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James R. Kaskie, who played key roles in the consolidation of Kaleida Health and construction of the Gates Vascular Institute, has been forced out as head of the hospital system, and officials are not ruling out sweeping changes in the system’s management structure or future layoffs.

In recent weeks, Kaleida Health has announced job restructurings because of declining patient numbers at Buffalo General, Millard Fillmore Suburban and DeGraff hospitals.

Kaleida had a debt of $304.5 million as of 2011, with annual revenues of $1.12 billion and expenses of $1.13 billion.

Jody Lomeo, chief executive of Erie County Medical Center, has been named interim chief at Kaleida Health.

“We determined that change was needed. A change not in strategy or direction, not in what we were doing, but how we were making it happen, or not. And that meant a change in leadership,” John Koelmel, chairman of the Kaleida board of directors, said at a news conference held this morning at Gates Vascular Institute.

Koelmel, the former CEO of First Niagara Financial Group, said it was important to make the change in an expeditious way.

“Pace matters. Time is of the essence. We had no opportunity to call time out and regroup,” he said.

Under a state-ordered agreement in 2008, the medical center and Kaleida Health remain separate institutions but operate under a unified governing organization known as Great Lakes Health.

In a sign that there could be further dramatic changes in the hospital system’s management structure, officials said today that no search is currently under way for a permanent successor to Kaskie. Officials said they will conduct a thorough review of the management structure in hopes of promoting further collaborations and creating a “more integrated system” between Kaleida facilities and ECMC.

There isn’t a permanent position for which Lomeo, or anyone, can be a candidate, Koelmel said, and no search for a permanent Kaleida CEO will begin any time soon.

“We are using this time, this circumstance, to further evaluate – re-evaluate – the business model, corporate structure, not just within the parameters of Kaleida but within the context of the broader Great Lakes system,” Koelmel said.

Kaskie was named president and CEO of Kaleida Health, the largest health care provider in Western New York, in 2006. He also served as chief executive of Great Lakes Health.

Kaskie received $1.5 million in compensation in 2011, according to Kaleida Health’s filings with the Internal Revenue Service.

Kaleida Health also includes Women & Children’s Hospital, and Kaskie played a central role in plans to build a new pediatric facility downtown on the Buffalo Niagara Medical Campus. Construction of the new $237 million facility is scheduled to begin in the spring.

Lomeo will continue in his roles at ECMC.

Koelmel said the board took the action within recent days. “The decision that the Kaleida board made was very recent, and we conveyed that to Jim,” he said. “We conveyed that this was a unanimous decision that a leadership change was needed and that we were looking to make that effective as of today. And he accordingly tendered his resignation.”

Koelmel would not discuss the severance package that Kaskie will receive. “We’ll work through that with Jim in accordance with the terms of his employment agreement," was all Koelmel would say about the issue.

But Koelmel praised Kaskie’s role in advancing a number of major initiatives.

“During Jim’s 10-year tenure as CEO, Kaleida’s accomplishments have been many, including the opening of the world-class Gates Vascular Institute (GVI), the consolidation of Millard Fillmore Gates Circle Hospital with Buffalo General Medical Center, the creation of centers of excellence in collaboration with ECMC, the expansion of Millard Fillmore Suburban Hospital, the unprecedented growth of the Visiting Nursing Association of WNY, and the tremendous momentum for construction of a new Children’s Hospital,” Koelmel said in a written statement. “We – and the entire community – owe Jim a significant debt of gratitude.”

Koelmel seemed to downplay any role that finances may have played in Kaskie’s ouster.

“We’re an organization that’s positioned that’s very well. We’re an organization that’s very strong, that’s very stable. This isn’t about a sinking ship,” Koelmel said.

Labor costs are about 60 percent or 65 percent of Kaleida’s operating expenses, he said.

“Unfortunately, as we redesign our business model, there’s going to be impacts on personnel and on labor,” said Koelmel, who later referred to the need to “right size” the Kaleida system.

At the press conference, Robert Gioia, chair of the Great Lakes board, said changes are needed to continue to control costs, stressing that cost containment in the health sector is an issue across the country.

“Jim has helped collaborate with UB, ECMC, and strengthened that relationship over the last six years. Jim was the right person at the right time, just as Jody is the right person in the right time today,” Gioia said.

The boards of Great Lakes, Kaleida Health and ECMC have approved the moves and employees at the institutions learned of the news this morning.

Gioia acknowledged the difficulties that occur when sweeping changes are made. “This community for some reason fears change and is so resistant to change," Gioia told reporters.”But in order to move forward, many times, change is required.”

Broad change could be coming. Gioia said the boards of Kaleida, ECMC and Great Lakes five years ago opted not to put in place a full merger of Kaleida and ECMC, citing the “herculean” task involved.

“Now, that was then, this is now. I think the dynamics within the industry have changed dramatically over the last five years,” Gioia said.

The hospital system has 10,000 employees at its five hospitals and other facilities, making it the region’s largest private employer. Kaleida has $1.2 billion in annual revenue and serves about one million patients per year.

Kaskie joined Kaleida in 2004 as the president and chief operating officer and he was named to Kaleida’s top job in 2006. He added the Great Lakes titles in 2007.

Lomeo has served as CEO of ECMC since January 2009 after previously serving as its interim CEO.

Lomeo’s appointment as interim CEO of both Kaleida and Great Lakes Health is being billed by Koelmel as a “next step in continuing to advance the importance of the vision and mission of a more fully integrated Great Lakes Health System of Western New York.”

Koelmel said Lomeo has proven to be a skillful collaborator.

“What ECMC has achieved under his leadership has been outstanding and we are confident he has earned the trust of those working across Kaleida Health and Great Lakes Health that will enable him to work with our exclusive team and to guide us through this important transition,” Koelmel said.

Kevin Hogan, chairman of the ECMC board of directors, also lauded Lomeo’s leadership skills in the health care arena.

“Jody has built bridges in every direction while ECMC has made tremendous strides over the last five years," he said.

Hogan said he’s confident that Lomeo’s new role will benefit Great Lakes Health during the next phase of growth.

Lomeo reiterated his belief that Great Lakes Health represents a “once-in-a-lifetime opportunity to get it right in health care” for the region.

“We have tremendous assets here, including our world-class facilities, a strong partnership with the UB Medical School, outpatient services, and most importantly, our physicians, nursing staffs and tremendous employee teams that deliver the highest quality care every day for the benefit of the patients they serve,” Lomeo said in a statement. He was not available to take questions from the media.

Lomeo is a Buffalo native and graduate of the University at Buffalo.

Officials said under Lomeo’s leadership, more than $200 million has been invested in the ECMC campus off Grider Street, including construction of a new long-term nursing facility that replaced the Erie County Home in Alden.

Other recent initiatives on the ECMC campus include the creation of a kidney transplant center and the opening of a Behavioral Health Center of Excellence.

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