Here, in order, are the factors that Erie County legislators need to sort through regarding the proposal to renovate the emergency department and make other improvements at Erie County Medical Center:
• First of all, this is a necessary project. The hospital lacks the space and sophistication needed as demand for its services rises. It’s crucial for the hospital to stay medically current and to meet its mission. The projected cost is $100 million, $45 million of which is for the emergency department. The remainder is for other upgrades, including boilers, room for arriving ambulances and other expenses.
The control board agreed last week to borrow up to $120 million for the hospital, with the excess to help with cash flow issues, according to Kenneth J. Vetter, executive director of the Erie County Fiscal Stability Authority.
• It is perfectly acceptable – and, in fact, logical – for the Erie County control board to borrow on behalf of the hospital. It lowers the overall costs of the project, since the control board’s high credit rating cuts the interest rate.
What is more, as the control board’s chairman, James Sampson, has observed, the board has pursued this kind of borrowing before. There’s nothing unusual about it. Legislators who oppose the approach to the project need to stop feigning shock and focus on the important matters.
• Besides the clear need for the project, those issues primarily include who will benefit from the reduced costs, the hospital or the county (read: taxpayers). That’s something worth arguing about, though not at the expense of hindering the work.
The question arises over concerns that Erie County Executive Mark C. Poloncarz has pressured the hospital into crediting the county for the projected savings associated with the lower borrowing costs. The money would count against payments the county is required to make for the costs of indigent care.
Thomas J. Quatroche Jr., ECMC’s president and CEO, says that’s not the case. The hospital is glad to help the county in that way, he said, even though the formal relationship between the two does not mandate it.
But it doesn’t make sense. If it’s truly a voluntary offer, that’s spectacularly considerate of the hospital, but its first duty has to be to its own bottom line and the patients who will benefit from the hospital’s stronger financial position.
It’s true that the county and hospital have formal legal responsibilities to one another. The county is required to pay the hospital $16.2 million a year, plus the local share of indigent care, while the hospital is required to credit the county for services it provides.
In this case, however, the county is not providing a service; the control board is. Even if the county did the borrowing, as was first proposed, it would be at best debatable whether that qualified as a service.
So, either the hospital is genuinely generous in its willingness to donate savings of up to $25 million to the county or it is under pressure to do so. Poloncarz, speaking last week to The News editorial board, said that even if the hospital keeps the money, he would be able to close whatever gap might occur, though it would require budget cuts or, presumably – he didn’t say this – tax increases.
That’s the better approach. Let the hospital benefit from the control board’s involvement and let the county manage its own budget. Legislators need to ensure that this project goes forward, as quickly as possible – delay can only increase costs as interest rates start to rise – but if they can protect the hospital from this expense without holding up the work, then that’s what they should do.