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By David Staba

During its campaign to yank Children's Hospital out of Western New York's health-care picture, Kaleida Health has made some pretty bold statements.

"We recognize that change is never easy, but it takes a leader to make the tough decisions that will ultimately benefit the greater good," reads an unsigned statement on the welcome page of Kaleida's Web site, "Kaleida's plan for change ... not only ensures its survival but also allows for the investment necessary to create world-class centers of excellence."

The organization goes on to reiterate claims made repeatedly in advertising and the media that shoehorning a 600,000 square foot free-standing facility into roughly 150,000 square feet at Buffalo General will result in " 'a hospital within a hospital' -- one that retains a child-friendly environment for children and women's services with a completely separate identity from the hospital's adult services. It is our intention to continue to provide all the services rendered on the Bryant Street campus, with no interruption or decline," the site says.

Of course, Kaleida's administration has made a lot of promises during its four years of existence. No one knows that better than the doctors who work in its system.

"They said they would get $150 million by closing down adult facilities, which they haven't done," said Dr. Joseph Bernat, head of the pediatric dentistry department at Children's, while discussing the reasoning behind the 1998 merger that put the hospital under Kaleida's care. "They promised us we would never be closed. They told us that our residents would be eligible for federal dollars under the graduate medical education and Medicare acts and that would bring $8 to $10 million in additional revenue into the Children's Hospital side, so our educational programs could be done.

"There were all these promises that we would be better off. None of the promises from the merger have materialized. As a matter of fact, it's been just the opposite. Instead of $150 million in savings in the system, they're going to lose $180 million over the last four years. Everything has just gone in the opposite direction."

Much of the doctor's distrust arises from more than mere words. Kaleida has clung to much of the money raised by the annual Variety Club Telethon and other fund-raising efforts, funds earmarked for specific projects. Meanwhile, Kaleida propaganda has alternately referred to the Bryant Street facility as "aging," "decrepit" and "crumbling," during both its ill-fated bid to build a new $150 million building connected to Buffalo General and through the present campaign.

"They continue to degrade the facilities here, let the facilities go down and not invest in Children's," Bernat said. "There's the $8.5 million that's been raised to build a new neonatal intensive care unit, the $3 million that was raised for the new emergency room, the $400,000 for a helipad -- the list goes on of money that has been raised by this community through philanthropic events that the Kaleida system has elected not to go forward with.

"The money is raised and in the bank. It's sitting in the Children's foundation, but it needs Kaleida approval to be spent."

Then there's the issue of former Chief Executive Officer John Friedlander's departure. Friedlander, Kaleida's steward through its formative years, reportedly left the organization last year with a golden parachute worth up to $8 million -- more than 15 percent of the $52.8 million the organization claims it lost last year. Asked about the size of Friedlander's buyout by the Buffalo News editorial board, his successor, William McGuire, and Chief Operating Officer Carrie Frank had a troubling answer -- neither knew how large it was.

By choosing not to release, in its entirety, a consultant's report that recommends the change, Kaleida made its own credibility the central issue in the Children's Hospital debate. That may not have been such a good idea.

About 20,000 people braved freezing temperatures on Saturday to protest the move at a rally in Buffalo's Niagara Square. An organization dedicated to stopping the move, Women and Children First, has raised more than $150,000 in its first three weeks of existence. And several members of the local delegation to the New York State Legislature, including State Senators George Maziarz and Dale Volker, along with Buffalo Assemblymen Arthur Eve and Sam Hoyt, have demanded that Kaleida release the report authored by the St. Petersburg, Fla.-based Hunter group in its entirety.

"This isn't a Republican issue or a Democratic issue," Maziarz said of bi-partisan cooperation on the matter. "If that report backs up their position they ought to make it public. If it doesn't they're just lying to people."

A summary of the report, available on Kaleida's Web site, cites an overabundance of hospital capacity as a driving force behind the move. Buffalo's occupancy rate is listed at 70 percent, lower than Rochester, Syracuse or Pittsburgh, despite an average stay significantly longer than either of the latter two cities.

Opponents point to two other hospitals located within a mile of Children's -- Millard Fillmore Gates Circle on Delaware Avenue and Buffalo General on High Street -- as the culprits. The average capacity of each hovers around 50 percent, despite average stays substantially longer then the national average, while Children's averaged 76 percent capacity last year, and is often full during flu season and the winter months.

"The problems are on the adult side," Bernat said. "We're at a capacity where it's supposed to be. I think it's important to recognize that the consolidation of services and the closing of beds has to happen on the adult side."

The report summary also shows that while Kaleida maintains the largest share of Buffalo's hospital market, it has lost 2.3 percent during the non-profit organization's four-year life, business split between the Catholic Health System and the Erie County Medical Center.

Those numbers don't take Niagara County into full account -- Memorial Medical Center and Mount St. Mary's each refer pediatric patients to Children's. The hospital also operates, in concert with the University at Buffalo, a pediatric dental clinic in Niagara Falls. The Buffalo Avenue clinic, located in the former home of Shredded Wheat founder Henry Perky, had more than 5,000 visits last year -- more than 75 percent of which were made by patients covered by Medicaid or Children's Health Plus.

Bernat said the proposed move of Children's, which would drastically shrink the 11,000 square foot pediatric dentistry facility on Bryant Street, would endanger the Buffalo Avenue operation.

"The office in Niagara Falls barely makes enough money to keep it going, because most of the kids are on Medicaid," Bernat said. "Without our other facilities, we would not be able to sustain it. We'd have to severely downsize it, if we'd be able to keep it going at all, and eventually close it."

That's an example of Kaleida's true priority -- preserving itself, rather than maintaining or improving health care in the region, Bernat said. During Kaleida's tenure, Children's national ranking has dropped from 17th to 21st. The facility has gone from earning surpluses in each of the four years before the merger to posting six-figure deficits, according to Kaleida. And Kaleida's financial problems have made recruiting vital pediatric specialists to the area all but impossible.

Why close Children's, one of the chain's healthier hospitals, rather than shut down one of the markedly more sickly, Millard Fillmore Gates Circle or Buffalo General?

"It's easier," Bernat said. "The mortgage on this building is paid off. You might have to keep it warm inside, but you can essentially wipe out all the overhead costs just by shutting the doors. The other hospitals still have enormous mortgages on them, and they can't just close them down, because they'd be foreclosed on them by their guarantors."

Kaleida also apparently believes it has a captive audience of both doctors and patients.

"If they closed Gates Circle, for instance, the doctors there have no love for the Kaleida system and no allegiance for the Kaleida system," Bernat said. "They can just as easily take all of their patients down to Sisters, rather than down to Buffalo General.

"We have nowhere to go. There are no other pediatric services in town for us to go to. They truly believe we have nowhere to go, so we're the easy pickings. That's why we bring a big bang for the buck and they feel they can move us."

Kaleida's reasoning resonates with the same sort of business acumen that took the organization from a multi-million dollar surplus in its first year of existence to a $52.8 million claimed loss last year.

"Their own admission is that they think they would be able to retain 75 percent of the business here at Children's in a much smaller facility," Bernat said. "When asked how they came up with that number, people from the Hunter Group just shrugged their shoulders and said they guessed. When they asked us, we said we'd probably keep a third of the business, if we were lucky. It's like they threw a dart at a dartboard and came up with 75 percent."

Bernat scoffed at the notion that service could be maintained at its current level in a relocated facility squeezed into an adult hospital. The emergency and operating rooms at Children's, the busiest in the Kaleida system, would be afforded half their current amount of space under the plan. While Kaleida cites potential savings from combining services like dietary, maintenance and pharmacy departments, Bernat said such combinations would lead to a lower quality of care.

"You get people who don't routinely treat children who think of them as just small adults, and they make errors," he said. "You begin to see critical errors and you begin to see a degradation of services. Every person in this institution is dedicated to taking care of a child. That's not true at any of the adult institutions."

The resulting loss of business would quickly offset any savings resulting from Kaleida's plan, Bernat said.

Critics allege that the plan to effectively snuff Children's stems not from the Hunter Report, but from years of closed-door planning that preceded Kaleida's formation.

"I think this has been in the plan for a long time," Bernat said. "I think the fact that Gerry Lippes was the chairman of the board of Children's when we merged and now he's the chairman of the Kaleida board trying to close it shows there has been a plan that probably goes back seven or eight years that has targeted, for whatever reason, the Children's Hospital.

"Right before the merger, everybody promised us, don't worry, you'll never become two floors at Buffalo General. Now, if that option hadn't been discussed five years ago, why was it even brought up?"

Some sense self-interest as another motive. Lippes, a prominent Buffalo corporate attorney, recently tapped crony Larry Quinn to investigate potential reuses for the six-acre Bryant Street campus, according to a story written by UB professor and community journalist Bruce Jackson on his new Web site, Quinn's term as president of the Buffalo Sabres is best remembered for the departures of both general manager John Muckler and coach Ted Nolan after a season in which each won league-wide honors and the team surprisingly won a division title.

Most of Kaleida's 25-member board (which the Hunter Group suggested downsizing "to increase effectiveness and efficiency") is made up not of medical professionals, but executives from other fields.

"The business leaders that tend to be on the boards have a vested interest in keeping their health-care costs low," Bernat said. "So how do you do that? You chop the health care system as much as you possibly can and keep the costs as low as you possibly can. And now that they've come up with a plan, even if it's a bad one, I think there are big egos involved."

On Jan. 15, Lippes gave Children's Hospital leaders until March 11 to come up with an alternate plan. But while Kaleida spent $2 million on the secretive Hunter Report, it offered none to explore other options. And Lippes said one possibility favored by many hospital advocates -- spinning Children's out of the Kaleida system altogether -- wouldn't be considered.

Despite those strictures, Dr. Steve Lana said last week that Women and Children First would offer its alternate plan, one preserving Children's on Bryant Street while adding an ambulatory facility, which would be presented to the Kaleida board of directors before its scheduled March 11 vote on the Hunter Group recommendations.

For many Children's supporters, though, the only real option is breaking from Kaleida completely.

"Are they suddenly going to wake up tomorrow and be different people with different ideas?" Bernat said of remaining under Kaleida's leadership. "We're being picked apart. If we fold into just two floors in Buffalo General, then the Children's Hospital is gone. It's just absolutely gone. The misinformation that Kaleida is putting out, saying, 'We're not closing Children's Hospital, we're just moving it,' it's just not the truth. The truth is that they're closing it."

Bernat suggested Children's could again become a viable independent institution with increased business were it not wedded to Kaleida.

"There are a whole host of ideas that would turn this into a dynamic, vibrant independent institution," he said. "And we would be able to have cooperative agreements with ECMC, with the University, with the Catholic system, with the Kaleida system, with Niagara Falls, with Jamestown.

"The entire region would own this facility, not any one hospital facility. The people in Western New York have been so generous and so supportive of this institution that we can't lose it now."


Niagara Falls Reporter March 5 2002