Hospital sale fixes only one problem

After last week’s rally to save Lake Shore Health Care Center in Silver Creek High School, optimism about saving the facility and finding a potential purchaser has been growing.

Finding a buyer or investor is a portion of the battle. How to keep the Lake Shore facility, a perennial money loser, viable in the future is the larger dilemma.

During the rally, which boasted 1,000 residents, state Sen. Catharine Young announced $1 million in funding to keep the hospital running. A bankruptcy judge in Buffalo ruled earlier this week to keep the doors open for the time being. And, on Wednesday, U.S. Rep. Tom Reed announced more Federal Emergency Management Agency funding to the tune of $5 million.

While our area welcomes the dose of good news, the future of the Irving hospital needs a reality check.

Officials estimate the operation, which had revenues of about $38 million, will have lost $9 million in 2013. That deficit is not a one-year mirage. It is here to stay unless major restructuring takes place.

In 2006, the Berger Commission on health care facilities recommended a severe downsizing of the Lake Shore facility. When TLC Health Network, the parent of Lake Shore, and Brooks began talks to work toward forming the Lake Erie Regional Health System of New York, the commission allowed the two entities to go about the details on their own.

Brooks came to the table with a history of solid financial management. TLC had a case of the maxed out credit card blues.

It was a marriage of opposites like so many other couples. Those differing cultures likely led to a behind the scenes tug of war. And, to keep most of the players smiling publicly, spending decisions were allowed to be made that led to the results of today.

Though the partnership was formed as a consolidation, there was little being done in the last six years that brought efficiencies. Both hospitals barely changed their make-up of services and each kept separate administrations.

“I think we were on a real consolidation plan,” said Chris Lanski, chairman of the Lake Erie Regional Health board of directors, during a meeting this month with the OBSERVER. “How quickly you are able to execute that is a real challenge.”

Jonathan Lawrence, former chief executive officer for the group, was hired from Little Falls, N.Y., in 2008 for a fresh look and to force efficiencies. Last March, he was abruptly let go. It was the first sign to area residents that trouble was brewing. In the spring and summer, layoffs at both Brooks and Lake Shore were the next step.

“(Efficiencies) had been happening gradually … but it just was not enough, a too little, too late type of thing I think,” said Gary Rhodes, interim chief executive officer for Lake Erie Regional Health.

But no residents – or state officials – could foresee the closing of a health-care facility.

Which gets us back to where Lake Shore is headed if it is sold. Whatever group or individual that purchases the facility has some tough choices in making a plan for future stability. In six years, the Lake Erie Health group – many with ties to a history of smart financial decisions at Brooks – did not find the right formula.

So what is? Downsizing of a new Lake Shore and its services has to be the most logical answer, despite some pleas of community residents.

“What I’m really hearing out there is people really don’t want the business model because they really aren’t aware of that,” Rhodes said. “They don’t want the business model to change and the model needs to change here (at Brooks) as well.

“I don’t know what that looks like, but talking about the things … like insurance and reimbursement and stuff like that, everyone’s model is going to have to change. (Lake Shore) is more of a dramatic change simply because there wasn’t modification over time and I think there was a bit of complacency because of the grant money.”

More grant money has been tapped again, thanks to Reed. But those state and federal funds have not halted the sea of red that is tied to Lake Shore’s history.

A new buyer will not either. If and when a buyer is found, another shake-up will be looming.

John D’Agostino is the OBSERVER publisher. Send comments to jdagostino@observertoday.com or call 366-3000, ext. 401.