Putnam hospital CEO responds to audit, 'would not' do anything differently

Putnam County Memorial Hospital CEO David Byrns responded Thursday to a scathing audit, saying he would not approach any of the expenditures differently (Photo: KTVO)

Putnam County Memorial Hospital CEO David Byrns responded Thursday to a scathing report by State Auditor Nicole Galloway.

Over the phone, Byrns told KTVO he wouldn’t change any of the “questionable” expenditures the auditor found, including at least $5,000 spent on alcohol, cigarettes, car washes and golf outings, along with nearly a million dollars paid out to himself and his company from hospital funds.

“Honestly, I wouldn’t, no,” Byrns said over the phone Thursday.

That includes a $500,000 loan Byrns took out for the hospital from his own company, Hospital Partners.

In the audit report, investigators noted that the hospital’s Board of Trustees had never approved the loan. Byrns said he told the board, but “there wasn’t time” to sign any agreements.

“When I went in, the hospital was getting ready to close,” Byrns said.

Instead, Byrns said he gave the hospital a loan with an eight percent interest rate, then proceeded to pay his own company back out of hospital funds, all without explicit board approval.

When asked about the $10.6 million in “lab management fees” that board members said they did not know about, Byrns ended the interview and referred KTVO to a statement released Thursday afternoon.

In that press release, Byrns touted his company’s achievements.

“Since Hospital Partners Inc., has taken over the day-to-day operations of Putnam County Memorial Hospital more than six million dollars has been paid to alleviate much of the outstanding debt and allow the hospital to fund critical programs,” the release stated.

An attorney associated with the hospital also defended the practice of billing the hospital for patients who had never actually been there, calling the audit report a “gross mischaracterization.”

“The assignment of non-patient lab specimens has been standard procedure for rural and critical access hospitals for many years,” said health care compliance attorney Mark Thomas in the statement. “We appreciate the Auditor’s concerns and them seriously. We will be reviewing and addressing the procedural findings within the report; however, had the Auditor’s office referred to the applicable health care laws that govern this commonly-accepted practice before issuing the report, we genuinely believe the findings would have been substantially different. We have also reached out to the Attorney General’s office to request a meeting to clarify this issue.”

Thomas serves as outside counsel for Hospital Lab Partners, LLC (not to be confused with Hospital Partners, Inc.). Hospital Lab Partners contracted with the hospital in an agreement made with Byrns and never approved by the Board of Trustees. Over the phone, Thomas told KTVO that generally, a hospital billing an insurance company for work completed by a lab in another location is very common.

“It’s not exotic,” Thomas said. “It’s normal. Hospitals do it all the time.”

According to Thomas, the line between lawful and criminal came down to the association of the hospital that billed insurers to the lab that did the testing. For example, Thomas said, if the lab kept patient data and related documentation without sharing with a hospital, and then "leased" the hospital’s code to charge insurers or the government, “that would be criminal.”

Thomas said that was not the case with Putnam County Hospital and the labs it contracts with through Hospital Lab Partners, though he said he had “no idea” if the hospital had actually followed the proper procedures since he does not represent the hospital, only consults for the labs’ management company.

What was puzzling to Thomas, though, was the 33 phlebotomists who are “employed” by the hospital in 11 different states.

“That’s a fair point,” Thomas said of the auditor’s questions over the employees. “I told them they need to get that figured out.”

A spokeswoman for Attorney General Josh Hawley told KTVO Thursday that his office is in the process of reviewing the audit’s findings.

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