By Marty Wilder

Save Bradford Hospital.org

3/3/2023

Editor’s note: This is the second of two parts about Bradford Hospital’s recent arrangement with Olean General Hospital, Upper Allegheny Health System and Kaleida Health. In the first article, we pleaded with people involved to explain the loss of $9 million from Bradford Hospital Foundation. As of now, we have not heard from any of the parties involved.

The drastic changes at Bradford hospital — the loss of its ICU, operating room and all 107 beds — are not mentioned in the primary legal document which ultimately tied its fate to a Buffalo, N.Y., health care system in 2017.

This Affiliation Agreement, in fact, gives total control of our hospital to Kaleida Health working through Upper Allegheny Health System, itself the “parent” to Bradford and Olean hospitals.

The 2017 document, which apparently has not been updated or replaced, was obtained by Save Our Hospital organization through a Freedom of Information request. (A similar Freedom of Information request from the Pennsylvania Department of Health has been filed but is pending a legal review by the state.)

Not only does this agreement not foretell the radical changes about to hit Bradford, it, in fact, makes the omission conspicuous by asserting the opposite scenario — no change in beds or services was planned.

And it does cite the hospital’s precarious financial position as the rationale for joining forces with Kaleida:

“This decision was based on a five-year plan, long-term financial plan that was developed for BRMC and its sister hospital under BRMC’s parent company — Upper Allegheny Health System which demonstrated a future inability to remain financially viable given the downward pressure of revenue in the health care industry as well as rising costs to provide care.”

Further, “BRMC is not unique in this vulnerable position. Hospitals across America especially rural hospitals face a daunting challenge of survival.”

New York State officials, who needed to approve the agreement, specifically questioned what might happen to services in Bradford and Olean.

In a September 2017 letter to Brian Groski of New York State’s health facility planning office, administrators assured him “there are NO service or bed changes proposed at either OGH or BRMC as a result of this proposed merger.”

“The hospitals serve different states with different primary insurance coverages and are 23.5 miles away from each other,” the letter added. The merger’s intent was to increase the bottom line of both hospitals through improved federal reimbursement, and extra revenue through a drug discount program.

That long-term financial plan was part of a “strategic planning process” undertaken by the board of directors. It apparently is not a public document.

Current administrators have frequently made reference to a “transformational plan” that presumably explains the need for the radical change in services that began to occur just a few years after the merger.

We believe it would be of general public interest to understand when, how and why a decision was made to cut services in Bradford and direct patients to Olean “some 23.5 miles away,” in apparent contradiction to the 2017 merger agreement.

Presumably, this “transformational plan” is the document that recommended the elimination of Bradford’s ICU unit and operating room. Initially, it would have eliminated all in-patient beds. Ten beds were added to meet the minimum requirements of Pennsylvania to be called a “hospital.”

It would be of interest to learn how the “transformational” plan addressed anticipated transportation needs between Bradford and Olean hospitals; complex insurance questions; any analysis of McKean County’s struggling but vital EMS system; and perhaps, even, a plan to provide adequate staff in Olean to accept new patients from Bradford.

Interestingly, the Affiliation Agreement itself provide a path for Bradford services to be cut back — or even for the hospital to be closed.

“An acute care hospital will continue at the BRMC site so long as that facility remains financially viable so as to allow it to continue to provide an acceptable overall level of clinical quality and patient safety,” the agreement says.

Beginning in the the fiscal year when the merger occurred, Bradford was required to have at least $1 as a “positive contribution margin.”

“… if BRMC has a negative contribution margin as averaged at $250,000 a year or greater over a rolling three-year period or in the amount of $1 million in any one fiscal year all service offerings would potentially be subject to modification or elimination to promote forward moving viability.”

In fact, a decision to close Bradford would have rested with the Pennsylvania attorney general to either agree to any closing, or go court to stop it. Since it has never been officially “closed,” of course, this measure presumably was never triggered.

There are no such hypotheticals for Olean hospital in the Affiliation Agreement.

It’s hard to overstate, of course, the importance of the Foundation’s assets in this scenario.

Finally, the Affiliation Agreement raises some interesting historical information about financial concerns at both hospitals

Everyone, it seems, has been told Bradford Regional Medical Center was awash in red ink for years.

There is no doubt, there were times when the hospital struggled financially even to pay its bills. And Medicaid’s falling reimbursements and the Covid years put them firmly in the category of “struggling” rural hospitals.

Even still, Bradford was in a better financial position than Olean in some ways when merger talks were held.

In the financial analysis in the affiliation agreement, Olean hospital had achieved an “operating loss” of $3,201,939 in 2016. Bradford also had a loss in 2016, but much smaller — $488,608.

Year 2017 tells a different story and Bradford was said to have had a $5.6 million operating loss.

Bradford’s financial figures are also relevant in context.

We believe the deck became stacked against Bradford when Olean began moving services, such as maternity care, across the state line. So when Bradford’s numbers started to crash over time, the “red ink” doomed our maternity services. Insiders have said it was done methodically throughout the hospital as part of a so-called “planned failure.”

It was gratifying to see this in the Affiliation Agreement: “If services are reduced or curtailed at the BRMC site, OGH will use good faith efforts to continue to provide those health care services that meet the needs of the people in the BRMC service area, as determined by OGH’s federally required community health needs assessment.”

Finally, in some irony, the document also says that if Bradford is ever closed and sold “due to lack of financial sustainability” the net proceeds would be put into Bradford Hospital Foundation to continue to be used to support health care services in Bradford.