Buffalo Niagara Medical Campus | Clinical, Research, and Academic Excellence

Kaleida asks state for $123.5M

By Annemarie Franczyk
Business First of Buffalo
7/20/2007

Kaleida Health has asked Albany for $123.5 million to fund a three-part plan that would help the health-care provider partially comply with state mandates to close or reconfigure services and pursue joint operations with Erie County Medical Center.

The request was filed July 16, the deadline for health facilities affected by the decisions of the Commission on Health Care Facilities in the 21st Century to apply for a portion of the federal/state funds made available to pay for the forced changes. The greatest changes were imposed in the New York City area and Buffalo.

Kaleida has asked for:

$120 million to move services from Millard Fillmore Gates Circle Hospital into and around Buffalo General Hospital.

$1 million to develop a strategic plan for DeGraff Memorial Hospital in North Tonawanda.

$2.5 million to perform due diligence needed to create a governance arrangement with ECMC.

A state official acknowledged that the $550 million pot of money won't cover the full cost of the sweeping changes prescribed by the commission for 80-some hospitals and nursing homes across the state.

"In no way, shape or form will there be enough to reimburse every hospital to the penny, but it's a start," said Claudia Hutton, Department of Health spokesperson.

But Kaleida President and CEO James Kaskie maintains that the three proposals will be covered in full.

"If we are the second most challenging market for them and we're an organization willing to change, we think they should be very generous," he said. "Change can be very good if it's properly funded."

The Catholic Health System and ECMC filed requests for funding, but declined to release details pending a state decision.

Kaleida, however, came forward with some indication of its intentions to comply with the state commission mandates, which include closing Millard Fillmore Gates. The health system intends to move current services from that facility over a three-year period into existing and renovated space in Buffalo General and new space to be built adjacent to it on the Buffalo Niagara Medical Campus. The plan has been spearheaded by a committee of 75 physicians and involves emergency, stroke, cardiology, neurology, medical/surgical, geriatrics and other services, Kaskie said. The $120 million request would pay for the renovation and construction needed to accommodate the services moving from Millard Fillmore Gates.

Kaskie foresees possible expansion of the hospital into the intersection of Ellicott and Goodrich streets, and onto land at 50 High St., where an empty medical office building was razed in May.

Kaleida expects to engage a "community-based reuse planning process" to determine the best use for Millard Fillmore Gates, an 818,000-square-foot facility situated in a primarily residential area.

"We have an obligation with our community to decide what is the best use for it," Kaskie said.

Kaleida is less certain about plans for DeGraff, except that it will try to convince the state not to convert it into a nursing facility as mandated but keep a mix of primary-care and urgent-care services there instead. The state's plan - moving nursing home beds to DeGraff from Millard Fillmore Gates - wouldn't make business sense because it would further deplete senior nursing options in downtown Buffalo and put the beds in an area with less need, Kaskie said. Further, moving medical services out of North Tonawanda would be a disservice to the community, he said. The $1 million funding request would pay for a study to determine the best configuration of services.

Kaleida also wants $2.5 million in state funding to pay for the work leading to a new organizational structure that would govern a consolidation with ECMC. The union would be a complicated one, combining a nonprofit organization with a public benefit corporation. The two organizations have had tumultuous negotiations since the state commission announced the union last November, and have stopped meeting in recent months.

"We're advancing this as Kaleida Health because we believe it's time to begin discussions on due diligence and the planning process. We're hoping ECMC will want to be part of that," Kaskie said.

ECMC's attitude appeared to coincide with Kaleida's.

"We've espoused since December that a consolidation should happen under the proper terms because we think it's good for health care in Western New York," said Thomas Quatroche, spokesman. "We're pleased to see that Kaleida has put forward a proposal to further espouse that consolidation."

Applicants to the state needed to demonstrate compliance with the commission and detail how much has been spent making those changes. Awards would be considered reimbursement for costs incurred, and only after the health facility exhausts other sources of funding, Hutton said.

The aid combines $300 million in federal funding and $250 million from the state. The state funds are the last bit from a $1 billion initiative created four years ago by the Health Care Efficiency and Affordability Law for New Yorkers, or HEALNY. Previous grants covered downsizing and technology improvement projects.