ECMC is still a public institution, so why the high salaries?

The Erie County Medical Center (ECMC) has a long public history. It was originally run by the City of Buffalo, but it was later turned over to the County of Erie for management and funding. The City retained the reversionary rights to the hospital should the County ever seek to divest itself of the institution. The hospital was known as E.J. Meyer Memorial Hospital in those days.

In the late 1970’s, when construction of the current facility was nearly complete, but before it was opened, the then Erie County Executive Ned Regan attempted to get the County out of the hospital business by transferring it to pre-Kaleida Buffalo General Hospital, which was in need a new facility. After a long, protracted, and heated debate, the County Legislature turned that proposal down.

Over the past nearly forty years, since the hospital’s public operation was reaffirmed, the institution has gone through various transformations. The number of beds in the facility was reduced. Several CEOs came and went. Some of them were professional health facility administrators and others had more governmental/political experience. Programs were added and subtracted. But the institution remains a public facility.

In the early part of this century, the Giambra administration, in search of operating cash to cover county budget expenses after county property taxes were slashed, came up with the idea of basically having the hospital purchase the hospital from the County. The deal provided the County with more than 80 million dollars of cash, but the County also was left with the ultimate responsibility of paying off the hospital bonds for the purchase if the hospital could not do so. Basically that would mean that the County might need to pay back a good deal of the cash that it received in the arrangement.

The structure of the hospital changed when the hospital bought the hospital. State legislation was required to complete the deal, so the governor was given some appointments to the hospital Board of Directors, along with those of the County Executive.

As this was all moving along, the other hospitals in the area, in various cooperative moves, merged into to the two behemoths that we have in Western New York today: Kaleida and Catholic Health. Going one additional step, the Great Lakes Health System of WNY was created to facilitate coordination and cooperation between ECMC and the Kaleida organization.

All of this was driven by forces related to rapidly rising health care costs. There were too many hospital beds, and patients stayed in them too long. With a big push from the federal and state governments, as well as insurance companies, hospitals were required to reform and shrink in size while measures of patient care increasingly emphasized results and reductions in return visits. The process has generally worked to bring costs under better control.

None of this has meant, however, that the costs of doing things in hospitals has gotten less expensive. Anyone who has stayed in a hospital during the past few years or knows someone who has, be it for a few hours or a few days, is usually shocked by the bill for the stay. The cost of a simple surgical procedure, apart from the cost of the surgeon’s work, can run into the thousands of dollars, even if the patient was in at 7 AM and out by 4 PM. Most hospitals are highly unionized, so personnel costs for rank-and-file employees are high, and so are the medications and equipment used. Those television ads promoting the hospitals do not come cheap either. The ads exist because competition exists for patients among the various hospitals in the region. Public relations and marketing are expensive. That activity does not serve any patient.

So that brings me back to ECMC and its role as a public institution.

County subsidies to ECMC

When the Giambra hospital sale occurred several years ago, some folks would have had you believe that the county was out of the hospital business. Not so.

The 2016 Erie County budget contains an appropriation of $16.2 million to ECMC. The cost is related to the County’s obligations under federal law for services to patients who cannot pay their bills. In addition, as part of the deal whereby the hospital bought the hospital, county government is obligated for the costs of workers’ compensation and retiree medical insurance for hospital employees who worked there prior to the approval of the new management structure in 2004. The cost of those items is $3.25 million in 2016. The total contribution of taxpayers to the Erie County Medical Center Corporation this year is $19.45 million, or about 7.5 percent of the total county tax levy.

In addition, earlier this year the County Executive requested the Legislature’s approval of an additional $5 million to cover overruns in the appropriation. County financial responsibilities will likely continue with multi-million contributions to ECMC for years to come. Things have gotten very expensive in recent years.

The ECMC 2015 Annual Report, as required by law, lists all employees who make more than $100,000 during the year. There were a total of 276 such positions, mostly people providing direct patient services – doctors, nurse practitioners, nurses, pharmacists, etc. There are also a large number of administrative types on the list.

If you were to try to sort through the list, as I did, you might notice a little problem. The list doesn’t get broken down as you might expect if you were looking for certain categories of personnel: administrators and other titles; or rank by salary; or alphabetical by the employees’ last names. Some clever bureaucrat at the hospital, who apparently never took a course in public organization transparency, came up with this clever little way to sort the 276 $100,000+/year employees: by their middle initials! I guess if you are stuck with that pesky state law that requires a listing of $100,000+ personnel and you would like to make it as difficult as possible to find out who is on the list, then sorting the data by middle initial helps do the trick.

But diving into that data is interesting. Someone who thinks that work in a public institution is a public service might be quite surprised with the administrative salaries at the publically owned Erie County Medical Center.

In late 2015/early 2016 there was a change in leadership at ECMC. The CEO, Richard Cleland, was ousted along with the Senior VP of Operations, Mary Hoffman. Cleland made $637,739 in 2015; Holmes, $328,903. At first, the impression was given that they were dismissed for cause, but later the hospital settled with Cleland for a full two years of pay and the story went away.

Into the CEO’s position moved Thomas Quatroche, Ph.D., most recently hospital president, but as recently as 2015, the hospital’s senior vice president of planning, marketing and business development at a 2015 salary of $419,393.

Quatroche did public relations and marketing work for the majority of his tenure at the hospital. He has been a politician (Hamburg Town Board member) and an educational administrator (Erie Community College, Niagara County Community College). In January, when he was moved up to ECMC CEO, his salary was not disclosed. Just recently it was announced that his new salary as CEO is $725,000. He made about $200,000 ten years ago when he was hired to lead the hospital’s PR and marketing effort.

For perspective, when I was county budget director in the late 1990s, we dealt with an issue concerning the appropriate salary for the CEO, and we settled on about $200,000. The hospital was a little bigger then.

Other ECMC administrative salaries of note include some that have attracted public attention, including regular-part-time general counsel Anthony Colucci III who made $451,000 in 2015 (plus hundreds of thousands more in annual payments to his law firm); and Peter Cutler, who recently came to the hospital from Governor Cuomo’s economic development team in Albany. Cutler’s salary has not been announced yet – we might need to look for the $100,000+ list in next year’s annual report (under the K’s – his middle initial.) Cutler’s immediate predecessor was paid $211,078.

Other well paid administrators at the hospital include:

  • Chief financial officer — $225,309
  • Senior VP of operations — $287,772
  • Senior VP of operations — $165,520
  • Controller — $173,678
  • Budget director — $114,601
  • Assistant VP for facilities construction and maintenance — $155,310
  • HR consultant — $185,417
  • VP of HR compliance — $163,087
  • Chief HR officer — $125,000

ECMC is still a public institution

I am not qualified and would not venture to determine the quality of patient service at ECMC. I have no reason to doubt that excellent patient service is provided. There exist various public and private ratings of hospital services where inquiring minds can check such things out.

As a public institution that draws millions of dollars annually in taxpayer subsidies, however, and whose very existence is guaranteed by the County’s full faith and credit, I think it reasonable that costs at a public institution should be reasonable. The advertising is excessive. The salaries of the top administrative honchos seem far in excess of what a public institution should pay. Compare some of them with the salaries of comparable department heads in the county government itself, who generally have equal or greater responsibilities.

I know that the response to all this is that ECMC needs to compete for patients and top administrators. I don’t understand the logic of competition among hospitals. Merge and collaborate, and do more of that than is being done today.

ECMC has noted that it did no national searches for their top administrators. They have often hired the guy down the hall. The administrators may be competent but there is no justification for the salaries. They almost make the folks at the Erie County Water Authority look like pikers!