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Fusion of hospital, medical center is explained

Patients and residents of the communities served by Olean General Hospital and Bradford Regional Medical Center are not likely to notice much difference in services after Nov. 1, when the two hospitals move forward in tandem.

On that day, a new parent organization -- Upper Allegheny Health System -- will go live with centralized back office functions and administrative support for both hospitals at a new off-campus location in Olean. All clinical services at both hospitals will stay put and continue business as usual under the current names.

Olean General's president and chief executive officer, Timothy J. Finan, said Monday that the idea grew out of his conversations with Bradford Regional Medical Center CEO George E. Leonhardt.

"We were very like-minded in believing some sort of collaboration would be absolutely critical for both our hospitals," Finan said, pointing to the geographic isolation of both campuses, located 90 minutes to two hours away from regional referrals available in Buffalo and Erie, Pa.

There is a trend toward joining urban hospitals into systems that are not appropriate for the less-defined health care systems found in rural areas, he added, and Olean was not tagged for closure or merger in the Berger Commission report.

Besides, a full-asset merger was unlikely because it raised state Health Department concerns because the hospitals are located in different states.

"There was the reality of federal and state budget deficits, and the rural economies were going to coalesce to create challenges in the future," Finan said, adding that "those were the realities everybody was trying to reckon with" when the talk of an integration began.

Both hospital governing boards recognized that they compete for primary and specialty doctors, nurses, technologists and other clinicians, while also struggling to find the capital to support infrastructure and technology. While neither hospital was facing a financial crisis, officials jointly recognized common risk factors that could threaten the long-term viability of both institutions.

The integration process began last October. A consultant and facilitator helped the trustees come up with a plan and a new name, shepherding them through a joint regulatory approval that placed the parent organization's corporate structure in New York State.

A certificate of need for the new parent organization was authorized in April. Bylaws and a certificate of incorporation will be filed soon.

Finan said that the next step is "not necessarily the end state" but that integration is "doable" to maintain adequate community hospital services. Accommodation would be made for further collaboration, based on strategic and business merit.

Even a full-asset merger or a consolidation might occur in the future, but it will be handled by Upper Allegheny, Finan said. Some work already has been done, such as a study on a possible integration of the hospitals' labs, and a search is under way for a computer platform too serve both hospitals.

Those kinds of efficiencies of scale will help attract more doctors and specialists to the region, Finan said.

Leonhardt will become senior vice president of planning for Upper Allegheny's future growth and development. Finan will be CEO of both hospitals, under Upper Allegheny. A new 17-member board of trustees will be chosen, and about half the current members will be eliminated.

A location for the Upper Allegheny Health System offices will be chosen from several possible Olean sites in October. Administrative tasks and departmental functions in planning, finance, human resources, purchasing, information technology, communications and marketing will be centralized in the new parent headquarters, relocating a "nominal" number of employees, Finan said.

Olean General's 186-bed hospital will continue to serve a population of about 100,000, while Bradford Regional will provide for about 50,000 through its 114-bed acute-care hospital, physician practices, home-care agency and 110-bed nursing home. Together under Upper Allegheny, the corporation is projected to have a combined operating revenue approaching $180 million and employ about 1,700 people.

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