State votes down Kaleida ambulatory surgery center

April 14, 2014 Updated Apr 14, 2014 at 8:37 AM EDT

April 14, 2014 Updated Apr 14, 2014 at 8:37 AM EDT

A panel of New York state health officials Thursday voted against an ambulatory surgery center project planned for Orchard Park.

The $2.7 million project, a collaboration between Kaleida Health, 22 surgeons and the University at Buffalo School of Medicine & Biomedical Sciences, was vigorously opposed by Catholic Health and two other independent hospitals.

"We are disappointed but plan to appeal," said Michael Hughes, a Kaleida spokesman. "We look forward to a successful outcome in that process."

Members of the Public Health and Health Planning Council heard from both sides over a 75-minute comment period during a special meeting of its establishment committee, which delivered a split decision during a vote to the full council.

Additional comments followed by members of the council, with some saying the project would worsen an existing issue with overcapacity at existing surgery centers within area hospitals, reduce access for the poor and result in millions in lost revenue to the opposing hospitals.

"I would be less concerned about this if it was in inner city Buffalo, but it's not," said Peter Robinson, a council member from Rochester. Also vice president and chief operating officer at the University of Rochester Medical Center-Strong Health, he said hospitals often play a role in balancing off each other. This project could have a Robin Hood effect, which he said could lure affluent patients to the new suburban surgery center, while leaving the poor, uninsured population to find access at city hospitals like Catholic Health's Mercy Hospital.

"They rely on the revenue from a more affluent patient population to subsidize the public payers. When you start to erode that, you're undermining the viability of those safety net providers."

Others argued the project met all the statutory requirements for need, and said competitive issues should not be the deciding factor.

Christopher Delker, a council member and program research specialist with the state Department of Health, said it seemed unlikely that the affected hospitals would remain static in response to what they describe as a new provider in what they perceive as their service area.

"It would be a rare manager or board that would stand pat while other providers come in, especially those of a larger sized system," he said. "They would have the wherewithal to adapt and be fairly nimble in response to the situation."

The Southtowns Ambulatory Surgery Center LLC was planned as a multi-specialty center and anchor tenant for a 45,000-square-foot medical office building at 5959 Big Tree Road.

Hospital officials on both sides repeated the same arguments laid out at the March 27 establishment committee meeting, but without a quorum, the committee was unable to make a recommendation to the full council. The same arguments were repeated at today's special meeting, but this time the full council had the opportunity to hear the back and forth.

Catholic Health argued that its Mercy Hospital and Sisters of Charity Hospital facilities stood to lose between $3.3 million and $6.5 million annually if the surgery site opened.

Others opposing the site included Bertrand Chaffee Hospital in Springville and the Lake Erie Regional Health System of New York (LERHSNY), whose TLC Health/Lake Erie Health Care Center operates in Irving.

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