Medical school audit details management problems
By Beverly Creamer
Advertiser Education Writer
Internal management "deficiencies" within the John A. Burns School of Medicine at the University of Hawai'i have meant contracts were signed after work had begun, bills were sent out late, and faculty failed to file outside employment disclosure forms on time or at all, according to State Auditor Marion Higa.
Advertiser library photos
In a new audit of the medical school, Higa pointed to several problems in internal management practices that led to potential conflict-of-interest issues for faculty with outside employment; lost interest payments in two instances; and slow billing procedures, all resulting in a negative cash flow situation twice last year.
State Auditor Marion Higa said she found problems within the UH medical school.
Medical School Dean Edwin Cadman said he had found ways to increase efficiency.
"The University agrees with our recommendations," Higa said in the official audit statement, "and responded that it has already taken steps to implement some of our recommendations."
Medical School Dean Edwin Cadman said that he had identified measures to increase efficiency within the school and was in the process of implementing them. And chief financial officer Robert Nobriga said that staff within the medical school had helped pinpoint some of the issues for auditors.
"After reading a lengthy 1998 audit report on the school by a private CPA firm I realized significant improvement was needed in the area of financial management," Cadman said.
In illuminating the problem areas, Higa pointed out that all of the contracts between the school and Hawai'i healthcare organizations — primarily hospitals — were signed and executed after faculty had begun providing services. Medical school contracts with Hawai'i hospitals bring in about $6.7 million a year out of a total budget of $57.9 million, Nobriga said.
"School faculty provided services for at least four months, and approximately $2.3 million in expenses were incurred, before the healthcare organizations could be billed," Higa said. "As a result, the school's cash flow was negatively impacted and interest that could have been earned on the amounts outstanding was lost."
Higa told The Advertiser that this is not uncommon in state departments, but it put both sides at risk.
The University advanced the money to pay salaries until the contracts were signed, Nobriga said.
According to Nobriga, based on current interest rates of 1.5 percent to 2 percent on timed certificates of deposit, the losses in interest revenues would be $5,000 to $6,700.
"It's a cumbersome process to put together the agreements and to get the department chairs as well as the hospitals on board to agree to what has been laid out," he said. "The auditor's report says we need to allow more time for planning."
As a result, the process will begin by April 1 this year to complete by July 1, Nobriga said, to ensure delays don't occur again.
The auditor also said the medical school does not comply with UH policies and procedures to avoid conflict-of-interest situations involving school faculty by letting faculty miss deadlines to file outside employment forms.
Nobriga said that many of the faculty are paid just $4,000 to $5,000 a year to teach at the medical school, and that their primary jobs are in private practice, or serving in positions at local hospitals.
The office of James "Wick" Sloane, chief financial officer for the university, promised Higa's office that medical school administrators would be held responsible for filing future disclosure forms on time.
As part of the audit, the certified public accounting firm Deloitte & Touche LLP gave the medical school an "unqualified" financial audit which Higa called "a clean opinion" of their financial statements. "It's what any organization would want," she said.
Cadman called it an "A-plus."
