County Health Director Reorganizing AIDS Office

In response to several critical internal audits of Los Angeles County’s AIDS services--including one that documents a potential loss of $26 million because of unreimbursed expenditures--county health director Mark Finucane has quietly begun to revamp the Office of AIDS Programs and Policy.

In a memo to the Board of Supervisors this week, Finucane described a series of moves that shift power from the agency’s interim chief, Nancy Delgado, in the key areas of oversight and finance. Finucane also promised to speed up the search for a permanent director of the AIDS office.

Over the past several months, the county’s auditors have questioned management of the AIDS program, saying administrators’ applications for state reimbursement of $26 million for prescription drugs were either faulty or not submitted at all. Auditors said the department also had problems managing contracts with private health care providers, overpaying one of them $654,000.

The state has also begun an audit of the program, which has been without a permanent director for nearly two years.

“It’s a terrible embarrassment to the county,” said Supervisor Zev Yaroslavsky, who had pressed for the reorganization. “I’m disappointed it’s taken this long.”

The program’s interim leaders, he said, were like “Keystone Kops,” expending a lot of energy without remedying the problems.

At a time when the AIDS office should have been preparing for the vast changes wrought by the potent new drug cocktails used to fight AIDS and HIV, administrators were instead dealing with a lack of leadership, said Assistant Auditor-Controller J. Tyler McCauley, who worked on the audits. Instead of a strong manager to set policy, he said, the program has been piloted by interim directors.

“They need to settle down and have one person who is in charge of that place,” McCauley said. “Otherwise, things fall through the cracks.”

The management has been “disjointed,” McCauley said, and the cash flow has been so impeded by the failure to obtain reimbursement for the $26 million in drugs that other services are beginning to suffer. The county has also lost other potential revenue--the interest that might have been earned on that money, he said.

Under Finucane’s reorganization plan, top health department officials will take over functions previously handled by the AIDS office.

Interim director Delgado will now report to John Schunhoff, the county’s acting director of public health, instead of to Finucane. Schunhoff led the agency until two years ago, when he was plucked to run public health, and is considered to have a good grasp of its needs and problems.

“He will have a closer, hands-on approach,” said Nancy Rubin, executive officer for the county Department of Health Services, which oversees the AIDS office.

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Neither Schunhoff, who had a recent death in his family, nor Delgado, who was on vacation, could be reached for comment. But Rubin said that Schunhoff will be closely involved in day-to-day operations, establishing formal plans for all projects and providing weekly reports to Finucane.

In addition to increasing Schunhoff’s oversight of the AIDS office, the reorganization plan shifts responsibility for obtaining reimbursement and other accounts receivable to the health department’s finance director. This job also had been Delgado’s ultimate responsibility.

Rubin, who is Finucane’s second in command, said the department made the changes “because we didn’t find that the resolution was coming fast enough on some of these issues.”

She was careful not to blame Delgado for the agency’s problems. But she did suggest that the interim director may not have been familiar with the procedures--and the high level of politics--involved in providing funding and other services for AIDS patients.

“I think she’s done the best she could do under the circumstances,” Rubin said. “Whether she’s familiar enough and had all the resources at her disposal is a question [the auditor] could ask.”

Delgado remains on the A list of candidates applying to be permanent director of the department, Rubin said.

The county had assembled a list of eligible candidates, including her, but it was thrown out after a candidate who was not included challenged it under Civil Service rules. Now, Rubin said, the county must begin the process--which is laden with red tape--all over again.

Finucane also proposed to formulate a plan by Jan. 9 to settle outstanding issues with AIDS Healthcare Foundation, the agency found to have overbilled the county for pharmaceuticals.

The health director said he will meet with the county’s lawyers to determine whether there is a way to get the money back. Last October, an audit showed that the agency, run by former City Council candidate Michael Weinstein, had paid discounted prices for drugs and then billed the county for the highest allowable amount.

Weinstein, who has vowed to go to court before returning any of the money, said that the billing practice was legal, and that the money was used to provide services for people with AIDS.

But the state will not reimburse the county for the funds until the books reflect the actual price that AIDS Healthcare Foundation paid for the drugs, according to McCauley’s audit.

The final piece of Finucane’s plan speaks to the acrimonious, politically charged environment surrounding the provision of AIDS-related services and funding. The county has had strained relations not only with Weinstein’s group, but also with other service providers.

Finucane’s report says that the AIDS office staff will be warned that “failure to . . . maintain positive provider relations will result in disciplinary action.”

McCauley said he is pleased with the plan.

“This would address the issues in the reports--and in short order,” he said. “It sounds to me like they’re getting pretty serious.”