Robert Gioia tells a lie, health executives have a secret party, and one doctor throws up his hands and asks where all the money for hospital consolidation has gone

Robert Gioia

On Thursday, November 6, the Mansion on Delaware was the place to be if you wanted to remain informed about the ongoing hospital consolidation process ordered by the Berger Commission.

There, the boards of Kaleida Health, ECMC, and the Great Lakes Health System of Western New York (a.k.a. Western New York Health System, Inc., a.k.a. Newco) met first for a buffet lunch at noon, followed by presentations by consultants from PricewaterhouseCoopers among others. At 5:30pm, attendees repaired to the bar.

You didn’t read about it in the Buffalo News, hear about it on any local radio stations, watch it on any local TV outlets, nor sound off about it on any local blogs. The meeting wasn’t publicized, even though New York State Supreme Court judge Patrick H. NeMoyer ruled, on September 12, that Great Lakes Health System (then known as WNYHS, or Newco) must “adhere to the requirements of the Open Meetings Law until such time as the hospital merger is completed and ECMCC is dissolved as a public benefit corporation.”

Of course, ECMC has not been dissolved as a public benefit corporation—and there doesn’t appear to be a lot of movement in that direction, though recently County Executive Chris Collins proposed to sell ECMC to Kaleida for one dollar. Collins, we are told, fears that the taxpayers will “be on the hook” as contract benefits come due unless the county “gets out of the hospital business.”

Since the beginning, the whole Berger Commission story has been incorrectly perceived by our local media as a story about healthcare. That’s why News medical reporter Henry Davis has been on the case. In reality, it’s been a business story all along. It’s been a story about how to manipulate patient services to increase business for what will become a private, not-for-profit healthcare entity that will be immune to Freedom of Information and Open Meetings laws, operating beyond the scrutiny of the press and the public.

So, what’s wrong with that, you ask? Consider the amount of taxpayer money that will be funneled into this new organization. Let’s say there are 900,000 people in Erie County. Of those, public employees and their families account for roughly 200,000 people, all enjoying state-subsidized healthcare. Add to that about 150,000 elderly residents eligible for Medicare, and 100,000 poor who are eligible for Medicaid. Then add 100,000 veterans. You’re left with 350,000 people covered by individual plans or through their employers, and anyone in this boat know how big a percentage of your paycheck goes into maintaining your healthcare coverage.

Still, most of the vast amount of money paid for healthcare is public money. Should that money simply be turned over to a private not-for-profit group that has no obligation to open its books? According to a January 13, 2008 article in Business First, the private, not-for-profit Kaleida Health executives were at the top of the list when it came to hospital executives’ salaries in 2006. CEO James Kaskie made $1.2 million, up from $844,333 the year before. William D. McGuire, whom Kaskie replaced, enjoyed a $1.74 million salary in 2005. The article goes on to state that Kaleida’s CFO Robert Glenning and CAO Connie Vari each made over $800,000 in 2006.

By contrast, recently departed ECMC CEO Michael Young earned $510,490 in 2006, while CFO Sue McCarthy brought home roughly half that. Young left for a job at Atlanta’s Grady Memorial Hospital in September of this year, and didn’t receive any kind of golden parachute upon his departure.

Now figure in the amount of money spent by hospitals on equipment and supplies. Does it appeal to your sense of fairness that so much public money should be spent with vendors chosen by a private entity that has no obligation whatsoever to disclose who they do business with, and what kind of value they are getting for their purchases? Such an idea is unthinkable in the public sector. Politicians and public entities are expected to operate with the understanding that deals will be scrutinized, and when illegal back-room agreements are discovered, people sometimes go to jail.

This is a unique scenario, this merger of a public entity into a private one. It has precious little to do with wounds, illnesses, and treatments. It’s about money. Here we have the New York State Board of Health naming people to a board that then applies for 501c3 status, turns around and says, “You mere citizens can’t touch us now. We’re a private entity, suckers.” Is that what government is supposed to do? Create private businesses to receive public funds?

According to a redacted Western New York Health System summary of NewCo related costs—they’re not the same thing evidently, and not to be confused with Great Lakes Health System of Western New York, whose business address is 100 High Street, the same as Buffalo General’s, for those of you following this nominal shell game—these folks have spent $636,902.65 since last November. Again, that’s a redacted amount. Relative peanuts were spent on things like chartered aircraft and a board retreat at the Buffalo Club. The real money was spent on things like developing a name and logo ($40,000), accounting, tax and business consulting with New York City firm RSM McGladrey ($207,082), PricewaterhouseCoopers ($165,000), and let’s not forget legal fees for things like trying to fight their way out of compliance with the Open Meetings Law, which they continue to do.

On November 11, I called Robert Gioia to check on the meeting schedule. He told me the last meeting was in October. He said the next meeting is December 10. “No meetings in November?” I asked. He said no.

Yet I’d heard rumors that there had been a meeting among all the players on November 6. The Newco meeting minutes often refer to the “zero tolerance” policy forbidding any of the participants from talking to the press. The media are supposed to be handled by Gioia. So how was I supposed to find out about a meeting that Mr. Gioia told me never happened?

Enter Dr. James Evans. Evans, a surgeon serving as president of ECMC staff, who has been part of this consolidation process from the beginning, told me all about it on November 20. Here’s what he had to say about this top-secret “retreat”:

AV: I was trying to find out about the meeting that took place on November 6, over at the Mansion on Delaware.

Evans: Yeah.

AV: What was that meeting all about?

Evans: It was a retreat. It was, like, all kinds of stuff.

AV: Who all was there?

Evans: Oh, everybody in the world. All the boards from everywhere.

AV: Like Kaleida.

Evans: Kaleida, ECMC, and Great Lakes.

AV: People from the Department of Health?

Evans: Um, I don’t think there was anybody from Health.

AV: What all was being discussed?

Evans: The board retreat information is 30 pages long. But I’ll tell you what, I’ll read you the agenda, starting with a buffet lunch, of course.

AV: I hope it was good.

Evans: I don’t know. I didn’t make it. There were meetings, objectives, and agenda. Then we had an hour-and-a-half on “The Clinical and Financial Imperatives to Change.” That was presented by Dr. Chen, who is a consultant from Pricewaterhouse. Then we had “The Requirements for Effective Change.” That was led by Mr. Marian Jennings, of Jennings Consulting Corporation. Then there was a group discussion on “Capacity to Change.” Then we had key takeaways for each board. Then we had visioning exercises. What is our collective desire for the future? Major implications for all boards. Reception for two hours afterwards.

AV: See, I never get invited to this fun stuff.

Evans: Well, you know, what can I say? I get invited, but I’m too busy to go. You know, I have a real job as a surgeon.

AV: Was there any kind of an explanation of how this differed from an open meeting? The way they are supposed to be being held?

Evans: Well, you know, in terms of open meeting, we have a lawyer from Long Island whose advice is: “Just ignore it and it’ll all go away.” So, they ignore it, and I don’t know if it’s gonna go away or not. But that’s how they act, anyway. [Pause.] The good news is I won’t have to try to work with these people in two months.

AV: You’re getting out?

Evans: My term rotates off. So they won’t have me to kick around anymore. I’m pretty much disgusted with their behavior, meeting materials 14 hours before or at the meeting; meetings cancelled, postponed, etc. I mean, of course, as it turns out I was one person at the first meeting who actually went on the Web site and read all the meetings of the Berger Commission. And basically the Berger Commission was all about money. I mean the first five meetings are all about how bad the mortgages are on all the hospitals, and the banks won’t lend them any money. And their bond ratings are terrible. Most of the hospitals in New York State have worse [mortgages] than subprime mortgages in California. So the whole idea was to figure out how to shift things around so that you’d force hospitals to make money even if they didn’t want to.

AV: How does that work exactly?

Evans: Well, if you have a hospital that’s got 70 percent occupancy, or 60 percent occupancy—if you close their competitor, or you close their other branch, then it’s gotta go up. Whether they’re doing quality work or not, it’s gonna go up. In other words, by restricting the numbers, that’s what happens.

AV: How do you think things are gonna play out for ECMC?

Evans: My question was: Where is the money? There’s not been a delivery of any dumptruck full of money. Certainly ECMC has not gotten money from the state. So the question you ask is: How are you going to do anything with no money? I mean, there’s not enough money to build the new facilities they’re talking about. The state hasn’t released the checks. They’ve informed them now, saying, “Oh, we regret to inform you there were two other levels of approval that you didn’t go through, so we can’t send you the money yet.”

AV: And now, looking at the current state budget…

Evans: Like, where’s the $65 million? Can we have a press conference where we get one of those big, mock checks that they do? Can I see the $65 million? Can I see the deposit receipt? There’s no money! Okay? So, there’s no money. So now you say, “Well, what about the state budget? No? Well, then we’ll turn to our friends the feds.” Like, oh, yeah…what are they gonna do? Give us money because they feel more sorry for us than they do for General Motors?

So what it means is everybody will sort of be on their own figuring out what to do. In terms of Erie County Medical Center, I don’t see a lot changing at anything other than a glacial speed rate. So we’ll continue to take care of sick folks. We’ll keep the homicide rate down by taking care of the gunshot wounds. You know, all these snowmobilers that are gonna run into trees…we’ll take care of them. And the people who need unusual or esoteric things will have to go out of town. Because we still can’t recruit the people who do the super-super specialty things, ’cause we don’t have the facilities, we don’t have the revenues…but the core operative business of trauma, we will survive on that.

I noticed what UB put down their great plan for their three campuses. And they stood up there in front of the TV cameras and made the preposterous statement, “We’re gonna hire 4,000 faculty.” I mean, they’re talking about layoffs of staff because they’re not gonna get enough money from the state next year.

AV: Oh, boy.

Evans: Yeah, there’s no money. And so, I think ECMC is going to continue to do reasonably well, but like everybody else now, we have increased costs. It’s gonna be a challenge. I think, of all the hospitals around, in terms of tertiary care services, we will do better than anybody else. But that’s only a relative thing.

AV: So the next meeting isn’t until December 10, right? Mr. Gioia told me it’s scheduled at 8:30am at WNED studios.

Evans: Well, I don’t even know if we’re even gonna have one in December. They keep waffling on it.

AV: Why are they waffling on it?

Evans: Oh, we’re having battles over doctors.

AV: Meaning, like, who’s gonna go where?

Evans: Well, if you remember there was this binding agreement and it said we’re supposed to have a 10-person steering committee that has 10 doctors on it. Well, there are certain members on the parent board who don’t like the composition of the elected committee. So we’re having battles about, you know, minutiae.