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State forces pair of hospitals to resuscitate dead issue Hospital merger talks resurface in Niagara Falls and Lewiston

Niagara Falls Memorial Medical Center and Mount St. Mary's Hospital have spent nearly a decade embattled in what a state commission on hospital reform has coined a "medical arms race."

It started in earnest after a merger between the Falls and Lewiston hospitals failed in the late 1990s, and has led to a spending spree that has improved health care in western Niagara County -- as well as the cost of that care.

Administrators from both hospitals agree the new technology, unique programs and superior staff that have come with this medical race will draw patients from a wider area.

Most doctors along the Niagara River already practice in both hospitals.

And roughly one-third of the beds in both hospitals usually are empty.

All of those factors led the state's so-called Berger Commission to recommend that the two hospitals merge.

As was the case a decade ago, that will be easier recommended than done.

"We were hoping the merger would have taken place 10 years ago," said Sister Margaret Tuley, chairwoman of the Mount St. Mary's Board of Trustees.

Instead, the Falls Memorial board walked away from an almost done deal and later filed a lawsuit against Mount St. Mary's.

Hard feelings linger, especially at the Lewiston hospital, six miles from Falls Memorial.

A merger?

"We have no intention of going down that road again," Tuley said.

Neither hospital has yet begun discussions about the recommended merger, part of a plan released in late November and expected to start moving forward on Jan. 1.

The commission has strong wording designed to bring both sides to the table for negotiations. Its report says that if either hospital fails to participate in good faith, the state health commissioner will recommend closing that facility.

Hospital leaders have taken differing views of the commission's recommendations.

Joseph A. Ruffalo, CEO and president of Niagara Falls Memorial, has embraced the state report, echoing the recommendations and calling the state panel the "Rightsizing Commission."

Judith A. Maness, CEO and president for Mount St. Mary's, calls the Berger panel the "Closing Commission," alluding to recommendations that several hospitals across the state be closed, including St. Joseph and Millard Fillmore hospitals in Erie County.

The commission has pointed out that nearly half of the hospital beds in the region sit empty because of the decline in population and changes in health care. They say duplication of services and existing facilities, many older and in debt, has spread rising fixed costs over fewer patients. That has put added financial pressure on hospital users and health insurers, as well as taxpayers who help pay for the Medicare and Medicaid programs.

In Niagara County, the commission also has recommended that DeGraff Memorial Hospital be converted into a nursing home and that Newfane Inter-Community and Lockport Memorial hospitals continue on a path toward joint management.

Niagara Falls Memorial is a not-for-profit locally owned hospital.

Mount St. Mary's is part of Ascension Health, a consortium of 60 hospitals headquartered in St. Louis. The hospital started looking for a partner in 1995. After the merger with Falls Memorial failed, Maness said, Mount St. Mary's, sponsored nationally by the Daughters of Charity, joined with the Sisters of St. Joseph to create Ascension Health in 2000.

The hospital is now in talks, which began before the Berger Commission report, to affiliate with Catholic Health Systems, which runs several hospitals in this region, including St. Joseph Hospital in Cheektowaga.

Maness said those negotiations must be completed before any merger talks can begin with Falls Memorial.

>Understanding merger

Ruffalo and Maness have been involved in mergers before coming to Niagara County.

Maness said she came to Mount St. Mary's in 1997 with experience in merging a Catholic and non-Catholic hospital.

Ruffalo led the Kaleida merger in Buffalo and has been credited with leading Children's Hospital out of debt in 1990.

"I can always see possibilities," Maness said of the recommended merger. "Ten years ago, they tried to understand the future of health care. Businesses by and large had left the community. The population is getting older and it wasn't growing. They looked for ways to provide good health care for the citizens of this region. All the pieces were there in 1997 and 1998 and continue to be present today.

"The numbers of unemployed and underinsured have continued to grow."

Maness said most programs in the two hospitals were merged in 1998 and became Health System of Niagara but were pulled apart by Niagara Falls Memorial 18 months later.

Both sides faced multimillion-dollar debts at the time and fought a bitter legal battle for several years over who would pay these debts.

In 1996, Mount St. Mary's was on the brink of financial disaster when the Daughters of Charity took over the hospital from the Sisters of St. Francis.

After the merger between the Falls and Lewiston hospitals failed, Mount St. Mary's then faced a $30 million lawsuit filed by Niagara Falls Memorial. That lawsuit was dropped in 2003.

Niagara Falls Memorial -- with 183 beds and more than 200 physicians -- also was facing financial hurdles in the late 1990s that spilled into this decade. At one point, it was unable to pay city water bills and was laying off workers and closing clinics.

By 2003, Niagara Falls began to post some modest surpluses. Ruffalo said last week that it is continuing to see a systemwide growth in income, going from losses of $4.5 million in 2001 and in 2002 to average gains of $1 million in each of the last four years. Ruffalo said the hospital now hopes to hire 87 more staff members, including 68 clinical positions.

Gains largely can be tied to specialized care, such as the Heart Center, the Diabetes and Endocrinology Center, University Sports Medicine and the Brain and Spine Center.

>Fiscal picture

Mount St. Mary's, with 179 beds and a 250-bed nursing home -- Our Lady of Peace -- has a staff of 197 physicians and 250 nurses.

Its financial picture has not been quite as rosy as its neighboring hospital. Reimbursement rates from health insurance continue to be a sore spot, and Maness said the hospital is not being fairly reimbursed for the full costs of care. As a result, Mount St. Mary's has provided more than $10 million in uncompensated care since 1998, the CEO said.

However, she said, Mount St. Mary's has been able to undertake $63 million in capital investments since 1997, including $12 million in a new intensive care unit, $38.5 million to open Our Lady of Peace and $500,000 in 2003 for a new Wound Center for diabetics who need specialized care and hyperbaric medicine.

Both hospitals offer clinics for the poor in Niagara Falls that provide free or low-cost care.

Mount St. Mary's is currently raising $1 million to expand its site on Ninth Street, but Maness said the state Health Commission is trying to "punish citizens" by refusing to provide a state certificate of need.

Without it, she said, many may be unwilling to donate toward the expansion.

Falls Memorial leaders said last week that they are ready to give a merger another try, but they will have to address the lingering hard feelings harbored by their hospital neighbor.

Ruffalo and Falls Memorial board Chairman Don J. King said the state has given them just 18 months to work something out.

"We just have to respect each other," King said. "I don't think it should be about egos. It's not about us . . , it's about the future of health care. . . ."

"I spoke to the head of Ascension," he added, "and said, 'Isn't it time for us to come together and try to find some common ground?' "

Ruffalo said that, unlike the past merger plan a decade ago, he believes neither hospital should lose its emergency room. He said Falls Memorial has 28,000 patients a year and Mount St. Mary's reported 23,000 patients annually in emergency.

"There's not enough hours in the day to handle that amount of patients in one emergency room," said Ruffalo.

William G. Mayne Jr. was on the Mount St. Mary's board of trustees 10 years ago and served for a time on the combined hospital board. He remains on the Mount St. Mary's board.

"We all tried valiantly a number of years ago. It was very disheartening when it fell apart," Mayne said. "A lot of those factors are still in place. It's an emotional issue, but both hospitals are looking at what is good for the community."

That joint interest may be a place for a merger to start.

"I hear the problems stated are about trust and integrity," Niagara Falls Memorial board Vice Chairman James Roscetti said, adding that it's time to think about the future.

"How the people feel [about the failed merger]," he said, "should just be set aside."

e-mail: nfischer@buffnews.com

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Mount St. Mary's Hospital

Address: 5300 Military Road, Lewiston

Founded: 1907

Beds: 179, but only 155 are staffed; 250 beds in Our Lady of Peace Nursing Home.

Average occupancy rate: 60 to 70 percent, based on reduced staffing; nursing home is at 100 percent occupancy

Employees: 1,250

Ownership: Ascension Health Care, St. Louis

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Niagara Falls Memorial Medical Center

Address: 621 Tenth St., Niagara Falls

Founded: 1895

Beds: 183 beds in hospital, but only 163 are staffed and, of these, 66 are reserved for psychiatric beds; there are an additional 120 nursing home beds.

Average occupancy rate: 70 percent for surgical; 97 percent for intensive care; 85 percent for psychiatric. Nursing home is at 100 percent.

Employees: 1,200

Ownership: Not-for-profit locally owned hospital

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