Auditor scolds hospital agency on billing
The agency that runs rural state hospitals and other health facilities does not follow procurement laws and lacks adequate controls on information technology and billing, according to state Auditor Marion Higa.
State auditors and an accounting firm hired by Higa found the Hawaii Health Systems Corp. lost at least $204,000 in Medicare and Medicaid reimbursements in 2006 because the claims were not submitted within a one-year deadline. The auditor said state hospitals do not follow or in some cases do not even have established billing and collection policies.
Higa said the health system refused to sign a letter attesting that its own financial statements were presented fairly, which prevented the auditor from giving opinions on the corporation's financial statements.
She called the lack of cooperation by the agency "bothersome."
The state auditor's report also criticized the salaries of top executives of the corporation, saying that the salaries are "not comparable to other state agencies."
In a written news release, the corporation said, "Health care is an extremely complex business. ... We are trying our best to balance the operational needs of the hospital, while still trying to comply with a myriad of regulations at both the state and federal level."
The hospital system said that its own auditors have not found any material weaknesses in its finances.
The news release did not directly address alleged lax billing and collection policies, but said the health corporation has "developed internal controls that constantly monitor collections." The health corporation also said it collected $394 million this fiscal year and that "no hospital can fulfill 100 percent collection goals."
The state auditor's examination was limited, and the findings of the review "are not valid," according to the health system.
The news release went on to say that "unfortunately, the (state procurement) code was not set up to run hospitals," and the agency is working with lawmakers to see what portions of the procurement code apply to state hospitals.
Higa called the procurement issue "serious," adding that "we believe they are making their own interpretation of their authority."
The auditor and the hospital system noted that salaries for top executives are near or slightly lower than other private hospital executives in Hawaii.
However, the state audit report notes that salaries are still two to three times what state department heads make, and she questioned bonus payments and severance packages of one to two years' salary.
Thomas Driskill Jr., health systems president and chief executive officer, said in the written release, "We are gratified that the report found no wrongdoing, no malfeasance, no significant loss and no misappropriation of public funds. At the same time, as a responsible hospital system, we continue to make improvements."
The hospital's board, which oversees the operations of the hospital system, met yesterday on Kauai but did not issue as of yesterday afternoon a statement on the auditor's report.
The corporation runs 12 hospitals on five islands and has 3,200 employees. It received $36.3 million in state tax money in 2006.