Broward Health rattled by corruption probes, may seek a new way to govern itself

By Dan Christensen and Buddy Nevins, FloridaBulldog.org 

Fort Lauderdale’s Broward Health Medical Center, flagship of the North Broward Hospital District.

“What a colossal mess!”

That’s the opening salvo from the Miami-Dade County Grand Jury’s August 2010 report on ailing Jackson Memorial Hospital.

The same could be said today of Broward Health.

Six years ago Jackson was plagued by financial mismanagement and deficits so large that it teetered near bankruptcy. Tax-assisted Broward Health’s problem isn’t a lack of money; it has more than $700 million in reserves. Broward Health’s problem is corruption.

Broward Health was rattled by last week’s news of investigations by both the FBI and the state chief inspector general. And while North Broward’s public hospital network has never faced a state or county grand jury’s scrutiny, some at the district and elsewhere are wondering whether it is time to find a better way for the $1.8-billion enterprise to govern itself, free of political influence and control.

Broward State Attorney Michael Satz has the authority to empanel a grand jury to look at how Broward Health could be reformed to operate more efficiently. On Tuesday he said the situation is not at the point where he would consider convening a grand jury, adding that he doesn’t want to duplicate or get in the way of an ongoing federal investigation.

“Sometimes it is an easy decision. With the pill mills (grand jury in 2009) it was easy. It was a problem that everybody was talking about. It was something that needed to be addressed,” Satz said. “The Feds and the Justice Department is all over there. They have been there a while. We don’t want to get in the way of the Feds.”

Broward Health is the brand name of the North Broward Hospital District, an independent special taxing district that operates under a state charter dating to the 1940s. The governor appoints the district’s seven volunteer commissioners to four-year terms. Last year the district collected about $140 million in property taxes.

The district, which operates four hospitals and dozens of clinics and outpatient centers, has long been plagued by periodic questions of mismanagement, cronyism and theft.

When Hamilton Forman was in charge

From the 1970s to today, the North Broward system has grappled with scandal. Powerbroker Hamilton Forman, who controlled the district for three decades through his position on the governing board of commissioners, was accused of building a political machine from the political contributions of physicians and vendors at the hospitals. Contracts were alleged to be handed out only to political supporters of whatever governor was in power.

In the 1980s, a $7-million nonprofit fund-raising arm of the district only brought in 100 new paying patients and lost money on much of its ventures, such as a new office building near Imperial Point.

In 1990, Forman left the hospital commission.  The controversial didn’t end.

A public clinic paid for with tax dollars was opened in 1997 behind the walls at the gated Century Village of Deerfield Beach because one of the district’s commissioners lived there. It ended up a losing proposition, and the district was stuck with a $500,000 loan to pay off.

In 2002, the district’s chief financial officer was jailed for embezzlement. Meanwhile, the hospital district was accused of a pattern of overpaying for physician practices and wasting tax money on non-health care related expenses. It spent lavishly on parties and gifts, such as roughly $32,000 in one year on flowers and $304,000 on taxis. It gave $28,000 to charter schools, including one owned by Forman.

The North Broward Hospital District also spent big on construction, like a $100-million-plus renovation of Broward General Medical Center that included a splashy, new multi-story-high new entrance. By 2003, a federal Grand Jury was investigating whether favored developers got illegal advanced word on where the district was going to build a $170-million office building. No one was indicted, and the building plans were put on hold for  years.

Broward Health’s scandals were supersized in September with the announcement that it had agreed to pay $69.5 million to settle a federal whistleblower lawsuit alleging it was part of a sprawling Medicare and Medicaid fraud scheme with doctors that went for more than a decade.

The settlement also imposed new duties on both commissioners and staff to monitor, report and certify that its financial arrangements with physicians and vendors meet federal requirements. Likewise, it required the establishment of a new Code of Ethics and new ethics training for board members, administrators and doctors.

“This is just a resolution of something that’s been on the table for the last four or five years and goes back as far as 2001,” Dr. Nabil El Sanadi, Broward Health’s chief executive, said at the time. “It’s always good to get things like this over with.”

Yet even as El Sanadi spoke, more scandal was bubbling beneath the surface at Broward Health.

Fate steps in

Fate stepped in last month when El Sanadi, cast 14 months ago to lead Broward Health’s turnaround, killed himself for reasons that remain unclear. The day of his funeral Florida’s Chief Inspector General Melinda M. Miguel, informed Broward Health her office would review every contract the district has awarded since July 2012. She cited unspecified “allegations.”

Bad turned to worse last week with confirmation that the FBI is investigating allegations of corruption in Broward Health’s purchasing department. The story exploded with additional allegations by a private investigator hired by El Sanadi to look into corruption that Broward Health general counsel Lynn Barrett had withheld evidence from the FBI.

The resulting turmoil at Broward Health has raised core questions about the district’s culture and how it governs itself. In the case of Jackson Memorial, the grand jury publicly addressed those questions.

The grand jury’s focus was evident in the title of its report: “Designed to Fail: A Redesign to Succeed.”

The grand jury took testimony about an array of operational problems at Jackson and concluded “sweeping change in all areas is needed” to protect what it called “our sainted jewel of an institution that we all rely on.”

The Public Health Trust runs Jackson Memorial Hospital and the Jackson Health System. The trust is an ostensibly independent governing body, but it is largely controlled by the Miami-Dade County Commission.

The grand jury found that the Public Health Trust, the county commission and county administrators had failed to properly oversee the Jackson Health System and that “the governance system must be changed.”

But grand juries merely recommend, and the suggested changes didn’t happen. Instead, Jackson Memorial experienced a financial turnaround under new management. Miami-Dade County continued its control, and the Public Health Trust shrank its board of trustees from 17 members to seven.

Jackson grand jury threw a spotlight

Still, the grand jury’s examination was useful.

Most importantly perhaps, it threw a spotlight on Jackson and made the case for needed structural change in a time of crisis.

It called for the appointment of a group of local experts in hospital finance, management and governance to study and recommend the best governance system for Jackson Memorial. In May 2011 a task force report of 41 Miami-Dade executives recommended that Jackson be converted to a nonprofit run by a small, independent board separated as much as possible from county politics, the Miami Herald reported.

The story by reporter John Dorschner said the group had noted that 90 percent of American public hospitals “have restructured their governance to be insulated from political pressure.”

Two examples were Tampa General and Atlanta’s Grady Health Systems, “both of which have nonprofit companies operating facilities that remain owned by local governments, with oversight groups making certain that the poor are well served and the tax dollars are spent appropriately,” the story said.

Again it didn’t happen. Entrenched county interests prevailed, just as they had in 2009 when Miami-Dade commissioners rejected a proposal to ask voters to approve a different system of government for Jackson that would have granted it greater autonomy.

As an independent special taxing district run by seven commissioners appointed by the governor and established under state law, Broward Health doesn’t face such control issues from Broward County. The county pays the district about $10 million annually to help provide for indigent care.

Despite its contribution, county government has no say on how Broward Health will be governed in the future.  That can only be decided by the Legislature, perhaps with a nudge from a Grand Jury.