The University of Arkansas System is still seeking answers to sometimes awkward questions about past financial doings on its medical campus in Little Rock.
The UA invested 2,213 hours in two audits of the radiology department at the University of Arkansas for Medical Sciences and its business dealings with Medical Assets Holding Co. of North Little Rock and various affiliates.
The initial audit findings, which covered January 2010 through April 2012, are under review for possible criminal charges.
The findings often question the flow of money through Medical Assets Holding affiliates to radiology staffers, as well as suspect payments from UAMS to the company or related firms.
The case status of the first audit findings is described as “awaiting other agency action” by Pulaski County Prosecuting Attorney Larry Jegley.
Asked what other agency, Jegley said, “I can’t say.”
Findings from an expanded internal audit that delved back to November 2006 and earlier are poised for similar prosecutorial review. The questioned transactions in this audit to-taled more than $985,000.
In some instances, the UA was informed by the attorneys representing Medical Assets Holding that there were no written contracts or agreements or supporting paperwork for the transactions.
“As a result, [the audit staff was] unable to resolve the appropriateness of the transactions,” the expanded internal audit reported.
While investigators analyze whether the bookkeeping anomalies rise to the level of something more sinister, UAMS appears to be unwinding its business relationship with Medical Assets Holding (MAH).
The venture is owned by its CEO, Rodney Thomason, who also is a member of the Winthrop P. Rockefeller Cancer Institute Foundation Fund Board of Directors at UAMS.
MAH is involved, through its affiliates, in a string of medical and real estate investments that include million-dollar high-tech equipment at a half-dozen hospitals and clinics. Thomason couldn’t be reached for comment.
The initial audit didn’t quantify exactly how much money is in dispute, and the door remains open for civil litigation to find resolution.
Some of the money in question, tallied in the hundreds of thousands of dollars, was paid from affiliates of Medical Assets Holding directly to UAMS staffers instead of flowing through the university.
According to UA officials, UAMS was entitled to retain a portion of those funds, which were paid on top of the staffers’ university compensation. The unspecified UAMS share would have gone to the College of Medicine coffers.
Litigation on Hold
In May, the UA Board of Trustees authorized a lawsuit to recover $31,372 from Jack Evans, the former business administrator for the UAMS radiology department. According to the UA audit, he allegedly diverted that much in department funds for his personal use.
But no lawsuit has been filed while UA officials continue talks with Evans, who retired in May 2012 when the UA launched the initial internal audit.
Evans’ financial interaction with Medical Assets Holding and related entities is at the heart of many of the red-flagged events recounted in the internal audit report of the UAMS radiology department dated Jan. 16, 2013.
The UA collected $292,018 in two payments from Medical Assets Holding in March 2013 after starting its expanded internal audit of the radiology department.
Until four months ago, Thomason had an ownership stake in two medical imaging scanners and the PET Center on the UAMS campus.
In a business arrangement that dated back to 2001, UAMS had access to the Medical Assets Holding equipment without shouldering its cost or sharing in any of the profit.
The medical imaging equipment, which combines PET (positron emission tomography) and CT (computed tomography) capabilities, is now owned by UAMS along with the PET Center facility.
UAMS exercised its option to buy the two scanners in a nominal $10 transaction in connection with taking ownership of the PET Center at the end of a contract with Thomason’s group.
Thomason remains a stakeholder in another expensive piece of equipment at UAMS through Arkansas Medical Cyclotron LLC.
However, the future is uncertain for the on-campus cyclotron, which produces medical isotopes for use in PET scanning.
“It is my vision as interim director of the radiology department and director of nuclear medicine, that there will be a cyclotron on campus,” said Dr. James McDonald in an interview with Arkansas Business. “It’s essential to research and also to direct clinical applications.
“The future of the cyclotron is in the hands of the board of trustees. The issue is in Dr. Bobbitt’s office.”
Plans are in motion to de-commission the cyclotron, according to UA officials.
UA System President Donald Bobbitt couldn’t be reached for comment on the cyclotron at UAMS and why it is now considered unnecessary.
Other sources for the most commonly used medical isotopes are available for clinical applications.
Dr. Marc Berridge oversees operation of the cyclotron on the UAMS campus and is president of an associated enterprise, 3D Imaging Drug Design & Development LLC.
“There is talk that we would potentially relocate the cyclotron,” Berridge said.
“UAMS may want us off the campus, but it’s not a done deal. We’ve looked at several locations.”
Berridge was an employee of UAMS until the first audit brought into question his dual employment with 3D Imaging, where he estimated spending 90 percent of his time.
That employee-sharing ar-rangement ended in March 2013 when Berridge was removed from the UAMS payroll.
While the future of the UAMS cyclotron is uncertain, plans for the PET-CT scanners now owned by UAMS are more definite.
The 8-year-old unit will be retired next year in favor of a new model that will reduce scan time from 45 minutes to about 20 minutes. The increased speed will allow more patients to undergo scans, and that ramped-up capacity will require more space for uptake rooms for patients.
UAMS will use a mobile unit to fill the gap for a couple of months while the new scanner is installed and patient waiting space expanded. The second PET-CT scanner is marked for replacement as well.
“We haven’t had any specific conversations, but I would expect it to be done in 2016 or 2017,” McDonald said. He said this new unit might be put in the Winthrop P. Rockefeller Cancer Center for the convenience of patients.
Dr. Phil Kenney, chairman of the radiology department during the period covered by the first audit, resigned from his leadership position in an agreement with administrators on July 1, 2012. Kenney remains a professor in the UAMS radiology department.
Dr. Ernest Ferris, long-time chairman of the radiology department until Kenney succeeded him in January 2008, retired from UAMS on June 30, 2012.
The second audit confirmed that problems began before Kenney’s chairmanship.
“It showed that we had a lack of internal controls, and that has now been brought to light and addressed,” said Ben Hyneman of Jonesboro, UA trustee and past chairman of the trustees’ Audit & Fiscal Responsibility Committee.
The expanded UA internal audit, which covered the beginning of Kenney’s leadership and the end of Ferris’ time as department chairman, didn’t go as deep as the initial audit.
“The decision was based on a timing issue because of when the board of trustees wanted the report,” said Jacob Flournoy, director of UA internal audit. “We did as much work as we thought provided value during the time allowed.”