>>
Gary Walker: JUST AHEAD ON "NEED TO KNOW," WHILE THE STATE HAS
NOT YET APPROVED AN ACTUAL CLOSING DATE FOR GENESEE HOSPITAL,
WHAT'S HAPPENING NOW IS THE HOSPITAL IS SHUTTING DOWN SOME SERVICES
AND HAS DIVERTED 70% OF ITS PATIENTS TO OTHER HOSPITALS. AND
BY THE END OF NEXT WEEK, THE HOSPITAL CAN STOP ACCEPTING AMBULANCES
TO ITS EMERGENCY ROOM. COMING UP, WHAT IN THE WORLD HAPPENED
AND WHAT'S THE IMPACT ON OUR COMMUNITY? WE'LL TALK WITH HEALTH
CARE EXPERTS ABOUT IT AND THEN WE SIT DOWN WITH THE BUSINESS
EDITOR OF THE "DEMOCRAT AND CHRONICLE" TO GET A BUSINESS PERSPECTIVE.
IT'S ALL NEXT ON "NEED TO KNOW."
>>
AND I THINK IT'S GOING TO BE GREATLY MISSED BY THIS COMMUNITY
WHEN IT GOES OUT OF BUSINESS.
>>
THIS IS "NEED TO KNOW," THE ROCHESTER AREA'S ONLY IN-DEPTH NEWS
PROGRAM. "NEED TO KNOW" IS A PRODUCTION OF WXXI NEWS AND PUBLIC
AFFAIRS, COVERING ISSUES, POLITICS, EDUCATION AND CURRENT EVENTS.
>>
"NEED TO KNOW" IS MADE POSSIBLE BY THE DAISY MARQUIS JONES FOUNDATION,
BY DORSCHEL LEXUS, AND THROUGH THE SUPPORT OF VIEWERS LIKE YOU.
>>
Gary Walker: THANK YOU FOR JOINING US. I'M GARY WALKER. IT'S
BEEN AN INTEGRAL PART OF ROCHESTER FOR MORE THAN A CENTURY AND
NOW IT LOOKS LIKE WE'RE SAYING GOOD-BYE. ON MARCH 28th, VIAHEALTH,
WHO OWNS AND OPERATES GENESEE HOSPITAL, ANNOUNCED ITS PLANS
TO SHUT THE HOSPITAL DOWN. VIAHEALTH BLAMES ITS $60 MILLION
DEBT ON MEDICARE CUTS, INSUFFICIENT INSURANCE REIMBURSEMENT
AND COMPETITION. OTHERS SEE IT FROM A BUSINESS PERSPECTIVE,
A BUSINESS THAT WENT BELLY-UP. ROCHESTER IS HAVING A HARD TIME
LETTING THE HOSPITAL GO. IT IS THE CENTER OF AN URBAN COMMUNITY,
AND JUST IN THE PAST FEW YEARS, GENESEE HOSPITAL SEEMED REBORN,
OPENING UP A STATE-OF-THE-ART BIRTHING CENTER, A CANCER CENTER
AND NEW PALLIATIVE CARE CENTER. BUT YEARS LATER, THE HOSPITAL
STILL OPERATING AT A LOSS EXCEEDING $2 MILLION EACH MONTH. ONE
OF THE MOST DIFFICULT THINGS TO COMPREHEND IS HOW DID THIS ALL
HAPPEN? HOW CAN A HOSPITAL, A CONSUMER-DRIVEN BUSINESS, GO UNDER?
WHAT REALLY WENT WRONG AND CAN IT HAPPEN AGAIN? "NEED TO KNOW'S"
MATT CUMMINGS HAS THE STORY.
>>
AND I THINK IT'S GOING TO BE GREATLY MISSED BY THIS COMMUNITY
WHEN IT GOES OUT OF BUSINESS.
>>
Matt Cummings: THAT'S VIAHEALTH C.E.O. TOM LITZ, MAKING THE
ANNOUNCEMENT ON MARCH 28th THAT AFTER 114 YEARS OF SERVING THE
COMMUNITY, GENESEE HOSPITAL IS SHUTTING ITS DOORS. FOR GENESEE'S
PATIENTS AND THE COMMUNITY IT HAS LONG SERVED, THERE ARE STILL
MANY UNANSWERED QUESTIONS: HOW COULD THIS HAVE HAPPENED? HOW
COULD AN INSTITUTION LONG SINCE SO VITAL TO ROCHESTER'S HEALTH
CARE SYSTEM FALTER? HOW COULD A HOSPITAL GO OUT OF BUSINESS
WHEN IT'S A CONSUMER-DRIVEN INDUSTRY OF PATIENTS AND INSURANCE
DOLLARS? THE TRUTH IS THERE IS NO ONE REASON FOR GENESEE'S FINANCIAL
TROUBLES. MANY FACTORS PLAYED A ROLE.
>>
THE MERGER BETWEEN GENESEE AND ROCHESTER GENERAL NEVER RESULTED
IN WHAT YOU MIGHT WANT TO SEE, THE REDUCTION IN COSTS, THE REDUCTION
IN OVERLAP IN SERVICES AND THAT KIND OF THING.
>>
MY OWN OPINION IS THAT'S BECAUSE OF COMPETITION.
>>
AT THE FEDERAL LEVEL, THE MEDICARE PROGRAM HAS REDUCED RATES
OF REIMBURSEMENT CONSIDERABLY.
>>
Matt Cummings: BOTH AL CHARBONNEAU AND ART STREETER HAVE WATCHED
THE GENESEE TRAIN WRECK UP CLOSE, STREETER AS THE ASSISTANT
DIRECTOR OF THE FINGER LAKES HEALTH SYSTEMS AGENCY AND CHARBONNEAU
AS THE CHIEF OPERATING OFFICER AT GENESEE HOSPITAL FROM 1983
TO 1995 AND NOW AS THE PRESIDENT OF THE ROCHESTER HEALTH COMMISSION.
THE TWO TELL A TALE OF COMPETITION AND FAILED MANAGEMENT. BUT
FIRST, LET'S TAKE A STEP BACK. IN THE MID-'90s WHEN LOCAL HOSPITALS
BEGAN TO COMPETE FOR PATIENTS, THREE SEPARATE HEALTH SYSTEMS
FORMED THROUGH COLLABORATIONS AND MANAGEMENT MERGERS. STRONG
HOSPITAL AND HIGHLAND HOSPITAL FORMED THE STRONG PARTNERS HEATH
SYSTEM. SAINT MARY'S LINKED WITH PARK RIDGE TO FORM UNITY HEALTH
SYSTEM. AND VIAHEALTH COMBINED GENESEE AND ROCHESTER GENERAL.
>>
IN NEW YORK, WE HAVE GONE FROM A RATE-SETTING SYSTEM TO NEGOTIATED
RATES, AND SO ALL THE HOSPITALS HAVE BEEN COMPETING ON RATES,
THAT KIND OF THING. BUT THEN AT THE FEDERAL LEVEL, THE MEDICARE
PROGRAM HAS REDUCED RATES OF REIMBURSEMENT CONSIDERABLY. EVERYBODY
KNEW ABOUT IT. I MEAN, WE HAD LIKE A FIVE-YEAR FEED TIME. MOST
FACILITIES CUT THEIR COSTS AND SO FORTH IN ANTICIPATION, BUT
THE VIA FOLKS DID NOT.
>>
Matt Cummings: ACCORDING TO STREETER, TWO OF THE NEW HEALTH
CARE GROUPS TOOK ON THE CHANGES IN REIMBURSEMENT AND THE COMPETITION.
>> STRONG TOOK $80 MILLION IN EXPENSE OUT OF THEIR COST STRUCTURE,
AND UNITY TOOK LIKE $40 MILLION OUT OF PARK RIDGE AND SAINT
MARY'S. WE HAVEN'T SEEN THAT IN THE CASE OF VIAHEALTH, AT LEAST
A PIECE OF IT, YOU KNOW. PEOPLE OFTEN SAY, "WELL, THEY SHOULDN'T
HAVE SPENT ALL THAT MONEY. THEY SHOULDN'T HAVE INVESTED IN THE
GENESEE PLANT."
>>
Matt Cummings: OVER A TEN-YEAR PERIOD, VIAHEALTH SPENT OVER
$30 MILLION RENOVATING GENESEE, ADDING STATE-OF-THE-ART BIRTHING,
CANCER AND PALLIATIVE CARE CENTERS, NOT TO MENTION A NEW PARKING
GARAGE AND FACELIFT FOR THE BUILDING. WHILE THE BUILDING LOOKED
TO BE THRIVING ON THE OUTSIDE, ON THE INSIDE, STREETER SAYS
THE MANAGEMENT OF GENESEE JUST DIDN'T MAKE THE CHANGES NEEDED
TO COMPETE.
>>
THEY WERE PRESUMING THAT THE PHYSICIANS WOULDN'T GO AWAY; THEY
WERE PRESUMING THAT THE UTILIZATION OF THE HOSPITAL WOULDN'T
DIVE THE WAY IT DID NOT TOO LONG AFTER THAT. AND THEY DIDN'T
CHANGE THEIR WAY OF PRACTICE IN THE MEANTIME.
>>
THE COMPLEXITY OF BRINGING TWO VERY STRONG HOSPITALS TOGETHER
-- ROCHESTER GENERAL AND GENESEE -- IT -- THE CHALLENGE OF BRINGING
TWO STRONG HOSPITALS TOGETHER IS MORE COMPLEX THAN ONE STRONG
AND ONE WEAK. AND SO I THINK FOR AWHILE THERE, THE VISION, THE
SUBSTANCE OF THE VISION FOR BOTH HOSPITALS PROBABLY DIDN'T COME
TOGETHER AS RAPIDLY AS PRACTITIONERS WOULD HAVE LIKED TO HAVE
SEEN IT.
>>
Matt Cummings: CHARBONNEAU WAS PASSED OVER FOR THE PRESIDENT'S
JOB AT GENESEE BUT SAYS HIS ANALYSIS OF GENESEE'S MANAGEMENT
IS NOT SOUR GRAPES. STREETER'S ANALYSIS TENDS TO BACK THIS UP.
>>
IN TERMS OF THE CURRENT SITUATION, THE CURRENT CRISIS, I ATTENDED
A BRIEFING AT BLUE CROSS WHERE THE VIA FOLKS WERE MAKING A PRESENTATION,
AND BASICALLY -- THIS WAS ONLY LIKE SIX WEEKS AGO, AND BASICALLY
THEY WERE SAYING, "WE DO THINGS RIGHT. WE'RE NOT GOING TO CHANGE
HOW WE DO IT. WE JUST WANT YOU TO PAY US MORE." THEY DIDN'T
GET THE IDEA THAT THEY NEEDED TO REDUCE COSTS; THEY NEEDED TO
CONSOLIDATE SERVICES AND SO ON.
>>
Matt Cummings: AS FOR VIAHEALTH, TOM LITZ MAINTAINS GENESEE'S
CLOSURE STEMS FROM THE LOSS OF ITS DOCTORS TO OTHER HEALTH SYSTEMS,
REDUCED MEDICARE FUNDING AND LOWER MEDICAID PAYMENTS AND LAGGING
INSURANCE REIMBURSEMENT RATES. HOWEVER, THAT LAST REASON IS
DISPUTED BY ZEKE DUDA, CHIEF FINANCIAL OFFICER FOR EXCELLUS,
INCORPORATED, THE PARENT COMPANY OF BLUE CROSS AND BLUE SHIELD.
>>
OUR REIMBURSEMENT RATES FOR GENESEE ARE VERY CLOSE TO ACTUALLY
WHAT WE GIVE TO STRONG MEMORIAL HOSPITAL AS WELL. OUR REIMBURSEMENTS
ARE NEGOTIATED. THE CONTRACT WAS NEGOTIATED AT THE END OF 1999,
INCREASES OVER EACH PRIOR YEAR. WHAT WE GIVE THEM IS A COST-BASED
CONTRACT, AND IT'S ALL VERY REASONABLE. WHEN YOU LOOK AT THOSE
NUMBERS COMPARED TO THE OTHER HOSPITALS IN ROCHESTER, IT'S VERY,
VERY SIMILAR. SO THE ISSUE IS NOT REIMBURSEMENT. THOSE AMOUNTS
HAVE BEEN GOING UP EACH YEAR. IN FACT, BLUE CROSS HAS BEEN ONE
OF THE BIGGER ECONOMIC SUPPORTERS OF THE HOSPITAL. WE GAVE THEM
$10 MILLION IN ADVANCES ABOVE AND BEYOND WHAT OUR CONTRACT CALLED
FOR JUST TO KEEP THEM GOING FROM LAST SEPTEMBER TO SEE IN FACT
IF THEY COULD COME UP WITH A TURNAROUND PROGRAM.
>>
Matt Cummings: VIAHEALTH OFFICIALS REFUSED OUR REQUEST FOR AN
INTERVIEW OR TO LET US VIDEOTAPE ON GENESEE HOSPITAL PROPERTY.
BOTH CHARBONNEAU AND STREETER POINT TO THE LOSS OF DOCTORS AS
KEY. MANY DOCTORS TOOK THEIR PRACTICES TO STRONG AND UNITY.
DOCTORS WE SPOKE WITH WHO LEFT GENESEE FOR OTHER HOSPITALS SAY
THEY WON'T GO ON CAMERA BUT SAY THEY MOVED BECAUSE OF GETTING
A BETTER DEAL, NOT SO MUCH FINANCIALLY BUT IN SECURITY. IN OTHER
WORDS, THEY DIDN'T WANT TO BE OR HAVE THEIR PATIENTS BE ON THE
LOSING SIDE.
>>
I THINK YOU HAVE TO LOOK AT THE QUESTION OF DID THEY PAY ATTENTION
TO WHAT THE PHYSICIANS WERE SAYING IN TERMS OF THEIR NEEDS AND
THINGS OF THAT NATURE. THAT'S WHERE THE COMPETITION HAD THE
BIGGEST IMPACT FOR THEM. PEOPLE SAW IT MOST RECENTLY WITH THE
O.B. GROUPS, BUT THERE WERE A LOT OF SORT OF LITTLE INCREMENTAL
DECISIONS WHERE THE PHYSICIANS WANTED CERTAIN RENOVATIONS, CERTAIN
PIECE OF EQUIPMENT, SOME CHANGE IN ENVIRONMENT, AND THE HOSPITAL
DIDN'T PAY ATTENTION. SO IT'S COMPETITION.
>>
Matt Cummings: NOT LOST IN ALL OF THIS FINGER-POINTING IS THE
MORE THAN 100,000 PEOPLE WHO REGULARLY VISIT GENESEE FOR MEDICAL
SERVICES. MANY PATIENTS ARE POOR, WITHOUT TRANSPORTATION AND
ARE ON MEDICARE AND MEDICAID. GENESEE ACCOUNTED FOR ONE-THIRD
OF ALL EMERGENCY ROOM VISITS IN THE AREA. FOR THEM, GENESEE
HOSPITAL IS LOCATED ON TWO MAIN BUS LINES, PROVIDING QUICK ACCESS
TO THE HOSPITAL. WITH ITS CLOSURE, THOSE PEOPLE WILL NOW HAVE
TO TAKE A MUCH LONGER BUS RIDE TO ROCHESTER GENERAL OR THROUGH
THE CITY TO MAKE IT TO STRONG OR HIGHLAND, TIME LOST DURING
A MEDICAL EMERGENCY. (Sirens)
>>
EVEN E.M.S., EMERGENCY MEDICAL, IF AN AMBULANCE PICKS YOU UP
AND THEY DON'T HAVE THE OPTION OF GOING TO GENESEE, WELL, MAYBE
IT'S ONLY FIVE MINUTES MORE TO GO TO GENERAL OR STRONG, BUT
FIVE MINUTES CAN BE PRETTY IMPORTANT.
(Music)
>>
Gary Walker: THE CLOSING OF GENESEE HOSPITAL NOT ONLY AFFECTS
THE COMMUNITY; IT ALSO HAS A SEVERE ECONOMIC IMPACT ON ROCHESTER.
2,211 PEOPLE ARE OUT OF A JOB. 70% ARE STILL LOOKING. VIAHEALTH
HAS BEEN ABLE TO PLACE THE REST WITHIN ITS ORGANIZATION. NOW,
JOINING ME IN STUDIO ARE: DANIEL SISTO. Mr. SISTO CAME IN FROM
ALBANY THIS MORNING. HE'S THE PRESIDENT OF THE HEALTH CARE ASSOCIATION
OF NEW YORK STATE. THEY SPEAK FOR HEALTH CARE PROVIDERS STATEWIDE.
Mr. AL CHARBONNEAU, PRESIDENT OF THE ROCHESTER HEALTH COMMISSION
AND THE FORMER CHIEF OPERATING OFFICER AT GENESEE, AND BONNIE
DeVINNEY, WHO IS A SENIOR PLANNER FOR THE PRIMARY CARE FOR FINGER
LAKES HEALTH SYSTEMS AGENCY. THANK YOU FOR JOINING ME. LET'S
START OFF WITH KIND OF A QUESTION THAT I HAVE AND EVERYBODY
THAT I HAVE SPOKEN TO ON THE STREET HAS IS THAT I UNDERSTAND
THE PRESSURES ON THE ELEMENTS, BUT IT'S HARD TO SQUARE, WITH
ME AND WITH OTHERS, THAT A COUPLE HUNDRED THOUSAND CUSTOMERS
COMING THROUGH YOUR DOOR SEEKING YOUR SERVICES WOULD ADD UP
TO YOU GOING OUT OF BUSINESS.
>>
WELL, GARY, YOU STARTED THE VIDEO BY SAYING IS IT THE COMPETITIVE
ENVIRONMENT OR WAS IT MEDICAID AND MEDICARE CUTS AND EVERYBODY
POINTING FINGERS. AND THE REALITY IS THEY WERE ALL RIGHT. YOU
CAN HAVE LOTS OF CUSTOMERS COMING IN YOUR DOOR BUT IF YOU ARE
LOSING MONEY ON MOST OF THEM, YOU CAN'T MAKE IT UP ON VOLUME.
>>
Gary: SO WHEN YOU'RE SAYING LOSING MONEY, YOU'RE TALKING ABOUT
THE MEDICAID PATIENT?
>>
WELL, LET'S TAKE MEDICAID. IT'S BEEN TEN YEARS SINCE ROCHESTER
GENERAL OR GENESEE OR STRONG HAD AN INCREASE IN THEIR MEDICAID
RATES FOR THEIR EMERGENCY ROOMS OR THEIR CLINICS. TEN YEARS.
THE PRICE OF PHARMACEUTICALS, THE LAB TESTS, THE NURSES THAT
ARE IN THAT E.R. HAVE GONE UP. TAKE MEDICARE OVER THE NEXT FIVE
YEARS. THE VIA SYSTEM WILL TAKE ABOUT $125 MILLION MORE IN LOST
REIMBURSEMENT JUST FOR MEDICARE. AND OF COURSE WE HAVE OUR CONGRESSMEN
IN NEW YORK SPEAKING OUT AGAINST THIS AND SENATORS SCHUMER AND
CLINTON NOW JOINING IN, TRYING TO MAKE UP FOR THE OVERSHOOTING
OF THE MEDICARE REDUCTION TO THE BALANCED BUDGET ACT. SO PART
OF IT IS GOVERNMENT CUTBACK.
>>
Gary Walker: OKAY. I WANT TO GET OUR OTHER GUESTS IN HERE, BUT
A QUICK QUESTION: ARE YOU SAYING THAT A HOSPITAL THAT HAS A
MAJORITY OF MEDICAID PATIENTS IS ALWAYS GOING TO BE IN JEOPARDY?
>>
ABSOLUTELY.
>>
Gary Walker: I TURN TO MY OTHER GUESTS. YOUR RESPONSE TO THAT?
WHAT DO YOU THINK?
>>
WELL, FIRST OF ALL, JUST AS A MATTER OF DETAIL, GENESEE'S MAJORITY
OF PATIENTS ARE NOT MEDICAID. THE MAJORITY OF PATIENTS WOULD
BE MEDICARE AND COMMERCIAL. I THINK WE NEED TO LOOK --
>>
Gary Walker: BUT NOT THE SAME AS THE PRIVATE PAY, THOUGH, AS
FAR AS REIMBURSEMENT RATES, OR AM I WRONG?
>> COMMERCIAL WOULD BE THE BEST-PAYING RATES AND MEDICARE WOULD
BE SECOND. I THINK WE ALSO HAVE TO LOOK AT TRENDS IN THE USE
OF HOSPITALS. FOR EXAMPLE, INPATIENT STAYS ARE DOWN ACROSS THE
NATION AND THE SITE OF THE HOSPITAL AS BEING THE PREFERRED PLACE
TO GIVE CARE IS CHANGING AND IT'S MOVING FROM THE INPATIENT
TO THE OUTPATIENT, FROM THE OUTPATIENT TO THE COMMUNITY. SO
IT ALSO RAISES A QUESTION OF ARE WE DEALING WITH TOO MUCH CAPACITY
IN OUR COMMUNITY? AND WHEN YOU START DEALING WITH THE COST VERSUS
CAPACITY EQUATION, YOU BEGIN TO REALIZE THAT THERE ARE LESS
EXPENSIVE AREAS TO PROVIDE THE SERVICES.
>>
Gary Walker: LET'S GET TO BONNIE DeVINNEY OF THE FINGER LAKES
HEALTH SYSTEMS AGENCY.
>>
THE HEALTH SYSTEMS AGENCY SAID A COUPLE OF YEARS AGO THAT THERE
WAS TOO MUCH CAPACITY ON THE INPATIENT SIDE IN THE COMMUNITY
AND CALLED FOR COMMUNITY DIALOGUE AND LOOKING AT HOW DO WE REDUCE
CAPACITY BECAUSE WE KNEW THAT EXCESS CAPACITY ADDED TO COSTS
IN THE HEALTH CARE SYSTEM. WE REMAIN CONCERNED, THOUGH, THAT
BECAUSE OF THE WAY THE GENESEE IS CLOSING, THERE WASN'T THAT
THOUGHTFUL PLANNING PROCESS, AND THAT'S WHAT WE'RE HEARING FROM
THE COMMUNITY, THAT THERE ARE A NUMBER OF PEOPLE, THERE ARE
A NUMBER OF SERVICES THAT ARE NOT GOING TO SUCCESSFULLY MAKE
THE TRANSITION.
>>
Gary Walker: LET ME LOOK AT THIS. Mr. SISTO JUST LAID OUT A
PRETTY GOOD MENU OF ITEMS THAT ANY HOSPITAL WOULD FACE, PARTICULARLY
IN GENESEE'S PLACE. HOWEVER, Mr. CHARBONNEAU HAS SAID WELL,
ALL THE HOSPITALS IN THIS AREA FACED PRETTY MUCH THE SAME ATMOSPHERE.
THEY HAD ALL THE SAME PRESSURES ON THEM THAT GENESEE HAD. SO
WE HAVE TO ALSO SAY THAT THERE'S SOME -- YOU HAVE TO LOOK TO
GENESEE'S MANAGEMENT AND VIAHEALTH.
>>
IN PART, YOU ALWAYS HAVE A MANAGEMENT QUESTION. BUT LET ME POINT
OUT THAT WHETHER IT'S ACCOUNTING STUDIES, CONSULTING STUDIES,
DORMITORY AUTHORITY, ANY NATIONAL GROUP WILL TELL YOU THAT OVERALL
THE HOSPITAL SYSTEM IN NEW YORK STATE IS THE FINANCIALLY WEAKEST
IN THE COUNTRY. THAT'S COMING OUT OF THE REGULATORY SYSTEM.
NOW, YOU THROW IT INTO A COMPETITIVE MARKET, AND WHAT BOTHERS
ME ISN'T THAT I HAVE TO PROTECT EVERY HOSPITAL OR THAT NONE
SHOULD CLOSE, BUT WHAT BOTHERS ME IS THE HYPOCRISY. THE HYPOCRISY
IS SAYING, "HOW DID THIS HAPPEN? THIS IS BEYOND BELIEF." TO
HAVE PEOPLE IN THE INSURANCE COMMUNITY HERE AND THE BUSINESS
COMMUNITY ACTING THIS WAY WHEN IN 1997, IT WAS THE BUSINESS
COMMUNITY IN ALBANY THAT DEMANDED WE GO TO NEGOTIATED RATES
AND COMPETITION BETWEEN HOSPITALS, AND THE ONLY CAVEAT THEY
HAD IS WE DON'T WANT TO PAY AS MUCH FOR GRADUATE MEDICAL EDUCATION,
BUT WHERE THERE'S A BIG, POWERFUL INSURER, LET US GET OUT THERE
AND NEGOTIATE RATES BECAUSE THERE'S TOO MUCH CAPACITY. THE POLITICIANS
WILL NEVER LET US CLOSE A HOSPITAL, SO WE'LL PUT THEM IN THE
MARKET, LET THEM COMPETE LIKE REAL BUSINESSMEN. AND NOW WE ACT
SHOCKED THAT SOMEBODY LOST THE MARKETING BATTLE.
>>
Gary Walker: LET'S PICK IT RIGHT UP FROM THERE. NOW HERE'S THE
POINT, FOR PEOPLE WHO ALSO BLAME GENESEE'S MANAGEMENT: ISN'T
IT A FAIT ACCOMPLI THAT GIVEN A COMPETITIVE MARKET, EXCESS CAPACITY,
A CUT IN THE RATES, THAT SOONER OR LATER ONE OF THE HOSPITALS
IN ROCHESTER, NEW YORK, WAS GOING TO CLOSE, AND IT WAS JUST
THE ONE THAT WAS PERHAPS THE WEAKEST OR YOU CAN BLAME MANAGEMENT,
BUT THIS IS GOING TO HAPPEN NO MATTER WHAT?
>>
I THINK IF THERE IS EXCESS CAPACITY GIVEN A COMPETITIVE ENVIRONMENT
THAT YOU WILL GO IN THAT DIRECTION BECAUSE ANOTHER GIVEN IN
A COMPETITIVE ENVIRONMENT THAT USUALLY APPLIES, TOO, AND THAT
IS LOWERING COSTS, THAT'S NOT WHAT WE HAVE DONE IN ROCHESTER.
IN FACT, COMPETITION IN A LOT OF RESPECTS CAN BE BLAMED FOR
INCREASING COSTS IN OUR COMMUNITY. WE HAVE GONE FROM BEING A
THIRD LESS THAN THE NATIONAL AVERAGE --IN FACT, DAN, WHEN YOU
SPOKE AT THE FORUM, YOU QUOTED THAT ROCHESTER WAS $132 P.M.P.M.
BELOW THE NATIONAL AVERAGE IN TERMS OF PREMIUMS. WE ARE NOW
ABOVE THE NATIONAL AVERAGE IN TERMS OF PREMIUMS IN ABOUT TWO
SHORT YEARS. SO, YOU KNOW -- AND I WOULD ALSO LIKE TO SAY THAT
WHILE YOU CAN -- PEOPLE CAN ALLEGE OR POINT THE FINGER AT GENESEE
MANAGEMENT; I THINK THAT'S CERTAINLY A PLACE TO LOOK, BUT REMEMBER
BACK IN 1995 AND 1996, GENESEE SUFFERED A FAIRLY SUBSTANTIAL
LOSS OF ADMISSIONS, SOMEWHERE IN THE ORDER OF 30 TO 35%, AND
NEVER REALLY RECOVERED FROM THAT. SO IF YOU LOOK JUST AT 1996
AND 1997, YOU'RE COMING INTO THE BEGINNING OF THE BALANCED BUDGET
ACT, YOU'RE COMING INTO THE LOSS OF DOCTORS TO OTHER HOSPITALS,
AND YOU'RE TALKING ABOUT SOMETHING THAT'S PLAYED OUT OVER A
LONG TIME.
>>
Gary Walker: SURE. I GUESS THE POINT WE'RE TRYING TO MAKE IS
THAT -- FOR INSTANCE LIKE THE COST RESTRUCTURING AT THE STRONG
GROUP, $80 MILLION IN COST RESTRUCTURING; UNITY DID $40 MILLION.
GENESEE WAS SPENDING MONEY. I'M WONDERING IF GIVEN THAT ATMOSPHERE,
CAN YOU SEE ANY SCENARIO WHERE THE THREE HEALTH GROUPS -- STRONG,
UNITY AND VIAHEALTH -- WERE GOING TO SURVIVE AT THE PRESENT
CAPACITY AT THE PRESENT SERVICE LEVEL? IT JUST SEEMS LIKE IN
THIS COMPETITIVE AND ECONOMIC ATMOSPHERE SOMEBODY WAS GOING
TO LOSE.
>> GARY, I AGREE; SOMEBODY WAS GOING TO LOSE. BUT THE POINT
ABOUT THE INVESTMENT BEING MADE IS FALSE IN A WAY. WHEN YOU
SHOOT THAT GUN OFF TO START THE RACE, THE HOSPITALS THAT ARE
IN IT KNOW THEY HAVE TO HOLD ON TO THEIR BEST PHYSICIANS, HAVE
TO ATTRACT THE CONSUMER, HAVE TO LOOK GOOD FOR THE INSURERS,
THE BUSINESS COMMUNITY. SO YOU HAVE TO MAKE A MAJOR CAPITAL
INVESTMENT TO BE IN THE RACE. YOU HAVE TO UPGRADE YOUR PLANTING,
EXPAND THE EMERGENCY ROOM, GET THE GOOD EQUIPMENT, HIRE THE
BEST PHYSICIANS YOU CAN. AND THE RACE IS ON. IF YOU DON'T MAKE
THAT INITIAL INVESTMENT, YOU'RE NOT EVEN IN IT. THEN WHEN YOU
LOSE LATER, SOMEBODY WILL SAY, "WELL, WHY DID THEY INVEST THAT
MONEY?" BECAUSE THE BUSINESS COMMUNITY DEMANDED YOU GO INTO
A RACE.
>>
Gary Walker: LET ME PAINT A PICTURE OF A HOSPITAL IN TROUBLE:
HIGH DEBT, INNER-CITY HOSPITAL, HIGH NUMBERS OF MEDICAID PATIENTS,
SEVERE COMPETITION FOR DOCTORS AND THEIR PRACTICES, MANAGEMENT
THAT MAY NOT BE UP TO THE TASK, MORE CUTS PENDING IN REIMBURSEMENT
RATES... I'M NOT TALKING ABOUT GENESEE; I'M TALKING ABOUT ROCHESTER
GENERAL HOSPITAL. THEY HAVE A $31 MILLION LOAN TO GENESEE; I
DOUBT THAT'S COMING BACK IN. THEY HAVE ALL THE SAME PROBLEMS
THAT GENESEE HOSPITAL HAD, AND THEY HAVE THE SAME MANAGEMENT.
I ASK YOU ALL WHAT DOES THAT SAY ABOUT THE CHANCES OF ROCHESTER
GENERAL SURVIVING?
>>
I WOULD -- I THINK THERE IS A VERY SOLID CONSENSUS IN THIS COMMUNITY
RIGHT NOW. YOU MIGHT NOT BE SEEING IT IN THE NEWSPAPERS, ALTHOUGH
YOU ACTUALLY MAY, BUT FRANKLY THERE'S A SOLID CONSENSUS IN THIS
COMMUNITY THAT THE ROCHESTER GENERAL WILL HAVE TO SURVIVE AND
THE COMMUNITY WILL NEED TO DO WHAT IT HAS TO DO TO MAKE IT SURVIVE.
>>
Gary Walker: BUT WAIT A MINUTE. IT'S A COMPETITIVE ENVIRONMENT
HERE.
>>
LET ME GO ON FOR A SECOND. I THINK THERE'S ALSO A PRETTY SOLID
CONSENSUS IN THIS COMMUNITY THAT COMPETITION SHOULD GO AWAY.
WE SEE NO INSURERS TALKING ABOUT A COMPETITIVE MODEL ANYMORE.
I THINK THE BUSINESS COMMUNITY, BOTH THE I.M.C. AND THE CHAMBER
AND INDIVIDUAL BUSINESS LEADERS, HAVE COME OUT AND SAID, "WE
WANT TO GO BACK TO A COOPERATIVE, COLLABORATIVE MODEL, ONE THAT
GAVE US THE PERFORMANCE THAT THIS COMMUNITY EARNED ITS REPUTATION
FOR NOT SO MANY YEARS AGO."
>>
Gary Walker: ARE YOU BUYING INTO THIS, BONNIE?
>>
WELL, I THINK ABSOLUTELY THE COMMUNITY CANNOT LOSE ROCHESTER
GENERAL'S CAPACITY. IT'S GOING TO BE VERY DIFFICULT FOR THE
COMMUNITY IN THE SHORT TIME THAT IT HAS TO ABSORB THE EMERGENCY
ROOM VISITS THAT ARE COMING OUT OF GENESEE AND TO ABSORB SOME
OF THE OTHER SERVICES. BUT IN THE END, WE WILL NEED ROCHESTER
GENERAL'S CAPACITY, AND THE COMMUNITY IS GOING TO NEED TO DO
WHAT IT CAN TO KEEP ROCHESTER GENERAL THERE. AND I THINK THAT'S
A PARTNERSHIP WITH THE VIAHEALTH SYSTEM, THE GOVERNMENT, THROUGH
THE COUNTY AND BUSINESS COMMUNITY.
>>
Gary Walker: Mr. SISTO.
>>
IT NEEDS TO BE DONE COMPETITIVELY BUT BY PROPPING UP AND SUPPORTING
ROCHESTER GENERAL BECAUSE YOU CAN'T AFFORD TO HAVE ONLY STRONG
AND BLUE CROSSES DOMINATING INSURANCE --
>>
Gary: SO FORCES ARE AT WORK RIGHT NOW --
>>
YES, ONE WAY OR THE OTHER, ROCHESTER GENERAL WILL BE SUSTAINED.
>>
Gary: OKAY.
>>
I HOPE THAT ALONG THE WAY GOVERNMENT PAYS ITS FAIR SHARE SO
THE BUSINESS COMMUNITY DOESN'T HAVE TO TELL THE BLUES TO TAKE
OVER EVERYTHING.
>>
Gary Walker: EXACTLY. BUT THE THREE OF YOU ARE PRETTY MUCH SAYING
GENESEE IS DONE. NOT EVERYBODY SHARES THAT. THERE'S GOING TO
BE A RALLY TODAY. THERE ARE SEVERAL OTHERS. LAST WEEK THERE
WAS A TOWN MEETING DRAWING OVER 100 PEOPLE. LET'S HEAR A LITTLE
BIT FROM THAT.
>>
WE HAVE A MORAL OBLIGATION TO DO EVERYTHING HUMANLY POSSIBLE
TO TRY TO PREVENT THE CLOSING OF GENESEE HOSPITAL. (Applause)
>>
THE OTHER THING I THINK IS SO TERRIBLE IS ALL THE MILLIONS OF
DOLLARS SPENT BUILDING A SPORTS STADIUM -- (Applause and cheering)
IS THAT IMPORTANT? (Continued applause) I DON'T THINK IT'S AS
IMPORTANT AS LIVES. (Applause)
>>
AND I WOULD LIKE TO KNOW WHY ARE WE AS A COMMUNITY SITTING BY
AND EXPANDING THE ZOO, UNDERGROUND BUS TERMINAL, A FERRY TO
CANADA. WHY?! WHY ARE WE GETTING ALL THAT? AND, MAYOR JOHNSON,
2020, WANTS TO MAKE THIS A COMMUNITY THAT PEOPLE WANT TO COME
TO? WHY WOULD THEY COME HERE IF WE DON'T HAVE HOSPITALS? (Applause)
THANK YOU.
>>
Gary Walker: OKAY. WE HAVE A VERY SHORT PERIOD OF TIME LEFT,
BUT LET ME ASK YOU THIS. THERE'S TWO OTHER QUESTIONS. ONE, WHERE
IS THE OUTRAGE FROM YOUR ORGANIZATION? I HAVEN'T HEARD A LOT
FROM YOUR ORGANIZATION, Mr. CHARBONNEAU, THE HEALTH COMMISSION.
I HAVEN'T HEARD A LOT OF PEOPLE SAYING "THIS IS AN OUTRAGE AND
HERE'S WHAT WE ARE GOING TO DO." AND THE SECOND ONE, YOU CAN
MAKE IT A SHORT ONE, YES OR NO ANSWER, IS GENESEE HOSPITAL FINISHED?
>>
THE FIRST ANSWER TO THE QUESTION IS THAT WE THINK THE OUTRAGE
COMES IN THE SENSE THAT WE HAD A HEALTH CARE SYSTEM THAT WAS
SUBSTANTIALLY BELOW THE NATIONAL AVERAGE IN ITS COST AND HIGHER
IN ITS QUALITY AND WE HAVE LOST THAT. THE OUTRAGE COMES IN THE
POINT OF PUTTING A PROGRAM TOGETHER CALLED THE ROCHESTER HEALTH
FORUM TO MAKE THAT HAPPEN AGAIN. AND WE'RE VERY MUCH ON OUR
WAY TO DOING THAT.
>>
Gary Walker: YOU'RE NOT PUBLICLY VOCAL ABOUT IT. YOU ARE WORKING
BEHIND THE SCENES? IS THAT WHAT YOU'RE SAYING?
>>
WELL, THERE ACTUALLY IS HUNDREDS OF PEOPLE WORKING ACROSS THE
COMMUNITY ON THIS. AND THE SECOND IS I THINK GENESEE --
>>
Gary Walker: I HAVE TO CUT YOU SHORT -- I WANT TO GET THE OTHER
GUESTS IN.
>>
THE FIRST RECOMMENDATION OF THE ROCHESTER FORUM WAS TO REDUCE
HOSPITAL CAPACITY. THE MARKETPLACE DID IT FOR AL. AND THE MARKETPLACE
WILL DO THIS ALL OVER NEW YORK STATE. THERE ARE 93 HOSPITALS
IN THE STATE RIGHT NOW WITH LESS THAN TEN DAYS OF CASH.
>>
Gary Walker: AND?
>>
THE F.L.H.S.A. HAS BEEN WORKING VERY CLOSELY WITH THE COUNTY
AND OTHERS TO TRY TO ADDRESS SOME OF THE CONCERNS THAT THE COMMUNITY
HAS. >> Gary Walker: ALL RIGHT. I'M GOING TO GO AROUND QUICKLY.
YES OR NO, IS GENESEE FINISHED?
>>
FINISHED --
>>
Gary: AS A HOSPITAL.
>>
FINISHED AS A HOSPITAL.
>>
AS AN ACUTE CARE HOSPITAL.
>>
YES.
>>
Gary Walker: WE'LL BE TALKING MORE FROM A BUSINESS SIDE WITH
THE "DEMOCRAT AND CHRONICLE" BUSINESS EDITOR IN JUST A MOMENT.
BUT IN CASE YOU HAVE ANY QUESTIONS ABOUT GENESEE'S SERVICES,
YOU CAN CALL VIAHEALTH. THE NUMBER IS (716) 922-5465. THAT'S
(716) 922-5465.
(Music)
>>
Gary Walker: THE IMPACT OF THE CLOSING OF GENESEE HOSPITAL IS
ALSO A MAJOR BUSINESS STORY. JOINING US TO TALK ABOUT THE BUSINESS
SIDE OF THE GENESEE HOSPITAL CLOSING IS "DEMOCRAT AND CHRONICLE"
BUSINESS EDITOR ELLEN ROSEN. ELLEN, THANKS FOR JOINING US.
>>
THANK YOU.
>>
Gary Walker: A LOT OF PEOPLE HAVE ASKED ME, AND I'M NOT QUITE
ON THIS, THE STATE HAS A LOT TO SAY ABOUT WHEN A HOSPITAL CLOSES
BUT WHY CAN'T THE STATE SAY IF IT CAN CLOSE OR NOT OR IF IT
JUST SHOULD STAY OPEN?
>>
WELL, IN MANY MAJOR CITIES LIKE NEW YORK AND CHICAGO, THERE
ARE ACTUALLY PUBLIC HOSPITALS. BUT HERE IN ROCHESTER, OUR HOSPITALS
ARE PRIVATELY OWNED CORPORATIONS. WHILE THE STATE DOES GOVERN
THE ACTUAL HEALTH CARE THAT GOES ON IN THE HOSPITAL, THEY DON'T
HAVE ANY CONTROL -- AND THEY DO ACTUALLY GOVERN SOME OF THE
BUSINESS PRACTICES OF THE HOSPITAL. YOU CAN'T REALLY FORCE A
PRIVATE CORPORATION TO STAY OPEN IF IT'S LOSING MONEY.
>>
Gary Walker: IT'S HARD FOR ME TO SEE INVESTING IN A PRIVATE
NON-PROFIT JUST BY THE NAME "NON-PROFIT." IT WOULD JUST SEEM
LIKE A BAD INVESTMENT.
>>
RIGHT. WELL, IT HAS NO SHAREHOLDERS IN THAT SENSE, WHICH IS
WHAT MAKES IT A PRIVATE COMPANY AS OPPOSED TO A PUBLIC COMPANY.
>>
Gary Walker: THERE HAVE BEEN ABOUT $30 MILLION IN RENOVATIONS
TO GENESEE HOSPITAL. THEY HAD TO BOND; THEY HAD TO BORROW. THOSE
ARE OUTSTANDING DEBTS. AND NOW WITH THE HOSPITAL SHUT DOWN,
ANY ABILITY TO PAY FOR THOSE RENOVATIONS REALLY DRIES UP. COULD
YOU WALK US THROUGH A LITTLE BIT, NOW WHAT HAPPENS TO ALL THAT
MONEY? WHAT HAPPENS TO ALL THOSE CREDITORS?
>>
WELL, THAT'S ACTUALLY A VERY GOOD QUESTION AND ONE THAT WE'RE
STILL TRYING TO GET MANY ANSWERS TO. WE KNOW THAT SEVERAL YEARS
AGO THE HOSPITAL TOOK OUT SEVERAL LOANS. COMIDA, THE COUNTY
OF MONROE INDUSTRIAL DEVELOPMENT AGENCY, HELPED THEM FLOAT ABOUT
$35 MILLION IN BONDS AND THEN THERE WAS ANOTHER $22 MILLION
LOAN THAT FLEET BANK HAD WITH THE HOSPITAL OVER A NUMBER OF
YEARS. WHO HOLDS THOSE LOANS RIGHT NOW, WE'RE NOT ACTUALLY SURE
OF. WE KNOW THAT M&T IS ACTING AS TRUSTEE FOR SOME INDIVIDUAL
INVESTORS, AND WE KNOW FROM SOME OF THE PEOPLE THAT WE'VE TALKED
TO THAT THE INVESTORS THAT GOT INTO THIS GOT INTO IT FOR THE
BUSINESS ANGLE AND NOT THE IDEA OF ACTUALLY OWNING A HOSPITAL.
WE KNOW THAT TOM LITZ HAS ALSO SAID, THE C.E.O. OF VIAHEALTH,
HAS ALSO SAID THAT HE IS PERFECTLY WILLING, OR EXPECTING TO
ACTUALLY TURN THE KEY ON THE DOOR AND HAND THOSE BUILDINGS OVER
TO THE CREDITORS. AND THE ONLY WAY THEY MAY GET SOME OF THEIR
MONEY BACK -- AND THESE ARE ONLY THE SECURED CREDITORS -- WOULD
BE THROUGH SELLING EITHER THE BUILDINGS OR THE CONTENTS THAT
ARE LEFT THAT CAN BE SOLD.
>>
Gary Walker: CAN CREDITORS ACTUALLY GO AFTER THE OTHER SIDE
OF THE BUSINESS, ROCHESTER GENERAL, AT ALL?
>> THAT'S ANOTHER QUESTION WE DON'T KNOW. THERE COULD BE CORPORATION
ISSUES, INCORPORATION ISSUES THAT WOULD PROTECT ROCHESTER GENERAL,
BUT OBVIOUSLY THAT'S THE BIGGEST FEAR OF VIAHEALTH, WHICH IS
WHY AT THE TIME THEY MADE THE ANNOUNCEMENT TO CLOSE THE HOSPITAL,
ONE OF THE QUESTIONS WAS WHY DOESN'T VIA SIMPLY DECLARE BANKRUPTCY
AND THEY SAID THEY DID IT TO PROTECT R.G.H., BECAUSE THAT'S
THEIR PRIMARY GOAL RIGHT NOW, TO PROTECT AND SUSTAIN R.G.H.
BECAUSE THE COMMUNITY REALLY NEEDS THAT HOSPITAL TO STAY OPEN.
>>
Gary Walker: THE CLOSEST THING I CAN IMAGINE IS WHEN THEY CLOSED
ELM GROVE, THEY PARSED OUT PIECES OF IT. BUT IF YOU'RE GOING
TO SHUT THAT BUILDING DOWN AND SELL IT, IT JUST SEEMS TO ME
IT'S VERY LIMITED USE FOR A HOSPITAL AND A HUGE PARKING LOT.
>>
WELL, ACTUALLY, ACCORDING TO THE ARCHITECT WE TALKED TO -- WE
HAD SOME OF THIS IN LAST SUNDAY'S PAPER -- THE BUILDING IS DEVELOPED
IN SUCH A WAY THAT IT COULD BE SPLIT UP INTO OTHER USES; IT
COULD BE SUBDIVIDED; IT COULD BE RENOVATED AT NOT VERY HIGH
COST, CERTAINLY NOT EXORBITANT COST. IT'S A QUESTION OF WHO
WOULD WANT TO DO THAT. THERE HAVE BEEN SOME IDEAS THAT HAVE
BEEN FLOATED OUT THERE ABOUT PERHAPS ANOTHER HOSPITAL SYSTEM
TAKING IT OVER OR PERHAPS THE HOSPITALS SHARING IT, FOR INSTANCE
ONE HOSPITAL TAKING OVER THE BIRTHING CENTER, ANOTHER HOSPITAL
TAKING OVER THE OUTPATIENT CENTER. BUT THAT WOULD REQUIRE A
LEVEL OF COOPERATION THAT WE'RE NOT SURE WE'RE GOING TO SEE
FROM THE CURRENTLY COMPETING HEALTH AGENCIES HERE.
>>
Gary Walker: A LITTLE BIT OF TIME LEFT. WHAT DOES THE BUSINESS
SECTION OF "THE DEMOCRAT AND CHRONICLE" HAVE PLANNED FOR THIS
STORY COMING UP?
>>
WE ACTUALLY HAVE A WHOLE TEAM OF JOURNALISTS, REPORTERS, EDITORS,
GRAPHIC ARTISTS AND PHOTOGRAPHERS WORKING ON THIS. WE'RE INVESTIGATING
HOW IT CLOSED, WHY IT CLOSED. WE'RE KEEPING ON EVERY ASPECT
OF THE STORY AND WE'LL KEEP WRITING ABOUT IT UNTIL WE FEEL THOSE
QUESTIONS HAVE BEEN ANSWERED.
>>
Gary Walker: AND MAYBE YOU CAN COME BACK AND TALK TO US MORE
ON "NEED TO KNOW" ABOUT THAT STORY.
>>
THANK YOU. WE'D LIKE TO.
>>
Gary Walker: THANK YOU VERY MUCH. THAT'S ELLEN ROSEN. SHE IS
A BUSINESS EDITOR FOR THE "DEMOCRAT AND CHRONICLE." AND THAT'S
OUR PROGRAM FOR THIS WEEK. NEXT WEEK'S EDITION OF "NEED TO KNOW,"
WE'LL TAKE A LOOK AT OUR GROWING LATINO POPULATION AND WHAT
THIS MAY MEAN POLITICALLY AND ECONOMICALLY FOR ROCHESTER. UNTIL
THEN, I'M GARY WALKER. GOOD-BYE.
(Music)