The costs of dealing with the failure of New River Behavioral Healthcare are starting to be felt by its new overseer and five of the counties the provider once served.
Smoky Mountain Center, the local management entity (LME) in charge of monitoring the defunct provider, has estimated it will cost between $11,358 and $13,750 a year to store New River's medical records.
Smoky also estimated it will cost between $41,240 and $112,150 to pack and transport the mostly paper records and purge those that no longer have to be kept. It's expected to cost an additional $41,000 to $117,000 for retrieving, refilling and scanning records.
The LME provided those estimates from bids received from four vendors. New River Service Authority has authorized paying up to $50,000 toward the packing, transporting and purging expenses.
The projections are the latest development involving the closure of New River Behavioral of Boone on Oct. 31. The agency had provided behavioral-health services to more than 13,000 clients in eight counties — Alleghany, Ashe, Avery, Iredell, Surry, Watauga, Wilkes and Yadkin.
Brian Ingraham, chief executive of Smoky, said its board of directors has not voted on the vendor proposals but is likely to approve the lower-cost bids.
Ingraham said New River Behavioral having mostly paper medical records is not unusual for a behavioral-health provider.
"Some of the records go back to the inception of New River about 40 years ago," said Shelly Foreman, director of planning and public affairs for Smoky. "We feel confident there will be other conversion costs that are unknown at this point."
The collapse of New River Behavioral was caused by unreliable financial reporting and ineffective management, according to Martin Starnes & Associates PA of Hickory, a consultant hired to review the agency.
However, the consultant said in a Jan. 6 report there was "no evidence of misappropriation of assets (that) came to our attention."
The authority has authorized paying $5,000 as a retainer to the law firm of McGuire, Wood & Bissette P.A. to help determine the legal liability of the failed provider, its previous management team and its auditor.
According to the Wilkes Journal-Patriot, New River's errors and omissions insurance provided liability coverage for claims of professional negligence against New River's top administrative officials and board.
Pat Mitchell, an authority board member and Ashe County manager said, "It does appear management (chief financial officer Larry Aggers and/or chief executive Pam Andrews) were over their heads in handling all aspects of the financial picture." Both officers were replaced before the shutdown of the agency.
Neither Andrews nor Aggers have been available for comment since New River was closed. Andrews said in a statement dated Oct. 12 that the agency's auditor, Lowdermilk, Church & Co. LLP, had conducted "forensic accounting and a review of every number for possible malfeasance or misappropriation of funds — to date none has been found."
The provider experienced at least $5.7 million in documented losses over the past two years. That amount likely will increase as independent audits of its finances are conducted.
The consultant said New River's board of directors was not told the agency was facing a major financial crisis related to its accounts receivables until a few months before its collapse.
Mitchell said she does not expect the consultant's report to trigger a probe by the State Bureau of Investigation. Jennifer Canada, a spokeswoman for the N.C. Attorney General's Office, said Monday the SBI is not investigating.
Since Oct. 4, the N.C. Division of Medical Assistance has suspended N.C. Medicaid payments to New River because of what it called credible allegations of fraud by the behavioral-health provider. The payments were worth $626,977 as of Dec. 21 — the date of the consultant's report.
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