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There's been an unofficial cease-fire in the Battle of Children's Hospital since officials of Kaleida Health announced early last month that it might not eradicate the region's only treatment facility for kids after all.
So Kaleida's rapidly shifting hierarchy promises to really, really look at all the options and not just find a new way to justify the plan that got batted back in their faces. And most of the Buffalo media resumes fluffy coverage that treats the beleaguered giant's words and figures as gospel.
But not everyone is so happy with playing nice.
"I trust those people as far as I can throw a pool table," said one volunteer entrenched in the fight to keep Kaleida's bean-counters from spreading Children's precious assets on the system's massive wounds.
With good reason, it turns out.
During a closed-door meeting in Buffalo last week, an official of Fleet Bank (which holds the paper on much of Kaleida's massive-and-growing debt) said the financial institution is already interviewing area attorneys to represent it in the eventuality of a Kaleida bankruptcy.
Fleet's fears, he said, are based on the bank's estimates that Kaleida's losses are up to twice those reported to the public.
Suddenly, only being $52.8 million in the red (Kaleida's announced losses for 2001) doesn't look nearly as bad.
A group of businessmen formed Kaleida, you'll recall, in 1998 to more efficiently (their words) run Children's, Millard Fillmore-Gates Circle, Millard Fillmore-Suburban and DeGraff Memorial in North Tonawanda.
Unfortunately, to the good ol' boys -- or maybe just ol' boys is more appropriate -- who spent much of the previous decade mulling the idea, "operating more efficiently" meant plopping a fresh layer of bureaucracy on top of the administrations already in place at the hospitals.
While administrative expenses rose (thanks largely to astronomical bonuses paid to already handsomely paid Kaleida executives), revenues dwindled.
Kaleida execs like to blame the federal Balanced Budget Act, which capped Medicaid and other payments, for much of the red ink.
That sounds good, but the law in question passed in 1997. Unless some of Kaleida's cost-saving measures were to conduct its correspondence via the Pony Express, cancel its newspaper subscriptions and keep televisions turned off at all times, it seems someone should have been aware of it within, oh, a year or so.
Kaleida's answer -- paying more than $2 million to the Hunter Group to ride in and save the fiscal day.
In the highly edited version of the Hunter Group's report finally released after intense public pressure, the Florida consultants told Kaleida that it needs to pare down its administrative branch and eliminate duplication of services within its structure.
In other words, the same things Kaleida's founding fathers vowed in selling its creation.
Their original point man through Kaleida's formative years, former President and Chief Executive Officer John Friedlander, departed last year with a multi-million dollar parting gift. His successor, William McGuire, must be wondering what he got himself into when he accepted the job.
The Children's firefight erupted days after McGuire took over. Two weeks ago, he began cleaning house -- starting with the four executives who profited most handsomely from a bonus structure that would have been envied by all those extinct dot-com "businesses."
You almost have to feel some sympathy for McGuire -- though he's surely being well-compensated for his headaches -- and wonder whether the figures chairman Gerald Lippes and the rest of the board of directors fed him during the interview process were the Enron-ized numbers given to the public or the real deal.
And the comparison between Enron and Kaleida becomes less of a reach each day. But while the collapse of the energy-trading behemoth stripped thousands of their life savings and cost outside shareholders billions of dollars, a Kaleida bankruptcy could have a silver lining.
Unlike the heavily mortgaged Buffalo General and Millard Fillmore-Gates Circle facilities, Children's Hospital stands as Kaleida's most marketable entity.
If Kaleida goes under, that would not only make the best-case scenario put forth by Children's supporters -- spinning off the hospital as an independent entity -- more viable, it would take the decision out of the organization's hands.
As for the rest of the hospitals, they'd have to either again go it alone or band together under a different umbrella.
A monstrous bail-out of some sort would be needed in either case to keep all of them open, but thanks to Kaleida's mismanagement, that's inevitable anyway.
A sign outside the office of Women and Children First, a Children's Hospital advocacy group that grew out of opposition to Kaleida's predatory stance, reads "Buffalo needs Children's, not Kaleida."
As true as those words may be, they could use a little inclusionary editing.
All of Western New York needs Children's. And nobody needs Kaleida.
| Niagara Falls Reporter | www.niagarafallsreporter.com | April 2 2002 |