Roman Catholic healthcare sponsors in Western New York are nearing completion of an agreement to form a 42-member regional healthcare system that would control 30% of the market.
It's the second large system to emerge in the region, home to 1.2 million people. Earlier this month, the Federal Trade Commission approved the merger of Buffalo (N.Y.) General Health System, Children's Hospital of Buffalo and Millard Fillmore Health System in Buffalo, which will create an organization with total assets of $596 million.
More than a year and a half in the making, Catholic Health System of Western New York brings together 42 Catholic healthcare organizations and their affiliated services. It represents $500 million in operating revenues and 8,000 full-time-equivalent employees. The system includes nine acute-care facilities, nine skilled-nursing facilities, two adult-living communities, five home health organizations and five physician-hospital organizations. The five PHOs will be merged into one.
System officials expect to reach a final agreement by the end of August, at which time they will file for state and federal approvals.
The quest to build a Catholic system in Western New York began in December 1995 at the initiative of Bishop Henry J. Mansell of the Buffalo Diocese and four religious sponsors. That diverse structure proved to be a major hurdle as members of the group were challenged "to embrace change," said Robert V. Stanek, chairman of the implementation committee.
As envisioned, the system would pursue a "virtual merger" by aligning under a single parent, governed by a 15-member board. Although providers in the network won't merge assets, they will share a bottom line.
The system will consist of three corporate members: the Diocese of Buffalo; Eastern Mercy Health System, Radnor, Pa.; and St. Louis-based Daughters of Charity National Health System's eastern region. Collectively, they will choose 15 members to sit on the system board.
The system's acute-care network includes Sisters of Charity Hospital of Buffalo and Mercy Hospital in Buffalo; Kenmore (N.Y.) Mercy Hospital; Our Lady of Victory Hospital, Lackawanna, N.Y.; St. Joseph Hospital, Cheektowaga, N.Y.; and Genesee Mercy Healthcare, the parent of St. Jerome and Genesee Memorial hospitals in Batavia, N.Y. The system will have an affiliate relationship with Health System of Niagara, which includes Mount St. Mary's Hospital of Niagara Falls, Lewiston, N.Y., and Niagara Falls (N.Y.) Memorial Medical Center.
Efficiency studies have identified some $75 million to $100 million in savings that might be achieved over a five-year period. A planning process will be launched at the end of August to determine how to proceed.
A national search for a system president and CEO is under way. Until the new leader is chosen, Staneck, who is president and CEO of Buffalo's Mercy Health System, parent of Mercy Hospital, will oversee the new system's implementation. This fall Staneck expects to move to Philadelphia to assume the post of executive vice president of Catholic Health East's mid-Atlantic division.
Catholic Health East recently was created through the consolidation of Eastern Mercy Health System; Sisters of Providence Health System, Holyoke, Mass.; and Franciscan Sisters of the Allegany Health System, Tampa, Fla. (June 2, p. 8).