Auditor General Jack Wagner said his office is very concerned about what he called the lack of good management at Torrance State Hospital and now, concerned about the management at various hospitals throughout the state.

“The items that we’re most concerned about are potential ethical conflicts, questionable billing practices, and the lack of oversight of management to properly manage contracts,” said Wagner.

He said the contracts relate to the employment of a company for positions such as chief medical examiner and a number of psychiatrists. The cost of employing those individuals by contract, said Wagner, has reached proportions far in excess of what the taxpayers should be paying, well above $350,000 per position for chief medical officer and one psychiatric position, plus there is a possible conflict of interest involving taxpayer dollars.

“Because the chief medical officer oversees these psychiatrists that are employed by contract, and then they have a private firm that the psychiatrist owns and the chief medical officer works for the psychiatrist, so  we are very concerned that there is a revolving door, so to speak,” said Wagner.

Wagner said this has been going on throughout the entire audit period, which begins about ten years ago and covers part of 2011. There are also concerns of overbilling for conferences and travel and other issues, which may not have proper management oversight.

“This chief medical officer under contract, this psychiatrist under contract, all they had to do was call in and say they were on duty,” said Wagner, “simply with a phone call, not validating their presence at Torrance State Hospital, but only through a phone call, they were then receiving hourly pay in excess of $170 per hour, and we in fact know there were instances they were not on premises, therefore the taxpayers should not have been paying for their services.”

Wagner said these instances and others raise a red flag, and added that it’s clear the top management of Torrance State Hospital needs to do a better job, and that the Department of Public Welfare, which oversees the hospital, must do a better job of managing taxpayer dollars.

“We are living in tough economic times where revenues at the state level are down, cuts in services are occurring across the board, and we cannot be wasting taxpayer dollars,” said Wagner.

The findings were uncovered as the result of a special performance audit. The audit includes 18 recommendations to improve the oversight of the Department of Public Welfare/Torrance State Hospital’s contracted medical professionals including:

• Torrance State Hospital should ensure that any real, apparent, or potential conflicts are eliminated.
• Torrance should not contract for a chief medical officer but should instead have a chief medical officer who is actually on Torrance’s staff.
• Torrance should seek reimbursement from Liberty Healthcare Corporation for any time that Liberty-contracted personnel spent planning and conducting or attending training sessions.
• Torrance should seek reimbursement for the approximately $6,750 spent to provide food and training materials for five October 2010 training sessions.
• Torrance should immediately cease approving and paying for hours that medical personnel submit on their time cards unless those physicians have followed procedures to show they have actually been on site at Torrance and performing their required duties.
• Torrance should obtain a refund from Liberty for the $1,349 paid for psychiatric care at Torrance when the psychiatrist was reportedly conducting a retreat at his private company.
• Torrance should immediately cease paying all unallowed expenses, including time and travel, for the continuing education courses of Liberty-contracted professionals.
• Torrance should obtain a refund for the more than $42,000 in continuing education and travel expenses identified in this audit, and conduct a thorough review to determine and collect from Liberty any other expenses inappropriately paid for Liberty-contracted professionals.

Wagner made a complete copy of the Torrance State Hospital audit report [PDF] available through his website.

Wagner said a few changes have already been made, such as doctors can no longer simply call to check in for work. He said that’s a step in the right direction, but that more needs to be done.