Forensic audit ahead? — Hospital board mulls deep dive into past leadership’s financial management
At its Feb. 22 meeting, the Weston County Hospital District board of trustees asked CEO Cathy Harshbarger and her management team to explore how the hospital might go about conducting a forensic audit to determine whether past hospital leadership improperly dispersed funds.
Hospital administrators will also assess how much time employees would need to spend on the audit.
Trustee Ben Roberts said that while the board is advancing in its goals of improving the hospital, he believes that it should ensure, on the public’s behalf, that there was no past malfeasance. He said he doesn’t want to
take staff attention away from the myriad problems Harshbarger and her team inherited, but hospital leadership should commit to determining what options are available for an investigation.
Roberts said he trusts the current management, but he wonders about “that elephant in the corner,” including the COVID-19 years.
“When someone in the public comes to me with a belief that there’s been malfeasance with money, I would love to be able to tell them ‘not,’” Roberts said. “I think any time we’re going forward as a board and as an organization, if we can’t make that statement, we’re going to have trouble.”
Trustee Nathan Ballard supported the idea, recommending that the management team make a plan at the time they believe would be best for the organization, choose consultants and present a plan to the board. He said that the audit could focus on “one or two” people “who would have been in the position to override the controls of the organization and do whatever they would like with our checkbook and so forth.” He said that the audit could allow the hospital to determine whether a lot of money is missing and, if so, attempt to get that money back.
“If somebody stole a lot of money from this hospital, I’d like to see them prosecuted,” he said.
Ballard told the NLJ in a follow-up conversation that he wants to understand why spending increased “so dramatically, such that our hospital was almost destroyed.” He wants to start with fiscal year 2022 and is only “interested in the activity of the then CEO and possibly whoever was in charge of accounting at that time.” The review he is seeking would begin with former CEO Maureen Cadwell’s tenure and go through the activities of Randy Lindauer, Harshbarger’s immediate predecessor.
The fiscal 2023 audit report said that “it is notable, however, that in each of the past three years the operating losses have increased. And in 2023, for the first time in recent history, operating losses exceeded the nonoperating revenues, resulting in a negative total margin.”
A negative total margin is a loss, and operating losses have been increasing for
the two years that preceded the hospital’s first loss “in recent memory,” Ballard said. The hospital lost $2.36 million in fiscal 2023, according to the report. Ballard anticipates there will also be a loss for fiscal 2024, and so far, based on cash reports, the hospital is also losing money in fiscal 2025.
“It is very important that this board understand what happened so we can make changes so this can’t happen again or else make it much harder for this to happen again,” he said.
Harshbarger said the cost for the audit could be as much as $100,000 to $150,000, but Ballard said he believes that the cost would be much lower for an audit of the scope he suggested because it would target the activity of specific individuals.
Trustee Karine Wright West said the benefits of the audit include the possibility of recovering funds and the ability for the board to tell their constituents they took the matter seriously.
Trustee Kari Drost voted against the motion. She said she believes such an audit would be mostly pointless. According to Drost, it would be a waste of time for the hospital’s finance team, which she believes is “actually making progress right now toward the financials that we really want to see.”
“For me, spending the money and taking the financial team away from the primary goal of moving forward, I just feel it’s too damaging at this point,” she said. “The only upside of it is the potential that perhaps you could recover some money in a lawsuit, but I have no faith in the justice department, and I hate lawsuits. All that would do is cost us lawyer fees.”
Drost said the financial team would have to provide the forensic auditors with all the information needed for
the audit.
“It’s an enormous amount of work,” she said.
Tish Miller, the hospital’s chief financial officer, said that based on her experience with two forensic audits, she would pull all invoices and review all reconciliations from each bank account that the hospital had for the specified years.
Harshbarger said the time it would take to only look at forensic auditing companies and define the project scope for them would not require a lot of time.
Ballard said the audit would be an attempt to explain how the hospital, which had been financially “stable year after year after year,” experienced millions of dollars of losses “in a stable community with a stable population.”
“Is it really just a sudden bout of ineptitude, or was it something else? And if it was something else and millions potentially have been taken from us, then I think we have a duty to look and see if we have any signs of that activity,” Ballard said. “If we do, perhaps we can go a little further. And if we don’t, perhaps we can stop.”
Board Chair Ann Slagle told the NLJ that she did not vote.
“As chair, I try not to vote unless I am needed to resolve a tie vote,” she said. “In general, I am opposed to the idea of a forensic audit right now because we need to be spending our money & time resources on the current needs of the hospital. I think that there are many other places within WCHS that currently need our resources.”
Trustee Ted Ertman was absent from the meeting.
Hospital Happenings
Notes from the Feb. 20, 2025, meeting of the Weston County Health Services Board of Trustees
CEO Cathy Harshbarger said she is developing a work-from-home policy so that such work arrangements can be regulated.
Harshbarger requested a board discussion regarding the hospital’s mission, vision and values statements and focus areas, and maybe even rebranding, as a mechanism of visually showing the community that the hospital is improving. The focus areas the hospital will have from an internal perspective are finance, people, growth, community and quality.
The hospital created a patient experience committee, which had its first meeting the previous week, reported Kim Scharf, the hospital’s quality director. The committee is reviewing wait times and updating patients on wait times.
The Manor’s census was 44 the week of the board meeting, with a slated rise to 47 this week and “another six or seven” residents the week after that, reported Shane Filipi, the nursing home’s administrator. Trustee Nathan Ballard said those are numbers that “we didn’t think were possible a few months ago.”
Ballard said one of the board’s strategic priorities is to undergo substantial open meeting training so that every board member is comfortable with those duties.