State plans $300M infusion for Utica hospital Rome, Oneida healthcare facilities seek prognosis of potential impact on their operations, communities


There’s $300 million in the new state budget to help to create a single health care facility that would replace hospitals in Utica and New Hartford.

The Mohawk Valley Health System, which operates Faxton-St. Luke’s Healthcare and St. Elizabeth Medical Center, wants to consolidate inpatient services at one new campus. No site has been been announced. Gov. Andrew M. Cuomo included $300 million such a facility in his executive budget released in January, and it remained in the spending plan during its adoption this week by the state Senate and Assembly.

Cautious reaction

Rome Memorial Hospital is responding cautiously to the state’s health care investment in the county’s largest city.

“The plan to construct a new integrated campus in Utica is a natural evolution of the ongoing consolidation efforts in that city,” said Rome Memorial President and Chief Executive Officer Basil J. Ariglio. “Given that it will take at least five years before the new facility is open, it’s too early to project the competitive impact on Rome Memorial Hospital, especially in an industry that is undergoing rapid changes.”

The new hospital would replace the inpatient care now provided at the St. Luke’s campus in New Hartford and at St. Elizabeth in Utica. The project is estimated to take four to six years to complete, and there are a number of steps that need to happen even before the first shovels are in the ground.

Competitive advantage eyed

Oneida Healthcare in eastern Madison County also is following the situation and already sees a possible impact on its business. Gene F. Morreale, Oneida’s chief executive officer, says MVHS will benefit through reduced operating costs because the $300 million is a grant and not a loan that has to be paid back with interest.

“The fact that a health care system in our region is receiving a significant endowment from the state to build a new hospital will no doubt provide that system with a financial competitive advantage,” he said. “Not having to pay interest expense for that significant amount of money will allow the system to function at a lower cost moving forward.”

Morreale adds, “The fact that health care providers are now being asked to be transparent with pricing and with high deductible plans owned by many insured, the pricing advantage for MVHS will no doubt have an impact at the expense of OHC. Our debt and related interest expense figures heavily into our pricing for services.”

The hospital official says users of the new facility stand to benefit from the state’s investment.

“This should permit patients who choose that system for their care to have access to a very nice infrastructure which the $300 million will help to pay for,” Morreale said. “The end result should be lower cost health care for the communities that the system serves. Access to capital remains a challenge for all of us in the health care industry and to remain competitive, we should all be afforded equal access to capital for necessary infrastructure upgrades.”  

Access to state-funding sought

Rome Memorial’s Ariglio shares his colleague’s concern about access to capital to pay for improvements.

“We’re grateful for the reassurances from both Senator Joseph Griffo and Assemblyman Anthony Brindisi that they will continue to work with Rome Memorial Hospital to secure state funding to address the health care needs of the residents we serve in Rome and western Oneida County,” he said. “We have spoken with both legislators about the need for capital funding to construct a new integrated primary care and behavioral health center, using the patient centered medical home model to enhance access to care and care coordination.”

Ariglio added, “Expanding primary care is pivotal to the success of multiple Delivery System Reform Incentive Payment projects, which support the state’s overall goal to reduce avoidable hospital use by 25 percent.

Rocco LaDuca, spokesman for Griffo, said state assistance could be available to facilities like Rome Memorial if pursued. He said there was money in the new state budget and old one that could possibly be tapped, citing the Vital Access Provider program among several.

“We are appreciative of our legislators’ commitment to help secure funding to support initiatives that we would be unable to do on our own,” Ariglio said. “They recognize the continued need for an acute care hospital in Rome to ensure access to care for the residents of Rome and the surrounding rural communities.”

‘Incredible opportunity’

According to MVHS, the $300 million for the new hospital is part of $700 million in the new state budget for upstate hospitals.

“This is an incredible opportunity for our community and we are extremely grateful to the governor and our legislators,” said Scott H. Perra, president and CEO of the Mohawk Valley Health System. “Last fall we began exploring the concept of a new, free-standing hospital. To be able to move forward with this concept changes health care in our community and enhances what we are able to do for the region.”

The new hospital could cost as much as $500 million. The state’s $300 million helps to lay the foundation for funding, says MVHS. Still needed will be additional financial support from federal and state governments, lending institutions and donations from the community.

“This funding promotes a cooperative approach and provides the best state-of-the-art services in one central location,” said Brindisi, D-119, Utica. “This plan will help eliminate duplication, with the goal of providing efficient, quality health care.”

“The delivery of quality acute health care is paramount to the welfare of our communities,” said Griffo, R-47, Rome. “Our local medical centers have already made difficult decisions in challenging financial times to improve how they provide their services, and so we are doing what we can through this funding to help them better meet the needs of the 21st century.”

He added, “While new facilities may be constructed, we should not overlook ways to still reuse the older buildings to provide valuable services.”

New site to be determined

“One of the most frequently asked questions is ‘where would we build a new hospital?’ and we don’t know yet,” said Perra. “We are working with Steve DiMeo and Mohawk Valley EDGE to look for potential sites in our area.”

He adds, “It will take time, research and planning to determine the best location.”

DiMeo told a meeting of county legislators Tuesday that while urban and suburban locations are being considered, “There’s a strong desire for an urban hospital.”

The final determination for the site will be made by the MVHS directors.

In commenting on the large amount of state dollars committed to the project, DiMeo said MVHS was being rewarded for past actions. The Mohawk Valley Health System was formed when Faxton-St. Luke’s and St. Elizabeth agreed to combine their operations last year. However, they had previously collaborated on providing some health care services. The former Faxton Hospital was fully joined with St. Luke’s in 2000.

“They’ve done the right things over a number of years,” said DiMeo.

Rome Memorial has been exploring affiliations with other hospitals.

Perra cautions that while there’s high interest in where the new hospital will be located, there are many additional items that need to be decided.

In the next 12 to 18 months a plan for the hospital, size, structure, location, services and staffing needs to be fully developed. Administration and the board of directors also need to work on a transition plan for the current hospitals. A state Department of Health certificate of need application has to be completed as well.

“We only have one chance to get this right and that is what we intend to do,” Perra said. “We want to build a new hospital for the families that we serve, one that will make a difference for generations to come.”


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