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The emerging Catholic health system plans to start its own heart-surgery program, and Erie County Medical Center is considering whether to have its own maternity unit rather than refer pregnant patients to other hospitals.

The $7 million Catholic health-system proposal would place a heart-surgery program at Mercy Hospital and a heart-catheterization lab for diagnostic heart procedures at Sisters Hospital.

None of the seven Catholic hospitals performs heart surgery or such procedures as angioplasty, a technique for unblocking clogged blood vessels.

ECMC's $2.7 million project would entail opening a nine-bed maternity unit.

But ECMC Chief Executive Officer Paul A. Candino said he would rather see a collaboration between his hospital and one of the two health systems, preferably the Catholic network, with the medical center providing heart surgery and the Catholic network delivering the babies.

Officials say they need to offer a complete set of services as health maintenance organizations and government health programs increasingly negotiate capitated contracts to handle the care of large groups of patients.

In a capitated contract, insurers pay a fixed amount for patients regardless of services used, shifting the financial risk of patient care onto health-care providers. As a result, hospitals have been studying what services make financial sense to do themselves instead of sending patients elsewhere.

"With capitation, we are responsible for the cost and outcome of our patients' care. But if our patients go to another hospital, we no longer control those things," said Maria Foti, vice president of planning and marketing for Mercy Health System.

The head of ECMC said he needs a maternity program or an affiliation with another hospital to provide the service if the publicly supported medical center is to compete with the two giant health systems forming in the region.

"We're trying to carve out a role for the medical center," Candino said. "We'd like to find a partner. But if we can't, we'll need a plan B, and that means at least preparing to provide maternity ourselves. We can't afford to send those patients to competitors."

The other health system consists of a merger of Buffalo General, Millard Fillmore and Children's hospitals.

It is not clear when -- or even whether -- the new programs would begin.

The proposals are complicated by massive changes occurring in the health-care industry. At the very least, hospital officials said, they sought state approval for their plans to give them options as they maneuver through the changes.

Until recently, New York State regulated health care tightly. It still decides whether proposed hospital investments in expensive new programs are needed, but is far less restrictive in an attempt to encourage competition.

An ECMC maternity unit would open at a time when the number of births in the region has declined by more than 14 percent since 1991 and when officials say there are more maternity beds than are needed.

But Candino said it does not make financial sense for ECMC to send maternity patients to the two competing health systems, especially as the state in 1988 begins mandatory enrollment of Medicaid recipients into managed-care programs.

ECMC is highly dependent on Medicaid, which accounts for about 30 percent of revenues. Candino said the medical center could lose many women Medicaid patients to the other hospitals or end up paying high fees for their maternity care.

Even with the push for more open markets, officials said, it is not clear how the state will treat the heart-surgery proposal.

New York has been a leader in regulating and monitoring heart-surgery programs, pushing programs to perform at least 500 cases a year on the basis of studies showing that the more cases a heart-surgery team does, the better the results.

ECMC's heart-surgery program was nearly ended in 1990 when it was temporarily closed because of a high death rate. But the hospital turned around the program. It will do more than 300 cases this year, and there are plans to add a second surgeon.

Meanwhile, Buffalo General and Millard Fillmore hospitals are heading toward combining their large programs.

Supporters of a Catholic program say a third heart-surgery program would increase competition. Others suggest that it may only lead to two unsustainable small programs or threaten ECMC's.

"Our position is that the hospitals should be allowed to function like regular businesses. Let them compete and take risks," said William Pike, president of the Western New York Healthcare Association. "But we acknowledge there should be a few exceptions. Some would suggest that open-heart surgery is one of them."

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