Community Hospital Acceleration, Revitalization, and Transformation Program - Phase 1
April 25, 2017 · Community Hospital Acceleration, Revitalization, and Transformation Program—Phase 1 · Read the full official report (PDF) ↗
Published April 25, 2017 Audit covers January 1, 2014 – December 31, 2014 Under Suzanne M. Bump · 2011–2023
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“$9 million in Phase 1 grants under the CHART Program provided limited measurable results.”
Read the plain-English breakdown
This is a state performance audit of Phase 1 of the Health Policy Commission’s CHART grant program, covering 2014.
“This report details the audit objectives, scope, methodology, findings, and recommendations for the audit period, January 1, 2014 through December 31, 2014.”
The State Auditor reviewed the program under Massachusetts law to check whether the Health Policy Commission handled the grants properly.
“In accordance with Section 12 of Chapter 11 of the Massachusetts General Laws, the Office of the State Auditor has conducted a performance audit of the Health Policy Commission’s (HPC’s) Community Hospital Acceleration, Revitalization, and Transformation (CHART) Program for the period January 1, 2014 through December 31, 2014.”
The program was part of a broader state effort to improve healthcare quality and control healthcare costs.
“The Legislature enacted this law to align the state’s healthcare-delivery system with the federal Affordable Care Act of 2010,2 improve the quality of healthcare, and reduce rising healthcare costs.”
For ordinary residents, the point of the program was supposed to be better, more coordinated, and less costly healthcare at community hospitals.
“HPC’s mission is to improve the quality, and reduce the cost, of healthcare across Massachusetts through independent policy and programs aimed at promoting healthcare innovation, accountability, and transparency.”
The auditor concluded that the state did not get clear, measurable value from all of the Phase 1 grant spending.
“As a result, the Commonwealth did not receive a measurable return on its grant funding investment at all of these hospitals.”
The auditor recommended tighter rules, better documentation, stronger financial oversight, useful consultant work, and required reports to the Legislature.
“HPC should establish policies and procedures to ensure that it provides the required annual report to the Legislature, including detailing all expenditures and resulting benefits of the CHART Program.”
This was not a small pilot in the long run: the overall CHART program was planned as a $120 million investment in Massachusetts community hospitals.
“Through the CHART Program, HPC plans to invest $120 million in multi-phased grants to qualified community hospitals throughout Massachusetts.”
CHART stands for a state grant program meant to help certain community hospitals modernize, coordinate care, and improve services.
“CHART Community Hospital Acceleration, Revitalization, and Transformation”
7 figure(s) pending source verification - not shown
What the Auditor checked
- Did not comply Did HPC administer CHART Phase 1 in accordance with state laws, rules, and regulations and in such a manner as to ensure that grantees’ expenditures were in accordance with final approved grant proposals?
- Partially Did HPC award CHART grants to financially viable community hospitals?
What the Auditor found
Why it matters: The Commonwealth did not receive a measurable return on its grant funding investment at all hospitals.
Standard: Section 2GGGG(e) of Chapter 29 of the Massachusetts General Laws requires HPC to consider anticipated return on investment before awarding grants. ( Section 2GGGG(e) of Chapter 29 of the Massachusetts General Laws )
2 recommendations
- HPC should ensure that future grants are administered in a manner that guarantees that measurable outcomes can be achieved within the grant period.agency: partially agreed
- HPC should ensure that it documents, in its board minutes, its formal responses to all questions and concerns raised by its board members.
Agency response & Auditor reply
Agency: "While the Health Policy Commission (HPC) concurs with the Auditor’s general recommendation that grant programs should be designed to enable awardees to be as successful as possible during a grant period, we respectfully disagree with the conclusion that the HPC failed to administer the Phase 1 grants properly."
Auditor: "Although some of the hospitals’ projects produced measurable results, there were just as many that did not."
Why it matters: Grant funds were at risk of loss or misuse by hospitals that might not be financially viable, might use funds for other purposes, or might cease operating.
Standard: Section 2GGGG(e) of Chapter 29 of the General Laws requires HPC to consider the financial health of qualified acute hospitals before awarding grants. ( Section 2GGGG(e) of Chapter 29 of the General Laws; Section 5.06 of Title 958 of the CMR )
2 recommendations
- HPC should develop policies and procedures for documenting and retaining its financial health assessments and evaluations that include an examination of key financial and economic performance indicators.agency: partially agreed
- HPC should retain documentation of its review of each grant applicant’s most recent independent audited financial statements and other disclosures as part of its assessment process.agency: partially agreed
Agency response & Auditor reply
Agency: "The HPC properly evaluated and scored all Phase 1 applications in accordance with the DHTF statute (M.G.L. c. 29, § 2GGGG), CHART regulation (958 CMR 5.00 et seq.), and the Phase 1 Request for Proposals, considering each hospital’s financial health and demonstrated need for investment, among several other statutory factors, when reviewing applications."
Auditor: "HPC asserts that it properly assessed the financial health of all grant applicants but agreed with the Office of the State Auditor (OSA) that it could have done a better job of documenting these assessments."
Why it matters: Hospitals could inaccurately report amounts spent for grant projects without HPC’s knowledge, and HPC could fail to recover misspent funds.
Standard: Section 2GGGG(i) of Chapter 29 of the General Laws and 958 CMR 5.08(3)(a) require annual review and reporting sufficient to monitor and evaluate funded activities. ( Section 2GGGG(i) of Chapter 29 of the General Laws; 958 CMR 5.08(3)(a) )
1 recommendation
- HPC should ensure that its compliance monitoring program includes a requirement for hospitals to retain, and provide to HPC on request, all applicable supporting documentation for grant expenditures in a standardized reporting format developed by HPC.agency: already implemented
Agency response & Auditor reply
Agency: "The Auditor’s recommendation aligns with the financial monitoring program that the HPC has implemented for Phase 2."
Auditor: "In its response, HPC states that it relied on each hospital’s certification that all CHART grant payments received were used in accordance with each approved project."
Why it matters: Hospitals committed staff resources, time, and money but received little meaningful feedback from the consultant.
Standard: HPC’s contract required the consultant to identify opportunities for improvement and develop reports and companion memos for areas of improvement.
1 recommendation
- HPC should ensure that all consultant deliverables intended to benefit CHART hospitals are valuable, accurate, and shared with hospital officials.agency: partially agreed
Agency response & Auditor reply
Agency: "While the HPC generally agrees with the Auditor’s recommendation as a guiding principle, it does not believe that this recommendation is applicable to the Safe and Reliable Healthcare (SRH) contract, because both the CHART hospitals and the HPC derived substantial value from SRH, and SRH produced the required deliverables to the satisfaction of the HPC."
Auditor: "We do not dispute that the leadership summit may have been successful."
Why it matters: The Legislature did not receive a proper accounting of CHART expenditures and resulting benefits.
Standard: Section 2GGGG(j) of Chapter 29 of the General Laws requires HPC to report annually on expenditures from the Distressed Hospital Trust Fund. ( Section 2GGGG(j) of Chapter 29 of the General Laws )
1 recommendation
- HPC should establish policies and procedures to ensure that it provides the required annual report to the Legislature, including detailing all expenditures and resulting benefits of the CHART Program.agency: agreed
Agency response & Auditor reply
Agency: "The HPC is committed to full transparency regarding expenditures from the Distressed Hospital Trust Fund (DHTF)."
Auditor: "In its response, HPC states it has published an annual business report on its website and has also informed members of the Legislature of the CHART Program’s revenue and administrative costs in order to comply with the reporting requirement."