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Audit probes NM hospital overrun by virus

SANTA FE – The former CEO of Rehoboth McKinley Christian hospital in Gallup on Wednesday challenged the findings of a special audit of finances and contracts at the taxpayer-supported hospital in Gallup.

David Conejo and attorney Luis Robles called the audit report “shoddy,” and said it “misrepresents the true financial picture” at Rehoboth under Conejo’s tenure.

The audit, commissioned initially by McKinley County and released by the state auditor’s office on Tuesday, alleges that Conejo’s hospital management company, Healthcare Integrity, circumvented proper oversight by hiring hospital executives as its employees and requiring the hospital to pay their salaries.

Conejo condemned the audit as “grossly inaccurate” and denied its assertion that his salary was not approved by the hospital board of trustees, saying that a board attorney and a bond counsel to the hospital agreed the compensation was appropriate. The audit says Conejo was paid as much as $645,000 one year, while Robles says yearly pay was about $450,000 after related tax payments.

Conejo has sued for wrongful termination after being fired in June from his position overseeing the 60-bed hospital on the outskirts of the Navajo Nation. Rehoboth hospital was overwhelmed with critical COVID-19 patients in the spring as coronavirus infections surged in Gallup and prompted an emergency lockdown with police roadblocks to keep infections in check.

“The state’s conspiracy theory that all of these allegations of impropriety by executives being hired by Healthcare Integrity is just an attempt to create innuendo and misleading allegations when in fact the hospital board had the authority” to make changes, Robles said in a statement.

The audit also cites evidence of no-bid construction work at the hospital by a company owned by a hospital trustee, and outlines disputed charges for night staffing and doctors’ hours by another contractor with ties to a former chief operating officer.

New executives at the hospital say efforts are underway to ensure proper internal controls and restore financial integrity.

Rehoboth hospital is supported in part by taxpayers through a property tax mil levy that provides about $2.5 million a year, giving the county fiduciary responsibility.

“You just had a complete breakdown in internal controls … which allowed the leadership to take advantage of the people of McKinley County,” State Auditor Brian Colón said in an interview.

The audit says that compensation was established for Conejo without indication of approval by the hospital board of trustees, and that annual CEO pay of up to $645,000 may be in excess of norms for fair and reasonable compensation at a 60-bed facility.

“It’s unconscionable the hospital’s much-needed funds went to a CEO overseeing one-tenth the beds of University of New Mexico Hospital for nearly the same pay,” Colón said in a news release.

The audit also said the hospital allowed service contractor Invictus Healthcare Management to bypass internal controls, and that the hospital is now disputing charges of about $750,000 in doctors’ hours and night-shift staffing services that were not rendered. The CEO of Invictus Healthcare Management served as the hospital’s chief operating officer at the time the contract was negotiated, the audit said.

The hospital audit also highlighted as “grossly excessive and atypical” the fees promised to Healthcare Integrity if Rehoboth were to terminate its management contract early or sell the property.

The hospital laid off nurses in March as a cost-saving measure only to be overwhelmed by a surge in coronavirus infections, eventually opting to transfer patients with severe respiratory problems to health care facilities in Albuquerque. Conejo has defended his handling of the pandemic, and said decisions on staffing and medical care were not his alone.

Auditors said that compensation provisions for the hospital CEO and other top managers raises concerns about possible violations of IRS codes. The audit report was referred to the state attorney general’s office, the state Taxation and Revenue Department and the Internal Revenue Service.