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Hospitals looking to cut costs of merger

Hospitals looking to cut costs of merger

Merger plans between St. Mary’s and Amsterdam Memorial hospitals are being pared down to eliminate m

Merger plans between St. Mary’s and Amsterdam Memorial hospitals are being pared down to eliminate major construction as both hospitals cope with the difficult financial environment.

According to communication between the hospitals and the state Health Department obtained by The Daily Gazette, an application submitted last year for state funding estimated the cost of initial plans at roughly $48.9 million.

Officials from both hospitals on Thursday said that though the plans are not finalized, they are optimistic about the ability of both hospitals to meet with the state’s goal of reducing health care costs while preserving services considered essential in the region.

Under the revised plan, detailed in a project update sent to the state in December, a modified project will cost roughly $22.6 million.

Officials at both hospitals signed a letter of intent in 2007 and a team of administrators began devising plans and an application for grant money from the state Health Department.

The department in October approved $20 million for the project under the Health Care Efficiency and Affordability Law Phase 7 grant program.

The new strategy eliminates construction and demolition projects originally planned for the Amsterdam Memorial Hospital campus on Route 30 in the town of Amsterdam.

These included plans to build an addition to the 160-bed Wilkinson Residential Healthcare Facility and a new ambulatory care building.

Under the new plans, Amsterdam Memorial Hospital’s 150,000-square-foot acute care facility will no longer be demolished.

Original plans called for St. Mary’s Hospital, situated on Guy Park Avenue in the city of Amsterdam, to acquire Amsterdam Memorial Hospital and take 13 acute care hospital beds out of operation there.

Instead, current plans call for decertifying 29 hospital beds at the Route 30 campus, nearly 75 percent of the beds there, according to documents submitted to the state Health Department.

There are currently 39 beds at Amsterdam Memorial Hospital, 24 listed as medical/surgical and 15 listed for physical/medical/rehabilitation, according to the state Health Department Web site.

The 24 beds are currently offered as a “swing bed” service, providing a place for people to go after surgery. The swing bed services would be brought to the St. Mary’s Hospital campus under the modified plans.

St. Mary’s Hospital employed about 920 people full time at the end of December 2007, according to the hospitals’ application for HEAL NY grant funding. St. Mary’s is certified to operate a total of 143 beds for alcohol rehabilitation, coronary care, intensive care, maternity, medical/surgical and psychiatric/mental health patients.

Left unchanged are plans to bring Amsterdam Memorial Hospital’s clinical services, including ambulatory surgery, anesthesia-related work, cardio-pulmonary service and lab services, to the St. Mary’s campus.

The outline of plans shows that several services will be consolidated at the Amsterdam Memorial Hospital campus, including the diabetes center, urgent care and the blood draw laboratory.

Amsterdam Memorial’s 160-bed nursing home, inpatient rehabilitation, urgent care and adult day care are among services considered essential in the community, St. Mary’s Hospital president and CEO Victor Giulianelli said.

The merger will result in a single entity with two campuses that provide a full spectrum of health care services, Giulianelli said.

“[Amsterdam] Memorial has marked out unique programs, they have an outstanding niche in the services they provide and they are critically important for the health and vitality of this community,” Giulianelli said.

OFFICIALS OPTIMISTIC

Giulianelli said that although plans are still being refined, he is confident the project will fit the needs of the community and the state.

“We’ve had extraordinary cooperation, unprecedented, in my experience, from the state Health Department,” Giulianelli said.

“We are confident, based upon the level of cooperation we’ve had with each other, with the state and other stakeholders, that we’ve got a great opportunity to make a new day in health care for this region,” Giulianelli said.

Giulianelli said the hospitals are targeting May as a possible start time for the merger.

The state Health Department grant and ongoing merger work are taking place at a time when both hospitals are feeling the strain of the current economic meltdown.

“We’re facing a very, very difficult financial situation,” Amsterdam Memorial Hospital CEO Donald Massey said.

Massey said financial challenges have been mounting at the Route 30 hospital as more and more people lose health insurance.

“There’s more and more people without insurance, so the demand for services is not going down but up,” Massey said.

At the same time, the hospital’s ability to get reimbursement for services is going down, Massey said.

The situation adds to other economic pressures felt by any institution facing escalating utility and other costs, Massey said.

Modified plans called for retaining approximately 80 percent of the staff at Amsterdam Memorial Hospital.

Staff that could be eliminated under the plans would include administrative support services and others considered duplicative.

That means about 300 of roughly 382 full-time employees at Amsterdam Memorial Hospital would be retained, according to a breakdown of cost savings projected as part of the project.

Sister Danielle Bonetti, vice president of mission integration at St. Mary’s, said job cuts are estimates at this point and no specific decisions have been made in that regard.

Staffing reduction and service consolidations could save roughly $6.5 million annually. Reduction in beds will save an estimated $3.2 million annually, and the merger of the two hospitals’ information system will save another $1.5 million as a one-time savings, according to the outline.

“We’re going to keep close to full employment when this is all said and done. We also hope the future will provide promise when we get out of this economic situation and we’ll have that opportunity down the road to expand,” Giulianelli said.

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