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Gov. George E. Pataki plunged into the heart of the area health care industry Monday to tout a new state budget he said was on time and on target in addressing the drain of Medicaid on county finances.

Pataki, appearing with County Executive Joel A. Giambra and top Kaleida Health executives at Buffalo General Hospital, pronounced the state's new spending plan "not just an on-time budget; it is a very good budget." And he seemed most enthused over short-term progress in capping the county share of Medicaid, as well as long-term prospects for "right-sizing" the state's health care delivery system.

"Most important, we're going to make record investments and have restructuring and reform in our health care system that will make the best health care system in the world even better," he said. The governor has been appearing at hospitals and health care facilities around the state in recent days to highlight the budget and its progress.

He said its "reform agenda" sets a 3.5 percent growth rate cap on county Medicaid costs this year, decreases to 3 percent in 2008 and then allows for the state's full administrative control.

The budget also creates a special commission to examine the state's health care system and make recommendations to eliminate excess capacity and duplication in high-tech services. That sounded especially pleasing to Kaleida President William D. McGuire, who said the industry wants to be "part of the solution and not part of the problem."

He said Kaleida has progressed from losing $125 million in the five-year period from 1998 to 2002 to making $7.5 million last year after cutting 634 beds from its system.

"We could save yet further monies by the actual taking down of space occupied by those 634 beds, and that will occur before the end of this year," McGuire said. "It's possible to save yet further monies by closing yet another hospital."

Pataki explained the commission's expected recommendations will prevent state taxpayers from inheriting Medicaid costs from counties. That will stem from what he believes will be more federal dollars because of state reforms in the health care delivery system.

Pataki also said the new budget and $14.5 million in federal funds obtained by Rep. Thomas M. Reynolds, R-Clarence, have essentially plugged the budget gap experienced by Women and Children's Hospital. He said the new budget includes $5 million, while another $7.5 million is expected from other state sources.

Giambra, who has been highly critical of state Medicaid spending for several years, did not speak at the Buffalo General session. He declined a request to react to the governor's remarks.


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