ICS Under Scrutiny in Idaho as CHC Woes Continue in Saipan

June 2, 2012

Blackfoot Idaho's Bingham Memorial Hospital CEO Louis Kraml and COO Dan Cochran who formed the International Consulting Services (ICS) specifically to land a questionable contract with Saipan's Commonwealth Health Center are being investigated in Idaho.

The hospital's  board of directors predictably supported the Kraml and Cochran with a public letter of support. CHC CEO's Babauta also penned a letter of support defending ICS and stating that there was nothing illegal in the transaction between ISC and CHC. The CHC letter of support and praise for ISC and Kraml was also signed by Chairman of the Board of Trustees, Jack Torres, Vice-Chairman Pedro Dela Cruz, and board members Roy Rios, Anothony Aguon, Dr. Jeremy Richards, Anthony Raho and Alvaro Santos. Both letters appear to be attempts to stave off further investigations into the ISC-CHC deal.

Read the CHC letter:

The letter states, "We hope this clears up any remaining questions with respect to  integrity or motivations of International Consulting Services, it principals or the Commonwealth Health Corporation." To the contrary, the CHC letter supporting ICS and Kraml raises even more questions.

The letter states, "It is important to understand that ICS did not approach CHCC to solicit business. In fact, CHCC sought out ICS through their reputation and asked them if there was anything they could do to help." How could ICS even have a reputation if it was registered in Idaho in February 24, 2012 and had no other known clients? In fact, it appears that ICS was created just to land the CHC contract which was signed in January 2012, even before ICS legally existed.

Regardless of the denials and support from the hospital boards, the Bingham County Commissioners are calling for a forensic audit of the hospital. KPVI reported:
Amid allegations of wrong doing, the Bingham County Commissioners want to take a closer at the operations at Bingham Memorial Hospital.

County Commissioner A. Ladd Carter says a written request for an audit was given to the Board of Directors of the hospital Tuesday.

The request states, "In light of the current allegations surrounding the hospital management, we are formally requesting your cooperation with a forensic audit. The Board of Directors is directly accountable to the citizens of Bingham County. This independent audit should help clear the air and allow the hospital to focus on their mission to serve the health care needs of the county." While the written request does not specify the allegations against the hospital, Commissioner Carter says his office is particularly interested in how the finances are being managed. That's because the hospital is required to make payments to the county up to $450,000 per year based on revenue and the amount of indigent care the facility provides. Indigent care is defined as treatment given to the needy or poor.
KPVI stated that the allegations originate from the questionable CHC-ISC deal. From KPVI (emphasis added):
Questions of illegal activity there prompted Bingham County to ask Planning and Zoning Commissioner Lee Hammett to take a closer look. Hammett says he is investigating a number of questionable and possibly illegal practices including Medicare and Medicaid fraud.

A Local News 8 report clarified the financial relationship between Bingham Memorial and the county:
The hospital pays the county a fixed fee of $150,000 a year and then five percent of excess earnings up to $150,000. 
In 2008, that was more than $23,000, and in 2010, $150,000. But in 2009, instead of excess, there was a deficit of almost $50,000, so the county did not get a payment. 
According to tax forms for 2009, that same year, Kraml made about $700,000 and Dr. Adam Wray, a dermatologist, closer to $730,000.
An executive session between county commissioners and BMH board of directors was scheduled for 10 a.m. on Tuesday, but sources said two commissioners had been uninvited as of Monday night. Apparently, the only one allowed to attend is Cleone Jolley, who is an ex-officio member of the board.
It was reported that since CHC-ISC stories made headlines in Idado, former Bingham Memorial Hospital employees have been contacting the press with allegations of wrongdoing. Local News 8 reports:
Since we reported on the outside business dealings of administrators at Bingham Memorial Hospital, our newsroom has been flooded with concern from the community, as well as past and present employees.

Many are raising questions about hospital practices.
Allegations of using hospital time and equipment on outside projects were revealed. A former employee stated that computer systems bought by the hospital were being sold to outside entities and the profit was pocketed by a former employee. Former employee Dan Keele stated that employees were told that all orders had to go through Cyberdine. Cyberdine Systems, LLC was registered to former Bingham Memorial Information Systems Director Jack York. It appears Cyberdine was a middle man profiting off of orders. York reportedly sent another Bingham employee to set up systems at a nearby law firm while he was working for the hospital.

New 8 reported:
Keele said it was easy for York to cover the fact that BMH workers were installing equipment outside the hospital, because the hospital contracted with a clinic in Pocatello, he said, that required an IT person to spend time there. Keele said that's why no one questioned where they were. 
"(The co-worker) hated what he was doing, but what do you do?" said Keele. "You either do what your boss says or you're fired. And Jack's fired a lot of people." 
Keele said the co-worker was being paid by BMH for the time spent on outside projects for York. 
Sources who wished to remain anonymous said administrators didn't take action right away. They said York reportedly left the hospital in April.
As I questioned in a previous post, who were the employees of ISC who were going to perform billing services for CHC? Were they also Bingham Memorial employees who were to perform the work while on the clock for Bingham Memorial?

As revealing are some of the comments to news stories that suggest further questionable acts:
  • I find all of this very interesting. First, the AG of Saipan investigates an overseas deal, which ultimately is deemed illegal, then it is uncovered that the CEO and his partners have 24 (?) LLCs. Then the Info Systems Operator is funneling equipment through his personal LLC company to sell BMH computers that they could have bought directly from a vendor. This seems like a very complex, layed onion. One that is mired in corruption and greed. This onion makes my eyes water. And, while this is happening, CEO Kraml is pulling in $750,000 a year? Either he is the worst CEO ever to not know what is going on in his own hospital, or he is choosing to look the other way, or he is directly involved and reaping financial benefits. I implore KIFI to keep investigating because I think they are just peeling away the first layer. Whatever the case, I will not utilize BMH for my health care needs anymore.
  • Seems you forget that the CEO's 600K to 900K compensation packages year in and year out end up costing the healthcare consumer big time. A bit extravagant for a non profit, wouldn't you say? My sense of it here is that the next time you get screwed by BMH billing policies (or any hospital's billing policies), you will be the first to yell foul! And, if you aren't subject to the high pricing, we could say that you apparently don't much care about those of us in Bingham County. It's Karole Honas' job to report this kind of news. Question is, are you man enough to hear the truth? 
  • My advice to the attorney general of Idaho is to investigate this whole organization. What a blatant abuse of the critical access hospital designation. This designation is there to provide health care to small communities that otherwise couldn't get it. Bingham is using this designation for huge profits, and obviously to pad the pockets of the CEO and COO. Of course the board is defending Mr. Kraml, they are probably profiting handsomely as well. Anyone ever look into how many board members have properties leased by Bingham? Might be worth looking into. James, you are either new, naive, or more likely, in the inner upper circle, and have a vested interest in seeing the gravy train continue on its merry way. Bingham employs some wonderful people, and they deserve an honest leader. Got to hand it to Louis though, he is good at what he does. If he wasn't so smooth, he couldn't spend his time in Boise schmoozing the politicians to keep them off of his back this long. Like a Ponzi scheme, it can't go on forever. It will be sad if some genuinely good people go down with the ICS principals, Mr's Kraml and Cochran.
  • A quick look at Bingham’s IRS reports will show significant abuse of the Critical Access Hospital system. The Critical Access Hospital program was intended to help small community hospitals survive thus ensuring access to basic services. In doing so, they are reimbursed on a cost “+” basis rather than on a DRG (fee schedule) basis. This means that CMS (Medicare/Medicaid) pay them for their costs plus a small profit margin. It was never intended to be a boutique surgery center that was guaranteed profits regardless of the appropriateness of costs. They weren’t intended to pay the CEO over $700,000 a year not to pay doctors twice the national average salary. Critical access hospitals don’t need to spend over $1,000,000 a year for “marketing” and they don’t need to own stretch limos to haul administrators and doctors around. Formal inquiry? At least. There should be a waste, fraud, and abuse investigation.
A June 2, 2012 article in the Blackfoot Journal stated that the Blackfoot City Police were investigating an incident at the Bingham Memorial Hospital:
The first involved the sale of computer equipment purchased by the hospital and then later sold to outside entities with the profit going to a former employee. The second was allegations by several employees that they were told to hide drugs in their cars during an audit of narcotic prescription drugs because the required storage cabinets inside the hospital couldn’t be locked and secured.
KPVI also covered the police investigation saying that Police Chief Dave Moore said that officers met with Prosecutor Scott Andrew regarding allegations against the hospital. Andrews advised them to continue the investigation and turn over findings to him.

Meanwhile, back in Saipan it was revealed that CHC had a mystery bank account for ICS. The Marianas Variety reported that the account has a balance of over $100,000. From the Variety:
Explicit language contained in the illegal CHC-ICS “Agreement for Billing Services” signed by Babauta and ICS president Louis Kraml on Feb. 28 explained the point of contact.

“Except in the event of a perceived emergency, ICS agrees: (1) to coordinate all official contacts with Client [CHC] regarding administrative matters through James Phillips, Chief Operating Officer,” reads “Part B - Duties of Client.”

Above and beyond Babauta‘s comment in the most recent board of advisors meeting that “around $200,000 has been collected by ICS” no actual, verifiable numbers have been made available to CHC leadership or the public by Phillips or Santos.

Buckingham yesterday confirmed that he instructed civil division chief, Gil Birnbrich, verify that CHC has ceased all operations with ICS.

Furthermore, Birnbrich is to certify with CHC that ICS has: accounted for all funds due to CHC, accounted for all charges levied against CHC and has returned all confidential patient records to CHC.
According to the Variety both the Office of the Attorney General and the Office of the Public Auditor are continuing to investigate the ICS-CHC deal.

Chairman of the CHC board Jack Torres and board member Roy Rios called for the resignations of
CHC Chief Operations Officer James Phillips and Chief Financial and Administrative Officer Alvaro Santos. On Thursday CEO Juan Babauta fired COO James Phillips according to KSPN News.

There has been no news coverage to explain why a CEO who signs off on checks to ICS seems to be in the dark on the details of the funds and mystery bank account.

More on the CHC and ICS:
ICS Leaves CNMI: Questions Remain
Kraml Makes Headlines in Idaho Press
CHC and ICS Deal: More Sketchy by the Minute
ICS-CHC Broken Deal Makes Idaho Headlines
ICS Contract Signed Before Company Legally Registered
CHC Contract Raises Questions
CHC Death Imminent
CHC Employees Should Sue
An Official State of Emergency at CHC
CHC Soon Just a Building
Healthcare Crisis in CNMI Must Be Addressed
Critical Money Woes Put CHC on Life Support
Made in the USA: Saipan's Backdoor to the United States
CNMI's Hospitals on Life Support
Unsafe to Live in the CNMI?


Anonymous said...

This is starting to look like many of these past TV Evangelists operations.

This may only be the tip of the "iceberg"
If these guys did not get greedy, they, may have just kept on with their operation in Idaho, NOW//

I am curious who was the one from the CNMI that "found" these guys.
But it just goes to show how gullible these so called elected and past elected are by fast talking "salesmen".
These people here are so arrogant and think they are so smart but when they deal with anybody from off Island, whether from Asia or America, they easily fall for the scams.
Same with them trying to deal with the US politicians.
The US Elected are, on the most part, all lawyers. The ones that are not are very educated.
These NMI elected and political appointees for the most part could not even compete with many of our own High School students for the most part. (many would not even come up to our elementary students)