State investigation accuses Savannah medical nonprofit of wasting, misspending $1.2 million

July 7– A Savannah-based nonprofit corporation created to provide medical technology to rural communities lost or misspent at least $1.2 million over a three-year period, a state comptroller investigation made public today found.

More than $700,000 of that sum was from state grant funds.

"It is very unfortunate that public money intended to assist in providing health care to people in remote rural areas was wasted and abused in this fashion," Comptroller Justin P. Wilson said. "The findings of our review are being forwarded to the State Attorney General’s office and the District Attorney General’s office."

The audit of Community Health Network Inc. accuses the organization’s former chief executive officer, Keith Williams, and its former assistant director, Paul Monroe, of receiving more than $90,000 in unauthorized salary and benefits.

In what is termed a "questionable relationship" while working for Community Health Network, Williams received $10,000 in March 2009 from a vendor that provided software to CHN. After his resignation from CHN, Williams went to work for the vendor as a paid consultant, the comptroller’s office said.

Auditors also allege Williams and Monroe falsified grant invoices and grant reports and misused proceeds from a state grant to purchase unauthorized software at a cost of $597,458.

In a statement, CHN board Chairman Jeffrey Mckissack said the board "deeply regrets the breach of trust that occurred through the actions of its former CEO and has worked to ensure that a full accounting of the organization’s finances and operations has been made."

Community Health Network has managed a network of computer and video equipment that allowed doctors and nurses in remote health care facilities to transmit scans, images and test results to medical specialists in major medical centers hundreds of miles away.

In 2009, Community Health Network reportedly had 17 member hospitals, clinics and other health care organizations that provided assistance to more than 100 clinics.

According to auditors, Community Health Network overbilled the state for another software purchase at a cost of $131,163. CHN was unable to account for $446,712 worth of grant funds provided by the Tennessee Health Foundation.

In addition, Community Health Network spent $1.47 million on a computer system that was never utilized and failed to properly process at least $749,000 worth of grant applications requested by health care providers, the investigation determined.

The review also details other accounting and internal control issues, including failure to keep accurate records and failure to budget for recurring expenses such as software maintenance and telecommunication line fees.

The audit covered the 2007-2009 calendar years.

According to Mckissack, after Williams resigned unexpectedly in January 2010, the CHN board "began uncovering the organization’s true state of affairs" and hired an accounting firm to conduct its own audit.

The following month, the board fired Monroe, CHN’s chief financial officer. The board also contacted the state to report its concerns and has "cooperated fully" with the state’s investigation, he said.

Deborah Gott was named to serve as interim executive director of Community Health Network and the organization has been maintaining basic services. However, CHN "faces serious fiscal challenges," Mckissack said.