Collaboration in Civic Spheres

State audit says Monroe public hospital district mismanaged – it now pledges reforms, and seeks tax hike in April vote

by Matt Rosenberg April 3rd, 2013

Voters on April 23 will decide whether to increase tax levy support for Valley General Hospital in Monroe and associated clinics in Snohomish County Public Hospital District #1, north and east of Seattle. But the system has not only been undercharging its funders, as supporters emphasize; it has also been wasteful and poorly managed, as detailed in a new accountability report from Washington State Auditor Troy Kelley.

The state accountability audit issued by Kelley on Monday of this week finds that the roughly 112-bed inpatient hospital and community clinic system – which has employed about 369 and which spent almost $50 million in 2011 – has substantially mismanaged its finances, and that this has placed the system at risk of failure. The district serves the communities of Gold Bar, Index, Monroe, Snohomish, and Sultan.


Key findings are that:

  • The district’s finances lack adequate oversight to protect taxpayer investments to date, putting it at risk of “not meeting its financial obligations” or of cutting services to patrons;
  • Its balance sheet was $3.4 million in the red as of last October with available cash about half a million less;
  • The negative balance has grown almost six-fold since 2007;
  • In 2011 the district suspended its Inpatient Psychiatry and Birth Center operations, cut staffing “due to low service volumes and continued losses,” and in 2012 ended employee pension payments, with a November 2012 pension obligation of almost $1 million;
  • In December 2012 it partnered with King County Hospital District #2, Evergreen Health, to provide services and expertise, while remaining independent.

  • Evergreen is to pay $1 million up front to Valley General for five years of clinic space rent but the district is seeking voter approval April 23 of an increased annual operating tax levy of $2.4 million, $1 million more in annual dollar terms than at present.

    ….Rising costs, shrinking revenues…
    The state audit says the district has failed to lower expenses as costs have risen; that filling key vacancies due to ongoing turnover has added to costs; and that the district “may not be able to continue operations at current service levels.”

    …Plus a series of fiscal snafus….
    The state audit also notes:


  • The district didn’t properly track procurement card usage, pay credit card bills on time, or document public benefits of spending and actual receipt of goods for which it was charged;
  • As well, from April 2011 to November 2012 $115,282 in accounts due were written off due to delayed billings and another $344,370 owed was lost because past due accounts weren’t adequately monitored;
  • Account adjustments valued at $55,570 weren’t documented, and financing and late charges on credit cards ran to $1,441;
  • Medical staff annual membership dues were improperly used to fund a $9,300 banquet;
  • Ads and sponsorships of $3,706 were paid by the district with no documentation of any resulting public benefit. In one case, the audit states, the District got “shirts and tickets to a beer garden” for a $2,500 sponsorship;
  • Additionally, three workers were overpaid $5,872 because of a records miscue.

  • Fixes pledged
    In the audit the district says it has taken or is taking major steps to fix problems and that its new alliance with Evergreen will lead to significant cost savings, efficiencies, and revenue enhancements. The district adds it anticipates savings from: labor concessions already secured on wages and benefits for union and non-union units; a labor productivity monitoring system to cut unneeded overtime; tougher contract oversight; a robust turnaround plan in development; key new hires; and synergies from its affiliations with Evergreen including increased referrals to Valley General for inpatient and outpatient services, and decreased outflow of patients referred to other hospitals.

    The Snohomish County Tribune reports that by-mail ballots are to be sent out this Friday April 5 and are due back by April 23 on a proposed hospital district tax levy of 37 cents per $1,000 of equalized assessed property valuation (EAV), which would raise the annual related charge for the owner of an average, $200,000 home in the district, from about $28 to $75 per year. The current levy is a meager 14 cents per $1,000 EAV, as hospital officials stress.

    The district’s board in January hired an experienced Washington hospital administrator, Eric Jensen, as the new CEO. Former CEO Mike Liepman left last April and was succeeded by interim CEO Michael Fraser prior to Jensen’s hiring.

    Online transparency poor
    Online transparency is not especially evident. Unlike many other local taxing bodies in Snohomish County and statewide, the hospital district’s web site includes no evident links to past or current meeting agendas, or agenda packet documents. It does include a page of links to past meeting minutes.

    Presiding over the district’s management in recent years has been a board of commissioners of three; Alice Cabe, Neil Watkins and John Hinchcliffe.


    One of our many special Public Data Ferret archives details 130-plus cases to date of management issues arising at local, regional, and state government entities mainly within Washington state – but also including several of note at the federal level. At our Public Data Ferret hub of originally reported articles based on online government documents and data, the “management” archive can also be viewed more narrowly, by type of jurisdiction. For instance: City of Seattle; King County government; King County local governments; Snohomish County local; and State of Washington.


    Public Data Ferret is a news knowledge base program of the 501c3 public charity, Public Eye Northwest. Ferret In The News. Donate; subscribe (free)/volunteer.

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