More on Dysfunction in NYS

February 5, 2014

An article about health insurance policies purchased through the New York State health exchange (an outcome of the Affordable Care Act) appeared on the front page of our regional newspaper (The Journal News) on Sunday, 2/2 –

The reporter had canvassed all of the acute-care hospitals in the Lower Hudson Valley and found that all would accept coverage offered through the exchange except one: Westchester Medical Center.

The reporter explained that the CEO of Westchester Medical Center had said the insurance exchange reimbursements were too low to cover the costs of the services it offers as a teaching hospital.

“We want to participate,” CEO Michael Israel said. “We have not been offered rates that we can live with.”

Westchester Medical Center (WMC) was originally a subsidiary of Westchester County Government, and it was reorganized in 1997 as a “Public Benefit Corporation”, one of about 1,000 of these ‘shadow government’ entities which exist across the state. (See a report issued by the NYS Comptroller in December 2013 —

Since this conversion, Westchester Medical Center (WMC) has been no stranger to controversy.

WMC is very similar to Erie County Medical Center (ECMC):  Both are teaching hospitals; ECMC has 569 certified beds; WMC has 652 certified beds; both were formerly subsidiaries of County Government; and each has converted to a Public Benefit Corporation.

One marked difference between ECMC and WMC shows up in the category of personnel and payroll.

In the year ending 12/31/2012, ECMC reported 3,436 employees and a gross payroll of $154 Million.  WMC reported 3,928 employees and a gross payroll of $280 Million.

ECMC paid a bonus to 61 employees, totaling $245,381. The highest individual bonus reported was $15,000.  That seems reasonable and fair, assuming there was some criteria employed to gauge the performance above and beyond the salary paid.  The CEO at ECMC total compensation was reported at $698,000.

WMC paid a bonus to just 13 employees, totaling $940,338.  The CEO at WMC total compensation was reported at $1,375,000 including a bonus of $339,000. Even the next in command at WMC was paid more than the CEO of ECMC:  total compensation $800,000, including a bonus of $150,000.

As CEO Michael Israel points out in a subsequent article published in The Journal News (2/4/2014)|newswell|text|News|s

““I don’t think it’s wrong or objectionable to want to be reimbursed an amount of money to cover the costs of treating our patients.”

Well said, Mr. Israel.

The remaining question is:  What sort of accounting shenanigans took place to allocate all (or a portion of) Israel’s compensation – and the other 12 who received extraordinary  bonuses – to the cost of treating patients?

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