Community Health Network Misspends $1.2 Million Meant for Rural Health

July 7, 2011; Source: The Courier | The story of the Community Health Network based in Savannah, Tenn., is replete with charges of really bad behavior by the organization’s CEO.  Allegedly, the former CEO and the former assistant director pocketed some $90,000 in “unauthorized salary and benefits” as part of a total of $1.2 million that a state comptroller investigation revealed as “lost or misspent” over a three-year period. 

The fact that the nonprofit’s purpose was to provide medical technology to rural communities is particularly galling, as medical care issues in rural America are serious business. CHN’s program involved “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,” linking over 100 rural clinics to 17 hospitals and clinics capable of providing specialist assistance. Because of distances to hospitals and providers, the importance of technology is self-evident. 

The audit charges that the CEO had an improper relationship with software vendors, the two officials “falsified grant invoices and grant reports,” “misused proceeds from a state grant to purchase unauthorized software,” and overbilled the state on another software purchase. 

The board chair,Jeffrey Mckissack, said he and his governing board colleagues “deeply regret . . . the breach of trust that occurred through the actions of its former CEO and [have] worked to ensure that a full accounting of the organization’s finances and operations has been made.”  Mckissack acknowledged that the organization faces a few financial challenges going forward.

Sorry, but something is missing in this story.  he pattern of deception and misspending revealed in the Courier story seems hard for a board of directors to have overlooked. A good chunk of the money came from the Tennessee Health Foundation, which one might have expected to keep a close eye on the uses of its philanthropic largesse. What was the board doing during the past three years? 

So often, these stories suggest not only senior staff improprieties, but a board that might have been asleep at the switch.—Rick Cohen