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Cook County Health Hires Audit Firm To Review Scathing Inspector General Report

Thursday, July 25, 2019
by Mariah Woelfel

Cook County Health Hires Audit Firm To Review Scathing Inspector General Report

Mariah Woelfel

July 25, 2019

Health system CEO Jay Shannon (right) addresses Cook County board members Thursday, July 25.

Mariah Woelfel/WBEZ

Health system CEO Jay Shannon (right) addresses Cook County board members Thursday, July 25.

The Cook County health system has hired an independent firm to review the findings of a bombshell report by the county’s inspector general that called into question the health system’s financial practices.

Cook County Inspector General Patrick Blanchard’s scathing June 21 report raised serious questions about the way Cook County Health leaders run CountyCare, the system’s Medicaid business, pay the doctors and hospitals in the insurance network and communicate that in a transparent way to county leaders and to the hospital’s own board.

Dr. Jay Shannon, CEO of the county health system, has disputed Blanchard’s findings. The health system has also questioned if Blanchard’s staff understood the complexities of Medicaid.

Shannon addressed the findings and announced the independent review, to be conducted by the accounting and audit organization Deloitte, at a Cook County committee board Thursday.

“I believe [the independent review] will result in a deeper, shared understanding of how a publicly owned and provider-led managed care plan operate, and restore any trust in our team that has been questioned,” Shannon said.

Among Blanchard’s most significant findings was that CountyCare finished the 2018 budget year owing hospitals and other vendors nearly $701 million. He said the backlog was so bad that some vendors cut off supplies, leading to a shortage of pacemakers and anesthesia for surgeries.

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He found that CountyCare did not generate enough money to pay all of its expenses at the end of each year, so it used money coming in to pay old bills. The investigation also raised concerns about whether the county health system is shuffling money around in order to make its finances appear better than they are.

As part of the independent review, Deloitte will look at the county health system’s financial books and accounting principles, Shannon said.

Shannon told county board members CountyCare is strong and transparent, and that CountyCare does not owe medical providers about $701 million.

“The finances of Cook County Health are stable,” Shannon said. “Last year, our net position improved to a positive $25 million. This could not happen if we had $701 million in unpaid bills.”

Shannon on Thursday held back detailed responses as to why the system disputes the specifics of Blanchard’s report. He said that information will be included in their response, which will include Deloitte’s review, to the IG report. The county health system expects to file that response by the end of August.

A leader of one of the hospitals that the county has owed money to in the past spoke at Thursday’s committee meeting. In May, Loretto Hospital CEO George Miller said the hospital would cut back services due to unpaid bills. Miller said the county health system owed them around $4 million.

He told commissioners at Thursday’s meeting Loretto has been made whole and has worked out regular payments with the county.

CountyCare was born out of the Affordable Care Act, which allowed states to expand Medicaid health insurance for people who are low-income or disabled. CountyCare has become a big moneymaker for the health system since launching in 2013.

Blanchard’s report set off a wave of anxiety among county commissioners, who publicly grilled health system leaders and questioned the sustainability of CountyCare late last month.

They’re concerned because CountyCare is crucial to the finances of not only the health system, but also to the county budget. The health system makes up nearly half of the county’s roughly $6 billion budget, and its Medicaid business generated $1.8 billion last year. CountyCare has helped reduce the amount of extra money the health system needs each year from taxpayers.

Several commissioners at Thursday’s meeting expressed disappointment in the lack of details from health system officials. Others commended Shannon for pursuing an independent review and for meeting with them personally ahead of the meeting.

“A report like this is concerning and it has to be answered,” said influential County Commissioner John Daley, who has expressed support for an independent review. “The independent inspector general has his job to do, and I’m not challenging him. Whenever your answers come back hopefully we will get a copy of them. I’m glad to see you’ve hired an independent review.”

The county health system includes flagship John H. Stroger, Jr. Hospital on the Near West Side, Provident Hospital on the South Side and clinics throughout Chicago and surrounding suburbs. The system treats patients who are largely poor and people of color, and provides far more free medical care to people who are uninsured or can’t afford to pay their bills compared to other hospitals in the county.

Mariah Woelfel is a producer at WBEZ. You can follow her @MariahWoelfel.


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