2001

Buffalo, NY, June 27, 2001 - John E. Friedlander, President and Chief Executive Officer of Kaleida Health, announced today that he will step down as President and CEO, but will remain with the system while a national search for a successor is conducted.

Friedlander, who was named Kaleida Health's first President and CEO in October 1996, has led the creation of the system, which is upstate New York's largest and is ranked 30th in the nation among integrated health care networks. Kaleida Health was formed as the result of a full asset merger between Buffalo General Health System, The Children's Hospital of Buffalo, DeGraff Memorial Hospital and the Millard Fillmore Health System. Prior to the merger, Friedlander had served as President and CEO of the Buffalo General Health System since 1994.

Friedlander has been a part of the Western New York health care delivery system since 1984, when he joined Buffalo General Hospital as Executive Vice President. With today's announcement, he said, "I have seen extraordinary changes in health care, regionally and nationally. The merger that created this system is the right thing for this community, and this merged organization will lead the region's health care industry well into the 21st century."

"In recent months, Tony Gioia, our Board Chair, and I, along with other current and former Kaleida board officers, have spent significant time discussing the current and future challenges facing Kaleida Health and the benefits Kaleida would gain with a new CEO to meet these challenges," Friedlander said.

"When I accepted this position, I knew what needed to be done and, as I expressed to the Board at that time, the magnitude of the changes before us would require a reexamination of leadership, once Kaleida's course was well established. That time is now. There comes a time of change for everyone and every organization, and the time is right for me to move on and for Kaleida to begin its next strategic planning cycle with a new CEO," Friedlander added.

"John has done an outstanding job as President and CEO of Kaleida Health," said Gioia. "Our merger was driven by the need to dramatically alter the way health care services are delivered in Western New York, a need which continues and which this organization will continue to address as the very core of our mission and strategic plan. It was through John's vision and leadership that a plan was created that positioned Kaleida to deliver health care services in the most quality outcome, patient driven, and cost efficient manner for all those we serve. The core of this plan continues to be the delivery of acute-care hospital services on the Millard Fillmore Suburban Campus and the relocation of The Children's Hospital of Buffalo to High Street as an integral part of the Buffalo Niagara Medical Campus."

"Under John's leadership, the merger was quickly followed by the creation of a single governing board and a single medical staff -- creating a strong and viable leadership structure that is unique among health care systems. Work began immediately after the merger to bring all 11,000 employees together under a single set of human resources programs. This monumental effort culminated with the successful negotiation of a landmark Master Union contract covering 8,000 employees in 18 separate collective bargaining units. Also under John's leadership, Kaleida has reduced costs by $61 million annually compared to 1998 levels, with $30 million annually resulting from merger related savings alone," Gioia added.

Gioia emphasized that the leadership agenda implemented by Friedlander and endorsed by the Kaleida Board of Directors will "continue on track" with a focus on four areas which the Board has endorsed as the health care system's Vital Priorities: Quality, with a focus on clinical outcomes and enhanced patient satisfaction measured against national benchmarks; Finance, with a continued focus on further reduction of operating expenses and consolidations to ensure operating efficiency, including enhanced revenue flow and reduced patient lengths of stay; Strategy, with a focus on the pursuit of the two acute-care campuses, including the Millard Fillmore Suburban expansion and construction of a new Children's Hospital on High Street, as well as an affiliation agreement with the University at Buffalo for new initiatives in teaching, research and clinical practice; and People, with a focus on continuing to build a unified Kaleida culture around quality patient care and the system's position as the leading non-governmental employer in Western New York.

Enhancement of reimbursement rates by the area's health maintenance organizations is the key initiative which Friedlander will continue to lead in the months ahead, Gioia noted. He added that Friedlander's numerous achievements have been realized in the face of the significant reimbursement shortfall from the local market and damaging cuts in Medicare payments resulting from the federal Balanced Budget Act, which have "posed unprecedented financial challenges" in recent years for all health care systems throughout New York State.

"Increasing payment rates to provide the much needed funds for investment in new patient care technology and high quality physicians and staff is one of the final things the Board has asked John Friedlander to do," said Gioia.

"Kaleida Health owes John a tremendous debt of gratitude for his determination, leadership, dedication and hard work over these past five years," noted Thomas R. Beecher, Jr., one of the six founding members of the Kaleida Health Board of Directors and immediate past board chair. "It is a tribute to John's commitment to Kaleida and the Western New York community that he will stay on in his current capacity while we commence a national search to identify a successor."