Local News

Tuesday, Oct 22 2013 06:18 PM

Supervisors vent anew over poor KMC oversight

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    By Casey Christie / The Californian

    Kern Medical Center.

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BY JAMES BURGER Californian staff writer jburger@bakersfield.com

Kern Medical Center's finances are stabilizing, it seems.

But it was clear Tuesday morning that nerves on the Kern County Board of Supervisors are still rattled by the messy financial reality at the public hospital.

Supervisor Mick Gleason yanked a housekeeping modification to the contract with the county's outside financial auditor -- the firm Brown Armstrong -- off the consent agenda so it could be discussed.

The item had nothing to do with Kern Medical Center. It would have authorized the signing of some paperwork and cleaned up some financial line items in the contract, which supervisors approved in June.

But Gleason, apologizing that he hadn't researched the issue or talked to the Auditor-Controller's office before opening the item up for discussion, seized it as a chance to question the firm's hospital auditing credentials.

"If Brown Armstrong does not have sufficient experience auditing the revenue cycle at Kern Medical Center, I think we should go out and find someone who does," Gleason said.

That launched a jumbled, confusing debate that ended with supervisors pushing back the item for one week and asking staff to look into the possibility of shifting work on KMC's financial audits to another firm.

GOOD NEWS

New KMC Chief Financial Officer Sandra Martin told supervisors Tuesday that financial realities seem to be tracking about where she and her staff project they should be.

By Friday, the loan from the county's general fund to the hospital had been expected to be $129.3 million, Martin said.

It ended up being $128.9 million.

Kern Medical Center remains in danger of having to furlough or lay off employees to make up for a multi-million dollar shortfall made public in September.

But things coming in close to expectations is good news for supervisors, who were stunned to learn last month of a $64 million gap between KMC's expected revenues from state programs and the most likely reality.

An investigation of the county's audit process by The Californian showed last month that there was plenty of blame for that to go around.

The Board of Supervisors, county auditors, administrative analysts in County Administrative Officer John Nilon's office and KMC managers failed to put together the troubling picture painted by repeated audits of hospital programs.

Taken together in hindsight, the evidence showed sweeping, pervasive mismanagement in the hospital's fiscal office that led to the current turmoil.

KEYSTONE COPS

Gleason's questions about Brown Armstrong -- which did annual audits of KMC -- caught Kern County Auditor-Controller Mary Bedard off-guard.

She struggled to explain the item that was before supervisors on Tuesday's agenda.

But Bedard warned that delaying the Brown Armstrong contract modification would be problematic. Brown Armstrong is launching work on an audit of the county's annual financial statements, which must be finished before the end of December.

While Brown Armstrong took some criticism Tuesday, Supervisor Mike Maggard took a moment to say the firm is good and has extensive experience auditing public entities like the county.

Maggard and Supervisor David Couch also questioned the validity of the audits Bedard's staff did on programs at Kern Medical Center.

"But If we have that conversation, then clearly we should have a conversation about these 'proscribed procedures' in this April 2012 audit which we just became aware of," Maggard said.

A Brown Armstrong representative could not immediately be reached for comment Tuesday afternoon.

After Gleason recommended alternatively passing or delaying or sending the unrelated agenda item back to staff for revision, supervisors voted 4-0 to bring the issue back next week.

After that, Martin mentioned that Brown Armstrong was due to launch its audit of KMC on Tuesday.

Maggard fumed.

Supervisors had voted to pursue taking KMC out of Brown Armstrong's hands, he said, only to learn it had already started the work.

Staff, he said, needs to communicate better.

Couch said coordinating these issues is critical.

"We need to be all on the same page. Everybody needs to have access to the same information," he said. "Otherwise we look like the Keystone Cops."

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