Central Health audit raises more questions than answers

On Tuesday, Sept. 10, the Travis County Commissioners Court received a troubling and confusing report on an audit it authorized in 2022 of the county’s health care district, Central Health. Audit consultant Mazars found that Central Health has committed no legal wrongdoing and has improved transparency – though there are areas in which it could improve, especially in financial reporting. In particular, commissioners, auditors and speakers disagreed or displayed serious confusion about a key issue: $35 million in taxpayer dollars that the Commissioners Court authorized to go toward indigent health care was instead used for education, salaries and other nonclinical purposes at UT’s Dell Medical School.

After about an hour of discussion, Mazars audit consultant Steve Herbst concluded that “fundamentally there’ s a difference of opinion as to what is construed as ‘permitted investment’ under the terms of the affiliation agreement – I think today’s conversation is really bringing that to light.”

Essentially, the document that governs the relationship between Dell Medical School and Central Health is unclear – commissioners agreed that any public funding it receives should go toward clinical health care for those who can’t afford it. Mazars’ audit found that is not happening – in fact, none of the $35 million has gone toward actual health care for that population – but Dell Medical School’s use of funds is actually permitted within the parameters of the affiliation agreement.

“This is, in my mind, a poorly written affiliation agreement if there’s no requirement that they actually provide care to the poor,” Commissioner Brigid Shea said.

Central Health’s relationships with its partners have been a point of contention in the past few years. The district is currently embroiled in a lawsuit with Ascension Seton over how many indigent patients the hospital is supposed to be serving. The audit excluded the relationship between Ascension and Central Health because of that. Aside from Ascension, the agreement that governs Central Health’s relationship with Dell Medical is “not operating today as it was intended to,” Herbst said. It’s meant to provide a road map for collaboration in a health care system that has multiple providers: “So our recommendation isn’t to jettison the (agreement) itself, but to continue to grow, refine and enhance it. You can’t abandon the core concept.”

Commissioners, however, were adamant about Central Health sticking to its stated purpose of providing health care to underserved populations and they were shocked that the agreement doesn’t require this.

“It seems like that should not be an afterthought,” Commissioner Jeff Travillion said. “Staffing a facility that does not understand that it has a duty to serve the underserved communities troubles me greatly.”

Central Health itself is largely unhappy with the methodology of Mazars’ report, saying in a written response that they have “serious concerns about its characterization of key elements of our delivery system, and the lack of foundation for some of its recommendations. The net effect of these errors and shortcomings is that the report fails to provide a clear, complete picture of Central Health’s delivery system.”

Central Health Board Chair Ann Kitchen noted that the report had been given to them only a few days before this meeting. She claimed there were glaring inaccuracies, including Mazars’ claim that “Central Health lacks a standard operating procedure for overseeing the expenditures of Central Health funds.” Kitchen said, “in reality, CH has comprehensive processes in place. I wanted to assure you all that we will implement those recommendations … but we feel that we are in a different place than we were in 2022 with regard to trust, partnership, and collaboration.”

Some had harsher critiques than just a misunderstanding of the agreement. Attorney Fred Lewis, who sent out a press release decrying the audit as a “whitewash,” claims that UT officially classifies the funds as a gift from Central Health and that Dell Medical School uses them as a “slush fund. … The Affiliation Agreement clearly is not an agreement for the medical school to provide medical care services to the poor; it is simply an arrangement for the hospital district to be a permanent, major funding source to create and maintain a medical school in Austin.”

Central Health’s CEO, Dr. Patrick Lee, countered those assertions, saying that, “The headline is that Central Health is doing a good job, full stop,” but pledged to implement recommendations – though he did make the caveat that there were inaccuracies in the report, and pointed to Central Health management’s written response.

“You have to take with a grain of salt the recommendations made when you mess up on the details,” Board Member Cynthia Valadez said. “I’d like for you to give us more time to have an opportunity to review the report and ensure that the board of managers has the appropriate data to be able to make those strategy and initiative decisions.”

Commissioners took up the concerns brought up by the audit and the confusion about the terms of the governing agreement in executive session, before which Shea said that UT classifying $35 million in public dollars as a gift is “unacceptable.” However, commissioners seemed to agree that the district is displaying movement in the right direction under Lee’s guidance: “Central Health has really improved and the situation is much different today than it was in 2022 when we commenced this process,” Shea said.

Photo by Larry D. Moore, CC BY-SA 4.0, Link.

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