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The year just ended surely stands as one of the most tumultuous ever for the region's health care industry.

And, 2000 promises even more turmoil.

It's as though fundamental changes that took a decade or so to occur elsewhere in the country have been compressed into a few years here.

1999 began with the Catholic Health System's decision to consolidate acute care in the South Towns at Mercy Hospital and to use Our Lady of Victory Hospital for other services, including rehabilitation and outpatient care.

The Catholic Health System, facing large financial losses, saw the consolidation as an absolute necessity if it hoped to cut costs and right itself.

But the decision came under intense criticism from residents, employees and doctors. The issue still evokes heated emotions.

Likewise, the region's other large hospital network, Kaleida Health, is generating an equal amount of anxiety as it ponders its plans for consolidation, including proposals to move Children's Hospital downtown to High Street and to expand Millard Fillmore Suburban Hospital.

For the hospitals, all of them under financial pressure to find savings because of reduced revenues and the movement of care to outpatient settings, most of the decisions that have been made and will be made come down to choices guaranteed to cause pain.

Many employees have lost their jobs, been forced to shift to part-time work and have had to move to new positions if they wanted to continue working.

In addition, services have been cut. Kaleida, for instance, recently announced that it would eliminate its heart-transplant program, which had been started with hopes of bringing the hospital prestige and new patients.

"We're going to see continued downsizing and that will carry with it a loss and shifting of jobs at the hospital systems," said William Pike, president of the Western New York Healthcare Association.

Indeed, in 2000, the Catholic Health System is expected to consolidate services at its Northtown hospitals -- Sisters, Kenmore Mercy and St. Joseph in Cheektowaga -- and Kaleida is expected to act on some of its plans.

Have the mergers been worth the disruption they've caused?

Yes, argues Pike.

"It's understandable that people would ask the question," he said. "But as a result of the mergers here, we have seen and will continue to see long-term savings from the consolidation of services."

On the positive side for hospitals, the year ended with New York state approving the Health Care Reform Act, which allotted funding to cover up to 1 million people who lack health insurance and continued funding for graduate medical education, bad debt and charity care and other hospital programs.

However, the method the state devised to pay for this -- tobacco settlement funds and an increase in the cigarette tax -- and the way the act was negotiated -- with the involvement of the state's largest private-sector union, Local 1199 Health and Human Services Union -- have been intensely criticized.

Perhaps no medically related issue in the Buffalo area fanned passions last year as much as the decision by Blue Cross and Blue Shield of Western New York to limit where members could get their prescriptions filled, making Rite Aid a preferred pharmacy.

Blue Cross and Blue Shield ultimately added other pharmacies to the network, but the policy continues to generate criticism from customers and pharmacists.

Industrywide, a handful of trends held sway, such as continued rising costs for prescription drugs, costs that were passed on to consumers in the form of higher premiums, and the shift toward establishing long-term contracts with hospitals to set payment rates for services.

The cost of employer-sponsored health plans jumped 7.3 percent in 1999 across the U.S. and no relief is in sight, according to William M. Mercer Inc., a benefits consulting firm.

In Upstate New York, the increasing cost of prescription drug coverage led health maintenance organizations to raise co-payments, limit pharmacy networks and create alternative drug plans.

And the outlook for 2000?

"We're likely to see more of the same," said Jake Flaitz, a health-care consultant in Mercer's Rochester office.

What we won't see, he and others predict, is employers shifting the cost of health insurance on to employees.

"There are probably two reasons," Flaitz said. "We've got a tight labor market, and there's a sense that employers have shifted about as much of the costs as they can."

As a result, there may be a push by HMOs and large employers to find new ways to control the cost of prescription drugs, the prices of which continue to go up.

"We're going to see employers attack the demand side instead of the supply side," Flaitz said. "Large employers are going to seek information from HMOs that they can use to educate their employees about the drugs they use in hopes of finding ways to lower costs."

Such efforts are part of a movement to gain more specific information about how health care is used in a community and, by comparisons with other areas of the country, eliminate inappropriate treatments and costly therapies.

"Increasingly, employers want to know what exactly is driving up the cost of medicine," Flaitz said. "And they want it detailed enough that it can be used on an employer-employee basis."

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