[Final Audit Report on the Reaccreditation Project and the Related Contract With Consultant Mercy International Health Services, Guam Memorial Hospital Authority, Government of Guam]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 95-I-78

Title: Final Audit Report on the Reaccreditation Project and the
       Related Contract With Consultant Mercy International Health
       Services, Guam Memorial Hospital Authority, Government
       of Guam

Date:          October 28, 1994


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United States Department of the Interior
Office of Inspector General
Washington, D.C.  20240



MEMORANDUM

TO:       The Secretary

FROM:          Acting Inspector General

SUBJECT SUMMARY: Final Audit Report for Your Information - "The
          Reaccreditation Project and the Related Contract With
          Consultant Mercy international Health Services, Guam
          Memorial Hospital Authority, Government of Guam"
          (No.  95-I-78)

DISCUSSION: The report concluded that the Guam Memorial Hospital Authority
had effectively administered the contract with consultant Mercy International Health
Services and that the consultant had fully complied with the terms of the contract.
However, the Hospital had not complied with the standards established by the Joint
Commission on Accreditation of Health Care Organizations. This condition
occurred because the Hospital, since its last accreditation survey in 1989, had not (1)
implemented an effective plan for correcting deficiencies identified by the Joint
Commission, (2) ensured that its administrators would be held accountable for
correcting patient care deficiencies identified in mock surveys, (3) required managers
to ensure that their operations fully complied with accreditation standards, and (4)
hired qualified nursing administrators and filled vacancies in essential nursing and
clerical positions. As a result, although the Hospital had spent $1.6 million to
improve operations and to prepare for an accreditation survey. there was no
assurance that the Hospital will regain accreditation or that it was providing quality
health care to the people of Guam.

The response from the Chairman, Board of Trustees, Guam Memorial Hospital
Authority, was sufficient for us to consider all five of the report's recommendations
resolved.


Joyce N. Fleischman


Attachment

Prepared by:  Marvin Pierce
Extension:  208-4252

 
                         N-IN-GUA-012-93

United States Department of the Interior
      OFFICE OF INSPECTOR GENERAL
           Headquarters Audits
           1550 Wilson Boulevard
              Suite 401
           Arlington, VA 22209
                              OCT 28 1994


               LETTER AUDIT REPORT

Ms. Rosie Tainatongo
Chairperson, Board of Trustees
Guam Memorial Hospital Authority
850 Governor Carlos G. Camacho Road
Tamuning, Guam 96911

Dear Ms. Tainatongo:

Subject: Final Audit Report on the Reaccreditation Project and the Related
      Contract With Consultant Mercy International Health Services, Guam
      Memorial Hospital Authority, Government of Guam (No. 95-I-78)

               INTRODUCTION

This report presents the results of our audit of the Guam Memorial Hospital
Authority's reaccreditation project and the related contract with consultant Mercy
International Health Services for fiscal years 1990 through 1993. This audit was
initiated as a result of our review of a procurement of consulting services in our
April 1993 audit report (No. 93-1-941) on the Hospital's management of procurement
and property. The objective of our current review was to determine whether the
consultant was complying with the provisions of the contract and the Hospital was
administering the contract effectively and was complying with standards established
by the Joint Commission on Accreditation of Health Care Organizations. According
to the Hospital's budget, revenues for fiscal year 1994 were expected to be
$53 million, which included a $10 million subsidy from Guam's general fund.

The audit showed that after 4 years of assistance from consultant Mercy
International Health Services, at a cost of $1.6 million, the Guam Memorial Hospital
Authority was not ready to undergo a Joint Commission survey. As a result, there
was no assurance that the Hospital will regain accreditation or that the residents of
Guam will be provided quality health care services.

 
BACKGROUND

The Guam Memorial Hospital Authority was established in 1977 to maintain and
operate a facility that provides health care services to the people of Guam and the
and the neighboring Pacific region. The Governor appoints the hospital's seven-member
Board of Trustees subject to legislative confirmation, and the Board appoints the
Hospital Administrator. The Administrator, as the chief executive officer, has full
charge and control over Hospital operations. On June 2, 1983, the Hospital lost its
accreditation because of 24 deficiencies in the Hospital's physical plant and patient
care services.  To correct deficiencies identified and regain accreditation, the
Hospital (1) started a renovation and expansion project in March 1986 and (2)
awarded a contract in September 1989 to Mercy International Health Services, a
hospital consultant, to assist the Hospital in meeting the accreditation requirements.
Under the contract, the consultant was to provide a "sustained management
development experience" for the Hospital's management team, with the overall goals
being to improve the quality of patient care, increase the cost effectiveness of
services, and raise the standards of operations to meet the Joint Commission
requirements. These actions were to have prepared the Hospital to successfully pass
a Joint Commission accreditation survey.  This contract was extended annually
through September 1993 because the Hospital (1) initially underestimated the
amount of work needed to regain accreditation and (2) had to do additional work
to keep pace with annual updates of Joint Commission accreditation standards. This
contract was funded by $1.1 million in local funds and a $500,000 technical assistance
grant from the U.S. Department of the Interior.

The Joint Commission on Accreditation of Health Care Organizations was
was established in 1951 as an independent nonprofit organization, whose mission is to
improve the quality of care provided to the public in organized health care settings.
Its members are the American College of Physicians; the American College of
Surgeons, the American Dental Association, the American Hospital Association, and
the American Medical Association. The major functions of the Joint Commission
include developing organizational standards, awarding accreditation certificates, and
providing education and consultation to health care organizations.

In 1994, because of the public's increasing demands for accountability from health
care organizations, the Joint Commission shifted the emphasis from standards that
focus on capability to those that focus on performance and the outcome of patient
care. These standards address patient care, organizational functions, medical staff,
and specific service requirements of various hospital departments.  The Joint
Commission accreditation survey assesses the extent of a hospital's compliance with
applicable Joint Commission standards. The extent of compliance forms the basis
for determining a hospital's accreditation status. Compliance is assessed through (1)
verbal information on implementation of the standards or examples of their

2

 
implementation, (2) on-site observations by Joint Commission surveyors, and (3)
documentation of compliance as provided by hospital staff.

SCOPE OF AUDIT

This program results audit included a review of the consultant's contract
performance and the Hospital's efforts since 1989 to regain reaccreditation. Audit
work was performed at the Guam Memorial Hospital Authority and the Office of the
Governor from September 1993 through April 1994.

The audit was made, as applicable, in accordance with the "Government Auditing
Standards," issued by the Comptroller General of the United States. Accordingly,
we included such tests of records and other auditing procedures that were considered
necessary under the circumstances.

As part of the audit, we evaluated the Hospital's controls for (1) monitoring the
consultant's performance under the contract and (2) correcting deficiencies, holding
managers responsible for corrective actions, and tracking progress toward
accreditation. We found internal control weaknesses in the methods used by the
Hospital to correct deficiencies, hold managers responsible for corrective actions, and
track progress toward accreditation. Our recommendations, if implemented, should
improve the internal controls in these areas.

PRIOR AUDIT COVERAGE

During the past 5 years, the U.S. General Accounting Office has issued no reports
that addressed accreditation at the Guam Memorial Hospital Authority. However,
in April 1993, the Office of Inspector General issued the audit report "Procurement
and Property Management, Guam Memorial Hospital Authority, Government of
Guam" (No. 93-1-941). While the audit report commented on problems associated
with the Hospital's accreditation efforts, it did not contain any recommendations
regarding accreditation because this area was going to be reviewed in greater detail
in our current audit.

               RESULTS OF AUDIT

We found that the Guam Memorial Hospital Authority had effectively administered
the contract with consultant Mercy International Health Services and that the
consultant had fully complied with the terms of the contract. However, the Hospital
had not complied with the standards established by the Joint Commission on
Accreditation of Health Care Organizations. This condition occurred because the
Hospital, since its last accreditation survey in 1989, had not (1) developed and
implemented an effective plan for correcting deficiencies in a timely manner, (2) held

3

 
its administrators accountable for correcting patient care deficiencies identified in
mock surveys, (3) established the requirement for managers to ensure that their
operations fully complied with accreditation standards, (4) hired qualified nursing
administrators, and (5) filled vacancies in essential nursing and clerical positions for
the Infection Control and Employee Health Programs. As a result, there was no
assurance that the Hospital will regain accreditation, even though it has spent
$1.6 million to improve operations and to prepare for an accreditation survey, and
that it was providing quality health care to the people of Guam.

Mock Surveys
                   
The consultant conducted four mock surveys1 from September 1989 through June 1993, and
the Hospital's accreditation team conducted one mock survey in February 1994. Each of 
the mock survey reports disclosed the Hospital's major noncompliance with standards
affecting patient care and included recommendations to correct these deficiencies. 
The Hospital Administrator stated that he had provided oversight of the correction of
mock survey deficiencies and overall accreditation progress through weekly meetings of
the Executive Management Council, which consists of associate and assistant administrators.
However, the deficiencies in patient care reported in the four mock surveys conducted have
recurred. Although the consultant's mock surveys showed that the overall scores in the
surveys had improved from 28 to 55 percent, the consultant indicated that the Hospital
needs a score of 75 to 80 percent to realize full accreditation. 

The consultant's annual report for 1992 cited the following major deficiencies within
the Hospital: (1) the former Nursing Administrator and the Consultant's Nursing
Advisor had "differing priorities"; (2) the Nursing Department's management staff
had not been held accountable for attainment of goals; (3) the nursing staff
functioned primarily in a "crisis mode," which made the nurses unable to deal
effectively with accreditation and operational issues; (4) the Nursing Department's
management did not function as a team, thus hindering progress in meeting goals;
and (5) the number of licensed staff available was inadequate to meet patient census
and mainland nursing standards.  In the June 1993 mock survey report, the
consultant stated that nursing care, which was a main factor in the accreditation
decision, was not being provided in compliance with the standards and recommended
that an evaluation of the effectiveness of the corrective actions be included in the
Quality Improvement Program, whose objective is to improve Hospital operations.

In the February 1994 mock survey, the in-house accreditation team gave the Hospital
an overall score of 49 percent, with the lowest scores occurring on the new 1994
standards for improving organizational performance, managing information, and

1The mock survey is a key means by which a hospital can prepare for an accreditation survey.

4

 
providing leadership. More significantly, the Hospital scored ''minimal compliance''
and had not improved in the areas of patient care, the qualifications and competency
of nursing staff, infection control, patients' rights, emergency services, special care
services, medical staff credentials, and decisions relating to patient care or to
assessing patients.

Specifically, the mock survey reported that patients had not been provided
instructions regarding their "medications," "disease process," and "home care" and
that patient privacy in the Hospital was not respected by the medical staff. The
survey also cited "cluttered, untidy, and often unclean" patient care areas and found
that medical/nursing reference materials were "14 to 28 years old." The survey
further found that patient allergies had not been adequately documented on
medication profile cards in the Pharmacy. According to the survey, the entrance to
the newborn nursery did not have a security system, and mothers' wrist bands were
not always checked upon their entrance to the nursery. Chief nurses, according to
the survey, were "frustrated" by "apathetic staff," who were "disinterested in
continuing education and resistant to progress" and were on the job "only . . . until
they retire." The survey also reported that the nursing care plan was "inadequate."
For example, in the surgical department, the only care plan for all the patients was
for the administration of pain medications. The survey further noted that data files
on medical staff practitioners were not being routinely reviewed by the appropriate
Departmental chairpersons for quality improvement performance in making
recommendations as to whether the practitioners should be reappointed and whether
changes should be made in clinical privileges as appropriate.

Barriers to Reaccreditation

The Hospital's Quality Management Department is responsible for the Hospital's
Quality Improvement Program. In this program, senior-level managers perform self-
evaluations, select problem areas for improvement, recommend corrective actions,
and identify indicators for evaluating the improvements. Although the Department
was in a prime position to make needed improvements, the Hospital Administrator
said that there was little correlation between the problems selected by the
departments for emphasis and the deficiencies cited in the mock surveys. The role
of the Quality Management Department was only to ensure that the semiannual
reports on the status of deficiencies in the mock surveys were submitted by the
Hospital departments in time for presentation to the Board of Trustees' Quality
Improvement Committee. Although the Board's Committee was responsible for
providing oversight of the Hospital's quality improvement activities, it had not taken
any substantive action regarding the deficiencies cited in the status reports. On these
reports, the reporting departments cited, without clarification, many corrective action
elements as "ongoing."

5

 
We also found that management's actions to correct patient care deficiencies were
inadequate. For example, on August 5, 1993, shortly after the consultant's senior
administrative advisor had left Guam, the Hospital Administrator promoted
employees who were not qualified, based on education or experience requirements
established in the position descriptions, to the two senior-level management positions
in the Nursing Department.  Thus we believe that many of the problems in
correcting deficiencies occurred because nurses did not have adequate leadership
capabilities.  We also found that the Infection Control and Employee Health
Programs were inadequately staffed and that shortages of emergency room physicians
and physical therapists continued because of difficulties in recruitment.
Departmental and unit-specific policies and procedures for Nursing and Infection
Control had not been prepared or updated as of October 1993. During October
1993, both the nursing administrator and the infection control officer stated that their
areas would probably not meet accreditation standards by March/April 1994, which
was the Hospital Administrator's initial target date for a Joint Commission survey.

Subsequent Developments

In its final report, dated June 30, 1993, the consultant recommended that the
Hospital appoint someone to coordinate Joint Commission accreditation progress
and correction of deficiencies and that it hold managers accountable for corrective
actions. This recommendation was not implemented until January 19, 1994, when
the Board adopted Resolution No. 94-03 approving the Accreditation Plan, which
outlined tasks and targeted completion dates. Included in the Accreditation Plan
were provisions for the appointment of an accreditation team, a team leader, and a
full-time coordinator for overseeing the corrective action plan.

In March 1994, the accreditation team leader reported the results (overall score of
49 percent) of the February 1994 mock survey to the Board of Trustees and
submitted the Hospital's action plan and timetable to prepare for the Joint
Commission's December 1994 accreditation survey. However, because of the
Hospital's low overall score in the mock surveys, we believe that the Hospital may
achieve only conditional accreditation unless Hospital management corrects the
deficiencies noted and complies with the accreditation standards.

Recommendations

We recommend that the Governor of Guam:

  1. Require the Chief of Staff (or his immediate staff) to develop and
implement procedures for monitoring the Hospital's accreditation project to ensure
that officials responsible for preparing the Hospital for accreditation follow the

6

 
corrective action plan established by the team leader and meet the established target
dates.

We recommend that the Chairperson, Board of Trustees, Guam Memorial Hospital
Authority, direct the Hospital Administrator to:

  2. Adhere to the Hospital's March 1994 action plan and timetable for
preparing the Hospital for the December 1994 Joint Commission accreditation
survey. Included in this preparation should be the expeditious correction of the
deficiencies noted in the February 1994 mock survey.

  3. Ensure that managers and supervisors are held accountable for maintaining
accreditation standards applicable to their operations by including a statement of this
responsibility as a critical element of their performance evaluation.

  4. Appoint nursing administrators who are qualified in terms of education
and experience standards under applicable position descriptions.

  5. Fill vacant positions that are essential to the effectiveness of the Infection
Control and Employee Health Programs. A national recruitment consultant should
be retained for difficult-to-fill positions such as emergency room physicians and
physical therapists.

Guam Memorial Hospital Authority Response

The September 29, 1994, response (Appendix 1) from the Chairperson, Board of
Trustees, Guam Memorial Hospital Authority, indicated agreement with all five
recommendations.

  Recommendation 1. The Hospital Authority stated that the Hospital will work
with the Governor's Special Assistant on Health to implement the "appropriate
monitoring of progress" made in addressing corrective actions and meeting
established target dates.

  Recommendation 2. The Hospital Authority stated that the Hospital has
approved the March 1994 action plan, has developed workplans for all departments,
and is monitoring progress at the weekly meetings of the department directors.

  Recommendation 3. The Hospital Authority stated that in August 1994, the
Hospital hired a Director of Human Resources, who will be responsible for updating
and revising all employee performance evaluations. According to the response, the
revised evaluations will include requirements for employees to comply with
accreditation standards.

7

 
  Recommendation 4. The Housing Authority stated that the Hospital has hired
a Nursing Director who has the required educational background and over 25 years
of nursing experience.

  Recommendation 5. The Housing Authority stated that the Hospital has
recruited an Infection Control Nurse and has hired a recruiting firm to assist the
Hospital in identifying qualified health care professionals for Hospital positions.
Office of Inspector General Comments

Office of Inspector General Comments

Based on the Hospital Authority's response, we consider Recommendations 4 and
5 resolved and implemented and Recommendations 1, 2, and 3 resolved but not
implemented. Accordingly, the unimplemented recommendations will be referred
to the Assistant Secretary - Policy, Management and Budget for tracking of
implementation, and no further response to this office is required (see Appendix 2).

The Inspector General Act, Public Law 95-452, Section 5(a)(3), as amended, requires
semiannual reporting to the U.S. Congress on all audit reports issued, actions taken
to implement audit recommendations, and identification of each significant
recommendation on which corrective action has not been taken.

Sincerely,


Marvin Pierce
Acting Assistant Inspector
  General for Audits

cc: Administrator, Guam Memorial
      Hospital Authority



8

 
APPENDIX 1
Page 1 of 3

GUAM MEMORIAL HOSPITAL AUTHORITY
850 GOV. CARLOS G. CAMACHO ROAD
OKA, TAMUNING, GUAM 96911
TEL: 646-5801 thru 5; 646-6710 thru 19
FAX: (671) 649-0145



September 29, 1994

Marvin Pierce
Acting Assistant Inspector General for Audits
Office of the Inspector General
United States Department of the Interior
1550 Wilson Boulevard
Suite 401
Arlington, Virginia 22209

Subject: Draft Audit Report on the Reaccreditation Project and the Related
      Contract With Consultant Mercy International Health Services, Guam
      Memorial Hospital Authority, Government of Guam 
      (Assignment No. N-IN-GUA-012-93)

Dear Mr. Pierce:

  The Authority is submitting its comments on the Draft Letter Audit Report on the
Hospital's Reaccreditation Project. We thank you for the opportunity to submit our comments
on the report.

  The first issue we would like to address is the statement that there is little correlation
between the problems selected by the departments for emphasis and the deficiencies cited in the
mock surveys, The hospital's quality process at that time focused on department specific issues.
For example, the "indicators" identified by the Radiology department would focus on patient
specific items. We would also like to clarify that these and all the other hospital-wide indicators
were developed and reviewed by the Quality Assurance/Improvement Committee. Three of the
four Mercy Consultants were "permanent" members of this same committee. At no time during
this period did they recommend that the Quality Assurance/Improvement Committee be  the
forum by which deficiencies identified in the Mock Survey would be addressed.

  The Accreditation status reports were presented to the Board Quality Improvement
Committee as a mechanism by which the Trustees could be apprised on each department's
progress. The Board's QI Committee does have oversight on the hospital's quality improvement
program and through these presentations, discussions and recommendations would take place on
these reports. The department head and Administrative Representative would be responsible to
do necessary followup on those issues. Again, the Mercy International Advisors were a part of
the Board QI Committee and did not make any recommendation that more action was needed
by this particular group. The citation about the "ongoing" status reflects any department specific
issues and again reflects that the process was continuously being addressed. Any items that were
resolved as adjudged by the Hospital-wide and Board QI Committees would have been indicated
as "closed".                             

9

 
APPENDIX 1
Page 2 of 3

Page 2 of 3: Response to the  Letter Audit Report
          N-IN-GUA-012-93
          September 29, 1994

  The concern identified by the auditor that there was no effective plan that was developed
to address the deficiencies cited in the Mock Surveys also needs to be commented on. It needs
to be made clear that the Mercy Consultants were given the "go-ahead" to work directly with
the department managers and the Administrative representative to address those deficiencies.
With the departure of the Mercy Consultants, the Administrative representatives continued to
work with the managers in their respective areas on the deficiencies. The Administrator then
followed up with those representatives or managers directly as the situation required.

  The report also indicates that the Hospital needs a score of 75 to 80 percent to realize
full accreditation.  Please note that the Joint Commission also awards "Conditional
Accreditation" to Hospital. This would mean that surveyors would come back to the Hospital
within a defined period of time to ensure that appropriate corrective actions were indeed taken.
There would not be any other distinction between conditional and full accreditation.

  One of the serious issues facing the Nursing department is the lack of adequate numbers
of professional licensed staff. This has resulted in the major focus of that department on
providing direct patient care. No one should assume that the nursing staff were not interested
in accreditation but the issue of providing direct care was deemed to be priority. Additionally,
even though there may have been times when the vacant numbers of nurse positions were very
low, there was still the issue of staff who were on either sick or annual leave. This also
compounded the situation of not having enough staff to begin with. It would be a safe
conclusion that most if not all of the problems in Nursing are directly related to staffing issues.

  The 1994 standards had areas of new focus, which the Hospital did not have enough time
to assess compliance in February 1994. Management decided that it would be a better tool. if
the assessment of compliance was done without time for study and then follow with an analysis
of how we needed to respond in order to come into compliance with those standards.

  The issue of promoting two employees who were not qualified was done on the
recommendation of the Mercy Consultants. In fact, these employees were identified by the
Senior Administrative Advisor and the Nursing Consultant who at the time was given the
authority to directly manage the Nursing department. The employees were recommended
because of the assessment by these two consultants that they had the best potential of all our in-
house nursing staff to lead the department. The Hospital Administrator recognized that they did
not have the paper credentials required by Joint Commission. However, the Mercy Consultants
did reassure him that they would provide training for these two employees in addition to
developing an educational plan that would enable them to meet the JCAHO requirements. It was
after that point that the decision to promote was made.

  With respect to the citation that the Employee Health and Infection Control departments
were inadequately staffed, the Authority submits that there is a continuous announcement for
these positions. The difficulty has been in having qualified applicants come in.  The same

10

 
APPENDIX 1
Page 3 of 3

Page 3 of 3: Response to the Letter Audit Report
          N-IN-GUA-012-93
          September 29, 1994

applies to the recruitment difficulties for emergency physicians and physical therapists.

  In response to Recommendation 1, we will work with the Governor's Special Assistant
on Health to implement appropriate monitoring of progress made in addressing corrective actions
and meeting established target dates. We have had a preliminary discussion with the Special
Assistant on Health and will follow up by 10/15/94.

  In response to Recommendation 2, the Hospital has approved the March 1994 action
plan. Workplans have been developed for all departments as related to standards in conjunction
with the Quality Management Department. Progress is monitored weekly at the Department
Directors meeting. This is currently ongoing.

  In response to Recommendation 3, updating and appropriate revision of all employee
performance evaluations is a priority. Responsibility for compliance with accreditation standards
shall be factored into the evaluation. This process began with the hiring of the Director of
Human Resources in August.

  In response to Recommendation 4, the Authority has brought on board a Nursing director
with over twenty-five years of nursing experience in addition to having the requisite educational
background. This individual is in charge of managing the department and will be also
responsible for further development of the program for in-house nursing management leaders.

  In response to Recommendation 5, we have recruited an Infection Control Nurse from
off-island as there were initially no local applicants. Since that time, we have had one applicant
also apply and was interviewed.  Additionally, we have engaged the services of a mainland
recruitment firm for the purpose of identifying qualified healthcare professionals for positions
at the Hospital. The Human Resources (Personnel Department) is coordinating this.

  Thank you for the opportunity for input into the draft report.  Please contact the Hospital
Administrator if additional information or clarification is needed.

Sincerely,


ROSIE R. TAINATONGO
Chairperson, Board of Trustees


cc:  Governor Joseph F. Ada
     Sam Gillentine
     Hospital Administrator

11

 
                       APPENDIX 2

STATUS OF AUDIT REPORT RECOMMENDATIONS

Finding/Recommendation
   Reference        Status              Action Required

   1, 2, and 3      Resolved; not       No further response to
               implemented.        this office is required.
                              The recommendations
                              will be referred to the
                              Assistant Secretary -
                              Policy, Management and   
   4 and 5          Implemented.        Budget for tracking of
                              implementation.

                              No further action is
                              required.









12

 
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