Miami's public health system landed in a potentially expensive debate over a $50 million contract with Siemens Medical Solutions after a regulator found that system's chief financial officer used "extremely poor judgment" while negotiating the deal.
The CFO had a prior relationship with Siemens and met with the vendor despite a protest of Siemens' successful bid, all of which "raises serious concerns about the integrity" of Jackson Health System's bidding, said Miami-Dade County's Inspector General Christopher Mazzella.
Top officials at Jackson and its governing board, the Public Health Trust, defended CFO Frank Barrett but conceded that the controversy can't be overlooked.
"You can't ignore a misperception that's out there," said Larry Handfield, a Miami attorney and chairman of the trust. "Perception is reality unless it's cleared up."
Jackson's president and chief executive officer, Marvin O'Quinn, has said he will ask Miami-Dade's ethics commission, a quasi-judicial agency, to review the finding by the county's inspector general. The commission may reprimand or fine officials found guilty of unethical behavior.
Mazzella wants the contract reopened to bidders, a move O'Quinn has warned could force the system to upgrade its existing information system in the interim at a cost of $1 million. The complex, five-year contract includes an overhaul of several information-system services, including registration, billing, payroll, accounting and accounts payable.
Simply reviewing proposals and awarding the contract again could cost an additional $400,000, O'Quinn said in an Aug. 4 letter to the Public Health Trust. But public pressure might force Jackson to do just that, even if Barrett's actions ultimately are judged legal and ethical.
Suspect sales tactics between IT vendors and healthcare-provider purchasers have come under the spotlight before. Last year, for example, Siemens was named along with four other information technology companies in a gift-giving scandal at the Nassau Health Care Corp. in East Meadow, N.Y. The public hospital system and seven of its executives settled allegations made by the state's ethics commission that they took illegal gifts and reimbursements from the IT vendors during a contract-bidding process (March 29, 2004, p. 14).
In finance, the perception that behavior is ethical and aboveboard is as important as actual good conduct because even ill-founded scandals can erode public confidence, said Ed Soule, an associate professor of corporate and management ethics at Georgetown University. Still, Soule warned that public opinion should not override fact. "Sometimes the public is wrong," he said.
Mazzella criticized Barrett for traveling to an invitation-only conference held by Siemens one week after the company won the contract from Jackson.
It's the latest controversy to roil the financially struggling system and its 1,838-bed safety net hospital. In November, Jackson canceled a no-bid contract with Cardinal Health after Miami-Dade's state's attorney's office and inspector general launched inquiries into allegations that Cardinal overbilled Jackson and that one Cardinal employee, Kevin Reece, billed the Miami health system for fishing trips, meals and visits to a Florida strip club. Reece pleaded innocent.
Barrett attended Siemens' conference while on vacation, covered his own airfare and paid for his own hotel. However, he enjoyed a hotel discount for Siemens conference attendees and played golf at the company's expense, according to the inspector general. Although the trip occurred after Jackson awarded the contract, Barrett arranged the trip while the awarding of the contract was under protest, Mazzella said. And Barrett had a previous relationship with Siemens from his work as CFO of Denver Health, he said. "Given the circumstances, it would be difficult to cure the perception that the Siemens procurement process is not fair," he said.
A Jackson spokeswoman said Barrett was unavailable because of a death in his family. Siemens declined to comment, spokeswoman Christine Foy said.