KHS must can Allied and take its lumps
Kern County taxpayers should be pleased to note that the Kern Health Systems board of directors voted last week to approve a new policy that requires the approval of the board and a cap on costs before contracts of $10,000 or more are signed.
That's a tremendous (and overdue) improvement over past policy at KHS, the independent county health authority, where nearly $8 million was spent on a claims audit of dubious value -- expenditures that some board members seemed only vaguely aware of.
However, the KHS board still has key questions to answer and crucial decisions to make, and many of them pertain to the Santa Ana-based consultant at the center of the controversy, Allied Management Group.
At Thursday's KHS board meeting, community board member Al Wagner asked that KHS terminate all contracts with Allied, whose audit bills hit $7.78 million after KHS's chief financial officer recently "found" records showing that an additional $371,000 had been paid. "I don't trust them," Wagner declared in the meeting.
KHS staffers responded by saying it would be a good idea to keep Allied around for two reasons:
* Firing the consultant could negatively prejudice a pending lawsuit between KHS and a group of emergency-room physicians who allegedly -- and fraudulently, KHS claims -- over-billed KHS. As part of its consulting services, Allied says it provides witness testimony in cases related to its audits.
* Allied is still providing valuable services under a separate contract in identifying problems with claims.
But another community board member, Estela Casas, read from a letter from Allied in which the consulting firm said it cannot assist KHS in court on the pending lawsuit because KHS suspended the $8 million audit before it was completed. The "preliminary findings" of the audit are "not legally accurate," the letter read.
In other words, the $8 million you spent on us thus far isn't sufficient. If you want results, you'll have to spend more. Let us finish the audit -- no matter where that might take you financially -- or you won't benefit from the $8 million you've already invested. In some circles, such a threat might be regarded as blackmail.
Yes, firing Allied now might prejudice the court case, but doesn't merely having had a public conversation on the subject essentially do the same thing? Doesn't the board's concern, reported in the newspaper, create the same issue?
KHS spokesman Rob Jones perhaps said it best: "Looking back at the audit, they (KHS) got screwed. They basically got led down a primrose path."
But KHS seems to have developed a devotion to Allied that approaches religious fervor. Why is this company so untouchable? As Casas points out, Allied is not going to play ball unless the money keeps coming. If that's not enough to say bye-bye, what is?
