Thursday, April 05, 2007

Good plans run amok

Leave it to government to create chaos in an attempt to create efficiency.

That's exactly what's happened as a result of the state commission charged with improving health-care facilities. The Commission on Health Care Facilities in the 21st Century — colloquially known as the Berger Commission after its chairman, investment banker Stephen Berger — was created by Gov. George Pataki and the state Legislature in 2005 to come up with a plan to fix the state's ailing health-care system. It did. Now, in the initial steps of the process of implementing that plan, the state has thrown community health-care providers into chaos, as the page one story by Julie Lane this week shows.

A good idea: strengthen and improve acute and long-term health-care facilities, which are suffering many ills, not the least of which is their ongoing financial crisis — caused in large measure by government in the first place.

A good plan: consolidate some hospitals — including the three community hospitals on the East End — to create economies of scale and eliminate duplication of services. This was a good plan that our three local hospitals had already devised and begun to put in place, in fact — forging an alliance with each other and with the county's only tertiary care hospital, Stony Brook — before the commission recommended it.

A botched execution, so far: bureaucratic stupidity in the initial implementation of the plan. It's already cost Peconic Bay Medical Center $200,000 and will likely cost it much, much more before the hospital can get back on track with its renovation and expansion plans.

The chaos: PBMC's already-approved, designed, bid-out expansion and renovation project was abruptly halted by the state health department after the Berger Commission issued its report in December.

Like Joe Jitsu in the old Dick Tracy cartoons, shouting "Hold everything!" for a quick consult with the boss via his trusty wristwatch radio, the health department stopped PBMC's construction project in its tracks. Hold everything! Freeze frame. And stay that way for months. But in this cartoon universe, the freeze frame has dire consequences.

PBMC, acting in good faith on the health department's prior approvals, obtained construction financing. It's paying interest on the debt that isn't matched by interest earned on the money in the bank.

The hospital, having no indication that its approved project would be stopped in its tracks like this, purchased construction materials, including custom-made structural steel, and must now pay storage fees to warehouse the materials.

PBMC, acting in good faith on its four health department-approved certificates of need, bid the entire project out — and arranged its financing according to the contract prices it obtained in the bidding process. Anyone who's ever dealt with a construction project like this knows bids are not a forever kind of thing. Oh, no. They're good for a set period of time. Go beyond that time and you have to rebid the project, because labor and material costs change. And because they change, if you have to rebid, you can expect to pay more.

The hospital even had jeopardized by bureaucratic inanity an opportunity to replace a portion of its ordinary financing with tax-exempt financing through the Riverhead Industrial Development Agency — because of the health department's reluctance to approve a change in PBMC's already-approved financing arrangements, now in limbo thanks to the "Hold everything!" order. The new financing would save the hospital $100 million over the life of the new facility. $100 million in savings, just by replacing one kind of financing with another. And the state agency charged with implementing recommendations aimed at saving hospitals money — blinked. Go figure. Fortunately, Assemblyman Marc Alessi got the health department to come to its senses and at least allow PBMC to proceed with the substituted financing.

The hospital's air conditioning broke at the end of last summer. New equipment was purchased — again, with the health department's approval — and would have been installed and operational in time for warm weather. But — "Hold everything!" Now PBMC must rent a temporary chilling plant, which will run on a costly generator. And even though the health department has come to its senses and concluded that the new air conditioning system is an "emergency" and should be reapproved immediately, it won't be possible to install the new permanent system before the end of summer. PBMC's cost for the temporary set-up this year: $50,000 per month, for four months — another $200,000.

The Department of Health maintains it must reapprove the rest of PBMC's already-approved construction project. And, since the Berger Commission requires PBMC to join together with Eastern Long Island Hospital in Greenport and Southampton Hospital, the health department won't reapprove the project until the other two hospitals sign off on it. But here's another irony. They already did — twice. Now they're taking a third, closer look.

With the three entities jockeying for position in the East End's health-care delivery system, and with everything PBMC has riding on the — ahem — speedy reapproval of its project by the state, including, perhaps, its very survival, I'd say our local hospital is caught by the short hairs.

"Hold everything!" Somebody get Dick Tracy on the radio. We need help.