From 2018 to 2021, Brooks-TLC Hospital System budget deficits totaled more than $55 million. Much of those losses — some $40 million — were recovered by New York State taxpayers through the vital access provider’s insurance program, while COVID relief funds picked up the rest. .
If a new care facility is built in Fredonia on the former Cornell Cooperative Extension site on East Main Street near the roundabout, however, it is hoped that these losses can be reduced to $3.3 million per year. “the best,” according to members who participated in a commission on future projects. “So in the best-case scenario, the hospital will need significant ongoing budget support, probably in perpetuity,” notes the report.
While not a best-case scenario, it is a marked improvement over the nearly $15 million in losses currently absorbed annually by Brooks-TLC. As part of the commission’s task to finalize its report on the region’s health care system, it reviewed both the plans for the proposed new facility and the financial breakdown of the project.
On Friday, the OBSERVER detailed the summary of the report which called for a new state-of-the-art building “essential” north of the county and also supported the plan for a micro-hospital with an adjacent ambulatory care center.
The members of the Commission also argued that the facility can be maintained – if and only if:
≤ Kaleida Health assumes full responsibility through a full merger of assets with Brooks-TLC.
≤ Kaleida is able to maintain a sufficient base of providers in the area who will refer to the new hospital.
≤ Kaleida is willing and able to absorb the ongoing financial consequences of this arrangement.
If the proposed project between Brooks-TLC and Kaleida cannot proceed, the panel recommends “a strong alternative partner should be sought as soon as possible to ensure the health care needs of the community are met”.
Commission members were convened in late July by State Senator George Borrello, Assemblyman Andrew Goodell, Chautauqua County Executive PJ Wendel and Dunkirk Mayor Wilfred Rosas after a proposed new construction was not accepted by the state health department. Members of the Commission include: Chairman Richard Ketcham, former CEO of Brooks; Dr. Robert Berke, who served in the past as county health commissioner; Anthony J. Cooper, who previously served as president and CEO of Arnot Health System in Elmira; and Charles Nazzaro, who served as UPMC Chautauqua’s chief financial officer.
In the commission’s report, the $71 million in state funding — provided since 2016 — would be broken down in this regard:
¯ $750,000 for the acquisition of the land.
¯ 37 million dollars for the micro-hospital.
¯ $17 million for the medical practice building, which would also be located on campus.
¯ $3 million for design fees and legal fees.
¯ $7 million to Kaleida for service bundle support costs.
¯ $6 million for equipment.
For all monetary figures noted in the report, which include operations and cost breakdowns, the commission relied on projections by accounting firm Freed Maxick in Buffalo. Some $12 million in savings noted by Freed Maxick included: the closure of the service line, which is the elimination of obstetrics wards and the intensive care unit, totaling $7.7 million; $3.6 million in savings from new facility efficiencies; and $780,000 in savings from consolidation of Kaleida’s back office and IT technology.
In terms of revenue opportunities, volume growth is expected to increase by $2.7 million, although the commission called this projection “optimistic.” An additional $3 million impact would come from outpatient areas, such as MRI, wound care, and pain management. Another $1.5 million would come from billing improvements that would bring Brooks money faster.
“It seems obvious that a population center the size of northern Chautauqua County cannot simply be left without a health facility of any kind,” notes the report. “With the distances and weather factors involved, northern Chautauqua County should not be left with just an urgent care facility that cannot truly accommodate critically ill or injured patients. At a minimum, there must be a real emergency service in place. An emergency service necessarily implies, that is to say requires, hospital beds. Brooks offers 15 inpatient beds and that’s appropriate given the services it provides.
There is no timeline for next steps. However, any decision on the Brooks-TLC plan regarding the release of funds will likely come from the state health department.