THE collapse of the business model for HealthAlliance of the Hudson Valley is almost epic in its scope and suddenness.

Five years ago, the relatively small Kingston community finally concluded that two hospitals could not operate independently within several blocks of each other and still pay the bills. The plan was for integration of Kingston Hospital and Benedictine Hospital to yield efficiencies adequate to maintain the two operated as one.

In short order, the promise of salvation through efficiencies has been drowned in red ink.

The plan failed and the harsh truth is that Kingston today simply may have too much hospital and too little work at too narrow a financial margin to long sustain both facilities.

It is, in truth, hard to comprehend how $47 million in state support for integration of the two hospitals could so quickly turn into a $10 million operating deficit for the resulting whole.

The problem would seem to be a shift in the healthcare paradigm.

RAPIDLY changing medical technology has undone the old hospital model, which was to serve as a kind of department store, all things to all healthcare needs. Sure, some hospitals were known to be better at this or that, but they performed a wide array of functions, some of which effectively subsidized the less lucrative.

Now, however, there’s a scramble to capture the market for the most lucrative procedures and tests. Modern technology increasingly is making it possible for doctors and private, for-profit companies to take that work in-house. This leaves less work and, significantly, often the least profitable, to the overbuilt hospitals.

HealthAlliance officials say the brutal economic downturn since 2008 only accelerated the loss of revenue as patients passed on elective procedures.

HealthAlliance Chief Executive Officer David Lundquist and Cynthia Lowe, chairwoman of the board, told us Wednesday that no decision has been made about closing one of the two hospitals. The tenor of the discussion with our editorial board, however, strongly suggested that, when preliminary decision time comes in about three months, a closing within 18 months thereafter almost certainly will be an integral part of the solution to the fiscal crisis. Continued...

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That reality, previously telegraphed by HealthAlliance, has shaken the community. HealthAlliance is the biggest employer in Kingston, with about 1,500 full-time and 300 part-time workers. No numbers have been attached to the prospect of closing one of the hospitals, but, if savings are to come, it surely will have to be a significant portion of what have been good, steady jobs – including some at the higher end of the pay scale.

THEN, of course, there is the bitter aftertaste of the battle to create HealthAlliance, which included some real skepticism over the effect of the integration of the two hospitals on the autonomy, identity and constituencies of the secular and Catholic pieces.

The anger on the street has been palpable and sustained since HealthAlliance confirmed earlier this month that it was considering closing a hospital. Within context, it’s understandable. But, for our money, that anger, if sustained much longer, will be entirely backward-looking and, therefore, thoroughly unproductive given the challenge at hand.

HealthAlliance is in a substantial hole. It’s in the best interests of the community to ensure it has the best healthcare it can afford. The central question that must be answered, and quickly, is what can be salvaged and sustained to meet the community’s current and future healthcare needs.

GIVEN the rapid changes in how healthcare is delivered and by whom, moving forward is likely to involve the transformation of the remains of HealthAlliance into some sort of niche institution. This will require insight about the direction of healthcare generally, as well as the particulars of the region’s demographic trends.

The considerable challenge facing HealthAlliance is convincing the community that, having failed so quickly and spectacularly with its most recent business plan, it truly knows what it’s doing this time around.

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