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Merged sites have deep roots Lockport, Newfane health facilities cement a process started in 1999

LOCKPORT -- Completing a process begun a decade ago, Lockport Memorial Hospital and Newfane Inter-Community Memorial Hospital are now one.

The merger into Eastern Niagara Hospital, replacing an affiliation arrangement in which the two hospitals had common management, might not have occurred if it weren't for the State Commission on Health Care Facilities, commonly known as the Berger Commission.

"While the affiliation between the two hospitals had been progressing well, the recommendation by the Berger Commission served as the catalyst for prompting us to take the next step in that partnership," said John A. McHugh, chairman of the board of the merged hospitals.

The two hospitals continue as a subsidiary organization of Eastern Niagara Health System. The parent organization also owns Newfane Rehabilitation and Health Care Center, a 175-bed nursing home.

Only indirectly related to the merger, the Newfane hospital is about to undergo an extreme makeover that will include larger, private patient rooms and a new administration building.

The merger, which took effect at the start of the month, otherwise will change virtually nothing. There will be no alterations in the number of jobs or the types of services offered, according to Clare A. Haar, chief executive officer.

"Since 1999, we have been on a track to do right by this community, to make our health care as efficient as possible by working together," Haar said. "There will be other economies that come as a result of the merger, but we've had the benefit since 1999 of being able to do it in a measured approach. That's why we can say that even though there will be no downsizing as a result of the merger, the economies we can achieve as a result of the merger can be achieved over time, through attrition."

The separate hospital boards will be abolished, but they had become something of a legal fiction anyway. That's because, since June 2007, the two boards had exactly the same 19 members.

Nine of the members also comprise the Eastern Niagara Health System board.

One of the few changes will be that Eastern Niagara Hospital -- Lockport Site and Eastern Niagara Hospital -- Newfane Site, as the facilities now will be officially called, will no longer issue separate financial statements.

"As a result of the path that we've embarked on together, both hospitals are on firmer ground," Haar said. "This is the right move in order to secure stability for health care in this community. No doubt about it."

Combined for 2008, the two hospitals showed net revenue of $57,000 -- it would be called a profit if they weren't legally a not-for-profit organization -- and an operating surplus of $3,113,000.

However, Haar said, most of that was accounted for by the $3 million in state HEAL grant funding the hospitals received before Dec. 31. The state Health Department granted the facilities $9.1 million to help pay off debt, as a compensation for the state basically ordering the merger. Haar said the remaining $6.1 million arrived after Jan. 1.

In 2007, Lockport Memorial, which is licensed for 134 beds, ran $1,054,000 in the black, while the 71-bed Inter-Community was $54,000 on the plus side. Haar took over at Newfane in September 1993, and the hospital has been in the black every year since 1994.

The Lockport hospital's board called on Haar and her Newfane team after Lockport Memorial nearly went broke in 1999. Meanwhile, work started last week on a major renovation at Newfane, a $3 million makeover of all patient rooms. The Newfane site will have larger rooms, many of them private, spokeswoman Carolyn Moore said.

Haar said something had to go because of the larger rooms, and that something was the administrative offices. As part of the project, a 2,600-square-foot, one-story administration building will be erected next to the hospital. Work will take about a year.

No major construction work is slated soon at Lockport, Haar said, but the hospital business office will be moved out of the hospital building into space on Professional Parkway in Lockport, Haar said.

Haar said Eastern Niagara has applied for state permission to add dialysis services to the Newfane lineup. Neither hospital offers dialysis now.

Haar said it will be typical in the future, when a new service is added, to offer it only at one of the two hospitals.

But both hospitals will continue their maternity units -- Newfane renovated its obstetrical facility a few years ago -- and Lockport will continue to offer its Reflections inpatient substance abuse program.

Lockport received a shot in the arm last year when it was awarded a new magnetic resonance imaging, or MRI, unit. Donald L. Kepner, chief financial officer, said the $825,000 unit is used for four to five examinations daily.

Haar said Lockport Memorial had to spend $400,000 to $500,000 to renovate and shield a first-floor room so the MRI unit can be used properly.

The three Eastern Niagara Health System facilities are major local employers. The Lockport site, combining full- and part-time staff, employs 450 people. The Newfane hospital employs 325; the nursing home, 250.

The hospitals have no shortage of patients. Moore said the occupancy rate for the two hospitals in January was 99.94 percent.

Haar said the number of patients who can't pay is slowly increasing.

"We don't turn patients away. We accept all comers," she said, but the amount of charity care is a burden on the hospitals.

Kepner said the hospitals carried $2.8 million of bad debt -- unpaid patient bills, mostly -- on their books last year.

The merger represents a change for the community, but it's not the first name change for Lockport Memorial, which was founded in 1908 as Lockport City Hospital and became Lockport Memorial in 1959. It was owned by the city until 1979.

Inter-Community opened in 1958. Although they've had common management since 1999, the affiliation wasn't finalized until June 2005.

"Probably for the community, the most challenging aspect of the merger will be the name change," said McHugh, who has been on the Newfane board since 1979. "Otherwise, the community should realize that this is a very positive change that will ultimately allow us to grow and maintain services at two sites in eastern Niagara County."


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