Hospital audit finds fault, but no missing funds

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SPRINGFIELD — The head of Vermont's human services agency will meet with Springfield Hospital officials next week to go over recent audits which show that while there was no missing funds, the hospital and its parent organization are in serious financial jeopardy.

Al Gobeille, the secretary of the Agency of Human Services, said Friday that Springfield Medical Care Systems officials will meet with him next Wednesday in Montpelier to discuss the audit and other ongoing efforts to keep the southeastern Vermont hospital and its affiliated health centers open. Gobeille said he had been impressed so far with the work of Michael Halstead, the interim chief executive officer who was brought in last month in an effort by state regulators and the local board to keep the hospital open.

"We're thrilled with him so far," Gobeille said. "Leadership is a hard thing to describe," he said, referring to Halstead, but he said Halstead has a lot of experience and has been working in health care administration for a long time.

The forensic audits were completed by the BerryDunn accounting firm of Portland, Maine. According to a press release from the hospital earlier in the week, BerryDunn examined bank statements, check disbursements, credit card statements and payroll distributions from October 2017 through December 2018. In addition to operating Springfield Hospital, Springfield Medical Care Systems operates health centers in Bellows Falls, Ludlow and Springfield, as well as in Charlestown, N.H. Gobeille said the state had advanced the hospital $800,000 two weeks ago to help it remain open, because the hospital only had a week's worth of cash on hand. The future of those health centers, as well as the hospital itself, are being evaluated.

The audit is the first concrete information the state received that examines the financial crisis, Gobeille said. It shows the hospital and its affiliated health centers had lost $14 million in the last two years, and the audit says that "raised substantial doubt about its ability to continue."

Wayne Scholz, the interim financial officer for the health care system, said the reference "was a standard practice when auditors believe an organization cannot meet its current liabilities within the next 12 months based on current assets."

Halstead was out of the office on Thursday and Friday. "It's important to note that the audit did not reveal anything that could have affected patient care," Halstead said in a prepared release, earlier in the week. "We will implement changes necessary to help get us get back on solid financial footing." He also said the BerryDunn audit "does show that at times, former leadership did not report to our board all of the information that was needed to make strategic decisions. That is something we are fixing."

Tim Ford, former chief executive officer, fired longtime finance officer Scott Whittemore in early December, and then resigned himself about a week later.

The hospital and health care system has laid off 27 employees, as well as cutting the salaries of management by 10 percent and staffers by 4 percent. The hospital and the health system employs a total of 730 people, including 529 full time employees.

Kevin Mullin, chairman of the Green Mountain Care Board, which regulates hospitals, said he hopes the community will continue to support the hospital and its affiliated health center as the board works on its severe financial troubles. He said it's possible the hospital will have to discontinue some of its traditional services.

"This is a very, very serious situation," said Mullin, but he said the audit shows there "didn't appear to be a misappropriation of funds."

Contact Susan Smallheer at ssmallheer@reformer.com or 802 254-2311, ext. 154.


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