Review of the Operations of the Sea Island Comprehensive Health Care Corporation and the Franklin C. Fetter Family Health Center

GAO reviewed the operations of two health care facilities to determine whether these centers were being operated in compliance with grant program requirements and whether there was adequate accountability for the expenditures of Federal grant funds.

GAO found instances of noncompliance with Federal grant regulations and poor financial management practices at both centers. At one center, the problems were primarily attributable to: (1) the practice of commingling funds that supported all of the health care activities; and (2) financial management practices that appeared to be designed to maximize Federal grant revenues with little concern for whether Federal funds were being used in accordance with applicable regulations and guidelines. At the other center, the problems were primarily attributable to the practice of making purchases and commitments for unbudgeted items and later requesting retroactive approval from the Department of Health and Human Services (HHS). The willingness of HHS to grant retroactive approval appeared to foster the continuation of this practice. In the past, the HHS oversight role in identifying and correcting these grantees' program deficiencies had been inadequate. However, as GAO began to focus attention on the problems, HHS acted to resolve them and eventually defunded both health centers. However, HHS plans to continue providing services at both locations by funding an entirely new board of directors to control the centers.