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City audit finds overbilling, missing board approvals and altered contracts at Nashville General Hospital
Summary
An internal investigation by Metro audit staff substantiated four of five allegations about contract management, billing and use of hospital resources at Nashville General Hospital; auditors recommended 12 corrective actions and said Metro and hospital officials are cooperating on follow-up and potential fund recovery.
Metro Nashville’s internal investigators reported findings this week after probing multiple allegations about operations at Nashville General Hospital, concluding four allegations were substantiated and one was not substantiated.
The audit team said it substantiated a $232,000 overbilling by a valet services contractor, multiple contracts that were executed without documented board approval totaling about $4.46 million, and a physician’s use of hospital clinic space and staff without billing the hospital for patients. Investigators also found instances in which contracts provided to media requesters did not match the copies on file at the hospital, suggesting documents were altered before release. One allegation about double reimbursement for tuition expenses by an executive-level employee was found to be unsubstantiated.
The findings came from an investigation that began after the auditors received allegations in April of the prior year and intensified after the city hired a lead investigator. Audit staff said they limited the review to the scope of specific allegations, producing substantiation determinations and 12 recommendations aimed at tightening contract controls, billing and records management. Metro staff said many of the recommended changes are already being implemented.
Among the principal operational issues the investigators reported: poorly documented contracting procedures at the hospital authority, prepaid fixed-hour contract language that allowed City Valet to invoice for hours regardless of reconciliation, and gaps in contract-tracking and records-retention that made it difficult to confirm whether certain contracts had been routed to the hospital authority board for approval.
The committee discussed the larger governance and oversight context. Committee members noted Metro’s ongoing subsidy of Nashville General — auditors and council members referenced a baseline subsidy of about $62 million for the hospital and a recent supplemental allocation of roughly $10 million — and raised questions about whether the authority’s procurement and contracting practices should be more tightly controlled given the scale of taxpayer support.
Audit staff said they will meet with the hospital’s interim chief executive and finance leadership to review action plans and timelines. Officials from Metro audit staff said they are working with the hospital’s interim CFO and acting manager and that hospital leadership and the authority’s finance chair have engaged in follow-up conversations. Auditors also said they are looking at whether funds can be recouped for confirmed overpayments, and that the hospital has begun canceling contracts and reviewing contracting practices.
The committee recommended continuing to track implementation and requested additional follow-up reports after the audit team meets with the hospital’s interim leadership and the authority’s board and finance committee.
