for pandemic-related expenses, according to audited financial statements. Closing Inland Hospital resulted in a loss of $40 million in 2025 but is expected to reduce ongoing operating costs. The system has also cut back on total compensation for top executives.
The changes have moved the system closer to getting out of the red. It lost $15 million last year, an improvement from its $156 million loss the prior year. EMMC also saw financial improvement last year, making $2 million from operations.
The system has performed better than it expected so far this year, though it lost $18.8 million in the first quarter. Rohrbaugh said the system had actually budgeted for a larger loss because the first quarter is usually slower and because the system planned to hire about 50 new physicians.
Northern Light Health operates its hospitals as a system and prefers not to publicly discuss individual performance, Rohrbaugh said. Nonetheless, fluctuations in EMMC’s financial performance have increased in recent years.
EMMC’s finances are worse than those of other hospitals in the system because it provides advanced services that are expensive and may lose money given the patient population size but that are still important to offer, Rohrbaugh said. These services include specialty pediatric services, advanced interventional and inpatient cardiac care, advanced neurological services including stroke care, behavioral health medical boarding, complex wound care and surgical cases transferred from other hospitals.
Many of these services are not available at smaller hospitals within the system, Rohrbaugh said. And many of those smaller hospitals do better financially than EMMC because they operate in a system with the flagship hospital.
“Without EMMC, we wouldn’t be performing as well as we do perform, and we’d actually perform worse,” Rohrbaugh said. “While there’s lots of pressures at EMMC, at the end of the day, it’s an important part of making sure that the communities we serve are served.”
To that end, Northern Light Health said it does not plan to eliminate more hospitals or sell any hospitals. System administrators have not been approached by outside companies looking to buy the system, said Paul Bolin, executive vice president and chief people officer.
“We’re not for sale, and we’re maintaining our sovereignty in terms of being a Maine-based company led by Maine people here in our community,” Bolin said. “Everyone has been very clear. We’re not looking for a buyout, and no one’s approached us. We don’t have any interest in that should they approach us.”
‘Pretty far down the line of serious financial trouble’
Northern Light Health is doing all the normal things that health systems do when they are in trouble, said Nancy Kane, professor emerita of health policy and management at the Harvard T.H. Chan School of Public Health. A health system can have one bad year, but it’s far more concerning once it has five bad years, she said. Northern Light Health has lost money the last four years, and EMMC lost money two of those years.
Northern Light Health only had 60 days of cash on hand as of last year, which is low, Kane said. The number demonstrates how long a system could operate without additional revenue.
“They’re pretty far down the line of serious financial trouble, and it proves that they’re not out of it,” Kane said.
In addition, Northern Light Health has historically spent more money on overhead expenses for the parent organization than other hospital systems, Kane said. Kane was an advisor on a study, published by the Healthcare Purchaser Alliance of Maine, which found that Northern Light Health’s “home office” contributed to the system’s losses between 2018 and 2023.
Costs for the system’s home office include expenses related to human resources, technology, budget oversight, and legal and financial services, which benefit every hospital in the system, Rohrbaugh said. The system could have charged those overhead costs out to each hospital — potentially prompting more hospitals to see losses and providing a rosier financial picture of the home office — but did not.
“By reporting this data as a system, reflecting the shared services that support each hospital, we are giving the most accurate financial report possible. Individual hospital results, as reflected in the study cited, do not reflect that business operation costs are at the system level,” Rohrbaugh said.
It can be difficult to determine what specifically drives losses for a health system because there’s little public data available and insufficient oversight from the state into hospital finances, said Trevor Putnoky, president and CEO of the Healthcare Purchaser Alliance of Maine.
“It is unclear how much of these losses are due to circumstances within the market or delivery system writ large, and management decisions made within the system,” Putnoky said.
Northern Light Health has undergone a years-long effort to reduce management expenses through reductions in leadership. Former health system CEO Timothy Dentry earned nearly $1.9 million in 2024, including retirement payments due to him, according to Northern Light Health.
But compensation for executives has declined as a percentage of total expenses. It used to make up 10 percent of expenses a decade ago and is now closer to 4 percent, according to the system’s tax filings. Northern Light Health has also cut more leadership, support and administrative positions than direct care worker positions such as nurses, Bolin said.
While Northern Light Health’s debt has grown since 2023, it managed to bring it down some last year. However the system’s problem is not necessarily the amount of debt it has but its ability to pay it off, said Anthony Jaccarino, senior program officer with the Maine Health and Higher Educational Facilities Authority. The bulk of Northern Light Health’s debt obligation — $502 million by his most recent count — is issued by the authority, which was created by state statute to create tax-exempt financing for health and secondary education institutions.
Northern Light Health isn’t the biggest health care borrower in the state. MaineHealth, for example, has more than $650 million in authority-issued bonds, Jaccarino said, while MaineGeneral owes the U.S. Department of Agriculture $308 million.
Most hospitals in Maine are operating on narrow margins, he said, but Northern Light Health’s bond rating has dropped below investment grade, reflecting bond raters’ opinion of the system’s financial health. Northern Light Health has a much less favorable bond rating than the other major health systems in Maine.
However, many hospitals in Maine are unrated, which looks worse than having a low rating, Jaccarino said. If all Maine hospitals had bond ratings, Jaccarino said he suspected Northern Light Health would not be at the bottom of the list.
He believes Northern Light Health leaders are making decisions with a “long view” to reduce their expenses. “It’s like a big ship turning around in a small channel: It takes a long time to turn it around,” he said. He is optimistic that the system can get back to an investment grade rating in the near future, he said, as long as the federal government doesn’t do “further damage to health care reimbursement” on top of imminent funding reductions.
Federal cuts are looming. The state anticipates that the One Big Beautiful Bill Act will result in an estimated 34,000 Mainers losing Medicaid coverage when changes to eligibility and work requirements go into effect next year, which will likely drive up the costs of uncompensated care for hospitals. Northern Light Health estimates it will lose about $27 million in the first year due to Medicaid cuts. All members of Maine’s congressional delegation voted against the legislation.
While Congress created a five-year fund for rural health care systems — with Maine receiving $190 million in the first year — it’s not anticipated to make up expected losses.
Richard Gundling, vice president of the Illinois-based Healthcare Financial Management Association, said Northern Light Health’s situation mirrors the persistent operating losses, rising labor costs and elevated debt levels that many rural hospital systems are facing across the country.
Rural health systems face a tougher financial environment because they have more patients on Medicare or Medicaid, which reimburses at a lower rate than commercial insurance, and they have to maintain essential services with low patient volumes, which makes it difficult to operate at economies of scale.
But financial sustainability is even more important in places where there are no other sources of health care to ensure people can continue to see a doctor, he said.
“Without EMMC, there’s nobody else providing the services in the upper two-thirds of Maine,” Rohrbaugh said.
Northern Light Health has a three-year strategy to reduce expenses by restructuring shared services across the system and “undertaking operational and clinical redesign efforts intended to improve efficiency,” according to the plan.
Northern Light Health has made progress cutting its reliance on contract workers, which previously cost the system $160 million at its peak during the COVID-19 pandemic; they now cost about $93 million, Rohrbaugh said. Plus expansion of an international workforce and recruitment of permanent staff are expected to improve labor costs by $67 million this year, according to financial statements.
Three health care policy experts agreed that the next challenge will be for hospitals serving rural patients to decide which offerings they can provide while remaining solvent. They will likely need to reduce services.
Michaud, the former president of the hospital association, said if something doesn’t change — and he doesn’t predict it will — then Maine will likely see more hospitals close across the state. The federal government is unlikely to give Maine more funding or expand Medicaid, Michaud said.
“There are going to be less services, and Maine people are going to be waiting longer and driving further. That is a fact. It’s only a matter of time. How could it be any other way?” he said.
Kane said it is becoming increasingly urgent to make sure that rural areas deliver care in a way that makes sense for a dispersed population. Northern Light Health has become too reliant on an old model of brick-and-mortar care that leans heavily on EMMC as its flagship hospital, she said. Instead, the system should invest more in its other types of services, such as primary care, ambulatory care, satellite clinics, home care and psychological care.
As for EMMC, Kane said, “If it’s too big to fail, they will have to make it smaller.”
If you have information or thoughts about the future of hospitals serving rural patients in Maine, please contact Rose Lundy at [Show Email].