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Following Allegations of Fraud, Calls for Audit of Medical System Intensify


This past Sunday, the front page article in Ventura County Star contained reference to an investigative report of a fired health care manager's claim of irregular and fraudulent financial practices in the county's public medical center.

The report from County Counsel centered on allegations against the county by Timothy Patton, former Chief Deputy Director and No. 2 person in the county's public medical system for most of 2016.

County Counsel's investigation makes clear it is a "legal non­compliance" review, not an audit of internal controls of the Health Care Agency (HCA).

We think the following comment early in the County Counsel's report sums up the miserable position of HCA:

"It is understood and accepted that HCA's accounting systems and resources need substantial improvement to adequately manage the financial and budgeting demands of the County's healthcare system. Patton's observations in this regard are not new or surprising."

Is that the County's version of saying "that's old news"?

To tell taxpayers the need for "substantial improvement to adequately manage the financial and budgeting demands of the County's health care system... are not new or surprising" is an astonishing statement. Who is responsible? Why haven't some heads rolled?

After our last newsletter we submitted a Public Records Request for financial statements for the HCA. The County did not have any and took five weeks to satisfy the request by generating the financial statements for us.

The seven month financial statement we received showed a loss of $10 to $12 million for the hospital system.

HCA is a $500 million enterprise yet apparently for years now it has been managed based on projections not financial statements. You cannot pay the bills with projections.

We also confirmed that the audit done annually is just a financial audit not a thorough audit of HCA internal control systems. We again reiterate our call for a complete audit performed by a firm experienced in auditing public hospitals. A full audit likely would have resulted in a lengthy management letter detailing serious failures that should have caught the attention of the Board of Supervisors and the CEO's office and resulted in some meaningful improvement.

Through another Public Records Request we learned about the turnover that occurred among top management. There were 10 senior executives who departed in the space of three years. Surprisingly, six departed in a six month period ending March 2017. Some resigned but we also learned that several who were said to have resigned were actually fired. Some with little or no notice.

Management turmoil is an indicator of serious problems in an organization.

There are other surprising problems and deficiencies in the operation we've discovered but the key question is why has this been allowed to continue for years? Who is in charge? Why has this dangerous situation been allowed to continue for so long?

The recent hiring of Huron Consultants under a $10 million contract is a step in the right direction. They bring much needed experience in controls and operations which will help turnaround the hospital. It's unfortunate the County needs to spend the money. More unfortunate would be if after $10 million and 15 months of their help, we don't have committed and capable people in critical top county positions who can sustain and nurture a well running hospital.

In this regard, we think that Catherine Rodriguez, County CFO, who has been deeply involved with the hospital over the last decade has proven to be incapable of providing the leadership and vision needed. She should have no further involvement.

HCA is an extremely valuable asset populated by dedicated staff and professionals. It has the potential to bring major benefits to the County and its communities. But because of its size it also brings major risks to the County. The County Board of Supervisors needs to pay attention... quickly.

To view the report from the Ventura County Counsel's Office dated April 5, 2018, click here.


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