Buffalo, N.Y., Feb. 6, 2002 -- Kaleida Health today unveiled a bold plan to create "centers of excellence" at specific hospitals and bring the highest quality of specialized health care to the community. The strategy outlines a number of recommendations aimed at achieving sufficient financial surpluses that will allow the system to continue to invest in technology and professional staff.

Gerald S. Lippes, chairman of the Kaleida Health board of directors, said the recommendations follow an analysis by The Hunter Group, a national health-care consulting firm that was retained to undertake an intensive review of the entire Kaleida system. Lippes said the findings underscore the urgent need for substantive change throughout the system.

"We as a community cannot continue business as usual when it comes to health care," Lippes said. "We must align the system with the needs of the community and do it on an affordable basis. The simple truth is this: We are over-bedded, over-utilized and under-capitalized and if we do nothing, the system will eventually implode. We have a chance to build on the great assets and talent that exist in Kaleida Health and these recommendations provide us a roadmap to do so. We all have to do our part."

Kaleida lost approximately $35 million from operations in 2001. By taking the major steps recommended by Hunter, the system would produce an operating margin of approximately 4 percent (on revenues of $700 million) by 2004.

"Like many hospital systems around the country, we needed a qualified, dispassionate third party to examine our system from top to bottom and help us set a plan for the future to achieve world-class excellence in a rapidly changing and increasingly challenging health-care environment," Lippes said.

The Hunter team studied virtually every corner of the Kaleida system and made recommendations for actions to be taken in three major areas: administrative and operational improvements and efficiencies; enhancement of clinical services and practices; and the consolidation of facilities and the concentration of key specialties at specific hospitals.

Lippes said the board has approved – and Kaleida will immediately begin implementing – many of the recommended strategies outlined in the Hunter report. The board is expected to finalize several open issues regarding facility consolidation and the concentration of key specialties by mid-March.

Acting on a major strategy contained in the Hunter report, Kaleida will concentrate specific adult specialties such as neurosciences, cardiovascular and orthopedics, as well as long-time strengths in women's and pediatric services, in centers of excellence in order to achieve even higher quality and volume.

Key to this strategy is Hunter's recommendation that Children's Hospital be relocated to Gates Circle or the High Street campus. The existing Bryant Street campus would be closed.

"We will still have a Children’s Hospital of Buffalo," Lippes said. "The new campus would feature a child-and-family-friendly environment for children's and women’s services, with a separate identity from the hospital's adult services. However, the two would share a number of services and create numerous efficiencies of scale."

The plan also calls for:

• Construction of a new Pediatrics Ambulatory-Services Building adjacent to and connected to the new Children’s Hospital to provide a comprehensive Pediatrics Outpatient Center that will include clinics, an outpatient diagnostic center, an ambulatory surgery center and a pediatric urgent-care center.
  
• Installation of a new Obstetric and Neonatal Intensive Care service that would be located in the Children’s Hospital and include a surgical suite, a labor-and-delivery suite, a 60-bassinet Neonatal Intensive Care Unit (NICU), and a postpartum nursing unit and newborn facilities;
  
• Provision of pediatric inpatient facilities in two separate patient units with all single-bed rooms;
  
• Provision for a Pediatric Intensive Care Unit;
  

In arriving at the conclusion that Children's Hospital should be relocated, Hunter carefully examined the region's demographics which show the number of child-bearing women is projected to continue declining markedly as are the number of children who would require pediatric services.

From 1990 to 2000, the region’s pediatric population decreased by 12,007, or three percent, and the sharpest decline in this age group took place between 1995 and 2000.

During the 1990s, the number of women of child-bearing age fell by 42,516, or 11.65 percent. The number of live births dropped by 3,119, or 14.7 percent.

These trends demonstrate that it is no longer possible for Buffalo to sustain a free-standing children's hospital.

Some of the country's leading adult hospitals, such as Johns Hopkins, the New England Medical Center, the Mayo Clinic, the UCLA Medical Center, and University Hospital in Cleveland contain children's hospitals on the same campus as adult facilities. In fact, of the 179 hospitals in the country devoted to children, only 49 are free standing, full service institutions, according to the National Association of Children's Hospitals.

"When we're all said and done, we will have created a new Children's Hospital that will be sized appropriately for our community and capable of providing every bit of the great services our Children's Hospital has always been known for," Lippes said. "Change is not easy, but in this case we think everyone wins, especially the children and women in our community."

The Kaleida board, Lippes said, has had preliminary discussions with Children's Hospital physicians and asked them to consider the recommendation and identify any viable alternatives.

Lippes cautioned that the Children's recommendation should not overshadow the steps Kaleida will take to improve its financial condition which in turn will enable it to invest in the quality of care.

Accordingly, Kaleida will promote centers of excellence by focusing Orthopedics/Spine services, Cardiovascular, and Neurosciences at individual campuses. This strategy also calls for the shift of orthopedic from Millard Suburban to another campus in order to free up desperately needed capacity at the Amherst facility which runs at an occupancy rate of 102 percent.

Lippes emphasized both Buffalo General and Millard Fillmore Gates will continue to provide a full range of general medical, surgical and emergency care in addition to serving as sites for the centers of excellence.

"By consolidating and concentrating our specialties at specific hospitals in the system, and building on our partnership with the University at Buffalo we will improve care, reduce costs, increase volume and develop stronger clinical programs," Lippes said.

"This is a critical piece to the puzzle and is as significant as any recommendation contained in the report. We are committed to working with our physician partners to create an environment in which they can excel and do what they do best. We all have a responsibility to our community to do this and we will."

Kaleida is also taking these steps in order to achieve financial surpluses:

• Adopting an organizational structure that under the leadership of a new Chief Executive Officer will promote more responsibility and authority at the hospital sites;
  
• Reducing the size of the system board in order to streamline decision-making.
  
• Reducing costs of supplies and labor. Lippes said the recommendations call for most of the labor savings to be made by eliminating through attrition 370 full-time equivalent positions – out of a system-wide total of 8,000 – over a three-year period;
  
• Consolidating physical capacity in synch with market demand and the system's financial situation. The most significant move involves the Children's relocation to another facility. All told, the recommendations would take 750,000-sq. ft. of space out of the system;
  
• Affirming the commitment to medical education and research by completing an educational affiliation agreement with the University at Buffalo;
  
• Reducing lengths of stay, admission rates and take other steps to achieve substantial savings;
  
• Improving billing and collection practices.
  

Lippes said the Kaleida board and leadership and the entire community must be committed to seeing through the Hunter Group recommendations if the region's largest and most innovative health-care system is to attain fiscal health and continue providing quality health care in the future.

Lippes noted that a recent study published in the Dec. 24 edition of Modern Healthcare ranked the hospital financial strength of 40 metropolitan areas and Buffalo finished in last place.

"It comes down to choices and whether or not we as a community have the will and the courage to take the bold steps," Lippes said. "Everywhere you look in Western New York, whether it's city or county government, the schools, the police, downtown development, or health care, the common theme is that we as a community have put off for too long the difficult decisions in favor of the status quo. What is more important than our health care? It's time for bold action."

Lippes acknowledged the recommendation to move Children's Hospital from its Bryant Street campus would be an emotional issue for the community but he said the time has come to put aside emotions and deal with the facts. The community cannot sustain the health-care system as it is presently configured, he said.

"As a former board chairman of Children's, I do not take lightly any recommendation to close the Bryant Street campus," he said. "But the reality is that we are a community in financial distress with a shrinking pool of child-bearing women and in order to maintain and improve the quality of care for women and children, we must alter the way these services are delivered.

"By moving women's and children's services to another facility and making substantial improvements in that hospital, we can achieve the mission of providing high-quality care to women and children for years to come and in the big picture, we stabilize the entire Kaleida system," he continued. "We completely understand the emotional attachment to the Bryant Street campus, but we submit that the quality of the care for everyone in the community and the ability to continue providing it are more important. There are examples all over the country of fantastic children's services being provided in the context of adult hospitals, so we know it can work."

Lippes said Kaleida would work with the city of Buffalo administration, elected officials, and neighborhood groups on a plan to redevelop the Children's Bryant Street campus. "This is one of Buffalo's great neighborhoods and we will cooperate on a redevelopment plan that works for everyone."