BUFFALO, N.Y. - An audit of the Erie County Medical Center found hospital administrators have not lived up to reporting requirements to the county, and hid a payment for advertising meant to win public support as a special commission examined hospital operations statewide.

"While the hospital appears to be moving forward financially, as is evident from its operating surplus in 2006, the significant and repeated, almost systemic, violations of internal controls raise serious questions about the manner in which the hospital is operating," Erie County Comptroller Mark Poloncarz said Monday.

The four-month review by Poloncarz's office examined the purchase and operation agreement that resulted from the county's sale of the hospital to a newly created public benefit corporation in 2004, as well as advertising and other records.

The audit said that between the sale of the hospital itself and the retirement of the Erie County Medical Center Corp.'s debt under current agreements, the sale will cost the county at least $503 million from 2004 through 2033.

ECMC administrators responded by questioning the timing of the audit, which comes as the hospital is in difficult consolidation talks with the Kaleida Health hospital system at the recommendation of the Commission on Health Care Facilities in the 21st Century.

"This isn't a performance audit; it's a headline hunt that the comptroller chose to release at a particularly sensitive time in the negotiations to form a new health care model for this region. Why is the comptroller trying to make ECMC look bad at this particular time," hospital spokesman Thomas Quatroche asked in a prepared statement.

"It is troubling to say the least," said Quatroche, who said the audit ignored the "financial success of ECMC over the past three years."

Among its findings, the audit said the hospital's president and chief executive, Michael Young, acknowledged that the hospital tried to conceal a payment to a vendor for advertising to avoid a possible public disclosure through a Freedom of Information filing.

Later Monday, ECMC released a 16-page response to the Erie County Legislature, questioning Poloncarz's impartiality and charging the audit "is full of inaccuracies and misstatements that were used by the comptroller and his staff to reach erroneous and, in some instances, misleading conclusions."

Poloncarz said ECMC officials did not object to the audit's findings, but did object to its tone.

Copyright 2008 - Newsday and the Associated Press