The former top administrator of a publicly owned rural Nebraska hospital resigned after a state audit identified more than $38,000 in allegedly improper credit-card charges, according to Nebraska State Auditor Mike Foley.
NE State Auditor Mike Foley
Foley announced Tuesday that his office had released a letter detailing what it characterized as widespread financial abuse involving Warren Memorial Hospital, which also operates as Friend Community Healthcare System.
The City of Friend owns the hospital.
According to the auditor’s release, the former administrator served as both chief executive officer and chief financial officer. The release did not identify the individual by name.
Foley’s office said the administrator stepped down after a draft of the auditor’s letter was provided to the hospital’s five-member board and other city officials for review.
The audit findings and supporting evidence are being provided to appropriate law-enforcement agencies, according to Foley. The release did not identify the agencies receiving the material or indicate whether any criminal investigation or charges have resulted.
The auditor’s office said it had been informed that the former administrator was attempting to reimburse the hospital for its losses and related legal expenses.
## Golf, travel and entertainment questioned
The auditor’s letter reportedly identifies hundreds of questioned transactions, including thousands of dollars in golfing expenses in Nebraska, Florida, Colorado, Nevada, Illinois and Tennessee.
Other questioned travel and lodging expenses included United Airlines ticket upgrades and what the auditor described as extraordinary alcohol and room-service charges at a Ritz-Carlton hotel and other locations.
The hospital also allegedly paid for streaming subscriptions, including YouTube TV and Hulu, as well as purchases through eBay, Sam’s Club, Costco and Menards.
Additional transactions reportedly involved Dollar General, 402 Creamery, Vic’s Pizza and Rocket Car Wash.
Foley argued that the money should have been used to support patient care at a hospital already facing the financial pressures affecting rural medical facilities.
“Every limited dollar should have gone directly to patient care instead of being wasted on an executive’s lavish personal entertainment,” Foley said in the release.
## Auditor alleges misleading explanation
The auditor’s office also questioned the former administrator’s explanation for opening a second hospital credit-card account under his own name.
According to the release, the administrator told auditors that the second account was needed because the hospital’s previous card had been canceled for nonpayment. Auditors said their review showed the second account was opened while the earlier hospital card remained in use.
Foley’s release noted that Nebraska law makes it a crime to willfully obstruct or hinder an examination by the Auditor of Public Accounts or to attempt to mislead someone performing those duties.
That language does not establish that the former administrator committed a crime. Any criminal determination would be made through a separate law-enforcement investigation and court proceedings.
## Financial pressure on rural hospitals
Foley said alleged misuse of money is particularly damaging to rural hospitals operating with limited financial margins, rising costs and employee-retention problems.
“This type of wrongdoing undermines the outstanding work of those who provide desperately needed healthcare services to our rural communities,” Foley said.
The auditor’s release did not include responses from the former administrator, the Warren Memorial Hospital Board or City of Friend officials beyond reporting the resignation and attempted restitution.
The complete auditor’s letter and supporting information are available through the Nebraska Auditor of Public Accounts website.