HealthFirst: Wrongdoing was fictional; audit exonerates decisions about clinic project

August 5, 2013 

Building committee chairman Tom Burich, left, board chairman T.A. Lester, middle, and Executive Director William North of HealthFirst gathered before the release of an audit July 25.

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  • At issue: July 26 Herald-Leader article "Audit finds conflict in clinic project, questions finances" and July 26 editorial "Get new manager for HealthFirst clinic; conflicts risk funding for project"

No wrongdoing. The report validates HealthFirst's Southland Drive and building-related transactions, resulting in no auditor findings. HealthFirst has demonstrated our integrity and competency as a viable, independent board, staff and organization. The public can trust us.

HealthFirst asked Mayor Jim Gray earlier this year for help with the clinic and the health tax commitment from the Board of Health. The call for an audit was not the kind of help we had in mind, but the results are positive for HealthFirst.

Auditor of Public Accounts Adam Edelen and Gray at a press conference on May 14 said that at least $250,000 in rent and management fees was spent with few tangible results. They spoke of poor management choices, but were more concerned about something larger going on and the public's right to know. The audit focus was to be on the real estate deal for the clinic at 496 Southland Drive. They said we are a poor state that can't afford to make dumb decisions.

The examination was comprehensive and took 73 days, extending far beyond the initial focus. But there were still no findings with the Southland real estate deal. We have spent much less than reported with many tangible results. There isn't something larger going on. We're glad the public knows this now, independent of the Herald-Leader's poor reporting. We ask the paper's editors to stop the harassment.

Contrary to dumb decisions, the auditor's report states, on page 25, "In this case, HealthFirst funds would pay less than $2.5 million for an approximately 34,000 square-foot built-to-suit medical center with adequate parking in a location preferred by HealthFirst."

This is a very smart decision.

On page 12 of the report, "While all concerns were reviewed thoroughly, the examination of information presented through documents and interviews led auditors to conclude that certain concerns did not result in a finding." These concerns, sensationalized in the Herald- Leader, include the historic review and environmental assessment, HealthFirst lease for property, agreement relating to the property owner's development lot and the HealthFirst option to buy leased property.

The review was largely due to a fictional narrative of wrongdoing and misconduct reported in recent months. Concerns, reported as questionable, problematic or troubling are in fact acceptable business transactions. The observations section (page 20) of the auditor's report should merit at a minimum an apology from the Herald-Leader's editors. How do the vendors and professionals whose reputations have been harmed by such reckless reporting receive satisfaction?

The examination of all documents and thorough interviews with board, staff and professionals led the auditor to report four findings with recommendations. We will address all recommendations within the 60 days identified.

Two findings concern the selection process and potential conflicts of interest with the project manager. We were aware of and publicly acknowledged the various relationships when we executed the contract in 2012. We will review our information and address these issues fully after obtaining guidance from the U.S. Health Resources and Services Administration. One finding is a bit unusual as it is based on an unsigned draft lease agreement with a parking clause that might create a potential problem with the building grant. It does not reference a current decision, action, document or agreement. How does a draft document create a finding? We're not sure but we will address it. We will make sure the new lease is fully acceptable to HRSA, and would have done so in any event.

The last finding is proscriptive of HealthFirst's financial management activities seeming to impose a restraint even after reporting no financial management findings. Some recommendations may conflict with our federal grant and the required independence and autonomy of the HealthFirst board. Others include activities put in place several months ago: Joint committee meetings with the Board of Health, health department staff invited to attend finance committee meetings and conservative budget management. We believe cash flow issues and Medicaid payment problems will be fully resolved once we move out of our slow summer season.

We look forward to the support of the mayor, Board of Health and community. We find the events of the last few months an unfortunate distraction to the important work ahead. We still have many obstacles to overcome but are more committed than ever to our mission of providing quality health care to all who need us.


At issue: July 26 Herald-Leader article "Audit finds conflict in clinic project, questions finances" and July 26 editorial "Get new manager for HealthFirst clinic; conflicts risk funding for project"

T.A. Lester is chairman of HealthFirst's board; Tom Burich is chairman of its building committee.

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