DeGraff Memorial Hospital in North Tonawanda will cease to function as a full-service hospital as of Oct. 1, when it will stop performing surgeries and close its intensive care unit.
Kaleida Health will transfer the services to another hospital within its system, Millard Fillmore Suburban Hospital, in Amherst, and will recast DeGraff primarily as an outpatient medical center with a renovated emergency department.
System officials said 104 of the hospital's more than 300 full- and part-time workers will be affected by the shift in services at the hospital. They will be offered other positions at DeGraff or at another Kaleida Health facility.
System administrators said inpatient cases had fallen sharply in recent years at DeGraff, leading Kaleida Health to take dramatic action to stem the growing financial losses.
"The reality with DeGraff is it can't, and won't, look in the future what it has looked like in the past," Jody L. Lomeo, Kaleida Health's president and CEO, told Buffalo News editors and reporters Thursday. "And it's just the way health care is going and it's how we're delivering care in the community."
DeGraff has a long history in North Tonawanda. In the 1970s and '80s, it was an independent, 169-bed hospital that delivered babies.
The hospital shrank to 66 beds after it merged with Kaleida Health in 1998.
The Berger Commission that sought to address whether the state had the right number of hospital beds had recommended closing DeGraff as a hospital in 2006 and turning it into a long-term-care facility. But Kaleida Health successfully lobbied to keep DeGraff open.
However, Michael P. Hughes, a Kaleida Health spokesman, said over the past decade fewer patients were having surgeries at DeGraff, fewer were checking in for overnight stays and fewer complicated procedures were handled at the hospital.
Out of the 66 beds, just 12 to 15 are occupied on an average day, and about five patients are admitted daily, Darcy Craven, president of DeGraff and Millard Fillmore Suburban, said in an email to DeGraff staff announcing the news. Surgeries, he added, are down 60 percent since 2012.
Overall inpatient admissions are down 33 percent since 2012, Kaleida Health said.
The lower patient volume has led to financial losses at DeGraff. In 2013, the hospital lost $1.5 million; in 2015, the loss rose to $3 million; and this year, it would rise to more than $6 million if no changes are made, Craven said.
"Each and every year, it's become more and more difficult to have a full-service hospital at DeGraff," Lomeo said. "Over the years it's just been somewhat of a drain on the organization financially."
In response, Kaleida Health is investing in an upgraded, $7.8 million emergency department that will open next year at DeGraff. The groundbreaking is set to take place in August.
Emergency care is one area that has seen an increase in volume, with cases rising from more than 14,000 emergency room visits in 2013 to nearly 15,500 in 2015.
The most critically ill of those patients will end up undergoing surgery at Millard Fillmore Suburban, Gates Vascular Institute or another Kaleida Health facility, with DeGraff serving as a feeder hospital, Kaleida Health officials said.
DeGraff will retain 10 beds for low-acuity patients, Craven said. The North Tonawanda hospital also will provide wound care, chemotherapy, GI services and geriatric primary care. The hospital may lease some unused space to area nonprofits.
The shift in services doesn't affect DeGraff's long-term care facility. Kaleida Health is calling the transformation of the hospital "DeGraff 2020."
Kaleida Health officials said there are 400 unfilled positions across the system and the DeGraff workers will have a chance to move into one of those positions. It may not be the same job the employee has now, and it won't necessarily be at DeGraff, but the executives say they hope to avoid laying off any of the 104 workers.
"That is our goal," Craven said.
Officers from Communications Workers of America, Local 1168, which represents the affected workers at DeGraff, said they still were reviewing the announcement from Kaleida Health. The employees range from workers who clean rooms and prepare food to registered nurses and pharmacists, said Robert Andruszko, an executive vice president with Local 1168.
"It's been shocking to a lot of our members, and quite disruptive," Andruszko said.
Workers understand that volume has shrunk, he said, "but there was a hope that they would experience resurgence after the opening of the emergency room."
Story topics: North Tonawanda