With staggering long-term debt and mounting operating lossesthreatening the ailing Niagara Falls Memorial Medical Center,officials are scurrying to try to stop the hemorrhaging.
The job will take major financial help plus what Don J. King,chairman of the hospital's board of trustees, calls systemic andcultural changes.
In the past week, the hospital laid off 32 employees, met withstate officials to seek help with a multimillion-dollar debt andbegan a search for a new chief executive officer -- all under thepressure of operating losses that had topped $1.4 million by the endof June.
The hospital also is seeking permission from the state to closethe Beeman Child Guidance Clinic -- which serves about 500emotionally disturbed children a year in Niagara Falls -- becausethe clinic is losing $50,000 a month due to insufficientreimbursement rates.
A search committee made up of four hospital trustees met Mondayto establish how the search will be conducted, according toChairwoman Cynthia A. Bianco, board secretary and assistant to thesuperintendent of the city school district. The committee was formedto find a replacement for Ellen E. Grant Bishop, whose resignationwill take effect Aug. 31.
Other members of the search committee are James C. Roscetti, anattorney for the school district; Dr. Kamil Alpsan, chief of themedical staff; and Annie Fields Chapman, director of the NiagaraFalls Housing Authority Family Resource Center.
The committee will conduct a regional, not national, search,using an Internet job site geared toward the medical field. Theexact qualifications and salary have not been set yet, Bianco said.The committee is looking for someone who knows finances, hospitaladministration and someone who can collaborate. The salary would becommensurate with skills and experience, Bianco said.
"We're not going to go for a long drawn-out process. We need atimely turn-around but a good result. The sooner the better as longit's the right person. We're looking to have someone in place byfall," Bianco said. "We're looking forward to finding someone whowill really lead us forward with the challenges we have and allhealth care facilities have."
The challenges are great.
Representatives of Memorial traveled to Albany Tuesday to try toget some help resolving a debt left over from the failed merger withMount St. Mary's Hospital and Health Center in Lewiston. The mergerwas dissolved in 1999. During the merger attempt, Memorialaccumulated a $20.5 million debt, according to the Daughters ofCharity, now a part of Ascension Health, the St. Louis-basednational health care system that is the sponsor of Mount St. Mary's.
In 2000, a year after the merger was dissolved, the Daughterstagged the debt at about $22 million, including principal andinterest that keeps accumulating at a rate of $91,000 a month.Memorial officials dispute the number but have not publicly namedwhat they believe the debt to be. The hospital has been making tokenpayments of $1,000 a week since 2001.
King said the figure has little meaning given the hospital'sinability to pay, but the cloud remains.
In 2001, the 195-bed, inner-city hospital experienced anoperating loss of $5.6 million out of $64 million in expenses,according to Michael H. Shaw, hospital spokesman. The hospital'sauditors, Deloite and Touche, said the medical center's liabilitiesexceeded assets by $13.6 million in 2001 and $6.2 million in 2000.
The auditors found that the Ascension Health loan "and othermatters raise substantial doubts about the medical center's abilityto continue as a going concern," Shaw said.
"There has to be a way to find the money," King said. "We haven'tdetermined the amount that would be acceptable. They know we don'thave it, and, frankly, they haven't bothered us, but it's still acloud that hasn't allowed us to act as efficiently as we could. Thechallenge is we're bleeding and we've got to stop the bleeding."
The Memorial officials met with representatives of AscensionHealth; Sen. George D. Maziarz, R-North Tonawanda; andrepresentatives of Assemblywoman Francine DelMonte, D-Niagara Falls;Local 1199 Upstate, Service Employees International Union whichrepresents the hospital's unionized employees; the state HealthDepartment; and the state Dormitory Authority, which is a bondingagency that works with dormitories, hospitals and health centers,Maziarz said.
He said it was the first time that all of the parties had mettogether and called it the best meeting he has attended regardingMemorial in two years. The parties agreed to keep talking, andeveryone at the table agreed on the need for both hospitals tocontinue operating, he and King said. The hospitals are gatheringsome more information before another meeting is set.
King came home saying he thought he could see some light at theend of the tunnel.
The Ascension debt is something that has to be addressed for thelong-term viability of the hospital, Maziarz said. But the mechanismfor accomplishing that is unclear. The debt could be forgiven, paidoff, or some combination of the two, Maziarz said.
At the meeting it was agreed that state health officials wouldfacilitate a meeting for the hospital with the U.S. Department ofHousing and Urban Development and the Dormitory Authority to helpthe medical center work through the process of creating a proposalfor Ascension Health to review. HUD can provide funding forconstruction and refinancing of debt, according to David J. DiBacco,senior vice president of Memorial. He said Unity Health System inRochester used HUD to resolve its Ascension Health debt using thesame process, which isn't an easy one.
"All the agencies recognize the plight we're facing. If there isany quick fix it hasn't been identified," King said.
"I think everything is on the table," Maziarz said.
"I think there was a little bit of air cleared. They've agreed tokeep meeting, which I think is good. I thought it was a very, verypositive step," he said.
The debt and operating losses aren't the hospital's onlyproblems. The building needs capital improvements, such as makingthe main entrance handicapped accessible, Maziarz said. And,"they're not very prompt with their payments to vendors," he said.
The hospital also has an outstanding debt in past due waterpayments to the city -- the figure stood at more than $360,000 in2000 -- although it is now making monthly payments, King said. Itprovides $3 million to $4 million a year in charity care. The figureincludes bad debt.
King said the hospital has to clean up its whole front entranceand the 10th Street and Pine Avenue area and make it much moreattractive than it is. He conceded, though, "we could probably makeit look like Broadway and there is some element in Western New Yorkthat would never come to Niagara Falls." He said the same challengesface all urban areas -- perceptions of lack of security and inferiorservices. But there also are success stories in urban areas, such asRoswell Park Cancer Institute and the Cleveland Clinic.
Such amenities are important when you're trying to compete withthe suburbs, but can get pushed down the priority list.
"When you put it against nurses, we're going to take nurses,"King said. "When the debt is removed I think we'll be able to take amore aggressive approach to changing the culture. It's difficult toborrow money today because that's on our books."
King also raised another issue in Albany.
"I put on the table that there has to be a continued and ongoingpartnership and collaboration between the two hospitals, because ifthere was one thing everybody agreed to to a person, it is there isa need for both hospitals to continue to meet the needs of theGreater Niagara area. And if that's the premise there ought to be aneed to get it resolved," said King, who was a Memorial trustee anda member of the Health System of Niagara board -- the name of thefailed merger attempt -- at the time of the merger.
That doesn't mean a return to a merger or even an affiliation, hesaid. But King believes there are opportunities for the twohospitals to share expensive equipment and build up separate,complimentary specialties.
King said one hospital cannot handle the amount of health carebusiness that currently exists in western Niagara County. Plus, manyof Memorial's customers don't have transportation to get out to thesuburbs. And, "if by some stroke of genius" a casino finally comesand tourism increases, then the location of Memorial makes sense forservicing those travelers.
"The idea of an affiliation was probably the right thing to do.We have an aging population and doctors who serve the same people.It only makes sense that there be a distribution of differentfacilities because of the cost structures. We have the samephysicians who work in both hospitals, so why shouldn't there besome major cooperation," he said. "It doesn't make sense that we bein a competitive situation with a declining population, a nursingshortage and all kinds of expensive mechanisms on the rise. And herewe are competing for the revenue."
e-mail: jscelsa@buffnews.com
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