Stanislaus County Grand Jury • 2005-2006

Stanislaus County Health Services Agency Grand Jury Case # 06-16

Published: September 06, 2005 21 pages
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Note: Missing finding numbers detected: F9, F12, F13, F14, F15, F18, F19, F22, F23, F25, F26, F27, F28, F29, F30, F31, F32, F33, F34, F36, F37

Findings and Recommendations 17 findings

F1
HSA did not have adequate funding to meet budget requirements from fiscal years 1997 through 2001 and 2003. Table 1 summarizes the financial results for HSA from 1997 through 2005. Line 18, Total Revenue and Gains, or Losses states that from 1997 through 2001 the HSA operated at a deficit ranging from $1.1 million to $8.2 million per year. In 2003 another deficit of $3.7 million was incurred. The years of 2002, 2004, and 2005 all operated within a balanced budget reflecting adequate County funding. Table 1 data was extracted from each of the County’s annual Independent Auditor’s Reports and Financial Statements for fiscal years 1997 through 2005. 5
Related Recommendations (1)
R1
Identification of clear goals and related performance standards
F2
The Plan contains a three-year financial projection incorporating reduced levels of financial support from the County beginning with $7.44 million in fiscal year 2005/06 and ending with $3.75 million in fiscal year 2007/08 plus additional County matching funds of $161,075. Planned net income for the three year plan is: Fiscal Year Net Income* 2005/06 $312,863 2006/07 ($107,630) 2007/08 ($2,013,283) * Parenthesis indicates a loss. Elimination of the losses is dependent on increased state and federal reimbursements through designation of selected clinics as an FQHC-LA or successful state legislation designed for that purpose. Tobacco Settlement
Related Recommendations (1)
R2
Lack of financial information
F3
In January 2006 the BOS approved the securitization of an additional $20 to $30 million of Tobacco Settlement revenue. The resulting bond proceeds would be deposited into an endowment fund, similar to the first Securitization Bond, and the interest income would be available for any general governmental purpose or for capital expenditures. Internal Funding Solutions
Related Recommendations (1)
R3
Internal Funding Solutions - Revenue from the Property Taxes/Current Secured and Property Taxes/In-Lieu Vehicle License be prioritized by the BOS so that a significant share is allocated to retire the internal note.
F4
Ancillary Services (Laboratory, Radiology, Pharmacy, and Rehabilitative Services) is currently located at CCII. The plan suggests that some of the Ancillary Service Clinics be relocated to CCII Family Practice Clinic building after it is vacant. However, if the Family Practice Clinic and the Residency Program are moved to Paradise, it would follow that the Ancillary Services would also move to Paradise to keep associated services near the patients and providers.
Related Recommendations (1)
R4
High general and administrative expenses
F5
It appears that the objective of the plan is to move HSA operations out of MAB and CCII. Most operations would be moved to the Paradise Medical Office where additional leased space is required. The annual lease cost of the Paradise Medical Office is $521,412 or $1.60/square foot for the existing lease. Table 2 Health Service Agency Facility Plan Current New Practice Location Location Notes 1 Family Practice Clinic CC2 Paradise Remodel 2 Residency Program CC2 Paradise Remodel 3 Family Practice Paradise NC 4 Family Planning Paradise NC 5 Primary Medical Care Paradise NC 6 Woman’s Health MAB McHenry To vacate MAB 7 High Risk Ob Gyn MAB McHenry To vacate MAB 8 Behavioral Health Paradise Paradise+ Additional leased space 9 Pediatrics MAB CC2 Family Practice Building If CC2 closed then MAB 10 Women, Infants, & Paradise Safety Children Center 11 Library Paradise Paradise+ Additional leased space 12 AMR Paradise Paradise+ Additional leased space 13 Specialty Clinics CC2 NC If CC2 is closed then MAB 14 Urgent Care CC2 NC If CC2 is closed then MAB 15 Community Services Paradise Paradise+ Additional leased Agency space Notes:
Related Recommendations (1)
R5
FQHC-LA Designation - The BOS continue to pursue FQHC-LA status; however, contingency plans should be developed identifying alternative sources of revenue to fund HSA in the event the County is unsuccessful in this effort.
F6 Page 4
The County budget process includes a proposed and final budget with quarterly reports. This process allows for funding adjustments to be considered and approved by the BOS to meet any additional needs or reductions mid-year, and to take appropriate action as required in a timely fashion. FINDINGS The BOS approved the amount and level of mandated health care to indigents, low income and uninsured citizens of Stanislaus County, which was not consistent with their commitment to corresponding levels of funding. After many years of heavy HSA losses, in 2004 and 2005 the County chose to commit a source of non-tax base health related revenues to pay back the deficits over an eighteen-year period. This, however, did not lead to any additional or consistent sources of funds to HSA. There are other approaches for funding HSA that the BOS should evaluate and employ immediately. Loss of Funding Up until 1997, the County Hospital provided medical care to a large share of low income and indigent patients. To compensate the hospital for the higher cost of caring for low income patients they received additional revenue through “Medicare Disproportionate Share” funding. Under sworn testimony the CGJ found that the BOS received erroneous information leading them to believe that they would retain this funding even though they closed the hospital. Patients Served HSA provides health services and levels of care for patients that are beyond the level mandated. The County is required to provide health care by the Welfare and Institutions Code to a limited group of indigent patients. Indigent care represented only 11.6 percent of total costs for HSA. In fiscal years 2004 and 2005, the payer mix was: Payer Percent of Total Medi-Cal 40.6 Medicare 12.9 Medi-Cal Managed Care 9.2 Insurance 5.9 Personal Self Pay 7.9 County 1.7 Other 10.2 Indigent Care 11.6 Total 100% Deficits 1. HSA did not have adequate funding to meet budget requirements from fiscal years 1997 through 2001 and 2003. Table 1 summarizes the financial results for HSA from 1997 through 2005. Line 18, Total Revenue and Gains, or Losses states that from 1997 through 2001 the HSA operated at a deficit ranging from $1.1 million to $8.2 million per year. In 2003 another deficit of $3.7 million was incurred. The years of 2002, 2004, and 2005 all operated within a balanced budget reflecting adequate County funding. Table 1 data was extracted from each of the County’s annual Independent Auditor’s Reports and Financial Statements for fiscal years 1997 through 2005. 5 2. The Plan contains a three-year financial projection incorporating reduced levels of financial support from the County beginning with $7.44 million in fiscal year 2005/06 and ending with $3.75 million in fiscal year 2007/08 plus additional County matching funds of $161,075. Planned net income for the three year plan is: Fiscal Year Net Income* 2005/06 $312,863 2006/07 ($107,630) 2007/08 ($2,013,283) * Parenthesis indicates a loss. Elimination of the losses is dependent on increased state and federal reimbursements through designation of selected clinics as an FQHC-LA or successful state legislation designed for that purpose. Tobacco Settlement 1. In November 1998 the national tobacco industry and the states settled many areas of litigation involving the use of tobacco products. As a result, California received approximately $25 billion in annual payments through 2025. Stanislaus County participated in the settlement and was successful in receiving a share of the payments from the tobacco industry.
Related Recommendations (1)
R6
Level of detail in management information
F7 Page 17
BOS/Staff Communications - The Auditor/Controller should issue independent, public reports and recommendations to the BOS concerning any County department that is experiencing or is projected to incur deficits. These reports and recommendations shall be done in a timely fashion to allow management to take aggressive action necessary to insure a balanced budget. The CEO shall provide monthly financial oversight reports to the BOS for County departments that are experiencing deficits. HSA should provide information or data directly to the BOS or through the Health Executive Committee. Elected officials should provide greater proactive oversight, guidance and direction.
Related Recommendations (1)
R7
Lack of standardized policies and procedures 11 Other specific issues were identified concerning organizational structure and the use of a hospital based “Meditech” billing system in a clinic environment. 3) In March 2005, a second review by The Camden Group reported several improvements since 1997 but suggested the following areas for continued review: (cid:121) Aggressive renegotiation of the Blue Cross Contract to increase revenue (cid:121) HSA administrative overhead is higher than industry benchmarks (cid:121) Write-offs are taken too soon rather than pursuing aggressive collection activities (cid:121) The need to improve the collection rates from Medicare, insurance and other payers (cid:121) HSA salaries and benefits are higher than industry benchmarks. (cid:121) Review of the SFMG contract for performance improvements (cid:121) Duplication of efforts between SFMG and HSA (cid:121) HSA currently uses a hospital based billing system rather than one specifically designed for clinics, which leads to additional staff time and inefficiency. (cid:121) Need to determine the cost/benefit ratio for the Residency Program. 4) In the CGJ’s review of the audited financial reports it was noticed that there were high levels of “Transfers Out” of HSA ranging from $14.7 million (1998) to $1.2 million (2000) with $7.0 million in 2005 (See Table 1.) Transfers Out represents dollars that flow out of HSA. Upon closer review and discussion with County staff it was determined that a significant amount of these out-going dollars are for operating expenses. 5) Although the Camden Group’s two reports were referenced in the Plan, under sworn testimony it was determined that they were not asked to review and comment on the effectiveness of the Plan. 6) California Government Code Section 29126.2 provides for the Auditor to review and issue financial reports and recommendations.
F8 Page 17
Information Technology Systems - The BOS should establish specific policy for uniform, countywide implementation of standardized ITS. The policy should be focused on bringing the separate, splintered implementation into a uniform system over time. (Recommendations for Funding section is provided under that section.) 17 APPENDIX 1 Interviews Conducted 1. September 29, 2005 Stanislaus County Chief Executive Officer 2. October 5, 2005 Stanislaus County Managing Director, Health Services Agency 3. November 28, 2005 Stanislaus County Manager III – Auditor Controller 4. November 28, 2005 Chief Executive Officer, Golden Valley Health Center 5. December 7, 2005 Member of Stanislaus County Board of Supervisor 6. December 9, 2005 Stanislaus County Chief Financial Officer, Health Services Agency 7. December 15, 2005 Past Hospital Director 8. December 15, 2005 Stanislaus County Chief Financial Officer, Health Services Agency 9. January 10, 2006 Stanislaus County Deputy County Counsel 10. January 30, 2006 Stanislaus County Treasurer/Tax Collector 11. February 2, 2006 Stanislaus County Assistant Executive Officer 12. February 8, 2006 Stanislaus County Auditor/Controller 13. February 10, 2006 Stanislaus County Assistant Executive Officer 14. February 16, 2006 Stanislaus County Auditor/Controller 15. March 1, 2006 Stanislaus County Assistant Executive Officer 16. March 22, 2006 Stanislaus County Auditor/Controller 17. April 24, 2006 Stanislaus County Interim Managing Director, Health Services Agency 18 APPENDIX 2 Comparison of Adjacent County Health Plans Merced Alameda 1. Compliance w/ a. Medical Assistance Program MAP (Adults): Contracts with The County has 5 Medical Centers and 28 Govt. Code 17000 Mercy Medical Center (Catholic Health Care West) Community Based Organizations, which provide b. Child Health and Disability Prevention (Children) pays for indigent care through contracts. The Medical follow up services on a claims-made basis. Centers are operated as separate entities such c. Correctional and Juvenile Detention Services: Contracts as the Alameda County Medical Center. w/California Forensic Medical Group and paid by Sheriff and Probation out of General Fund.
Related Recommendations (1)
R8
Information Technology Systems - The BOS should establish specific policy for uniform, countywide implementation of standardized ITS. The policy should be focused on bringing the separate, splintered implementation into a uniform system over time. (Recommendations for Funding section is provided under that section.) 17
F10 Page 20
Agenda Item – “Approval to proceed with Tobacco Settlement Asset-backed Bonds,” BOS, June 6, 2000.
Related Recommendations (1)
R10
January 30, 2006 Stanislaus County Treasurer/Tax Collector
F11 Page 20
Agenda Item – “Final Budgets including an explanation of the Series 2004 Stanislaus County Note,” BOS, September 14, 2004. 12. “County of Stanislaus Series 2005 A Stanislaus County Note.” 13. Agenda Item - “Refunding, Refinancing of the 2002 Tobacco Settlement Bonds”, BOS, January 17, 2006. 14. “Tobacco Securitization Summary.” 15. Agenda Item – “Acceptance of a Health Services Agency – Strategic Assessment Report and Related Actions,” BOS, March 22, 2005.
Related Recommendations (1)
R11
February 2, 2006 Stanislaus County Assistant Executive Officer
F16 Page 20
Agenda Item – “Proposed Facility Plan for the Health Services Agency Clinics and Related Services,” BOS, November 15, 2005.
Related Recommendations (1)
R16
March 22, 2006 Stanislaus County Auditor/Controller
F17 Page 20
Agenda Item – “Approval of Health Services Agency Facility Plan,” BOS, December 6, 2005. 18. “FQHC Look-Alike Program Summary,” Bureau of Primary Health Care. 19. “RFP No.05-49-KJM Federally Qualified Health Center Look-Alike Consultant,” BOS, November 28, 2005.
Related Recommendations (1)
R17
April 24, 2006 Stanislaus County Interim Managing Director, Health Services Agency 18
F20 Page 20
California Government Code section 29126.2 – The Auditor may issue reports and make recommendations.
Related Recommendations (1)
R20
California Government Code section 29126.2 – The Auditor may issue reports and make recommendations.
F21 Page 20
California Assembly Bill 959, Assembly Member Frommer, February 18, 2005. 22. “Health Service Agency of Stanislaus County, Modesto, California, Medical Clinic Operational Assessment,” The Camden Group, November 25, 1998. 23. “Health Services Agency of Stanislaus County, Modesto, CA, Strategic Assessment,” The Camden Group, March 17, 2005.
Related Recommendations (1)
R21
California Assembly Bill 959, Assembly Member Frommer, February 18, 2005.
F24 Page 20
Definition of Transfers-Out, Health Services Agency - Operating Transfers I In/Out, HSA Allocation, FY2001 through FY2005 Clinic and Ancillary Operating Transfers-Out Detail, County Auditor. 25. “April 7, 2006 Grand Jury Audit Exit Conference Meeting Minutes.” 26. “FY03/04 Benchmarking Report,” The Camden Group. 27. 2005 “Health Executive Committee Meeting Minutes.” 21 28. "Business Technology Strategy Power Point Summary” and supporting documents, County staff. 29. “County of Stanislaus California, Report to Management For the Fiscal year Ended June 30, 2005,” Macias, Gini and Company, LLP. 30. “Patient Volumes for the Last 10 Years and Projected Budget for 2006 through 2008,” November 16, 2005. 31. “Appointment of Interim Health Services Agency Managing Director,” CEO, January 24, 2006. 32. “Mid-Year Financial Report 2005/06,” February 28, 2006. 33. “Health Services Agency Organization Chart,” January 12, 2006. 34. “Financial Statements and Report of Independent Certified Public Accountants, Stanislaus Medical Center Enterprise Fund,” June 30, 1993 through June 30, 2005.
Related Recommendations (1)
R24
Definition of Transfers-Out, Health Services Agency - Operating Transfers I In/Out, HSA Allocation, FY2001 through FY2005 Clinic and Ancillary Operating Transfers-Out Detail, County Auditor.
F35 Page 21
Agenda Item – “Discontinuing the Community Health Advisory Committee in favor of the Health Executive Committee,” September 23, 2003. 36. “The Third Annual IHSP Hospital 200-The Nation’s Most - and Least – Expensive Hospitals, Fiscal Year 2003/2004,” Institute For Health and Socio- Economic Policy, December 13, 2005. http://www.calnurses.org/research/pdfs/IHSP_Hospital_200_2005.pdf. 37. “Medicare Disproportionate Share (DSH) Payments,” Lynn Davis Boyle, June 5, 2006. http://www.aamc.org/advocacy/library/teachhosp/hosp0003.htm.
Related Recommendations (1)
R35
Agenda Item – “Discontinuing the Community Health Advisory Committee in favor of the Health Executive Committee,” September 23, 2003.
F38 Page 21
Case 03-12-C, Civil Grand Jury Final Report 2001/2002, June 2002.
Related Recommendations (1)
R38
Case 03-12-C, Civil Grand Jury Final Report 2001/2002, June 2002.

Additional Recommendations 22

These recommendations are not explicitly linked to specific findings.

No Responses Found 2

Government entities assigned to respond to this report. No response documents have been linked in our database.

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