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By Mike Hudson

While Kaleida Health Care drowns in a sea of red ink so vast that plans are being made to close Children's Hospital, administrators of the non-profit corporation rake in six-figure salaries, receive bonuses and "corporate incentives" totaling millions of dollars annually and enjoy lavish expense accounts, corporate credit cards and other perks that would make executives at Enron blush.

Confidential payroll records obtained by the Reporter show the lion's share of $3,718,264 in bonus money paid out in the year 2000 went to line the pockets of a small group of administrators at Kaleida, Buffalo General Hospital, Millard Fillmore Gates Circle and Children's Hospital.

And a source familiar with Kaleida's accounting practices said the bonuses never showed up on financial statements presented to the company's Board of Directors but were routinely lumped in as part of the overall operating deficit for the month of April, when the bonuses were paid.

"I was stunned when I found out about it," the source said, speaking on the condition of anonymity. "They'd say, 'We lost this much last month, we need to lay some people off.' Meanwhile, they were laughing all the way to the bank."

The people laid off, the source added, were invariably nurses and other support personnel at the lower end of the salary scale.

Records for 2000 show that, at Children's Hospital, administrator Thomas Fenter augmented his $187,412 salary with a bonus of $42,291, while administrator Lawrence Zielinski added a bonus of $43,404 to his base salary of $176,403.

At Millard Fillmore Gates Circle, administrator Dr. Mark Shields magnified his whopping $339,917 salary to the tune of $71,095 in bonus money. Administrator Andras Vari received a bonus of $46,742 on a salary of $256,958, records show.

Taking top honors in 2000 was an administrator for the corporation, Carolyn Frank, who not only netted a base salary of $363,380, but was awarded a $78,076 bonus. Also experiencing windfalls in the Kaleida corporate office were Richard Braun Jr., who drew a salary of $284,255 and a bonus of $47,778, and Dr. Michael Noe, who got a bonus of $43,404 on top of his $261,990 salary.

Other top administrative earners for the year were James May ($226,575 salary, $19,631 bonus), Ludwig Waiter ($103,689 salary, $7,7664 bonus), Francis Meyer ($152,776 salary, $19,450 bonus), Linda Nenni ($145,522 salary, $12,651 bonus), Anthony Zito ($186,537 salary, $13,598 bonus), Edward Hunt ($92,683 salary, $5,282 bonus), Melva Visher ($102,764 salary, $9,102 bonus), Rosemary Kuca ($90,848 salary, $10,300 bonus), Cathleen Wright ($118,928 salary, $16,695 bonus), Margaret Mary Wagner ($127,489 salary, $18,503 bonus), Lawrence Piselli ($108,014 salary, $8,143 bonus), and Andres Garcia ($117,405 salary, $14,027 bonus).

In addition to the extravagant salaries and bonuses, many Kaleida administrators often enjoyed company-provided vehicles, corporate credit cards and lavish expense accounts in 2000, presumably as rewards for implementing the sound fiscal management policies that led the company to post an operating loss of more than $52 million the following year.

Obscenely high benefits packages for hospital administrators may not be the only reason behind the proposed hospital closing, however. It was disclosed over the weekend that Bryant H. Prentiss III -- a former Kaleida board member who served on an advisory panel that two years ago recommended moving Children's Hospital services from their current location -- later sold the corporation a piece of property on Main Street near where Kaleida officials now say they want children's services located.

Kaleida paid Prentiss $300,000 for the property.

Still, Kaleida officials and current board members in favor of closing the 110-year-old nationally recognized children's institution cry poor in their defense of the decision that has all of Western New York outraged.

"People talk up keeping Children's where it is," Kaleida Board Member Dr. Patricia Duffner told reporters. "But where will the money come from to support it?"

The fact is that Children's Hospital actually made money in the years prior to being taken over by Kaleida in 1998. Dr. Steven Lana, who is helping lead a fight to wrest the hospital away from Kaleida's corporate clutches, says mismanagement has cost Children's hundreds of thousands of dollars since the merger.

"We think it can be better-managed," he told reporters. "We think there are efficiencies that can be found."

Kaleida officials point to a recently completed report by an outside consulting firm which they say recommends closing Children's. They have steadfastly refused, however, to let the public, the media or anyone else outside the corporation view the report.

One person familiar with some of the specific recommendations in the report is Dr. Bradley Fuhrman, chief of pediatric critical care at the hospital.

"This plan was developed by accountants, not medical people," he charged. "You couldn't practice high-quality medicine with what they presented."

Opponents of the closing say they may appeal to state Comptroller H. Carl McCall and state Attorney General Eliot Spitzer to launch a thorough investigation into Kaleida's management and accounting practices here.

McCall has already gone on record, as has Sen. Hillary Clinton, in opposing the closing of Children's.

"This is Enron all over again," a source familiar with Kaleida's accounting practices told the Reporter. "When people find out what's been going on over there, they're not going to believe it."


Niagara Falls Reporter March 5 2002