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PAY AS YOU GROW
FUNDING FOR PROPOSED CAMPUS MAY INCLUDE HIGHER HEALTH INSURANCE

Establishing a world-class medical research and treatment center around High Street rests on a shaky foundation that must be shored up by a major infusion of cash - some from consumers - if it is to succeed.

Announced with fanfare by community leaders in January, the long-range plan calls for the medical institutions concentrated north of downtown to create an interactive campus that backers believe will become an economic boon for Buffalo.

However, there are some big challenges.

Although many observers believe the potential exists for cutting-edge genetic research thanks to strong financial backing by the state, the companion vision of a prestigious health care center is much more problematic.

To help solve that problem, local health care consumers - governments, businesses and individuals - will have to pay more for medical insurance.

The root problem, health-care providers say, is that Buffalo hospitals and doctors are underpaid for their work, compared to their national counterparts, and insurance reimbursements must be increased significantly to provide quality services.

"You're losing quality care because there's not enough money in the system," said Thomas Beecher, who is leading the charge for the plan. "Whether you have a medical campus or not, the problem is the same."

Not so, say insurance company executives, who believe adequate money already is being paid for medical services and the challenge is to find ways to spend it more wisely.

A major battle is shaping up between providers and insurance companies. Its outcome could make or break the health care component of the vision for a Buffalo Niagara Medical Campus.

The three most important pillars - Kaleida Health, the University at Buffalo School of Medicine and Roswell Park Cancer Institute - are having difficulty maintaining their current status, let alone achieving world-class recognition.

Kaleida, struggling financially, is in no shape to build what many believe is the key component of the health care campus: a $150 million Children's Hospital. The hospital company will have to win a significant increase in insurance premiums before it can proceed.

The UB medical school recently was criticized for the poor quality of its residency programs - where physicians receive their final training - by the national board responsible for its accreditation. It must correct 11 deficiencies if it is to continue training specialists.

Roswell Park was turned down last year by the National Cancer Institute when it sought to extend its accreditation as a comprehensive cancer center for five years. It was given three years at greatly reduced funding to improve its cancer research programs by recruiting top-flight scientists and research physicians.

The other half of the medical campus vision - its potential for major medical research, particularly in the growing field of bioinformatics and genetics - has a much more optimistic prognosis and will be enhanced further if Roswell Park solves its problems.

The Hauptman-Woodward Institute, located on High Street, is led by Herbert A. Hauptman, winner of the 1985 Nobel Prize in chemistry. The institute is doing highly respected research exploring the structure of proteins and other building blocks of the human genetic code.

"The structure of virtually every drug that's reached the market was validated by techniques we've developed," said George T. DeTitta, president of Hauptman-Woodward.

Pursuit of bioinformatics

The other good news is the commitment by Albany to provide $15.3 million for a biotech research facility in the old Bristol-Myers Squibb laboratory on Forest Avenue. The state also will provide $1 million to help assure that local research will lead to local jobs.

There is much optimism that those grants are stepping stones toward a much bigger prize - the $225 million bioinformatics research center at the Buffalo Niagara Medical Campus. The state is expected to provide $75 million toward the endeavor.

The proposed bioinformatics center involves a public-private partnership led by UB. It would include construction of a biotechnology center on the medical campus that would use a supercomputer to analyze diseases at the genetic level and create drugs to treat them.

That's great, say proponents of the Buffalo Niagara Medical Campus, but it's only half the loaf.

"A bioinformatics center would be a wonderful win, but it won't solve the problem we've been talking about," said Beecher. "That's not the direct delivery of health care.

"It would help recruiting, make the campus be seen as a place to come, but it would have a minimal impact on the clinical care side."

Working together

Beecher, a former chairman of Kaleida Health, acknowledged health care providers at the campus are not yet prepared to contribute to the goal envisioned by those involved. The answer, he said, is through cooperation and creating a prestigious common identity.

"I think we can manage the problems better together than alone," he said. "In fact, I don't think we can manage the problems unless we do it together."

"The medical school cannot solve the residence review commission's problems on its own because the medical school is only one party to the teaching mission. They've got to do it together with the hospitals."

"Roswell (Park) cannot solve its problems easily alone, they need to recruit talent."

"It's a lot easier to recruit talent to a medical campus that's got a Nobel laureate, that's got a sign up that says we're a medical campus and is actively involved in a long-range strategic plan to bring scientists here."

The most important ingredients to making the campus a world-class health care center is for Kaleida to relocate Children's Hospital from Bryant Street and for Roswell Park to keep its comprehensive cancer center status, said Dr. Michael Bernardino, vice president of health affairs at UB.

Treating children with cancer would put Buffalo among a handful of medical centers in the country that specialize in that area.

"The opportunity in Buffalo," said John Friedlander, president and chief executive of Kaleida, "is that we have a unique set of capabilities in Roswell (Park), the specialty cancer care facility and uniquely, a free-standing children's hospital.

"If you look around the country, there are not a lot of communities that have that kind of capability."

To build a new Children's Hospital will require money, lots of it, something that Kaleida does not have now.

Kaleida's growing pains

Friedlander estimated his organization needs to increase its annual bottom line by 1 percent - $7 million to $10 million - to generate the money needed to realize its ambitious construction and reorganization plan.

It is hoping that part of that improved financial picture will be persuading the federal government to increase the amount it provides hospitals for caring for the poor and uninsured. The remainder will have to come through higher reimbursements from private insurers.

That struggle will begin later this year when Kaleida opens contract talks with two of its major insurance providers, Univera and Independent Health.

Friedlander said Kaleida has achieved all the cost-saving goals it set three years ago when it was created by the merger of Buffalo General, Millard Fillmore, DeGraff Memorial and Children's hospitals.

"We've done that in a very painful way, a way that at some level has affected the care, and we are not going to cut below levels that are unsafe in terms of delivering care," he said.

"I think that's a very compelling case when we go to the insurance companies and say we've done our part," he added.

Insurers, however, believe that Kaleida must do a much better job of delivering quality health care. They agree the doctors and hospitals are paid less for services here than other places, but argue that patients stay in hospitals much longer and don't do as well.

"We believe there is enough money being spent in Western New York to provide efficient and quality health care," said Steve Jepson, senior vice president and chief operating officer at Blue Cross/Blue Shield.

"We believe a significant increase in premiums is not a way to solve problems. We need to find ways of delivering health care more efficiently and effectively. The employees of Western New York are paying us to do an effective job of managing their health care dollar."

Roswell Park's progress

As for Roswell Park, officials say they're on track for recruiting the scientists and physicians needed to bolster their scientific research and assure its continued comprehensive cancer center designation from the federal government.

"Our strategic plan for research is right on target," said Cynthia Schwartz, Roswell Park's liasion to the Buffalo Niagara Medical Campus. "We're very pleased with the progress we're making at this stage of the game."

Schwartz said Roswell Park has hired three new department chairs: John Cowell in genetics, Soldano Ferrone in immunology and Michael Battain in pharmacology and therapeutics. The search is continuing for leaders in two key departments, medicine and surgery.

Sources within Roswell Park, however, say the institution is continuing to lose scientists and physicians. They point to the recent departure of Dr. Gerold Bepler, director of the lung cancer program, to a Florida cancer center as an example of the flight of talent.

Roswell Park officials are nonplussed.

"I wouldn't say we're seeing anything other than the normal comings and goings that you have at a very large institution where you've got good staff who are under active recruitment by other facilities," Schwartz said.

Researchers in demand

As an example of how hot the competition is for talented cancer researchers, Kansas City, Mo., recently opened a $200 million Stowers Institute of Medical Research. Its wealthy founders also have bestowed a $1.1 billion gift to help it recruit top-quality scientists.

Friedlander said Buffalo does not need that kind of huge investment to make the Buffalo Niagara Medical Campus a success, because it already has the key parts.

"You have all the ingredients that can be combined into an idea that from the standpoint of making investments is not multibillion, but incremental," he said. "We have the right moon and stars and sun, what we have to do is align them.

"One thing is assured, if the investment isn't made, it will never happen. And the investment is being made in other places."

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