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Where Did the Money Go At Defunct State Hospital?

Michigan's Northville state hospital may now be shuttered, but a state audit finds that its former staff left behind a legacy of poorly used funds.

Aperformance audit of the former Northville State Psychiatric Hospital reveals a pattern of fiscal mismanagement dating back to 1992 that cost Michigan taxpayers hundreds of thousands of dollars.

Once one of Michigan's largest state psychiatric hospitals, Northville was built in the 1950s with the capacity to house more than 1,200 people. After the nationwide deinstitutionalization effort and the move toward community-based treatment, Northville was closed in 2003 (Psychiatric News, February 7, 2003).

A recent performance audit of the hospital and related closure activities conducted by the Michigan Auditor General's Office revealed the following major findings:

• Employees failed to document various services resulting in the state's losing $320,000 in Medicaid payments.
  
• Hospital officials spent $1.8 million on an electrical contract although the state had earmarked only $482,234 for the project.
  
• Employees used state credit cards and bought gasoline without controls, resulting in $23,000 in unapproved purchases on one credit card alone. And $49,000 in gas purchases were double-billed to the state's general fund.
  
• Lax documentation of $5.1 million in drug purchases at the hospital from 2002 to 2003 made it impossible to tell whether drugs were stolen.
  
• The hospital failed to keep track of patients' belongings and clothing, resulting in patients' being discharged without all of their possessions.
  

"The Michigan Department of Community Health [MDCH], which ran the hospital and closed it, is most directly responsible for the audit's findings," MDCH spokesperson T.J.Bucholz told Psychiatric News. Most of the audit's findings covered the tenure of Gov. John Engler (R), and some went back as far as 1994. The MDCH was formed in the mid 1990s.

"They played fast and loose at Northville during the Engler administration," Bucholz said.

So far there is no evidence of sale or misuse of prescription drugs and no evidence of criminal activity. MDCH is currently reviewing the audit's findings and determining whether to refer information to the state attorney general's office for criminal investigation.

"It shouldn't be just a question of `Where was the state when all of this was going on?'"

Bucholz said that the MDCH has instituted controls at all other state hospitals to make sure that what happened at Northville doesn't happen elsewhere.

During an interview with Psychiatric News, Hubert Huebl, M.D., president of NAMI-Michigan, said he wanted to know why audits were not conducted on a regular basis over the years when Northville was in operation instead of waiting until it was closed.

"The state needs to get more involved in monitoring, not just doling out the funds," Mark Reinstein, Ph.D., president and CEO of the Mental Health Association in Michigan, told Psychiatric News. "But how are they going to do that without appropriate staff? If some legislators are concerned about the findings of this audit, this may be a wake-up call and make them realize that you only get what you pay for."

Reinstein says that legislators need to appreciate that state-operated facilities and some community health programs and other mental health services have their own sizable bureaucracies and are not simply little organizations. So legislators must realize that these programs need to be monitored.

Michigan Rep. Leon Drolet made the audit's findings the focus of a March 8 hearing by the Government Operations Committee, which he chairs.

"It shouldn't be just a question of `Where was the state when all of this was going on?'" Reinstein said. "Questions were raised at the hearing regarding who was in charge of different responsibilities at the hospitals and whether any of these employees are still working some place in the system. And if so, why?"

Shobhana Joshi, M.D., formerly director of the Northville hospital, now heads the Hawthorn Center, located in Northville. That facility provides intensive inpatient psychiatric services to children and adolescents. She did not reply to requests from Psychiatric News for an interview.

Reinstein said that the hearing held by the state Senate committee did not adequately address the question of why the state failed to focus earlier on problem areas uncovered by the audit so it could take steps to correct them. He also faulted the hearing for concentrating mainly on the closure of Northville and the few years before it. He said that to trace the origin of some of the problems identified in the audit would have required auditors to go back to what happened in 1994, which he admits would have been costlier.

The Northville Psychiatric Hospital audit can be accessed online at <www.audgen.michigan.gov> by clicking on #3924003.

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