Audit Report on the Harlem Hospital Affiliation Agreement with the Columbia University Medical Center

This audit determined whether the Columbia University Medical Center (Columbia) is complying with the terms of its affiliation contract with Harlem Hospital and whether the Health and Hospitals Corporation (HHC) is adequately monitoring Columbia’s compliance. The primary scope of the audit was Fiscal Year 2009 (July 1, 2008, to June 30, 2009). We also reviewed certain aspects of the affiliation agreement relating to Fiscal Years 2002 through 2008.

HHC serves City residents through its 11 acute care hospitals, 4 skilled nursing facilities, 6 diagnostic and treatment centers and more than 80 community-based clinics. To help achieve its goals, HHC contracts with affiliates, including medical schools, teaching hospitals, and physician-owned professional corporations, which provide physician and supporting services to patients in HHC facilities. One of these affiliation contracts was established by HHC with Columbia to provide medical, mental health, and other services in Harlem Hospital and the Renaissance Healthcare Network Diagnostic and Treatment Center. This report focuses on services provided by Columbia to Harlem Hospital.

Harlem Hospital’s current affiliation agreement with Columbia is for three years. The agreement began on July 1, 2007, and continues through June 30, 2010, with a total estimated payment of $183,401,640.

Audit Findings and Conclusions

Our audit disclosed that Columbia is not complying with certain key financial and administrative provisions of its affiliation contract with HHC to provide patient services to Harlem Hospital. Although the affiliate has established a comprehensive accounting system and generally submitted required external audit reports by the due date, there were significant areas of noncompliance in terms of how the affiliate accounted for its use of HHC funds. Columbia did not submit required quarterly fee statements, annual recalculation reports, and other required documents. It also maintained unreliable personnel rosters, assignment schedules, and timekeeping records. Accordingly, HHC might not have received the full contractual benefit for monies paid to Columbia. HHC and Columbia have not reconciled to actual expenses the approximately $109 million in advance payments HHC made to Columbia for services provided to Harlem Hospital during Fiscal Years 2008 and 2009. The lack of quarterly fee statements and annual recalculation reports from Columbia for these two years made it impossible for us to determine how much Columbia should be paid for the services it provided to Harlem Hospital during this period. In addition, Columbia lacked HHC-approved subcontract agreements with certain providers that rendered services to Harlem Hospital patients on a per diem or temporary basis.

Our audit also disclosed that HHC did not meet its responsibilities to closely monitor the affiliate’s financial and administrative practices. As a result, there is an increased risk that some of the funds paid to Columbia were not used in compliance with contract terms.

Audit Recommendations

To address these issues, the audit recommends, among other things, that Columbia:

• Submit quarterly fee statements and annual recalculation reports to HHC on a timely basis.

• Ensure that it submits contracts for HHC approval whenever a subcontractor is engaged to provide services in Harlem Hospital.

• Establish detailed timekeeping procedures and ensure that all providers maintain accurate and complete time records of hours worked.

• Ensure that it maintains and submits accurate and complete provider rosters.

To address these issues, the audit also recommends, among other things, that HHC:

• Ensure that Columbia complies with the financial provisions of the contract requiring the timely submission of fee statements and recalculation reports.

• Closely monitor the operation of the affiliate to ensure that all subcontracting and hiring actions receive necessary HHC approval.

• Conduct a periodic review of the provider rosters prepared by the affiliate to ensure that active providers and vacant positions are properly identified and accounted for.