November 1, 2006

COMPTROLLER WEITZMAN ISSUES AUDIT OF COUNTY HOSPITAL’S NON-PATIENT REVENUES

Improvements to Financial Controls Made As a Result of Audit

As a result of suggestions made in an audit by the Nassau County Comptroller’s Office, the Nassau Health Care Corporation (NHCC) has improved policies and procedures governing the billing, collection and monitoring of non-medical revenue sources, and its controls over spending for non-patient care items, Comptroller Howard Weitzman announced today.

Non-medical revenues include apartment rentals to residents, parking fees, television/telephone rentals, and rental of rooftop space for transmitters.

“As a result of this audit, most of the weaknesses in financial controls have been addressed and corrected by the hospital’s current management team,” Comptroller Weitzman said.  “The current CEO and Board Chairman have made enormous strides in restoring the hospital to a firm financial footing in a relatively short period of time, and I am confident they will continue to take the actions necessary to prevent this vital community healthcare system from failing.”

NHCC uses outside vendors to collect the fees from the antennae, telephone and television rentals and for parking but did not monitor their contracts during the audited period of January 2002 to September 2004.  Although contracts with each of these vendors had expired, the companies still continued to collect revenue on the hospital’s behalf, and some monies due the corporation remained with the vendor.

Among the revenue problems cited in the report:

• $19,000 collected by the vendor for rooftop antennae rentals was not remitted to NHCC;



• Periodic reconciliations were not performed for television rental commissions, resulting in $86,300 in outstanding commissions due NHCC;



• $76,000 in blood sales to other hospitals were not billed nor was any follow-up action taken on unpaid invoices.

“Although they have now implemented improved financial oversight and reconciliation procedures, NHCC should still consider raising its fees when renegotiating contracts for antenna rental and parking services, to be more in line with current industry rates and generate badly-needed additional revenue,” Comptroller Weitzman said.

The audit also found that weak internal procedures resulted in a loosely controlled process for paying and recording non-patient expenses, including missing documentation for paid invoices totaling nearly $664,000; expenses of $750,000 that were miscoded and charged to the wrong expense accounts; and $316,000 in claims approved by individuals who were not employees of NHCC.

The complete audit report follows.

MMERF Audit Report Letter - (7 pages ~ 79 kb .pdf file)