(Blue Dog Press, 17 January 2002, Hospitals at the Edge #3)

Doctors for the Future 
an interview with UB’s medical VP Michael Bernardino

by Bruce Jackson

If Buffalo’s health care system were a person, it would be in some hospital emergency room on life support. Here are some of the troubling vital signs:

—The Kaleida system (Millard Fillmore Gates Circle and Suburban Hospitals, Children’s Hospital, Buffalo General Hospital, and DeGraff Memorial Hospital), hemorrhaging millions of dollars every month, recently dumped CEO John Friedlander, shelved its controversial plan to move Children’s Hospital to High Street and is now simply trying to survive.

—The Giambra administration is looking to find a convincing argument for the state to take over ECMC (the only 24/7 full-service hospital in the county) and has even suggested operating it as a public benefit corporation controlled by a board populated with Pataki and Giambra appointees.

—The Catholic hospitals go their own way, keeping their own counsel, and avoiding most of the public funding and political messes afflicting the other hospitals.

—All the hospitals have far more rooms than they or the county needs. They are all have difficulty hiring quality replacements for top people who die, retire or leave town.

—Physicians blame HMOs for their financial woes; the HMOs say they just respond to financial conditions presented by the rich and powerful guys who control the area’s corporations and political institutions.

—The Health Care Task Force, the self-appointed committee of rich and powerful white men headed by M&T Bank boss Robert Wilmers, seems to have collapsed after representatives of the Catholic hospital system pulled out of the conversation. This is unfortunate because they were the only group giving serious consideration to the essential concept of regional health planning. The group was the medical equivalent of county executive Joel Giambria’s kitchen cabinet of rich and powerful white men who give him advice on just about everything important.

Very few health care professionals are at all sanguine about the state of health care in the region, and many think the system, or what’s left of it, is spiraling out of control.

The University of Buffalo is at once inside and outside these problems. Faculty members in its five health sciences schools (Medicine and Biomedical Sciences, Nursing, Dentistry, Health Related Professions, and Pharmacy and Pharmaceutical Sciences) practice and do research at every major medical facility in the county. Its medical students spend their third and fourth years getting clinical experience in the areas hospitals and clinics. UB is a member of the consortium that oversees the area’s 55 graduate medical residency programs.

Is UB’s primary and perhaps sole mission providing public education or is it a public agency among other public agencies, one with a major specific mission (public education) but also an overarching responsibility (act as a good institutional community member)? This question comes up frequently in discussions about whether or not UB should have moved out to Amherst (which is moot), whether its law school should move back to town (which is nearly as moot),  and what role UB should play in regional health affairs (which is not moot at all). Should, for example, UB be actively involved in the politics of Kaleida and ECMC or should it simply utilize their resources in providing public medical education? What are the institutional obligations and loyalties of medical professionals who teach in UB’s programs and who practice or do research in the area’s hospitals?

Perhaps the person best qualified to answer such questions is Michael Bernardino, UB’s vice president for health affairs since spring 1998 and dean of the UB School of Medicine and Biomedical Sciences since last July 26. Before joining UB, Dr. Bernardino (who went back to school and got an MBA in 1996), was director of managed care with the Emory University System of Health Care in Atlanta and professor of radiology and director of abdominal radiology and of magnetic resonance imaging  in the Emory University School of Medicine. He has completed 25 research grants, edited two books, authored or co-authored three dozen book chapters and more than 180 scientific articles, and given more than 250 scientific presentations or lectures.


Bruce Jackson: Can you explain to me the mission of the UB medical school in terms of teaching, research, and service?

Michael Bernardino: Obviously our first mission is teaching to produce M.D.s. We have a research and a medical service mission.

Can you rank order them?

Education is first and foremost, because that’s the reason why we’re here. The research mission is important, because that’s also why we’re here. And I think the clinical service mission is important. But if I had to rank them, I’d rank them one-two-three, in that order. All three are very important because all three are intertwined in the education process in the clinical years. The clinical service portion is important for the third and fourth year students.

UB is a medical school that doesn’t have its own hospital.

And doesn’t want one.

Why not?

If you look at medical schools across the country, I’d say somewhere between 20 and 30% are having some financial difficulty. Most of those, it’s because their hospitals are having financial difficulty.

Remember, the main thrust of the school is to produce M.D.s, and the main payment for that comes from the state and through tuition. This school is in the black; it’s much stronger than the hospitals right now. We can restructure our education around the entities that are necessary for us to fulfil our mission. The hospitals can’t go someplace else. They need a certain level of activity to keep going. This is the reason why I don’t think we want to be saddled with a hospital. No matter what happens, we’ll just reconfigure. There’s a lot of things we can do to reconfigure. I’m not worried about whatever way we go.

There will always be sufficient clinical facilities for your third and fourth year students?

They’ll be sufficient for the number of third and fourth-year students that we might take in the future.

And that number might change?

It could.

This community is not growing. I don’t know that it’s falling apart like some people say. I don’t believe that. But this is not San Diego. And the demographics in the community are changing. That, in and of itself, has an effect on the school, because we’re trying to train doctors for the future, not the past. I keep harping on that: we’re training doctors for the future. This school gets paid to train M.D.s. That’s a four-year degree. Not post-graduates or residents.

There is a problem finding outpatient sites for the third and fourth year classes as we move into more outpatient medicine, which is the trend across the country. We need the inpatient facilities less as  we train doctors to be more outpatient-oriented, to make less utilization of inpatient resources. The amount of work necessary in training our students and keeping the degree and quality of the training is far greater than the past, which we have to document and which we have to insure. And then we have the issue that these doctors who we are training need to produce a lot more clinically or they can’t maintain their incomes. So we have all these things happening.

The school has to maneuver, it has to face up to these problems, which are solvable. But we can’t teach people or train people in the old models. It requires change. It requires us accepting the change and moving forward. It requires us making plans about the size of class in the future. Those are things and kinds of issue that we need to look at as we go forward.


Our biggest problem is the external environment, not the internal. The problem here is the hospitals. The hospital systems still think they own the physicians. There are too many hospitals and too many hospital beds. You’ve got an environment of no growth in the population and decreased utilization of resources.

Because more is done now on an outpatient basis?

Yes. If you take a look at human resource utilization today in this community, it’s still greater than you would see in other communities. The hospital administrators tell me that’s because it’s an aging population. That might be true to some degree, but certainly not to the degree that they would like to hide behind. There are still too many buildings in this community. The buildings are not focused on quality. Everyone’s afraid they’ll offend a physician and the guy will go practice across the street [e.g., move to another hospital]. Instead of offending people I think we should be setting standards of quality for care.

One of the reasons there was overutilization in this community was because the rate structure of the hospitals was regulated. Consequently, they ended up keeping people longer and overutilizing the hospital. That was how the hospital made money. When they deregulated, the communities weren’t ready. You had too much capacity. And New York State has a different kind of labor structure than other states. It always has. So the deregulation hit this state a lot harder than other places. Throughout the state hospitals are having trouble. All the hospitals in this community are having financial problems. Even the ones that are breaking even are doing badly. There’s no question about it.


Funding for medical student education comes from the state either in state tax supported dollars, or in tuition, or endowment. Postgraduate education, which I believe we also should be responsible for, is funded through a variety of sources. The major source is called GME, Graduate Medical Education, through the federal government, although in New York State there is a portion of it that comes through Medicaid.

GME is divided into two components: DME, direct medical education, which pays for the post-graduates’ training salaries and education, and the doctors to teach them. The second component is called IME, Indirect Medical Education, and this is where things get a little bit funny. IME is supposedly for the cost of utilizing the hospital system. There is a component based on a formula; it should politely be known as the fudge factor for a teaching hospital. They need it to make things work. There is a profit margin in the residency program and it is quite significant in New York State because New York State is paid more than other states for the residents. I think one reason the balanced budget act has taken such a toll in New York State is it specifically targeted New York State, because the reimbursement rate elsewhere in the country is not near as much.

That component goes to the hospitals directly. The school gets none of that money. They pay doctors with it, and this is where we get into trouble, because the doctors on the faculty don’t know who they work for.

I talk to people and they say they’re on the UB Medical School faculty or this staff of this or that hospital and when I try to find out who or what they belong to it often becomes murky.

Let me give you a little bit of history. This school had an all-volunteer faculty until around 1915, 16 or 17. Then the basic scientists became faculty. The clinical faculty of this school was all volunteer until the early or mid-sixties. Consequently, the departments were like private practices and not what you would consider a university practice. That’s one of the reasons why the practice plan was so screwy and disorganized. The way they ran the school was, you would go to a hospital administrator and ask him to put Department X here and Department Y there and some other department someplace else, because that hospital offered the best deal to get that department. And therefore the hospital got the GME money and paid the doctors from that and you didn’t know who worked for whom.


You just used the term “practice plan.” That term comes up frequently when physicians in town talk about UB. Could you explain what it is and why the subject generates such heat?

I could spend three hours on this one. The practice plan at UB is not like the practice plan at most places. The practice plan is the doctors in the medical school practicing medicine billing for their services under the rules and regulations of the State of New York and paying their expenses, hopefully funding some of their research from that money, and then paying taxes through the dean’s office to the school of five percent, which incidentally is not high compared to other medicals schools around the country. It varies from three to ten percent around the country.

This is something that medical schools do?

Yes. This is not unusual. It does not produce a lot of money. The practice plan itself produced somewhere around $84 or $85 million, but the taxable component of it that went to the Medical School, was only about $2.5 or $2.7 million, so it’s almost not even worth fighting about.

On the other hand, when I started in this job, the practice plan was chaotic. The governing board theoretically was supposed to monitor and govern the practice plans, but it didn’t function. Under the union rules, every department, whether it was a department of one or 150, got one vote on the board. Some departments didn’t exist as a functioning, corporate entity. One person even paid the bills out of his wife’s checkbook. Many departments were similar to shareholder corporations, some were profits, some were non-profits. We’re still converting the profits to not-for-profits, but most of the departments now have the same corporate structure, so they all look the same now. They have the same corporate structure as nonprofit entities. There is no single shareholder, so the chair can’t be in control of everything now. Each one of them now has the same accounting system, the same planning and budgeting system. They’re all on the same lockbox system. Each department has the same contract with UB Associates.

I figure this practice plan has come light years compared to where it was. They now have corporate contracts for each one of the partners and for new faculty members. They have rules of how to do compliance and budgeting. We have come up with how much money they should put away for a rainy day. That’s progress. It wasn’t made without a lot of pain, especially among people who didn’t want to change. But the rules and regulations of the federal government mandate a lot of what we have to do.

Is it far enough? No. I think it should be run with more professional staff. I think we should go to a multispecialty group practice in which there’s a single corporation. I think it would be an efficient way to help develop the medical school culture that needs to be developed here. The more things that these people can do together, like at most schools, which need to be located together, they develop more culture. Which is  part of what was lacking. It takes time. But we’ll get there. We’ve made a lot of progress.


How do you feel about the proposed High Street medical corridor project?

I still think it was the right thing to do for this community. It remains to see what happens. I really think what should have happened at this school a  long time ago was it should have been concentrated. That was an opportunity. You’re never going to get all the faculty down at one site because no one site in this community does all the services—unless you’re willing to close down things and open them up at one site. But I think it was the right thing to do. I think at best it’s been delayed. It would be a tragedy for this community if it didn’t happen.

If Kaleida falls apart, what does that do to UB’s medical school? Would it matter?

It matters only in that we will make changes to meet that situation.  I don’t think that’s going to happen. That doesn’t mean that there may not be more drastic measures in the Kaleida system. But I don’t think it’s going to happen. Sure it will affect us. But it will not close us down. We will move forward. We are already making plans. Remember, our view is if we can’t get to an affiliation agreement, which I think improves the current situation, we’re going to make plans to move forward with or without an affiliation agreement. So we’re going to make plans. And I think what we’re really looking  at is how do you configure the school in the future and what changes do you make in the environment. I’m not worried about the school.

Are you on the Kaleida Board?


Do you want to be?



We are part of a graduate medical education consortium. Most of the faculty who train the residents are in various medical departments, but the sponsor of the residency program is not the university, it is the consortium.

Sponsors of residency programs are reviewed by ACGME [Accreditation for Continuing Graduate Medical Education]. The Buffalo consortium is on probation. There are 400 sponsors in the country. Twenty are on the consortium model. Of the nine that are on probation out of 400 sponsors, over half are on the consortium model.

There are 55 programs in this consortium. Each of those has a special sponsor called a “residency review committee.”  So, for example, radiology, my subspecialty, has a radiology review committee. Only one of the 55 programs in this consortium is on probation. That’s the OB/GYN program in the Catholic health system.

UB is trying to develop an affiliation agreement, which we worked out with the ECMC administration. They’re ready to sign, the medical people there are ready to sign, the Giambra administration is not ready to sign because—you might ask them why.

Most people don’t realize what a complex situation exists here. Most places don’t operate like this. What we tried to do in the affiliation agreement is operate like any other medical school in the country.

We want to do away with the graduate medical education consortium here in Buffalo, in which the school is a component that has less than 30% of the votes. In the affiliation agreement, the school asks to get away from the consortium as the sponsor of the residency program.We’re trying to say to the hospitals, “Look, you’ll base your need on the number of residents you have, you’ll be guaranteed you won’t lose money.”

We’re worried about making sure the residents get a good education. The issue of service—because the hospitals are using these residents for service—I can’t solve that problem. These residents aren’t here to provide service for hospitals. They’re here for an education. What we want to do is make quality education in the forefront.

We want that money—not their money, but the money that the hospitals are using to pay faculty—to be paid to the university because in fact they should be working for the school. And all research dollars earned by faculty should be run through the Research Foundation or the UB Foundation. This gives UB a better name. And it also brings more of the back money to the campus.

What’s the likelihood of this affiliation agreement actually happening?

I don’t know. But we will make plans in case it doesn’t. We’re going to go ahead and do what we need to do to keep the school going, to make the school stronger and thrive.


How’s it doing now? What’s the health of UB’s medical school?

Look at the LCME [Liaison Committee on Medical Education] report, which publishes statistics gathered from every medical school, [online at  http://www.smbs.buffalo.edu/deansoffic/RptMeasure2000.htm]  We’re 50th-65th percentile in most things. There’s one thing we’re below: we need to do better in minority recruiting. That’s a tough nut to crack because everybody’s going after the same pool of applicants. We are in the 90th to 95th percentile in grant research dollars earned per faculty member, which tells me what faculty I have is very good on the basic research side. I just don’t have enough of them. Both the clinical expenses and the basic science research expenses for faculty have increased, which means that the programs are growing.

Or that they’ve gotten more expensive.

But we’re still above the 50th percentile in both, so that means compared to other medical schools, no matter what you want to say, we’re okay.

We’re going through a major LCME self-study process now. LCME is the accrediting process for the medical school. It’s done once every seven years. I think there are over 100 people involved in this self-study, which will come up with a strategic plan for this school, and which will come up with its deficits and its good points. At the end we will try to fix the deficits.


There were three goals when I came in. The first goal was to put some semblance of sanity into the finances of the practice plan. The second goal was to do an affiliation and deal with affiliation agreements. The third goal was to add infrastructure to the schools.

Looking back on things, in retrospect, I don’t think I ever appreciated three things. One: the complexity of the situation. It’s not possible to explain to someone; they won’t believe it. Two, the union rules and regulations. And three, just the resistance to change, not just within the school, but within the community and within SUNY itself. It’s just very, very difficult to move things along. If you go back over the last four years, I don’t think any of the things we’ve done have been rocket science. It’s sort of like English 101.

(Click here for links to the first two parts of this continuing series on Buffalo’s health care crisis and the three earlier articles on the proposed Children's Hospital move.)

copyright 2002 Bruce Jackson