Torrance State Hospital's financial oversight criticized
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State Auditor General Jack Wagner said Thursday that he will examine the state's $17.5 million contract for medical services with Liberty Healthcare Corp. after an audit of Torrance State Hospital in Westmoreland County uncovered what he described as "a tangle" of poor supervision, ethical conflicts and questionable billing.
Mr. Wagner said the Department of Public Welfare and Torrance officials failed to monitor their contract with Liberty, based outside Philadelphia, and urged DPW to fix the "serious deficiencies" identified in the audit.
DPW largely blamed the previous administration for the problems and said it has already begun to make changes, including a renewed attempt by Torrance to hire full-time staff psychiatrists instead of relying on contract employees.
Among Mr. Wagner's findings at Torrance was that a contract psychiatrist, Safdar Chaudhary, was paid by Liberty for what Mr. Wagner described as "questionable work hours" since he often couldn't be found on campus.
The audit said Dr. Chaudhary was paid $414,000 by Liberty for fiscal year 2010-11 after reporting that he worked 47 hours a week there, despite the fact that he runs a private practice in Export that also employs Torrance's chief medical officer, Herbert Chissell.
The audit noted seven instances in which Torrance hospital employees, including chief executive officer Edna McCutcheon, reported or knew of occasions in which Dr. Chaudhary could not be located on hospital grounds even though he had phoned in to report that he was there.
Mr. Wagner said Torrance still paid Liberty for all the hours the doctor reported at $168 an hour, plus another $331,962 in fiscal year 2009-10.
The audit also said that Torrance inappropriately endorsed Dr. Chaudhary's private practice, called S'eclairer, by partnering with him for conferences that benefited the practice. Dr. Chissell, who supervises Dr. Chaudhary at Torrance, is listed on the practice's website as a consultant.
"If not an actual conflict, there is surely the appearance of one when Torrance's chief medical officer supervises the psychiatrist at the taxpayer-owned hospital while working for him (with the apparent opportunity for financial gain) at the psychiatrist's private company," Mr. Wagner wrote in presenting the audit to Gov. Tom Corbett. "Regardless, the chief medical officer's position should not be held by a contracted employee."
Dr. Chaudhary, who teaches at Pitt's medical school, could not be reached for comment. Dr. Chissell, also a Liberty Healthcare contractor, also could not be reached.
In addition to the apparent conflict of interest, Mr. Wagner's audit found that Torrance paid $30,000 to doctors for meals, refreshments and training materials for training sessions that were not included in the contract. Torrance also paid $42,000 for psychiatrists to travel to other states for conferences that the hospital should not have paid for under the contract, the audit said, and paid more for contract psychiatrists than for its own staff psychiatrists.
Mr. Wagner said Ms. McCutcheon and other senior officials at Torrance failed in their duty to closely examine Liberty's invoices.
"Our findings were troubling," Mr. Wagner wrote. "Torrance spent millions of taxpayer dollars to contract for psychiatrists but did not effectively manage something as critical as ensuring that doctors engaged in patient care instead of other activities, or something as simple as verifying that doctors actually worked the number of hours they reported."
A secretary for Ms. McCutcheon said all statements regarding the audit would have to come from DPW, which said new leadership at the agency under Gov. Corbett has "placed significantly more emphasis on accountability."
In a written response included in the audit, Torrance officials specifically addressed the various concerns raised by Mr. Wagner, including a recommendation to stop using Dr. Chaudhary. In response to the suggestion that Dr. Chaudhary padded his hours, the facility said as of Jan. 23 all Liberty Healthcare personnel must sign in and out at Torrance.
The hospital also said it will attempt to hire staff psychiatrists to replace the contractors, although it has had trouble hiring in the past.
Regarding the perceived conflict of interest, the hospital said supervision by Dr. Chissell of Dr. Chaudhary has been "appropriate" and has not compromised professional obligations to patients.
As for the private conferences involving Dr. Chaudhary and references to his connections to Torrance, the hospital said any such references by private contractors will be eliminated in the future.
Torrance also rebuffed Mr. Wagner's suggestion that the chief medical officer should be a staff member and not a contractor, saying the position has been held by a contractor for 10 years and that it has been difficult to hire a staff officer for the job.
Liberty Healthcare also defended itself, saying in a statement that it has an "excellent reputation" and has received positive feedback from DPW and the state's Department of General Services.
The company refused further comment until it had a chance to review the report.
First Published February 17, 2012 12:00 am