Kaleida Health's administration will relocate from 901 Washington St. into vacant space inside the health network's hospitals.
Kaleida does not plan to sell the 7-year-old property, but will retain a commercial real estate broker to lease the 30,000-square-feet of office space, said Michael Shaw, communications director for Kaleida.
The cost cutting move allows Kaleida to put its management closer to hospital services.
President and CEO John Friedlander is considering taking office space at Buffalo General Hospital on High Street, Shaw said.
"Plans are still in the preliminary stage and we've yet to determine who will move where and when," Shaw said.
Moving gives Kaleida a new income stream from lease revenue at 901 Washington St. The building will become available office space within the growing Buffalo Niagara Medical Campus.
"I think this is an opportunity to bring a new player into the campus," said Thomas Beecher, chairman of the Buffalo Niagara Medical Campus, a planning committee with local government and business leaders.
The University at Buffalo plans to establish both clinical and research space in the campus for graduate medical education programs.
UB President William Greiner said Kaleida's office building would not likely serve any of the university's space needs.
"Right off the top of my head, that doesn't seem like space that would be of great interest to the university," Greiner said.
The building was an administrative office for Millard Fillmore Hospital, which merged with Buffalo General and Childrens Hospital of Buffalo in 1998 to form Kaleida.
Centralized administration was highly valuable during the early stages of merger integration, Shaw said. The health network has gradually been moving departments out of the headquarters, back into hospitals, in the last year.
Kaleida's chief financial officer moved into Millard Fillmore Gates Circle and the vice president of information services and technology has moved to Buffalo General, Shaw said.
"Internally, we continue to look for ways to reduce expenses and one of the ways to do that is to vacate buildings like this and to lease them," he said. "Our business is patient care and the hospitals are where the patient care takes place."