UAMS radiology audit to expand

Initial report ‘pretty shocking,’ UA board member says

University of Arkansas System auditors will expand an investigation into the radiology department at the University of Arkansas for Medical Sciences after an audit of a 30-month time span revealed a tangle of accounting and management problems.

Those problems included a persistent lack of payment from organizations that contract with the department; employee violations of moonlighting, vacation and conflict-of-interest policies; and a revenue shortfall.

“The findings of the report were, quite frankly, pretty shocking,” said Ben Hyneman of Jonesboro, chairman of the University of Arkansas board of trustees’ Audit Committee.“We’re determined to have this thing fully investigated.”

After reviewing the audit at a meeting on Thursday in Little Rock, the committee requested an expansion of the investigation to determine whether problems predate the audit.

The audit covering January 2010 to April 2012 also showed that a business that contracted with UAMS to provide radiology services diverted payments it owed the medical school directly to UAMS employees with the cooperation of the department’s former business administrator, Jack Evans.

Evans retired May 1, 2012, a week after leaders began exploring problems in the department, according to the audit. UAMS officials would not say whether they askedEvans to retire.

UAMS Chancellor Dr. Dan Rahn applauded Dr. Debra Fiser, dean of the College of Medicine, who requested the audit after she suspected problems.

In an interview, Rahn answered few questions about the audit, citing the ongoing investigation and discussions between UAMS attorneys and attorneys for the businesses that contracted with the radiology department. Attorneys and auditors are still working to determine how much those businesses owe UAMS, he said.

The department has an annual budget of about $20 million. Its expenditures exceeded revenue collected by $1.1 million in fiscal 2012, the audit said.

“We’re going to sort it out,” Rahn said. “We’re going to protect the interests of UAMS.”

Former radiology Chairman Dr. Phil Kenney stepped down from his leadership role in an agreement with administrators July 1, the audit said. Kenney remains a professor, UAMS spokesman Leslie Taylor said.

Medical Assets Holding Co., owned by Rodney Thomason, rents space from UAMS to house a PET scan machine and a cycolotron, a device necessary to support the equipment, the audit said.

Through the agreement, Medical Assets Holding Co. provides technical services for tests, and it pays a fee to UAMS in exchange for the services of the medical school’s doctors. UAMS doctors also provide medical services for Texarkana MRI, which is owned by Thomason, the audit said.

For the entire audit period, none of Thomason businesses paid UAMS for these services, the audit said.

“Rather, Mr. Evans, in a diversion of funds owed to UAMS, directed Medical Investments of Little Rock, another company owned/controlled by Mr. Thomason, to make payments totaling $627,990.26 for the audit period,” the audit said. “Of that total, $624,669.75 was paid directly to UAMS employees rather than to UAMS.”

None of the UAMS employees who received funds from Thomason’s company - a total of seven doctors and four administrative professionals - disclosed it on their conflict-of-interest forms, the audit said. Those employees assumed Medical Investments of Little Rock was affiliated with UAMS because the company was using UAMS’ name on itschecks without permission, the audit said.

UAMS has since sent a certified cease-and-desist letter to Medical Investments of Little Rock asking it to discontinue use of the medical school’s name.

Auditors also found that during the audit period, Medical Assets Holding Co. failed to pay $300,000 in medical director’s fees and lease payments as outlined in its contract with UAMS.

Employees who answered phones Friday at several numbers listed for Medical Investments of Little Rock said they did not know Thomason. A woman who answered his listed home number said he did not live there.

The audit also documents $154,261 in unpaid medical service fees by Texarkana MRI, three clinics working with UAMS without properly authorized contracts, delayed payments and a low collection rate for radiology services. UAMS collected only $688,000 of the $2.3 million it billed one clinic in fiscal 2012, the audit said.

UAMS has signed new, properly authorized contracts with the businesses, and attorneys are working to reconcile unpaid charges, the audit said.

The audit showed the cyclotron facility is operated by Dr. Mark Berridge, a full-time UAMS employee who also jointly owns a company with Thomason called 3D Imaging.

Under an arrangement that was never formalized, 3D imaging was to reimburse UAMS for 90 percent of Berridge’s salary and 100 percent of his expenses, which it never did, the audit said. During three fiscal years reviewed by auditors, UAMS incurred $722,689 related to Berridge, it said.

Berridge told auditors that he spends 90 percent of his time working on his companyand that he did not intend to eliminate the conflict-of-interest relationship as required by UAMS policy.

Berridge “will no longer be a UAMS employee after March 2013,” the audit said.

The audit also found Evans changed a salary in the payroll system without approval from Fiser and that Kenney offered unauthorized incentives to new hires, including sign-on bonuses and additional moving expenses.

Investigators also determined physicians were improperly calculating and reporting vacation and leave time, the report said.

Fiser requested the original audit after she discovered one of the department’s physicians was advertised as being associated with an outside clinic, which he had not reported to UAMS.

Upon exploring the relationship, she discovered additional problems, which she reported to UA System attorneys and the system’s Division of Internal Audit.

That physician, Dr. Eren Erdem, retained about $270,000 of compensation he earnedproviding services to non-UAMS clinics at the advice of Kenney, a violation of a policy that requires doctors to deposit such income into a Faculty Group Practice account, the audit showed.

Rather than seeking repayment of the earnings, UAMS has since reduced Erdem’s employment agreement and salary by 20 percent, the audit said.

Auditors recommended 29 changes in policy and enforcement methods. UAMS has complied with all recommendations, Taylor said.

UAMS has revised policies related to moonlighting and conflicts of interest, worked to educate employees on those policies, instituted periodic review of its doctors’ relationships with other entities and tightened its budgeting practices, the audit said.

Auditors will expand their investigation to determine when the problems originated and what else it will take to fix them, Hyneman said.

“I do believe we need more information to get a clearer picture of what’s happened,” he said.

Northwest Arkansas, Pages 11 on 02/02/2013

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