BEHIND THE HEADLINES
The Kaleida-ECMC merger: Some questions and some answers
Hard-fought agreement stops short of merging ECMC, Kaleida Health
When a state commission ordered Kaleida Health and Erie County Medical Center to join forces, the deal was guaranteed to be big.
Together, they employ more than 13,000 people, take in $1.3 billion a year and account for 40 percent of all the hospital care in the eight counties of Western New York.
Although Kaleida Health is much larger, the institutions also have maintained an edgy rivalry similar to that of the Buffalo Bills and Miami Dolphins.
Now, after months of acrimonious public battling over how to combine, the challenge is to figure out what Monday’s agreement means.
Here are answers to some questions:
Q— The state commission mandated a unified, nonprofit governance structure that includes the University at Buffalo. Why?
A— With a shrinking population and changes in medicine, too many hospitals in the region compete for fewer and fewer patients. ECMC and Kaleida Health struggle to support the medical teams and technology needed to build comprehensive specialty programs noted for their quality, research and educational experience. That has led to real and perceived concerns over quality.
Q— Why did it take so long to come to an agreement?
A— ECMC, a public institution, employs public-sector workers with county-negotiated contracts that include more costly benefits than provided by the private, non-profit Kaleida Health. Altering ECMC operations requires changes in state law, and significant funding is needed for reorganizing services.
To unite them required overcoming a host of legal, financial, political and labor issues.
Q— If the hospitals didn’t merge, what did they do?
A— The hospitals will remain separate, but a unified governing board — with representatives from ECMC, UB, Kaleida Health and the community — will have authority over major decisions. A physicians’ committee, half from ECMC and half from Kaleida Health, will play a significant role in the board’s decisions on medical programs and projects that require state approval. Some officials see this as a first step toward a merger.
But whether the state Health Department will approve such an arrangement remains unclear, since it calls for a nonprofit hospital organization to give decision-making authority to a group of physicians working at its facilities.
Q— What did ECMC and Kaleida Health get out of the agreement?
A— The restructuring was designed to reduce duplication, especially in heart surgery and kidney transplantation; establish centers of excellence that draw more patients to Buffalo from the region; strengthen finances, ease the recruitment of specialists; and improve the training of new doctors.
Q— What did ECMC and Kaleida Health give up?
A— They took a leap of faith by giving the parent board final authority over major decisions made at their institutions, including starting new services, planning construction projects and hiring top management. They also agreed to cede decision-making power to the new committee of physicians.
Q— What did UB get out of this?
A— Without a hospital of its own, UB has spread doctor training among the community’s major hospitals, which pursued their own competitive agendas. The training program has gaps; research efforts are weak; and physicians have come under increasing pressure to see patients instead of teach.
The unified organization is expected to improve incorporating volunteer community physicians into the teaching program and recruiting doctors to teach and do research.
Q— What happens to ECMC’s estimated $180 million in cash, which includes taxpayer subsidies for capital projects?
A— County Executive Chris Collins called for using the funds to help pay off the hospital’s debt and resolve its retiree health insurance costs, which are expected to rise significantly. He proposed a trust to pay a large portion of retiree health insurance.
He didn’t get what he wanted. The agreement says ECMC can use the money for projects at the medical center or to help renegotiate labor contracts.
Q— Who will pay ECMC’s debt and an annual taxpayer subsidy?
A— In 2004, then-County Executive Joel A. Giambra converted ECMC into a public-benefit corporation to give it more management flexibility. But he also used the conversion to borrow the money to delay a budget crisis. The county agreed to repay the debt, which now stands at about $101 million, not including interest. It also agreed that starting in 2010, the county will give ECMC an annual subsidy equal to however much money it loses.
Taxpayers remain on the hook, and the obligation is written in state law. But officials have pledged to work toward changing the law, eventually severing the county’s financial ties to ECMC.
Collins said the subsidy will not be an immediate issue if the combined organization increases revenues at ECMC by enhancing services.
Q— Do we know how services will change?
A— The commission ordered Kaleida to close Millard Fillmore Hospital at Gates Circle. Its programs, mainly heart and neurosurgery, will move to Buffalo General Hospital on High Street or the vicinity. The commission also recommended building a center for heart and vascular care, proposed for a site next to Buffalo General.
The state has promised $65 million for the combined projects, and ECMC has dropped a competing plan for a heart hospital.
If all goes well, officials said the global vascular institute could open in 2011, although the project depends on raising $40 million in private donations and receiving additional state funds.
Plans, otherwise, remain vague. Officials have said that the new arrangement would recognize and enhance various strengths, such as trauma, burn care, orthopedics and psychiatry at ECMC, and stroke, neurosurgery, cardiovascular care and pediatrics at Kaleida.
Q— What do we call the parent board overseeing operations at the hospitals?
A— It’s known as the Western New York Health System, but is likely to get a new name.
