Audit of New Mexico hospital finds mismanagement, unapproved CEO pay

Gallup, N.M.-based Rehoboth McKinley Christian Hospital has been improperly managed and operated, according to a state audit report cited by the Los Alamos Daily Post.

In the special audit report, state auditor Brian Colón found issues related to management contracts, improper reimbursements and violations of internal policies at the hospital, among other issues. In one example cited by the report, the audit found a noncompetitive contract was awarded to Invictus Healthcare Management to oversee operations at the hospital, which was against its policies.

At the time, Invictus' CEO also held the COO position at the hospital. The audit said Rehoboth McKinley allowed Invictus to improperly overcharge it more than $750,000 for night shift staffing services that weren't received, as well as excess hours for physicians who weren't penalized for poor performance. The audit says the contract wasn't reviewed properly by hospital leaders.

In addition, the board of trustees didn't approve compensation for its former CEO, David Conejo, according to the audit findings cited by the Los Alamos Daily Post. While Rehoboth McKinley is a smaller, 60-bed hospital, in 2018 Mr. Conejo received nearly as much compensation — $629,000 — as the CEO of the state's largest, 628-bed hospital, who made $676,000.

Luis Robles, the defense attorney of Mr. Conejo, refuted the findings in a Sept. 16 release shared with Becker's. Mr. Robles said the audit is "grossly inaccurate and misrepresents the true financial picture of David Conejo's tenure as CEO of Rehoboth McKinley." Mr. Robles said the audit wasn't carefully reviewed, and Mr. Conejo's attorney did not get a chance to review the audit, nor did auditors request a meeting with the hospital executives. Mr. Robles said Mr. Conejo's salary was presented incorrectly in the report and was actually closer to $400,000. Mr. Robles added that the allegations about no-bid contracts are incorrect.

The audit findings come after the board of Rehoboth McKinley fired Mr. Conejo as CEO June 11, about a month after a group of staff alleged mismanagement and approved a no-confidence vote. Mr. Conejo later sued the hospital, accusing his former employer of breaching a management contract with his own management company and purposefully promoting false and misleading information about the company.

The state auditor sent its report to the Internal Revenue Service and other oversight agencies, according to the newspaper.

Read the full report here.

Editor's note: This article was updated Sept. 17 at 11:32 a.m. CT to include information from Mr. Conejo's attorney. 

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