Schenectady County

Audit finds clinic badly run

A federal audit has cited Hometown Health’s current management as contributing to its near collapse

A federal audit has cited Hometown Health’s current management as contributing to its near collapse as a community health care provider.

The preliminary audit by the federal Bureau of Primary Health Care found Hometown “does not appear to be financially viable as currently organized, structured and operated.” It also said Hometown “lacks community support, the basic operating presumption for a successful health center,” and that it “masked” its poor financial performance through the use of grants.

The audit did not call for a management shake-up, but directed Hometown to submit a corrective action plan to the federal Department of Health and Human Services.

Hometown officials said the findings of the audit, conducted in July and sent to the facility in October, were preliminary and that a follow-up audit shows a different picture. Hometown officials said they could not release the follow-up but they are following its recommendations. The recommendations include combining Hometown’s pediatrics department into its family practice department. The merging has resulted in the resignation or firing of three physicians and one nurse practitioner.

Hometown is a not-for-profit federally designated community health center that provides primary care services to a large population of people with little or no insurance.

Other findings are that Hometown:

u Nearly defaulted on its federally guaranteed facility loan;

u Accumulated operating losses of $2 million between 2003 and 2007;

u Had a $900,000 deficit as of September;

u Increased its long-term debt by $800,000 since 2004;

u Suffers a cash-flow “crisis” that makes it unable to meet payroll, keep its building loan current and pay vendors for medical supplies;

u Saw its expenses grow 228 percent while revenues grew but 95 percent between 2003 and 2006;

u Saw administrative costs increase by 83 percent between 2002 and 2006, exceeding national and New York state norms by nearly 50 percent.

Another finding was that an unidentified former dentist who worked for Hometown is under investigation for Medicaid fraud. The audit found that the dentist was “funneling private insurance patients to his private practice and Medicaid and uninsured patients to the health center.”

Hometown spokesman Joe Gambino said the health care center is no longer in danger of defaulting on its loan. “We brought that up to date immediately when the auditor was here,” he said Friday. The auditor has been visiting Hometown regularly since December.

The Rev. Michael Hogan, chairman of the Hometown board of trustees, said the board has confidence in Hometown’s administration and that “there is nothing that has been told to us that indicates the management ought to be replaced at this time.”


The preliminary audit, which Hogan and Gambino said they haven’t seen, faulted Hometown for “pursuing other lines of business that distracted it from ensuring full use of its new facility on State Street. Those businesses were its contract with Schenectady County to provide medical services to jail inmates and its takeover of the Ellis clinic. Specifically, the audit called “ineffective” Hometown’s strategy of “improving its financial position through growth” and that Hometown pursued these ventures without considering its federal government loan and loan approval guarantee on its State Street facility, which opened in 2005.

The federal government guaranteed 80 percent of the $5.7 million loan on the project. The Community Preservation Corp. offered a $2.8 million loan; Metroplex a $1.5 million loan; and Primary Care Development Corp. $1.4 million in loans and grants.

Hometown took over the Ellis health clinic in 2004 for $1 but plans to close it in February, citing financial losses. Hogan said the two ventures were “originally seen as money makers. They should have brought in some good finances and it was a way for us to be a real part of the community.”

He said Hometown “ran into a lot of problems with Ellis and the jail, but as soon as we realized they would not help us, we terminated those contracts. It seems to us you have to try and if it doesn’t work out you have to be able to cut it.”

The audit faulted Hometown’s board for lack of oversight over financial operations at the center: “The health center has not been financially viable for a very long time, indicating a lack of understanding and sufficient oversight of the management team.”

In response to this finding, Hogan said the board put in place “a pretty good finance committee that has been working steadily.”


Hogan said measures Hometown’s management is taking, with board approval, give him confidence the facility will survive as a primary care provider in the community.

“We are quite furiously right-sizing. We have too many positions for the number of patients we are seeing. We are letting physicians go or accepting resignations to realign the business to the number of patients we have.”

The decision to “right-size” has been controversial, especially to Dr. Kevin Karpowicz, a noted pediatrician in the community. Karpowicz joined Hometown in 2005 when it bought out his practice, becoming its vice president of medical services. In November, he resigned as vice president but remained as a pediatrician on staff.

In December, he submitted his resignation, effective in April, stating that Hometown’s financial problems were overshadowing patient care. The board accepted his resignation Jan. 9, the day an article appeared in The Daily Gazette in which he stated his concerns.

He said the federal audit “lays out the picture pretty clearly, and the response to it has not been consistent with what the report says.”

The audit did not say Hometown should eliminate pediatrics, “at least it was not discussed with me,” Karpowicz said. “They are eliminating it basically because all the pediatric providers are leaving anyway.” He said Hometown management is blaming the providers for the facility’s problems and that they “should bear the brunt of the changes.”

With Karpowicz’s departure, the remaining Hometown medical staff is bracing to handle thousands of patients with a limited staff. Hometown said its staffing levels are adequate for the current patient load.

Karpowicz said he doesn’t believe this and is working with St. Clare’s Hospital to open a new pediatric service in Schenectady County by Feb. 1. However, it was announced Thursday that St. Clare’s will be taken over by Ellis Hospital under state directive; no timetable for this has been cited.

“It is my feeling and St. Clare’s feeling that the children of Schenectady, especially the poor and high-needs children, require pediatric services and that is why we have taken this step,” Karpowicz said. “It isn’t to steal or take away from Hometown’s services, but to provide a service they are voluntarily relinquishing.”

Categories: Schenectady County

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