As Governor Pataki gets treatment in a hospital this week, a commission he and the state Legislature convened is formulating a plan to close and restructure hospitals across the state.

The Commission on Health Care Facilities in the 21st Century is holding a hearing Friday in Brooklyn’s Borough Hall at which 39 elected officials, hospital administrators, union leaders, and community health providers are scheduled to testify.

The hearing is one of dozens the commission is holding throughout the state as it sifts through hospital data and financial information before making its recommendations in December.

“This is a painful thing for people to hear, but we need to embrace the failure of some institutions as a way to make the entire system stronger,” the director of government affairs at the Business Council of New York State, Elliott Shaw, said.

Industry officials said health care executives are worried about their institutions getting the ax, and some have been talking privately about mergers and new affiliations.

The president of the Healthcare Association of New York State, Daniel Sisto, said the anxiety stems partly from the chance the commission could “overreach in terms of downsizing.”

“We have a commission that’s going to tighten the system in the hopes of right-sizing it to stabilize the institutions, and at the same time we have the Bush administration and Pataki administration proposing massive cuts in Medicare and Medicaid, which would only serve to further destabilize the institutions that remain,” Mr. Sisto said.

The executive director of the commission, David Sandman, said that following the closures of more than 30 hospitals in the past decade and a slew of bankruptcies, changes are a must.

He said the recommendations will be a “balance of both art and science” and rely on numbers, on community input, and on a host of other factors. He said that calling it the “closing commission,” as some have, is a misnomer because while closures are a possibility, the panel will also focus on converting facilities.

“The commission has already been enormously successful,” Mr. Sandman said. “It has really changed the tone of the dialogue in New York State. It has prompted many institutions to engage in a process of serious self-assessment.”

The president of the Greater New York Hospital Association, Kenneth Raske, said the commission is functioning in a “highly professional fashion.” If $2.5 billion in state and federal money is allocated, which the commission is hoping for, restructuring is possible, he said.

“We need a systematic approach to the health care delivery system and not these random closures that we’ve seen where communities could be deprived of services,” he said.

Although the commission is considering several factors as it determines its recommendations, hospital occupancy rates have emerged as a lightning-rod issue.

The commission released a report earlier this month showing that a high percentage of hospital beds statewide are empty. The report showed that some hospitals, like Cabrini Medical Center and NYU Downtown Hospital, both in Manhattan, had only 25.6% and 34.1%, respectively, of their beds filled in 2004.

The Hudson Valley Medical Center, where Mr. Pataki had an appendectomy last week, had a 61.6% occupancy rate in 2004, compared with the state average of about 69% and the industry standard of about 85%.

But, Mr. Sisto said putting too much stock in occupancy numbers is a bad idea because the number of beds a hospital is licensed for does not also match the number they have in use.

Assemblyman Richard Gottfried, a Democrat, said he doesn’t want the commission to become a tool to cut back health care in underserved, low-income neighborhoods. Protests have been intense in neighborhoods in Brooklyn, Queens, and Staten Island where hospitals have announced closures in the last few years.

“They are not throwing darts at a board … is it going to be absolutely perfect? Probably not, but it’s long overdue,” Mr. Shaw said.