Aspen hospital finances to get review |

Aspen hospital finances to get review

John Colson
The Aspen Times
Aspen CO, Colorado

ASPEN ” Aspen Valley Hospital officials agreed on Monday to call in a team of legal and accounting specialists to go over the hospitals “policies and procedures” in order to reassure the public that the institution’s finances are in order, have not been tampered with, and are immune to fraud or embezzlement.

At the same time, board members emphatically denied that John Jellinek, the hospital board’s former treasurer, could have used his authority to play with the hospital’s investment accounts, as alleged in news stories in the Aspen Daily News.

They also agreed to spend the next “couple of weeks” accepting applications from those interested in filling Jellinek’s vacant seat, and specifically mentioned two unsuccessful candidates in last spring’s hospital district election as potential candidates for the job. Those interested should contact Nell Strijbos-Arthur at the hospital.

Local real estate broker Chuck Frias came in third in the election, with 400 votes, while attorney and law professor Albert Slap came in fifth with 60 votes.

Both have expressed interest in replacing Jellinek, according to board chairman John Sarpa, who added that others, whom he did not identify, have expressed the same interest. By law, the board has 60 days following the resignation to appoint a replacement.

Jellinek, 63, resigned earlier this month after newspaper stories detailing a list of financial and legal entanglements, including lawsuits by former partners and other complaints. The paper said on Sept. 10 that Jellinek’s financial problems “appears to have cast a cloud over the financial oversight of the cherished institution.”

The following day, the newspaper aired accusations from a former U.S. Bank president and other, unidentified sources, who claimed that Jellinek “dangled hospital accounts like ‘a carrot on a stick’ in exchange for personal loans and other financial favors” from at least one local bank.

Jellinek resigned on Sept. 11, and denied any wrongdoing with regard to the hospital’s finances or the complaints against him, personally.

At a special meeting Monday evening, three hospital board members talked about the repercussions of Jellinek’s departure. Jellinek and board member Dr. Mindy Nagle were not present, but Sarpa and members Barry Mink and Lee Schumacher conducted the meeting.

It was Sarpa who suggested a review of the hospitals policies and procedures, and particularly the bylaws governing the board’s roles and responsibilities. He and the board’s attorney, Elaine Gerson, noted that many of the bylaws are mandated by state law, and that there are areas that could be open to different interpretations.

Both Mink and Schumacher agreed that a review could help shore up public confidence in the institution.

“Our bylaws have not necessarily kept up with our practices,” said Schumacher, and they need to be brought “into the modern age.”

Hospital CEO David Ressler reported that, after he and others had reviewed the bylaws, they had discovered areas where the role of the treasurer, and his or her access to the hospital’s bank accounts, are not clearly defined. When asked by a reporter, officials conceded that one provision of the bylaws seems to permit the treasurer to make deposits to hospital accounts and move accounts around.

But, said Terry Collins, the hospital’s chief financial officer, “It’s literally impossible that somebody could access our funds without our knowing about it.” He said that accounting and fiscal procedures in place since 2004, when he started at AVH, are designed to prevent just such an occurrence, and that all checks and fund transfers must go through the hospital’s finance office.

Collins also said the hospital’s annual audits have shown no irregularities, although he conceded that the year-end audits “are not designed to uncover fraud or embezzlement.

Outlining the hospital’s procedures for investing and managing its reserve funds, Collins explained that prior to 2004, the district “never had much cash,” which drew chuckles from the board and those observing the meeting. From the late 1990s into the early years of this decade, the hospital went into a financial black hole due to mismanagement, mainly of its billing practices, and nearly went bankrupt.

Sarpa and Jellinek both were elected in 2002 to stem the flow of red ink and, along with other newcomers to the board, hired a new management team and brought the institution back from the brink of fiscal ruin.

In recent years, Collins continued, the hospital’s reserves have grown and have been invested, mainly through Alpine Bank. But in 2007, the management and the board formulated a new policy that called for putting the investment accounts out to a competitive bidding process. When the bids came back, Collins said, the hospital administration decided to split the investments between Alpine Bank and a new bank, United Western ” 80 percent of the funds remaining with Alpine, and 20 percent going to United Western.

Collins said Jellinek had introduced United Western to the hospitals administration, adding that he was aware that Jellinek did business with United Western, a relationship that figured in the news stories about Jellinek’s financial entanglements.

“But I didn’t consider that unusual,” Collins said, explaining that in his experience it is “pretty common” for board members to recommend doing business with banks and other institutions that they are familiar with.

Toward the end of the meeting, the board voted that Mink and Schumacher will work with Ressler and the administration to come up with a way of narrowing the list of candidates, should the number of applicants threaten the board’s ability to meet the deadline.

Sarpa urged that the review of the hospital’s policies and procedures be done concurrent with the replacement interviews, in the hopes that both will be done before the 60 days are up.

Collins estimated that the review could end up “costing $60,000, $70,000, maybe even $100,000,” to which Sarpa replied, “I think this is important enough” to spend that kind of money.

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