State Auditor Brian Colón
ALBUQUERQUE — Following active efforts by State Auditor Brian Colón in requiring Rehoboth McKinley Christian Health Care Services, Inc. (“Hospital”) to provide financial documentation, glaring concerns are revealed in the special audit report.
The Independent Public Account (IPA) who conducted the special audit notes significant issues, including findings related to management contracts, private inurement transactions, improper reimbursements, and other violations of internal controls and policies and procedures.
“This report confirms suspicions related to the operations and management at the Hospital,” Auditor Colón said.
In one instance a non-competitive contract was awarded in violation of the Hospital’s policies. Under a services agreement with Invictus Healthcare Management, LLC, a contractor whose chief executive officer (CEO) was at the time also the chief operating officer (COO) of the Hospital, the Hospital allowed Invictus to bypass internal controls and overcharge the Hospital more than $750,000 for night shift staffing services not rendered, and excess hours for medical doctors that should have been paid by Invictus, without penalties for poor or non-performance. The contract was not reviewed by proper responsible Hospital officials.
The special audit also revealed that compensation was established for the CEO of the Hospital and implemented without approval of the Hospital’s Board of Trustees, while at the time the Hospital’s CEO was also the CEO of Health Care Integrity, LLC (HCI).
HCI, whose organizer and registered agent is David Conejo, entered into a five-year agreement with the Hospital to serve as sole and exclusive manager and administrator for the Hospital, performing day-to-day management and administrative services. Under the agreement, the Hospital paid a minimum of $350,000 per year to HCI beginning in 2016, plus all expenses incurred by HCI, including salary and benefits of its employees.
Meanwhile, the compensation paid to the CEO of the Hospital in 2017 was more than $645,000 and in 2018 was more than $629,000. By comparison, the salary paid to the CEO of the largest hospital in the state, UNMH, a hospital with 10 times the number of beds as the Hospital (628 beds compared to approximately 60 beds, respectively), was around $676,000, raising concerns as to whether compensation was fair and reasonable.
The special audit report has been referred to proper oversight agencies, including the Internal Revenue Service.
“Contractual agreements must follow proper policies to ensure public funds are protected and expended appropriately, it’s unconscionable the Hospital’s much needed funds went to a CEO overseeing 1/10th the beds of UNMH for nearly the same pay,” Colón said.
The Hospital’s former CEO had significant influence over the Hospital’s operations, while the HCI management contract circumvented internal controls with respect to the Hospital’s code of conduct and conflicts of interest policy, allowing HCI to hire the Hospital’s CEO, CFO, and COO as employees of HCI, but requiring those employees to be paid by the Hospital.
New Mexicans concerned about potential instances of fraud, waste, and abuse should contact the Office of the State auditor. Reports may be made anonymously at www.saonm.orgor by calling 1-866-OSA-FRAUD, or speak to an investigator at505.476.3800.