An Embarrassment of Audits

Numbers never lie, as further examination of Public Health Trust bookkeeping reveals

Last month the Public Health Trust released an internal audit disclosing that it was stiffed $25 million by nonresident patients -- the majority of whom the hospital should not have admitted according to its own rules. Many were foreign nationals arriving for elective surgery who either didn't have insurance or whose insurance did not apply here; these patients promised to pay up front but never did.

And while the audit's language was severely self-critical, calling the trust's own collection efforts "ineffective," this was, of course, not the end of the story. The day the PHT released the results of its audit, I wrote about a soon-to-be-released second audit done by Miami-Dade County's Office of the Inspector General ("Doctors and Deadbeats," December 18, 2003), which determined the PHT had accrued $85 million in unpaid nonresident patient bills.

The discrepancy between the two studies caused a furor, with the county commission immediately asking Marvin O'Quinn, the trust's relatively new president, to attend a meeting on December 18 to explain what was going on. The PHT, as the name indicates, is a public entity funded by a countywide half-penny sales tax and overseen by the county commission. Its mission is to make sure the county's uninsured receive medical care, and to that end it uses this tax money to contract the University of Miami to run Jackson Memorial Hospital and its affiliates. O'Quinn appeared humble at first, acknowledging that his honeymoon was over (he started in July 2003). Then he attempted to explain why the two audits were so different.

Marvin O'Quinn is president of the Public Health Trust
Jonathan Postal
Marvin O'Quinn is president of the Public Health Trust

Apparently he didn't have to bother. Commissioners practically stumbled over themselves rushing to assure O'Quinn that they had complete confidence in him, and that they understood how scurrilous and scandal-mongering newspaper writers could be. "We know newspapers," Commissioner Betty Ferguson said knowingly at the meeting. "The paper will publish what it wants to publish," snorted Commissioner Javier Souto. Dan Ricker, publisher of the online government journal the Watchdog Report, wrote that commissioners Dennis Moss and Dorrin Rolle "told O'Quinn when it comes to the press they never get the story right and commission Chair Barbara Carey-Shuler said the recent Miami New Timesstory citing the $85 million loss 'did not tell the story correctly.'"

Now, I didn't make up the numbers and nobody called the next day demanding a retraction. Fact is, my story and the OIG audit were accurate. The commission just doesn't like being surprised. O'Quinn ended up writing a December 29 memo explaining what happened. The reason for the difference between the two audits says a lot about how the PHT was run in the past, and volumes about how it needs to be run differently in the future.

"JHS [Jackson Health Systems] maintains two collection files: active and inactive," O'Quinn wrote in the memo. "The active files ... represent accounts we are currently attempting to collect through our internal process. The inactive file ... represents those accounts we have attempted to collect internally, have written off as bad debt and delegated to an outside agency to continue to collect."

In other words, the trust wrote off $60 million in bad debt because it had delegated the task of collecting it to an "outside agency." The auditors didn't tell the board, the county commission, or the public, and were prepared to present the $25 million figure as the most accurate measure of the problem. The OIG, O'Quinn continues, "not being aware of our billing practices, looked at both the active and inactive files."

When it came down to it, the OIG report didn't even dwell on the $85 million, much of it accumulated through the treatment of emergency-room patients who must by law be cared for. Instead that report focused on 68 cases representing $16.3 million in debt deemed collectible.

This isn't O'Quinn's doing. He just inherited an institutional culture that needs to change. His predecessor, Ira Clark, under whose administration the unpaid debts accumulated, was notoriously secretive and unresponsive to the county commission and by extension the taxpayers. Clark's relationship with the University of Miami Medical School, the trust's biggest vendor, was cozy and unquestioning.

Clark is gone. O'Quinn needs to definitively show that this is a new era. There are some encouraging signs, his memo being one of them. In it O'Quinn comes clean about the reasons that led to the inconsistency between the two documents: Management didn't understand the full scope of the OIG audit, nor the limited scope of the internal audit; the internal auditor should have been included in all meetings with the OIG to discuss its report; the release of the internal audit prior to the OIG report without explanation made it look like a coverup. O'Quinn was pretty straightforward about the consequences. "Our credibility was damaged with the public and the press."

His candor is refreshing -- something new and necessary at the PHT.

This brings up some discouraging news. The man ultimately responsible for the hiring of O'Quinn, PHT board member and former chairman Michael Kosnitzky, might very well be ousted by the time you read this. Kosnitzky is a reformer. He pushed for an unprecedented performance review of Ira Clark, whose health was affecting his work, until Clark simply resigned. He fought for years to give the OIG desk space inside PHT offices (which was granted only last year), and has insisted on more and more thorough reviews of UM's annual operating agreement with the PHT. He wants more transparency on what the $70 million that the trust pays to the university actually buys. All of this has made him unpopular with the board, many of whom are UM allies, as well as UM's administration. The result is that his reappointment to the board is being challenged by previous PHT board chairman Amadeo Lopez-Castro, who is nominated to replace Kosnitzky. County commissioners who will ultimately vote on the board members are being quietly lobbied by the likes of UM trustee Mike Abrams, former PHT lobbyist.

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