LBJ: Approx. $200K 'lost' over several years

Is there a police investigation?

LBJ Medical Center estimates that some $200,000 in hospital funds was “misappropriated”, over a period of years, according to hospital chief executive officer Michael Gerstenberger, which is the first time the hospital has revealed the amount of money allegedly taken from its business office.

This issue came up during a House Health/Hospital Committee hearing last week when Rep. Tapumanaia Galu Satele Jr. asked the CEO if the alleged theft of hospital revenue had contributed to its current cash-strapped problems.

Gerstenberger responded that the hospital investigation into this matter “suggests that maybe $200,000... in funds... were misappropriated” adding that it’s difficult to tell the actual total because “the issue appears” to have occurred over a period of years and some records no longer exist.

While the misappropriated amount “appears to be a small amount” compared to the hospital’s more than $30 million budget in fiscal year 2011, Gerstenberger said the “bigger issue related to what LBJ discovered in the billing office this summer —  the fact that LBJ was not doing a good job in collecting [account] receivables.”

He said the office handling these duties has been reorganized, and functions have been separated so that money owed will be collected without any problems.

“Missing cash” at the Patient Financial Services department was first revealed by the hospital in its third interim report for fiscal year 2011 in early August, which was provided by the hospital management to its board of directors with copies to Gov. Togiola Tulafono, the Fono leadership, chairmen of the health committees in the Senate and House and the ASG Budget and Planning Office.

The report, prepared by Gerstenberger, didn’t specify the total amount of the alleged missing money, but Samoa News reported at the time — based on information obtained from people with knowledge of this case — that the alleged missing cash was around $100,000 or more.

The interim report did say that the hospital's review of this department “yielded disappointing results” which showed the hospital had “done a poor job of billing and collecting the monies due the hospital.”

It also said that the hospital had accepted the resignation of the department’s manager while the new chief financial officer, Viola Babcock, had “reorganized the area and implemented cash controls.”

By late August, four employees of the Business Office resigned due to the missing money, but weeks later their attorney claimed that the employees were forced to resign and sought reinstatement for his clients. The hospital denied the request and this issue is before the Administrative Law Judge.

What remains unclear is the LBJ investigation into this matter and whether the case has been turned over to police for further probe.


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