Performance audit and sunset review, Board of Examiners of Nursing Care Institution Administrators and Assisted Living Facility Managers

              Debra K. Davenport
Auditor General
Board of Examiners of
Nursing Care Institution
Administrators and Assisted
Living Facility Managers
Performance Audit Division
DECEMBER • 2004
REPORT NO. 04 – 12
Performance Audit and Sunset Review
A REPORT
TO THE
ARIZONA LEGISLATURE
The Auditor General is appointed by the Joint Legislative Audit Committee, a bipartisan committee composed of five senators
and five representatives. Her mission is to provide independent and impartial information and specific recommendations to
improve the operations of state and local government entities. To this end, she provides financial audits and accounting services
to the State and political subdivisions, investigates possible misuse of public monies, and conducts performance audits of
school districts, state agencies, and the programs they administer.
The Joint Legislative Audit Committee
Representative John Huppenthal, Chair Senator Robert Blendu, Vice Chair
Representative Tom Boone Senator Gabrielle Giffords
Representative Ken Clark Senator Peter Rios
Representative Ted Downing Senator Thayer Verschoor
Representative Steve Yarbrough Senator Jim Weiers
Representative Jake Flake (ex-officio) Senator Ken Bennett (ex-officio)
Audit Staff
Dale Chapman, Manager and Contact Person
Channin DeHaan, Team leader Danielle Mariano
Rachel Rowland Nathan Wayman
Copies of the Auditor General’s reports are free.
You may request them by contacting us at:
Office of the Auditor General
2910 N. 44th Street, Suite 410 • Phoenix, AZ 85018 • (602) 553-0333
Additionally, many of our reports can be found in electronic format at:
www.auditorgen.state.az.us
2910 NORTH 44th STREET • SUITE 410 • PHOENIX, ARIZONA 85018 • (602) 553-0333 • FAX (602) 553-0051
DEBRA K. DAVENPORT, CPA
AUDITOR GENERAL
STATE OF ARIZONA
OFFICE OF THE
AUDITOR GENERAL
WILLIAM THOMSON
DEPUTY AUDITOR GENERAL
December 29, 2004
Members of the Arizona Legislature
The Honorable Janet Napolitano, Governor
Michael Calderon, President
Board of Examiners of Nursing Care Institution Administrators and
Assisted Living Facility Managers
Victoria Martin, Esq., Executive Director
Board of Examiners of Nursing Care Institution Administrators and
Assisted Living Facility Managers
Transmitted herewith is a report of the Auditor General, A Performance Audit and Sunset Review of the
Board of Examiners of Nursing Care Institution Administrators and Assisted Living Facility Managers
(Board). This report is in response to Laws 2004, Chapter 279, which also directs a sunset review of the
Board. This audit was conducted under the authority vested in the Auditor General by Arizona Revised
Statutes (A.R.S.) §41-1279.03 and as part of the sunset review process prescribed in A.R.S. §41-2951 et
seq. I am also transmitting with this report a copy of the Report Highlights for this audit to provide a
quick summary for your convenience.
As outlined in its response, the Board agrees with the finding related to complaint processing and plans
to implement or implement in a different manner all but one of the associated recommendations. The
Board disagrees with the findings related to public information, board oversight, and compliance with
state requirements, but plans to implement or implement in a different manner most of the associated
recommendations.
My staff and I will be pleased to discuss or clarify items in the report.
This report will be released to the public on December 30, 2004.
Sincerely,
Debbie Davenport
Auditor General
Enclosure
Services:
The Board of Examiners of Nursing Care Institution Administrators and Assisted Living Facility
Managers (Board) has the following responsibilities:
􀁺􇩌 License nursing care institution administrators and certify assisted living facility man-agers;
􀁺􇩉 Investigate complaints involving potential
statutory violations and unprofessional con-duct;
􀁺􇩁 Adjudicate complaints by applying nondisci-plinary
or disciplinary options;
􀁺􇩐 Provide consumer information to the public;
and
􀁺􇩁 Approve continuing education programs and
monitor continuing education requirements.
Board membership and staffing:1
The Board consists of nine voting members appoint-ed
by the Governor:
􀁺􇩔 Two skilled nursing facility administrators, two
assisted living facility managers, and one
administrator or manager at large;
􀁺􇩔 Two representatives of the professions con-cerned
with the care and treatment of the
chronically ill or infirm elderly patients; and
􀁺􇩔 Two lay members representing consumers of nursing care institution services and assist-ed
living facility services.
As of November 2004, the Board had six staff members, including an executive director, a licens-ing
coordinator, a business manager, an administrative assistant, and two part-time investigators.
Facilities and equipment:
The Board leases space in a state-owned building at 1400 West Washington in Phoenix. Its equip-ment
includes typical office equipment such as office furniture and computers.
PROGRAM FACT SHEET
Board of Examiners of Nursing Care Institution Administrators and
Assisted Living Facility Managers
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
FY2003 FY2004 FY2005
(1st Quarter)
Revenues Expenditures, State General Fund
Remittances, and Operating Transfers
Board Revenues, Expenditures,
Remittances To the State General Fund, and
Operating Transfers
Office of the Auditor General
1 Since August 2003, the Board has had one continuous vacancy.
Mission:
The Board’s mission is “to protect the health, welfare, and safety of Arizona citizens who seek and
use the services of nursing care institution administrators and assisted living facility managers.”
Program goals:
1. To improve agency operations relating to complaint investigations to ensure consistent
and timely enforcement of statutes and rules regulating nursing care institution adminis-trators
and assisted living facility managers.
2. To ensure that licenses and certificates are processed in a timely and efficient manner.
3. To ensure that agency operations are effective and efficient.
Adequacy of performance measures:
The Board’s performance measures appear to be appropriate and well-aligned with the Board’s
goals. However, the Board needs to address problems with the mechanism it uses to capture
and then report the data that supports its measures. Specifically:
􀁺􇩔 The Board’s database, which provides the information used to report on several of its
measures, contains some inaccurate and incomplete information.
􀁺􇩔 The Board’s performance measure that reports on its administrative costs as a percent-age
of total costs is not based on its costs. Instead, according to the Board’s executive
director, the Board reports its percentage of administrative costs by taking the average
of administrative costs for all state agencies and reducing it to account for the Board’s
smaller size. The Governor’s Office of Strategic Planning and Budgeting recommends
that agencies develop standard methods for calculating administrative costs and sug-gests
some common administrative areas, such as human resources and contracting,
that should be considered in this calculation.
State of Arizona
Source: Auditor General staff compilation of unaudited information obtained from the Arizona Financial Information System (AFIS) Accounting
Event Transaction File for the years ended June 30, 2003, and 2004, and the quarter ended September 30, 2004, Master List of State
Government Programs, Arizona Revised Statutes, and other information provided by the Board.
The Office of the Auditor General has conducted a performance audit and sunset
review of the Board of Examiners of Nursing Care Institution Administrators and
Assisted Living Facility Managers (Board) pursuant to Laws 2004, Chapter 279. This
audit was conducted under the authority vested in the Auditor General by Arizona
Revised Statutes (A.R.S.) §41-1279.03 and as part of the sunset review process
prescribed in A.R.S. §41-2951 et seq.
The Board was created in 1975 to fulfill a federal
requirement that nursing care institution administrators
(administrators) be licensed and regulated in order for
the State to receive federal Medicaid monies. In 1990,
the Legislature added certification of assisted living
facility managers (managers) to the Board’s
responsibilities in order to ensure minimum care
standards for residents of assisted living facilities. The
Board’s responsibilities include issuing and renewing
licenses and certificates, conducting investigations
and hearings regarding statutory violations,
disciplining administrators and managers, and
providing consumer information to the public. As of
December 2004, the Board licensed over 290 active
administrators and certified nearly 2,300 active
managers.
Board should improve complaint processing (see pages
11 through 19)
The Board needs to take several steps to ensure that complaints are investigated
and adjudicated in an appropriate and timely manner. During fiscal years 2003 and
2004, the Board had to dismiss numerous complaints due to untimely investigations.
During that time, board staff forwarded 61 complaints for adjudication that had been
received in fiscal years 1999 through 2002. The Board dismissed 53 of these
Office of the Auditor General
SUMMARY
page i
Facility Definitions:
Nursing care institutions–Provide care for people who
need nursing services on a continuing basis, but who do
not require hospital care or care under the daily direction
of a physician. These facilities are often called nursing
homes and sometimes are referred to as skilled nursing
facilities.
Assisted living facilities–Residential care institutions that
provide or contract to provide supervisory, personal, or
directed care on a continuing basis for people who do
not require continuous nursing care. These facilities have
staff who assist elderly, disabled, or other residents with
eating, personal hygiene, and other activities.
complaints. Many were dismissed because so much time had passed that either the
manager’s or administrator’s credentials had expired or no further investigation could
be conducted because necessary information and access to witnesses were no
longer available. As a result, the Board’s ability to protect the public was decreased.
Board staff have continued to conduct untimely investigations for complaints
received in fiscal years 2003 and 2004. Over 100 of the 126 complaints the Board
received in those years remained open as of July 2004. Auditors reviewed 19 of the
closed complaints and found that all but 3 had been investigated and resolved within
180 days. However, a review of 25 randomly selected complaints still unresolved as
of July 2004 showed that they had been open between 260 and 680 days. These
lengthy processing times are a concern because information needed to adjudicate
complaints may become harder to obtain as time passes and administrators and
managers named in the complaints are able to continue to practice unchecked.
Three main factors contribute to the untimely investigations. First, the Board has
experienced high turnover among its investigative staff. Second, the Board lacks
needed investigation policies and procedures, including time frames for each step in
the investigative process. Third, the Board does not adequately monitor the
investigation process and does not have an accurate database for doing so. To
address these factors, the Board should consider adding a full-time investigator to
its staff, at least until it completes the investigations for complaints received in fiscal
years 2003 and 2004. As of November 2004, the Board had only two part-time
investigators. One option, if the Board has the resources, would be to contract for this
assistance. Another option is to convert its business manager position to an
investigator position, as it was originally designated by the Legislature. The Board
should also implement additional complaint investigation procedures, specify time
frames for each step in the investigative process, and use monthly management
reports generated from its complaint database to monitor progress.
Finally, two changes would improve the Board’s complaint adjudication process.
First, the Board should cease issuing letters of concern, which is a nondisciplinary
action, in instances where a disciplinary action is appropriate. Auditors identified two
instances in its September 2004 board meeting where the Board issued
nondisciplinary letters of concern, even though evidence of a violation existed.
Second, the Legislature should consider revising A.R.S. §32-3201 to provide the
Board with the authority to take action against administrators or managers whose
licenses or certificates expire before complaints are fully adjudicated. If the Board has
this authority, licenses or certificate holders would not be able to avoid discipline by
letting their license or certification expire, and disciplinary action would be
appropriately reflected on their professional record.
State of Arizona
page ii
Board practices restrict access to public information (see
pages 21 through 24)
The public does not have appropriate access to information regarding nursing home
administrators and assisted living facility managers. In four of five telephone calls
made by auditors, board staff did not release information regarding complaint or
disciplinary history, even though this information should be made available to the
public. The fifth telephone call concerned an administrator with no disciplinary history
but with two complaints. Staff did not disclose that the administrator had two
complaints. The Board should establish written procedures that detail the information
that is available to the public and then train staff on how to properly respond to public
inquiries.
The Board should also improve its Web site information’s quality and accuracy.
Board staff frequently direct consumers to their Web site for information, but the
information regarding administrators and managers is not always accurate. For
example, one manager was listed as possessing an active assisted living facility
manager’s certificate with no disciplinary action taken as of August 2004, even
though she had entered into a consent agreement with the Board and surrendered
her license in November 2003. Additionally, the site does not include information on
the number of complaints, nature of complaints, or how complaints were resolved for
each licensee or certificate holder. In addition, the Board does not provide
information such as board meeting minutes on its Web site. Therefore the Board
should ensure that the information provided on its Web site is accurate, and as
resources permit, expand the type of information it includes.
Board should improve oversight of operations (see
pages 25 through 30)
The Board needs to improve its oversight of board operations to address the
deficiencies previously identified, as well as other operational concerns. These
problems range from the ineffective use of its staff and financial resources,
unscheduled formal complaint hearings with the Office of Administrative Hearings,
and poor data management, including some inaccurate and incomplete data for
both licensing and complaints. These problems have been intensified by high
turnover in nearly all of its positions.
The Board should take action concerning its financial situation, including reviewing
and potentially reducing its expenditures and determining whether a statutory fee
increase is needed. Additionally, the Board could further improve its operations and
address its problems by increasing its oversight of the executive director and staff.
Office of the Auditor General
page iii
Although the Board delegates most of the responsibility for operations to the
executive director, board members are still responsible for ensuring that the agency
fulfills its statutory requirement to regulate administrators and managers. Auditors
found that executive directors at other regulatory boards provide regular updates to
their boards on operations and activities. While the Board’s executive director has
historically provided the Board with some information on operations, auditor
observations of the June through September 2004 board meetings found that the
executive director did not provide the Board with information regarding finances; or
license, certificate, and complaint processing information. As a result, the Board
should require its executive director to provide written reports to the Board at least
every other month on the number of complaints received, the status of open
complaints and hearings, the number of licenses and certificate applications
received, staffing issues, and revenues and expenditures. The Board should then
review and act on these reports, as needed, at board meetings.
State requirements not always followed (see pages 31
through 35)
Board members and staff have not always followed state requirements regarding
cash handling, procurement, and reimbursement for travel. Specifically, board staff
do not make timely deposits and the Board’s cash-handling procedures could be
enhanced. A recent Department of Administration, General Accounting Office (GAO)
review also found that board staff have violated procurement statutes and
administrative rules by agreeing to pay a vendor before receiving services, failing to
include the terms of the contracts that the State requires, and exceeding the Board’s
delegated purchasing authority. Finally, the executive director and some board
members have been over-reimbursed for some travel expenses, including
overpayments for lodging, meals, and parking. As a result, the Board should ensure
that it follows all state requirements for these activities. Additionally, consistent with
the GAO’s recommendations, the Board should recover the overpayments made for
travel expenses.
Other pertinent information (see pages 37 through 39)
During this audit, other pertinent information was obtained regarding Arizona’s and
other states’ regulation of nursing care institution administrators. While all 50 states
and the District of Columbia license and regulate administrators, states use three
different regulatory models to do so:
􀁺􇩉 Independent board—Eleven states, including Arizona, use this method. The
board members are typically appointed by the state’s governor and are
supported by their own staff and monies. This is the predominant method used
in Arizona to regulate health and other professions.
State of Arizona
page iv
􀁺􇩉 Independent board supported by a state agency—Thirty-three states and the
District of Columbia have established independent boards supported by staff
from a separate state agency. These states maintain a board composed of
industry and public members who approve licenses and take disciplinary
actions, but staff and support functions are typically provided by a public health
agency or an occupational licensing agency. These agencies typically staff and
support numerous health and other professional regulatory boards in their
states. The only example in Arizona of this arrangement is the Arizona State
Boxing Commission, which relies on the Arizona Department of Racing to
provide staff and support to its Governor-appointed commissioners.
􀁺􇩓 State agency—Six states place the responsibility for regulating administrators
within a public health agency or an occupational licensing department.
Sunset factors (see pages 41 through 47)
Terminating the Board would harm the public health, safety, and welfare because the
Board is responsible for licensing administrators, certifying managers, and
investigating and adjudicating complaints against administrators and managers.
Without regulation of these professions, the public could be subject to unqualified
and incompetent care. However, the Board could improve regulation by
implementing the recommendations in the first three findings in the report, and
regulation could be further improved with the following changes:
􀁺􇩔 The Board should ensure that it processes all initial license and certificate
applications within time frames prescribed by administrative rule. While a review
of 61 license and certificate applications received from August 2000 through
January 2004 determined that most were processed within the required 120
days, the Board did not process 12 of these 61 applications in a timely manner.
􀁺􇩔 To ensure that the Board operates in the public interest, the Legislature should
consider revising A.R.S. §36-446.02(B) to eliminate the requirement that lay
members represent consumers of nursing care or assisted living services to
make it easier for members of the general public to serve on the Board. One of
the consumer representative positions on the Board has been vacant from
August 2003 through October 2004. According to a representative from the
Governor’s Office, the Board’s statutes defining lay members are some of the
most restrictive among Arizona regulatory boards, and as a result, it has been
difficult to fill the positions.
􀁺􇩔 The Board should update its administrative rules to ensure that they are
consistent with statute and, as required by A.R.S. §36-446.04(B)(4), promulgate
administrative rules regarding the statutory requirement that assisted living
facility managers complete 12 months of work experience in a health-related
field.
Office of the Auditor General
page v
State of Arizona
page vi
Office of the Auditor General
TABLE OF CONTENTS
continued
page vii
1
11
11
12
14
16
19
21
21
21
23
24
25
25
28
30
Introduction & Background
Finding 1: Board should improve complaint processing
Untimely investigations resulted in dismissals
Recent complaints also resolved slowly
Several factors contribute to untimely investigations
Complaint adjudication needs improvement
Recommendations
Finding 2: Board practices restrict access to public
information
Access to public information is important
Board needs to provide more complete public information
Web site needs improvement
Recommendations
Finding 3: Board should improve oversight of
operations
Numerous problems at the Board
Greater oversight could improve operations
Recommendations
State of Arizona
TABLE OF CONTENTS
concluded
page viii
Finding 4: State requirements not always followed
Internal controls are weak
Procurement and travel policies not always followed
Recommendations
Other Pertinent Information
States’ regulation of nursing care institution administrators
Sunset Factors
Agency Response
Table:
1 Schedule of Revenues, Expenditures, and Other
Changes in Fund Balance
Years Ended June 30, 2003 and 2004 and
Quarter Ended September 30, 2004
(Unaudited)
Figure:
1 Expenditures, Revenues, and Fund Balance
Years Ended June 30, 2003 and 2004
31
31
32
35
37
37
41
6
26
The Office of the Auditor General has conducted a performance audit and sunset
review of the Board of Examiners of Nursing Care Institution Administrators and
Assisted Living Facility Managers (Board) pursuant to Laws 2004, Chapter 279. This
audit was conducted under the authority vested in the Auditor General by Arizona
Revised Statutes (A.R.S.) §41-1279.03 and as part of the sunset review process
prescribed in A.R.S. §41-2951 et seq.
Board responsibilities
The Board was created in 1975 to fulfill the federal Medicaid requirement that states
license and regulate nursing care institution administrators (administrators) to enable
Arizona to receive federal Medicaid monies. To help ensure minimum care standards
for residents of assisted living facilities, in 1990, the Legislature added certification
and regulation of assisted living facility managers (managers) to the Board’s
responsibilities. Administrators are responsible for the operations of a nursing care
institution, including providing oversight of resident healthcare, quality management,
and managing facility staff. Managers are responsible for the administration of an
assisted living facility, which includes depositing and refunding fees and charges,
resolving resident grievances, and managing resident social, recreational, or
rehabilitative activities.
The Board’s mission is:
To protect the health, welfare, and safety of Arizona citizens who seek and use the
services of nursing care institution administrators and assisted living facility
managers.
The Board has a variety of responsibilities that are designed to help it accomplish its
mission, including:
􀁺􇩉 Issuing and renewing licenses and certificates to qualified persons practicing as
nursing home care administrators or assisted living facility managers;
Office of the Auditor General
INTRODUCTION
& BACKGROUND
page 1
􀁺􇩃 Conducting investigations and hearings concerning unprofessional conduct or
other statutory violations;
􀁺􇩄 Disciplining violators;
􀁺􇩐 Providing consumer information to the public; and
􀁺􇩁 Approving continuing education and administrator-in-training programs and
monitoring continuing education requirements.
According to the Board’s database, as of December 2004, the Board licensed 290
active permanent administrators and 2 temporary administrators, and certified over
2,200 active permanent managers and 43 temporary managers.1 Also, according to
the Board’s database, the Board received 777 license and certificate
applications and 67 complaints in fiscal year 2004.
While the Board is responsible for regulating licensed administrators and
certified managers, the Arizona Department of Health Services (DHS)
regulates the facilities that administrators and managers operate.
Specifically, DHS licenses, inspects, and conducts complaint
investigations relating to nursing care institutions, assisted living centers,
and assisted living homes, both of which are types of assisted living
facilities.
Statutory licensure and certification requirements
The Board’s statutes and administrative rules contain the following general
education, experience, and examination requirements for initial licensure as an
administrator or initial certification as a manager.
Administrators must:
􀁺􇩐 Possess a master’s degree in healthcare administration or long-term care
administration or a bachelor’s degree and complete a minimum of 800 hours of
training in an approved Administrator in Training Program;
􀁺􇩐 Pass the National Association of Boards of Examiners for Long Term Care
Administrators national examination with a score of 70 percent or higher; and
􀁺􇩐 Pass the Board’s written examination, which tests an applicant’s knowledge of
Arizona statutes and rules, with a score of 80 percent or higher.
1 The Board reports that it has 443 administrators and 2,432 managers as of December 2004. However, these counts
include administrators and managers who are shown as having inactive licenses and certificates, and some
administrators and managers with active temporary licenses and certificates, but whose licenses or certificates have
since expired.
State of Arizona
page 2
DHS-Licensed Facilities
As of August 2004
Nursing Care Institutions 138
Assisted Living Centers 186
Assisted Living Homes 1,279
Source: Department of Health Services staff and October 25,
2004, report.
Managers must:
􀁺􇩓 Successfully complete a DHS-approved adult care home manager training
program or complete at least 34 hours of education and training that includes
training related to adult care residents’ needs and health facility management;
􀁺􇨠 Possess 12 months of health-related experience within the preceding 5 years;
􀁺􇩐 Pass the Board’s adult care home manager’s examination, which tests an
applicant’s knowledge of residents’ needs, Arizona statutes and rules, and
health facility management, with a score of 70 percent or higher; and
􀁺􇩓 Successfully complete an adult cardiopulmonary resuscitation program and
basic first-aid training.
The Board’s administrative rule R4-33-103 requires it to review
applications for licensure or certification within 120 days after
receipt. If an applicant can demonstrate that employment as
an administrator or manager has been secured, applicants
waiting to complete the required licensure or certification
process can apply for a 150-day temporary license or
certificate.
The Board issues license and certificate renewals every 2
years. Renewals require a completed renewal application, 50
hours of continuing education for administrators and 12 hours
of continuing education for managers, and payment of the
required fees.
Complaint resolution
The Board investigates and adjudicates complaints involving potential statutory
violations and unprofessional conduct by licensed administrators and certified
managers, as authorized by statute. A.R.S. §36-446.07 provides nine actions that
constitute statutory violations for administrators and eight actions that constitute
statutory violations for managers. These actions include unprofessional conduct,
addiction to or dependency on drugs or alcohol, falsely impersonating another
licensee or certificate holder, and unauthorized disclosure of information relating to a
patient or a patient’s records. Additionally, A.R.S. §36-446 further defines
unprofessional conduct as dishonesty, fraud, incompetent or gross negligence,
gross immorality or proselytizing, and other abuses, which may include intimidation
or neglect of patients.
Office of the Auditor General
page 3
Board Fees
As of October 2004
Administrators Managers
Application $100 $100
Exam 500 100
Temporary 250 50
Issuance 260 100
Renewal 300 100
Source: Auditor General staff analysis of A.R.S. §§36-
446.03 and 36-446.12, and administrative rule R4-
33-104 .
Unprofessional conduct
includes dishonesty,
fraud, and gross
negligence.
Board Fees
As of October 2004
The Board receives complaints from the public and DHS, which is responsible for
regulating nursing care institutions and assisted living facilities. The Board may also
initiate a complaint on its own judgment. According to statute, all complaints must be
submitted in writing to the Board within 1 year of the offending action. According to
board procedures, upon receiving a complaint alleging that an administrator or
manager violated statute, board staff open an investigation. A complaint investigation
includes a notice of complaint to the named administrator or manager, and obtaining
a response to the allegations and pertinent care records and witness statements.
After board staff complete the investigation, the Board requests that the administrator
or manager appear before the Board for questioning. Complainants also have an
opportunity to address the Board. If the Board determines that adequate information
has been obtained to determine whether a violation has been committed, the
complaint is adjudicated.
According to statute, the Board can discipline a licensee or certificate holder at this
time, but they must allow the licensee or certificate holder 20 days to request a formal
hearing. The Board can also refer complaints to Arizona’s Office of Administrative
Hearings to be heard by an administrative law judge. Upon its own determination or
the recommendation of the administrative law judge, the Board resolves the
complaints. If the Board imposes discipline, it can use one or more of the following
options:
􀁺􇩉 Impose a civil monetary penalty of not more than $500;
􀁺􇩃 Censure, which is a formal resolution of a legislative, administrative, or other
body reprimanding a person, normally one of its own members, for specified
conduct;
􀁺􇩉 Impose probationary terms, which may include education, training, and/or
monitoring;
􀁺􇩓 Suspend or revoke the administrator’s license or manager’s certificate.
Organization and staffing
The Board consists of nine members who are appointed by the Governor. However,
since August 2003, the Board has had one continuous vacancy. The Board is
composed of:
􀁺􇩏 One administrator of a nonprofit skilled nursing facility;
􀁺􇩏 One administrator of a for-profit skilled nursing facility;
􀁺􇩏 One manager of an assisted living center;
State of Arizona
page 4
􀁺􇩏 One manager of an assisted living home;
􀁺􇩏 One administrator or manager at large;
􀁺􇩔 Two representatives of the professions concerned with the care and treatment
of the chronically ill or infirm elderly patients;
􀁺􇩏 One lay member representing consumers of nursing care institution services;
and
􀁺􇨠 One lay member representing consumers of assisted living facility services.
The Board is authorized five full-time staff positions and had all five positions filled as
of November 2004. These positions include an executive director responsible for
operations; a licensing coordinator responsible for processing applications and
administering the state examinations; a business manager responsible for accounts
receivable, monitoring the Board’s continuing education requirements, procurement,
and drafting board meeting agendas and minutes; an administrative assistant who
maintains the front office and telephones and assists other staff as necessary; and
two part-time investigators who investigate complaints and issues that arise during
the license and certificate application process.
Budget
The Legislature appropriates monies to the Board from the Nursing Care Institution
Administrators’ Licensing and Assisted Living Facility Managers Fund (Fund). The
Fund contains revenues derived principally from licensure and certification
application and renewal fees. The Board deposits 90 percent of its revenues into the
Fund and remits all of its civil penalties and 10 percent of all other revenues into the
General Fund. Table 1 (see page 6) illustrates the Board’s actual revenues and
expenditures for fiscal years 2003, 2004, and the first quarter of fiscal year 2005.
While board expenditures stayed within the legislative appropriation for fiscal year
2004, the expenditures, remittances to the General Fund, and operating transfers
have exceeded revenues by over $171,000 in fiscal year 2003, over $139,000 in fiscal
year 2004, and nearly $33,000 for the first quarter of fiscal year 2005, which has
caused the Board’s fund balance to significantly decrease. While the Board raised all
of its fees to their statutory maximums in April 2004, it should consider whether a
statutory change is needed to further increase its fees. (See Finding 3, pages 25
through 30, for more information on the Board’s financial activity.).
Office of the Auditor General
page 5
Expenditures
exceeded revenues in
both fiscal years 2003
and 2004.
Audit scope and methodology
This performance audit and sunset review focused on the Board’s complaint
investigation and adjudication processes, provision of information to the public,
management of operations, and, under the 12 statutory sunset factors, continued
need for the Board. This report includes findings and recommendations in the
following areas:
State of Arizona
page 6
Table 1: Schedule of Revenues, Expenditures, and Other Changes in Fund Balance
Years Ended June 30, 2003 and 2004 and Quarter Ended September 30, 2004 1
(Unaudited)
2003 2004 2005 1
(1st quarter)
Revenues:
Licenses $187,478 $180,654 $ 37,896
Charges for services 30,380 43,184 26,236
Interest 7,960 3,406 1,685
Fines and forfeits 3,000 2,732
Other 3,740 5,134
Total revenues 232,558 235,110 65,817
Expenditures and other uses: 2
Personal services and employee-related 235,438 260,117 72,645
Professional and outside services 64,745 28,283 7,516
Travel 5,955 5,187 229
Other operating 60,929 49,809 11,729
Equipment 11,944 6,197
Total expenditures 379,011 349,593 92,119
Deficiency of revenues under expenditures (146,453) (114,483) (26,302)
Other financing uses:
Operating transfers out 754 1,556 45
Remittances to the State General Fund 3 23,813 23,574 6,543
Total other financing uses 24,567 25,130 6,588
Deficiency of revenues under expenditures and other financing uses (171,020) (139,613) (32,890)
Fund balance, beginning of year 457,463 286,443 146,830
Fund balance, end of year $286,443 $146,830 $113,940
1 Only the first-quarter financial activity for fiscal year 2005 is presented because Auditor General analysis of the Board’s
estimates for 2005 found that some revenue projections were possibly overstated and actual first-quarter financial activity
differed from board projections.
2 Includes administrative adjustments from the prior year.
3 As a 90/10 agency, the Board remits all civil penalties and 10 percent of licenses, charges for services, and other fines and
forfeits.
Source: Auditor General analysis of the Arizona Financial Information System (AFIS) Revenues and Expenditures by Fund,
Program, Organization, and Trial Balance by Fund reports for the years ended June 30, 2003 and 2004, and the AFIS
Accounting Event Extract File for the quarter ended September 30, 2004.
􀁺􇨠 The Board should take several steps to ensure that complaints are investigated
and adjudicated in an appropriate and timely manner;
􀁺􇩔 The Board should ensure that its staff provide accurate and complete
information to the public;
􀁺􇨠 The Board should better oversee its various functions by receiving and reviewing
reports from its executive director; and
􀁺􇩂 Board members and staff should comply with state requirements for cash-handling,
procurement, and travel reimbursement.
In addition, this report contains an Other Pertinent Information section that provides
information regarding Arizona’s and other states’ regulation of nursing care institution
administrators and assisted living facility managers (see pages 37 through 39). This
audit also includes responses to the 12 statutory sunset factors, including a
recommendation that the Board should be continued (see sunset factor 10, page
46). This recommendation is made pursuant to Laws 2004, Chapter 279, §22, which
requires this performance audit to include a recommendation on whether the Board
should be sunset as scheduled.
During the audit, data quality problems limited auditors’ ability to more completely
assess and provide information on complaint and licensing activity. Auditors received
a download of the Board’s database in July 2004, which is the only source for
information on the number of complaints and licensing applications received, and
examined it for completeness and accuracy. Auditors determined that many data
fields contained incomplete or inaccurate information. However, according to the
Board’s executive director, information in the Board’s database has been updated
and as of September 2004, information received after July 1, 2002, is as complete
and accurate as can reasonably be expected. As a result, auditors obtained a
second download of the database in December 2004 and found that, while
improvements had been made in the licensing data, the complaint data was still
inaccurate and incomplete. For example, auditors found that the status of some
complaints was inaccurately reflected in the database when compared to the
complaint file information and that several data fields, such as the type of complaint,
incident date, and complainant name, had missing information. Additionally, over
time, board staff employed different methods for numbering complaints, making it
difficult to determine the actual number of complaints received each fiscal year.
Finally, despite improvements to the licensing data, the database does not provide
an accurate count of the number of active administrators and managers with
temporary licenses and certificates because nearly 90 of these administrators and
managers had expired licenses or certificates, but were still designated active in the
database. Additionally, 33 temporary licenses and certificates did not have an
Office of the Auditor General
page 7
expiration date in the database, but were designated active as well. Therefore,
auditors could not accurately determine the number of complaints the Board
received, the source of complaints, the number of open and closed complaints, and
the number of temporary licensed administrators and certified managers.
Auditors used a variety of methods to study the issues addressed in this report.
These methods included interviewing board members, the Board’s executive
director, board staff, the Board’s Attorney General representative, the DHS director
and staff, and stakeholders from industry and consumer groups; attending board
meetings; and reviewing statutes, rules, board meeting minutes from fiscal years
2003 and 2004, and board policies and procedures. In addition, the following specific
methods were used:
􀁺􇨠 To assess the timeliness of complaint investigations and whether the Board’s
adjudication decisions were adequately supported, auditors reviewed and
conducted an analysis of a sample of 86 complaints, consisting of a random
sample of 18 complaints received during fiscal years 1999 through 2002, 24
complaints received in fiscal years 2003 and 2004 that were not included in the
computer database but located in the complaint file cabinets, 19 closed
complaints received during fiscal years 2003 and 2004, and a random sample
of 25 open complaints received during fiscal years 2003 and 2004.
􀁺􇩔 To determine whether the Board provides consumers with accurate and
complete information, including complaint histories about administrators and
managers, five auditors posing as members of the public made telephone calls
to the Board requesting information on four managers and one administrator.
Information supplied was compared to the information obtained from the
Board’s complaint files and database. Auditors also reviewed the Board’s Web
site and compared the information it provides to Web sites maintained by the
Arizona Medical Board and the Board of Psychologist Examiners.
􀁺􇩔 To determine whether the Board exercises adequate oversight of its operations
and whether board members and staff comply with various state requirements,
auditors reviewed and analyzed the Arizona Financial Information System and
other financial information from fiscal years 2003 and 2004, reviewed audit work
performed by the Department of Administration, General Accounting Office in
2004 and its December 2004 report on the Board, observed cash-handling
practices, interviewed an Arizona Office of Administrative Hearings official, and
contacted six Arizona regulatory boards to obtain information on their oversight
practices.1
1 Auditors contacted six Arizona regulatory boards with a similar number of staff and budget: the Arizona Boards of
Appraisal, Chiropractic Examiners, Examiners of Funeral Directors and Embalmers, Osteopathic Examiners in Medicine
and Surgery, Psychologist Examiners, and the Naturopathic Physicians Board of Medical Examiners.
State of Arizona
page 8
􀁺􇩔 To evaluate whether there is a continued need for the Board and to understand
the models used by other states to regulate administrators and managers,
auditors reviewed applicable sections of the United States Code and a study of
nursing home administrator regulatory practices in the United States.1
Additionally, auditors interviewed representatives of the United States
Department of Health and Human Services, Centers for Medicare and Medicaid
Services; and representatives from other states’ agencies and boards that
regulate nursing care institution administrators.2
This audit was conducted in accordance with government auditing standards.
The Auditor General and staff express appreciation to the members of the Board of
Examiners of Nursing Care Institution Administrators and Assisted Living Facility
Managers, the executive director, and staff for their cooperation and assistance
throughout the audit.
1 Center for Health Workforce Studies. School of Public Health, University of Albany. A Legal Practice Environment Index for
Nursing Home Administrators in the Fifty States. Rensselaer, New York. July 23, 2004.
2 Auditors contacted representatives of the following state agencies to gather information on other states’ practices: Alaska
Department of Community and Economic Development, California Department of Health Services, Colorado Department
of Regulatory Agencies, Connecticut Department of Public Health, Florida Department of Health, Hawaii Department of
Commerce and Consumer Affairs, Illinois Division of Professional Regulation, Minnesota Board of Examiners for Nursing
Home Administrators, Montana Department of Labor and Industry, Nevada Board of Examiners of Long Term Care
Administrators, North Carolina Board of Examiners for Nursing Home Administrators, Texas Department of Aging and
Disability Services, Utah Division of Occupational and Professional Licensing, and the Wyoming Board of Nursing Home
Administrators.
Office of the Auditor General
page 9
State of Arizona
page 10
Board should improve complaint processing
The Board needs to take several steps to ensure that complaints are investigated in
a timely manner. Lack of timely investigations affects the Board’s ability to protect the
public, and many complaints have remained open for so long that the Board has had
to dismiss them. These complaints include allegations of abuse or neglect.
Improvements needed include hiring a sufficient number of investigative staff,
establishing more detailed investigation procedures and time frames, and better
monitoring the investigation process. The Board also needs to stop issuing
nondisciplinary letters of concern when it finds evidence that violations have
occurred. Such action is not consistent with statute. Finally, the Legislature should
consider providing the Board with authority to take action against administrators or
managers whose licenses or certificates have expired since the complaint was
made. The Board’s lack of authority to do so, coupled with untimely investigations,
has resulted in many complaints being dismissed.
Untimely investigations resulted in dismissals
During fiscal years 2003 and 2004, the Board had to dismiss numerous complaints
due to untimely investigations. During this time, board staff forwarded 61 complaints
for adjudication that had been received in fiscal years 1999 through 2002. The Board
dismissed 53 of them. Many were dismissed because so much time had passed that
either the manager’s or administrator’s credentials had expired or that no further
investigation could be conducted. For example, the Board had to dismiss 21
complaints because the license or certificate of the person named in the complaint
had expired, thus eliminating the Board’s jurisdiction. In several other instances, the
Board found that a lack of information prevented it from adjudicating the complaint
and that further investigation could not be conducted because of the complaint’s age
or the absence of information in the file. Several of these complaints involved
allegations of abuse or neglect.
Not being able to appropriately adjudicate these complaints decreased the Board’s
ability to adequately protect the public. Not only was the Board unable to take action
In fiscal years 2003 and
2004, the Board
dismissed 53
complaints, many
because of untimely
investigations.
Office of the Auditor General
FINDING 1
page 11
against these administrators or managers, but during the time that these complaints
were pending, administrators and managers named in the complaint could continue
to practice.
Recent complaints also resolved slowly
Processing times continue to be long for many of the complaints the Board receives.
According to the Board’s executive director, during fiscal years 2003 and 2004, the
Board’s investigators focused, in part, on sending complaints received during fiscal
years 1999 through 2002 to the Board. However, based on a comparison of board
meeting minutes to the complaints available in the database, it appears that over 100
of the 126 complaints received during fiscal years 2003 and 2004 remained open as
of July 2004. Auditors reviewed 19 of the closed complaints and found that all but 3
had been investigated and resolved within 180 days. However, a review of 25
randomly selected complaints that were still unresolved as of July 2004 showed that
State of Arizona
page 12
Auditors reviewed 25
open complaints and
found they had been
open between 260 and
680 days.
􀁺􇩔 The Board received a complaint from DHS in September 1999 that alleged
that the manager of an assisted living facility abused and neglected the
residents. The manager was accused of not having enough food in the facility
and keeping the temperature of the facility at 90 degrees for 1 week. DHS
substantiated the allegations in August 1999. However, the manager
maintained an active certificate for almost 2 more years until June 2001, when
she allowed it to expire, and therefore was eligible to manage another facility
until that time. Board staff did not submit this complaint to the Board for its
review and adjudication until November 2003. This was over 4 years after the
complaint had been filed, and the Board could not take action because the
manager’s certificate had long since expired.
􀁺􇩔 The Board received another complaint from DHS in April 2000 that alleged
that a manager abused and neglected the residents at her facility. In this case
the manager was accused of verbal abuse. DHS substantiated the allegations
in March 2000 and required the manager to provide a plan of correction
related to the facility. The manager closed the facility in October 2003. The
Board did not review the case until April 2004, when it dismissed the complaint
because it was 4 years old and the Board had never notified the manager of
the complaint. However, according to the Board’s database as of July 2004,
the manager maintained an active certificate.
Case Examples
they had been open between 260 and 680 days. Four of these complaints, which
board staff say are the most critical to investigate as they involved allegations of
abuse or neglect, had been open for longer than 1 year.
The continued lengthy investigation times are a concern because information
needed to appropriately adjudicate these complaints may become harder to obtain
as time passes. Witnesses, as well as complainants and accused managers and
administrators, may forget details of the incidents, or may move and not provide
updated contact information. For example, the Board received a complaint against
Office of the Auditor General
page 13
Case Examples
􀁺􇩉 In February 2003, the Board received a complaint accusing an administrator
of neglect. The complaint alleged that a patient in the administrator’s nursing
home had developed gangrene in a wound due to improper care. The
complaint file included the complaint and the accused administrator’s written
response to the allegations, including medical records related to the case. In
addition, the file contained a letter from DHS indicating that the Board’s
investigator had submitted the complaint to DHS in February 2003, and a
second letter from DHS along with a redacted copy of DHS’ complaint
investigation report stating that their investigation had substantiated one of the
allegations in May 2003. However, there is no evidence in the file that board
staff conducted any further investigation after May 2003, such as contacting
witnesses named in the original complaint letter or preparing an investigative
summary and report documenting the allegations, the statutes violated, and
whether the allegations were substantiated. According to the Board’s
executive director and investigator, since the Board did not receive all the
information it needed from the redacted copy of DHS’ investigation report,
additional investigation became necessary and this complaint was set aside
to focus on other, higher-priority complaints.
􀁺􇨠 The Board received a complaint in August 2003 accusing a manager of abuse
and neglect. The complaint alleged that the manager forced a patient to take
his medication and slapped him so hard that his dentures fell out. DHS
substantiated these allegations and, as a result, the manager, who also
owned the home, surrendered his facility license in September 2003. The
complaint file included the DHS field report, a DHS facility survey, the notice of
complaint sent to the manager by the Board, the manager’s response to the
allegations, and a copy of a criminal indictment against the manager on
charges related to patient abuse. However, as of August 2004, board staff had
not prepared an investigative summary and report, which is the final step in
the investigation process that must be completed before forwarding the
complaint to the Board for review. According to the Board’s executive director
and investigator, this complaint investigation has not been completed due to
the Board’s workload.
Lengthy complaint
investigation times can
make it more difficult to
obtain necessary
information.
an administrator in October 2003 alleging improper care and inadequate medication
of a patient. However, the Board did not contact the administrator until July 2004,
several months after he had moved out of state. Although the administrator retains
an active Arizona license, it may be more difficult for the Board to complete its
investigation. Additionally, timely investigations are important because during the
investigation, licensees and certificate holders are able to continue to practice
unchecked.
Several factors contribute to untimely investigations
Three main factors contribute to untimely investigations. First, the Board has
experienced high turnover among its investigative staff. Second, the Board does not
adequately monitor the investigation process and does not have an accurate
database for doing so. Third, the Board lacks needed investigation policies and
procedures, including time frames for each step in the investigative process.
Board should ensure it has adequate staff—The Board has experienced
high turnover in its investigator position, and has not used an additional appropriated
investigator position to assist in complaint investigations. Specifically, during fiscal
years 2003 and 2004, the Board has employed five different investigators. According
to the Board’s executive director, reasons for this high turnover are termination due
to nonperformance, retirement, and transfer to other state boards. Additionally,
although the Legislature appropriated one additional position to the Board in fiscal
year 2002 to conduct complaint investigations, the executive director reassigned the
position to a business manager position instead of an additional investigator
position. According to the executive director, while an employee was hired to fill the
second investigator position, this person was performing mostly administrative work.
This may have occurred because the employee’s background when hired did not
include any investigation experience. Auditor review of the employee’s resume
determined that although the employee was previously employed as a paralegal,
most of her work experience was in human resources. In August 2003, the executive
director requested, and the Department of Administration (DOA) approved, the
change to a business manager position. As a result, as of November 2004, the Board
had two part-time investigators instead of the two full-time investigators authorized by
the Legislature.
To help ensure that it investigates complaints in a timely manner, the Board should
consider adding a full-time investigator to its staff, at least until it completes the
investigations for complaints received in fiscal years 2003 and 2004 that remain
open. The Board can consider two options for adding an investigator. First, if it has
available resources, the Board could contract for the additional investigator. This
option would allow the Board to obtain the assistance needed without affecting its
current staffing. Conversely, similar to when it changed the appropriated investigator
position to a business manager position, the Board could request DOA approval to
change the current business manager position back to an investigator position. This
State of Arizona
page 14
would enable the Board to hire an additional full-time investigator using the position
originally appropriated by the Legislature. The business manager responsibilities
could then be shared among the Board’s executive director, licensing coordinator,
and administrative assistant.
Complaint policies and procedures should be enhanced—While the
Board has complaint investigation policies and procedures, additional policies and
procedures are needed, as well as time frames for completing various steps in the
process. Currently, the Board’s policies provide only basic instructions for how to
process a complaint. In addition to some administrative requirements, these
procedures require board staff to send a letter to the accused administrator or
manager informing him or her of the allegations, obtain a response from the
administrator or manager, conduct necessary interviews, obtain necessary
documentation, and prepare an investigative report for the Board. However, the
Board’s policies and procedures lack the following:
􀁺􇩃 Complaint categorization and prioritization—The Board lacks written guidelines
for categorizing and prioritizing complaints. While the Board indicates that it
places high-priority cases in red folders and lower-priority cases in blue folders,
it lacks specific written procedures for prioritizing complaints based on their
severity. The Board should categorize complaints based on the nature of the
allegations, such as whether they involve abuse and neglect, financial
mismanagement, or other, less-serious allegations. The Board should then
determine the complaint’s investigative priority based on the severity of its
allegations. Other state agencies have specific methods for evaluating the
severity of complaints. For example, DHS complaint policies include procedures
for classifying the allegations in new complaints, procedures for prioritizing
complaints based on the classification, and guidelines for determining
investigative priority.
􀁺􇩉 Internal time frames for complaint investigation process—Although the Board
has defined the basic steps for investigating a complaint, it has not established
time frames for completing these steps. Creating deadlines for different phases
of the process could help the Board ensure that cases are not unattended for
extended periods. The Board should ensure that the number of days from
complaint receipt to adjudication is no longer than 180 days, which is a
reasonable amount of time to investigate and adjudicate complaints based on
other regulatory boards’ time frames. Additionally, the Board should establish
time frames for how quickly its highest- priority cases should be investigated. For
example, DHS policies require that its most severe complaints be investigated
within 10 days.
􀁺􇩇 Guidelines for processing complaints referred by DHS—The Board has
requested that DHS refer to it all manager-related complaints that resulted in a
DHS enforcement action against an assisted living facility, and any
administrator-related complaints involving the quality of care at nursing care
Investigation time
frames can help ensure
complaints are not
unattended.
Office of the Auditor General
page 15
institutions. DHS referred at least 62 such complaints in fiscal years 2003 and
2004, 17 of which were in the sample that auditors reviewed. However, the Board
has not established policies and procedures for obtaining all relevant
information from DHS or for determining what additional investigation is required
by board staff. For example, for 2 complaints in the auditors’ sample, the only
additional investigative work conducted by board staff involved requesting a
response from the manager or administrator to the allegations contained in
DHS’ report—which a manager and/or administrator had already responded to
as part of DHS’ investigation. Therefore, the Board should establish policies and
procedures that guide its staff on the investigation of complaints received from
DHS to help ensure that board staff obtain all relevant complaint information,
that adequately investigated complaints are immediately forwarded to the Board
for consideration, and that any areas needing further investigation are
addressed.
Once the Board develops and implements these additional policies and procedures,
it should ensure that its investigative staff are fully trained on them.
Board should monitor complaint investigation progress—Once the
Board establishes complaint investigation time frames, it should monitor the
progress of complaint investigations against these time frames. However, to
accomplish this, the Board must better manage its complaint database. As
previously mentioned, auditor tests found some information to be incomplete and
inaccurate.
The Board should develop procedures directing staff to enter information on
complaint and investigative activity in an accurate and timely manner and verify the
information’s accuracy. To assist staff in consistently entering data, the Board should
define key investigative activities and complaint information, such as the complaint-received
date, closed date, disciplinary actions, and type of complaint. Once these
procedures have been established, the Board’s executive director should generate
monthly management reports to help it track the progress of complaint investigations
by ensuring that the internal time frames of the investigative process are met. Auditor
review of the Board’s complaint database confirmed that it is programmed to
generate the management reports needed to track investigation progress.
Complaint adjudication needs improvement
Based on auditors’ review of the 19 complaints received by the Board in fiscal years
2003 and 2004 that have since been resolved, the Board appropriately adjudicated
all but one of these complaints based on the allegations and supporting
investigations. However, two changes would improve the adjudication process. First,
The Board should better
manage its complaint
database to better
monitor complaint
investigation progress.
State of Arizona
page 16
the Board should cease issuing nondisciplinary letters of concern in instances where
disciplinary action is appropriate. Second, the Legislature should consider revising
statute to provide the Board with the authority to take action against administrators
or managers whose licenses or certificates expire before complaints are fully
adjudicated.
Letters of concern used inappropriately—During the four board meetings
that auditors attended, auditors identified two instances where the Board issued
nondisciplinary letters of concern when disciplinary action was warranted. According
to A.R.S. §36-446.07(D), the Board may file a letter of concern if there is insufficient
evidence of a violation, but the Board wants to communicate and record its concern
about the manager’s or administrator’s action. However, in the September 2004
board meeting, auditors observed two instances in which the Board inappropriately
issued letters of concern when evidence of violations existed.
When asked by auditors, one board member acknowledged using letters of concern
in instances where the complaint allegations were substantiated, but explained that
she chose to issue a letter of concern in instances where the manager or
administrator confessed to the charges because she felt that the individual’s remorse
spoke to the person’s character. However, to comply with statute and to help ensure
that it adequately protects and informs the public, the Board should use letters of
concern only when a complaint has unsubstantiated allegations. To aid the Board in
using letters of concern appropriately, the Board should first determine whether each
allegation constitutes a violation, and then take appropriate nondisciplinary or
disciplinary action.
The Board should not
issue letters of concern
when disciplinary action
is appropriate.
Office of the Auditor General
page 17
Case Examples
􀁺􇨠 The Board issued a letter of concern to a manager for employing a caregiver
who did not speak sufficient English, and who failed to notify the State when
discovering that a resident had a bruise of unknown origin. During the board
meeting, the manager admitted to the allegations and stated that a plan of
correction had been submitted for the facility to DHS, which had separately
substantiated the allegations.
􀁺􇩉 In a second instance, the Board imposed a $200 civil penalty, but also issued
a letter of concern to a manager for inadequate training records and for
providing care to more residents than the facility license allowed. During the
board meeting, the manager admitted to the training records violation and to
taking in a friend’s elderly relative, even though the facility already had the
maximum number of permitted patients. Similar to the first example, DHS
separately substantiated these allegations and took enforcement action
against the facility’s license.
Board would benefit from additional disciplinary authority—Finally, the
Legislature should consider providing the Board with authority to discipline
managers and administrators with expired licenses. Under A.R.S. §§32-3201 and
3202, several state boards, such as the Arizona Medical Board, the Board of
Chiropractic Examiners, and the Arizona Nursing Board, have the authority to take
disciplinary action against a practitioner even after their license has expired. In effect,
these boards can suspend a practitioner’s license rather than allowing it to expire
until an ongoing investigation can be completed. This authority affords state health
profession regulatory boards the opportunity to conduct investigations, take
appropriate disciplinary action against licensees, and appropriately reflect any
disciplinary action as part of their professional record. Additionally, licensees cannot
avoid discipline by letting their license or certification expire. However, the Board
does not have this authority. This lack of authority, coupled with the untimely
complaint investigations, has resulted in the Board having to dismiss complaints
against managers and administrators because their licenses expired during the
course of the complaint investigation.
State of Arizona
page 18
Recommendations
1. The Board should consider adding a full-time investigator either by contracting
for additional investigator assistance or by requesting DOA approval to change
the current business manager position back to an investigator position, at least
until it completes the investigations for complaints received in fiscal years 2003
and 2004.
2. The Board should enhance its complaint policies and procedures by:
a. Developing and establishing policies and procedures for categorizing and
prioritizing complaints based on their severity, including timelines for
investigating the most serious complaints;
b. Establishing time frames for each phase of its investigation process to help
ensure that complaint investigations are conducted in a timely manner; and
c. Developing and implementing policies and procedures that guide its staff
on the investigation of complaints received from DHS to help ensure that
staff obtain all relevant complaint information from DHS, that adequately
investigated complaints are immediately forwarded to the Board for
consideration, and that any additional investigative activity addresses areas
needing further investigation.
3. The Board should improve the quality of the information in its complaint
database and use it to monitor complaint investigations by:
a. Developing and implementing procedures directing staff to enter
information on complaint and investigative activity in an accurate and timely
manner and verifying the information’s accuracy;
b. Defining key investigative activities and complaint information, such as
received date, closed date, disciplinary actions, and type of complaint to
help ensure the consistency of information entered into the database; and
c. Generating monthly management reports to help it track the progress of
complaint investigations by ensuring that the internal time frames of the
investigative process are met.
4. Once developed and implemented, the Board should ensure that its
investigative staff are fully trained on the additional complaint investigation
policies and procedures, and also ensure that all of its staff are trained on
procedures for entering complaint information in its complaint database and its
capability for generating management reports.
5. The Board should use letters of concern only when it is concerned about
unsubstantiated allegations in a complaint. To help ensure the appropriate use
of these letters, the Board should revise its procedures to first determine whether
each allegation constitutes a statutory violation, and then take appropriate
adjudicative action.
6. The Legislature should consider revising A.R.S. §32-3201 to provide the Board
with the authority under A.R.S. §32-3202 to discipline administrators and
managers whose licenses or certificates have expired.
Office of the Auditor General
page 19
State of Arizona
page 20
Office of the Auditor General
FINDING 2
page 21
Board practices restrict access to public
information
The public does not have appropriate access to information regarding nursing home
administrators and assisted living facility managers. Auditor telephone calls
requesting information found that board staff do not provide proper information
about licensees and certificate holders because the Board’s procedures are not
clearly defined. Additionally, the Board should improve its Web site information’s
accuracy and quality because it provides helpful information to the public.
Access to public information is important
One of a regulatory board’s important responsibilities is providing information that
allows the public to make informed decisions about using the services of licensees
or certificate holders whom the board regulates. For example, by informing the public
of disciplinary actions taken against licensees or certificate holders, boards assist
consumers in selecting competent and ethical professionals. The public records
statute seeks to increase public access to government information and to make
government agencies accountable to the public.
Board needs to provide more complete public
information
The Board’s practices impede consumer access to public information. To ensure that
consumers have appropriate access to public information about administrators and
managers, the Board should strengthen its public information policies and practices.
Board provides erroneous information—Auditor General staff called the
Board to request information on five different administrators or managers with
complaint histories. For each request, board staff either did not disclose public
information regarding the administrator’s or manager’s complaint or disciplinary
history, provided incomplete or inaccurate information, or restricted access to public
information. Specifically:
􀁺􇩃 Complaint information not disclosed—According to statute, complaint
information, including the nature and disposition of the complaint, and any
resulting disciplinary action, is public information. However, for three of the five
telephone calls, board staff would not release any complaint information,
incorrectly stating that this information is confidential. Additionally, board staff
would not release disciplinary information involving one of the managers, again
incorrectly stating that this information is confidential. For a fourth call, staff did
not provide any information on closed complaints as they were unclear on
whether or not they could release this information.
􀁺􇩃 Complaint information incomplete—The remaining telephone call concerned an
administrator with no disciplinary action but with two complaints. Even though
the administrator had no disciplinary history, staff did not disclose that he had
two complaints.
􀁺􇩃 Complaint information restricted—Finally, in response to two auditors’ telephone
requests to view complaint files, board staff indicated that access to complaint
files is restricted. However, according to A.R.S. §39-121, “public records . . .
shall be open to inspection by any person at all times during office hours.” While
board policy also makes public files available to inspections, board staff
incorrectly stated to one auditor that the Board’s files are confidential and not
open to public inspection. In response to the second auditor, board staff were
unclear on whether closed complaint files are open to public inspection.
Strengthen public information policies and practices—To help ensure
that consumers have access to all public information, the Board should establish
written procedures that detail the information that is available to the public. The Board
has a general public information policy, but it lacks direction on what information staff
should provide. The Board should expand this policy to include procedures for
properly responding to public information requests, including providing information
on the number of open, closed, and dismissed complaints, and the nature and
resolution of substantiated closed complaints. Other state boards have developed
written policies to assist their staff in making some of this information available by
phone. For example, the Board of Nursing has policies requiring staff to provide the
public with information over the telephone regarding the number and nature of both
dismissed and pending complaints, and the resolution of closed complaints.
The Board should also ensure that its procedures properly address the public’s
ability to view complaint and licensing files. In addition, once the Board has
developed and implemented these procedures, it should ensure that all staff are
trained on the procedures and how to properly respond to public information
requests.
State of Arizona
page 22
Board staff did not
provide complete or
correct information on
complaint histories.
Board policy should
prescribe how to
properly respond to
public information
requests.
Office of the Auditor General
page 23
Web site needs improvement
The Board should also improve the quality and accuracy of its Web site information.
Board staff frequently direct consumers to their Web site for information, and it is a
helpful tool for public information. In fact, for four of the five auditor telephone calls,
auditors were referred to the Board’s Web site for the requested information.
However, Web site information is sometimes inaccurate and is not comprehensive.
For example, one manager was listed as possessing an active assisted living facility
manager’s certificate with no disciplinary action taken as of August 2004, even
though she had entered into a consent agreement with the Board and surrendered
her license in November 2003. Additionally, the site does not include information on
the number, nature of complaints, or how they were resolved for each licensee or
certificate holder. In addition, while the Web site notes whether a licensee or
certificate holder has been subject to disciplinary action, the number and types of
disciplinary actions are not included.
The Board could also provide additional information on its Web site. For example,
board meeting minutes could be posted on the Web site. The Board of Psychologist
Examiners and the Arizona Medical Board post their board meeting minutes and
detailed information regarding the nature and disposition of complaints on their Web
sites. The Arizona Medical Board also provides information on the nondisciplinary
and disciplinary actions taken against its licensees. Therefore, the Board should
ensure that the information provided on its Web site is accurate and, as resources
permit, expand the type of information available.
Board staff refer callers
to the Board’s Web site,
but it is sometimes
inaccurate and not
comprehensive.
Recommendations
1. The Board should establish written public information policies and procedures
that detail the information that will be made available to the public, including:
a. The number of open, closed, and dismissed complaints;
b. The nature of closed complaints that resulted in board action;
c. The type of disciplinary action taken; and
d. The public’s ability to view complaint and licensing files.
2. The Board should ensure that staff is fully trained on how to properly respond to
public information requests.
3. The Board should ensure that its Web site information is accurate.
4. As resources permit, the Board should expand the information it provides on its
Web site, including:
a. Board meeting minutes;
b. The number of open, closed, and dismissed complaints against an
individual;
c. The nature of closed complaints that resulted in board action; and
d. The type of disciplinary action taken.
State of Arizona
page 24
Office of the Auditor General
page 25
Board should improve oversight of operations
Board members need to improve their oversight of board operations to address the
deficiencies discussed in previous sections of this report, as well as other operational
concerns ranging from ineffective use of staff to high turnover. Board members
should improve their oversight by requiring that the executive director prepare
management reports, and reviewing and acting on these reports as needed at board
meetings.
Numerous problems at the Board
The Board faces problems in a number of areas. Some of these problems, such as
resolving complaints in a timely manner and ensuring that the public has access to
information, have already been discussed in earlier parts of this report (see Finding
1, pages 11 through 19, and Finding 2, pages 21 through 24). In addition, staff and
financial resources have been poorly managed, formal disciplinary hearings have not
been scheduled with the Office of Administrative Hearings, and critical data on
complaints and licensing is inaccurate. These problems have been intensified by
high staff turnover.
Staff resources not used effectively—The Board has not ensured that its staff
resources are used effectively and directed to the Board’s most critical activities. For
example, as indicated in Finding 1 (see pages 11 through 19), while the Board,
including its investigator, focused in part on closing complaints received between
fiscal years 1999 through 2002, the majority of complaints received in fiscal years
2003 and 2004 remained open. However, resources appropriated to assist with
complaint investigations have not been allocated to address this problem.
Specifically, as discussed in Finding 1 (see pages 11 through 19), the Legislature
appropriated an additional investigator position to the Board, but the executive
director had this position changed to a business manager position.
However, it is not clear that there is a strong need for a business manager, especially
at the expense of an investigator position. Five of six other Arizona regulatory boards
FINDING 3
Staff resources have not
been allocated to critical
activities.
State of Arizona
page 26
auditors contacted did not have business or office
managers. Specifically, auditors contacted six other
Arizona state regulatory boards that have a similar
number of staff and budget.1 Only one board had a
business or office manager assigned to only
administrative duties, such as accounting and
board support. The five other boards assign staff to
assist with both administrative and regulatory
functions, including three boards that have deputy
directors with responsibility for complaint
investigations or licensing. For example, the Board
of Osteopathic Examiners in Medicine and Surgery,
with 5.5 authorized positions, has a licensing
coordinator who is also responsible for some
administrative activities, such as human resources
and procurement. Therefore, in addition to the
Board’s executive director, the administrative
assistant and licensing coordinator could potentially
take on the tasks currently assigned to the business
manager.
Financial resources not effectively managed—In addition to the ineffective
staff use, the Board has not effectively managed its financial resources. As illustrated
in Figure 1, during fiscal years 2003 and 2004, the Board’s operating expenditures
have been much greater than its revenues, decreasing its fund balance from over
$457,000 at the beginning of fiscal year 2003 to less than $115,000 by the end of
September 2004. Specifically, board expenditures, remittances to the General Fund,
and operating transfers exceeded revenues by over $171,000 in fiscal year 2003 and
over $139,000 in fiscal year 2004. Some of these
expenditures included substantial payments for
temporary employees and a raise that the Board
authorized for its executive director in September
2003. Based on auditor review of board meeting
minutes, while the Board determined that the
executive director deserved a 30 percent pay
increase, the Board authorized the pay increase
without discussing its effect on their financial
situation.
While the Board raised all of its fees to their statutory
maximum in April 2004 in an effort to generate
additional revenues, these higher fees may not
improve the Board’s financial situation. Based on
financial projections developed by the Board, with the fee increase revenues are
1 Auditors contacted six boards that have a similar staff and budget: the Arizona Boards of Appraisal, Chiropractic
Examiners, Examiners of Funeral Directors and Embalmers, Osteopathic Examiners in Medicine and Surgery,
Psychologist Examiners, and the Naturopathic Physicians Board of Medical Examiners.
Figure 1: Expenditures, Revenues, and Fund Balance
Years Ended June 30, 2003 and 2004
Source: Auditor General staff analysis of the Arizona Financial Information System
Revenues and Expenditures by Fund, Program, Organization, and Object;
and Trial Balance by Fund reports for the years ended June 30, 2003 and
2004.
$0
$50,000
$100,000
$150,000
$200,000
$250,000
$300,000
$350,000
$400,000
$450,000
2003 2004
Fiscal Years
Expenditures and Remittances To General Fund Revenues Fund Balance
Old Fee New Fee
Administrators:
Initial Application and Examination $350 $600
License Renewal 240 300
Managers:
Initial Application and Examination 40 200
Certificate Renewal 100 100
Fees: Increases Were Effective April 2004
Source: Auditor General staff summary of information from the Arizona Administrative Register,
Volume 10, Issue 10, and the Arizona Administrative Code, R4-104 and R4-33-205.
Office of the Auditor General
page 27
anticipated to exceed expenditures by approximately $83,000 in fiscal year 2005.
This is projected to increase the Board’s Fund balance to nearly $273,000. The
Board’s executive director provided information to the Department of Administration,
Central Services Bureau to help develop projections, but according to the executive
director the information used to project revenues, such as the anticipated number of
license or certificate renewals for fiscal year 2005, came from the Board’s licensing
database in April 2004, which auditors found to be inaccurate. Additionally, the Board
is required to remit 10 percent of its revenues to the General Fund. However a review
of the projections found that the Board did not include the required remittance in its
revenue or expenditure projections. Finally, in the first quarter of fiscal year 2005, the
Board received nearly $66,000 in revenues, but expended, remitted to the General
Fund, or transferred over $98,000.
Since the Board’s expenditures, remittances to the General Fund, and operating
transfers continue to exceed revenues, the Board should take appropriate action
concerning its financial situation. Specifically, the Board should review expenditures
and determine if any expenditures can be reduced, and consider whether a statutory
change to allow the Board to further increase its fees is necessary. If the Board
determines that a fee increase is necessary, it should request that the Legislature
increase the statutory fee limits.
Hearings not scheduled—Formal complaint hearings have not been scheduled
with the Office of Administrative Hearings, which has delayed board action for some
of its most serious complaints. According to board members, the Board sends
complaints to formal hearings when the violations appear to be knowingly committed
and serious. Auditor review of board meeting minutes for fiscal years 2003 and 2004
identified six complaints that the Board referred to a formal hearing at the Office of
Administrative Hearings. However, as of August 2004, board staff had not scheduled
these complaints for a hearing, even though the Board directed that all six hearings
be scheduled prior to March 2004. The Board’s executive director could not explain
why these complaints had not been scheduled for a hearing. Further, for another
complaint, the executive director signed a consent agreement after the Board had
rejected it and sent the complaint to a formal hearing. Board staff should ensure that
they schedule complaints for formal hearings as directed by the Board.
Problems with data accuracy—As previously mentioned in the Introduction and
Background (see page 7), auditors identified several problems with the Board’s
database, including missing and inaccurate information for both complaint and
licensing data. Specifically:
􀁺􇨠 Complaint information incorrect and incomplete—Information in the database
on the number of complaints received, complaint investigation progress, and
complaint closed date is incomplete and inaccurate. For example, auditor
review of 44 complaints the Board received in fiscal years 2003 and 2004 found
that 2 complaints reflected as closed in the database were actually still open,
while 6 complaints reflected as open were actually closed. Board staff have also
used different methods for tracking complaints received, making it difficult to
Board staff did not
schedule six formal
hearings.
State of Arizona
page 28
determine the number of complaints received during any given period.
Additionally, auditor review of the database determined that many of the fields
used to track and document the progress of complaint investigations, such as
date that the complaint was received, the date that board staff completed its
complaint investigation, and date that the complaint was closed, did not have
information, thus limiting its usefulness as a tool to track investigation progress.
􀁺􇨠 Licensing information missing—Information in the database on license and
certificate applications and complaint investigation progress is also incomplete.
For example, auditor review of license and certificate applicant data found that
the Board approved an estimated 984 applications received in fiscal years 2003
and 2004, but the database did not include the date of board approval for 112
of these applications. As a result, the database does not include the information
needed to determine whether the Board approved these licenses in a timely
manner.
As recommended in Finding 1 (see pages 11 through 19), the Board should improve
the quality of the information in its complaint database. The Board should also
improve the quality of information in its licensing database.
Turnover intensifies some problems—Some of these problems have been
intensified by high turnover. Since July 2002, the Board has employed at least five
different investigators, five different licensing coordinators, and four different
business managers. According to the Board’s executive director, this high turnover
has resulted from terminations due to nonperformance, retirement, voluntary
resignations and transfers to other state boards. In addition, the Board has used
temporary help from a private company several times during fiscal years 2003 and
2004 to help fill vacant positions, paying nearly $13,000 for temporary employees in
fiscal year 2003 and nearly $15,000 for temporary employees in fiscal year 2004.
Greater oversight could improve operations
In order to address these problems, board members should improve their oversight
of operations. Although the Board delegates most of the responsibility for its
operations to its executive director, board members are still responsible for ensuring
that the agency fulfills its statutory requirement to regulate administrators and
managers. According to the executive director, she currently provides verbal reports
to the Board on a quarterly basis that include information about its performance
goals. These goals include revising the managers’ state examination, reducing the
backlog of open cases, and amending the Board’s administrative rules to increase
licensing and certification fees. While the executive director has historically provided
some information to the Board on operations, including some financial information,
auditor observations of the June through September 2004 board meetings found that
the executive director’s verbal reports were very limited and did not provide sufficient
information related to progress toward goals or the Board’s operations, such as the
Board’s finances, or license, certificate, and complaint processing.
Similar to the six Arizona regulatory boards contacted by auditors, the executive
director should provide written reports regarding board operations and activities to
the Board for its review. These six regulatory boards provide at least some written
information to their boards during meetings. Four of the six executive directors
provide some type of written financial information at least every other board meeting,
and five of the six provide information on complaint status. Additionally, three of the
six provide information on licensing activity. Therefore, the Board should require that
its executive director provide a written report that includes information on such things
as the number of complaints received, the status of open complaints and hearings,
the number of license and certificate applications received, staffing issues, and
revenues and expenditures. The Board meets monthly and, at a minimum, the report
should be prepared and provided to it every other month. The Board should then use
this report to review board operations and activity and to direct its staff on needed
changes and improvements.
Office of the Auditor General
page 29
The executive director
should provide written
reports to the Board.
Recommendations
1. The Board should take the following actions concerning its financial situation:
a. Develop realistic revenue and expenditure projections based on
anticipated licensing activity;
b. Review expenditures and determine if they can be reduced;
c. Consider whether a statutory change to allow the Board to further increase
its fees is necessary; and
d. If so, request that the Legislature increase statutory limits on its fees.
2. In conjunction with recommendation 3 in Finding 1 (see page 19), the Board
should improve the quality of the information in its complaint and licensing
database.
3. Board staff should ensure that they schedule complaints for formal hearings as
directed by the Board.
4. The Board should improve its oversight of operations by requiring that the
executive director provide it with a written report at least every other month. The
Board should use the reports to review board operations and activity and
provide direction to staff. The report should include:
a. Information on the number of complaints received;
b. The status of open complaints and hearings;
c. The number of license and certificate applications received;
d. Staffing issues; and
e. Revenues and expenditures.
State of Arizona
page 30
Office of the Auditor General
page 31
State requirements not always followed
In addition to greater oversight, board members and staff need to comply with state
requirements regarding cash handling, procurement, and reimbursement for travel.
Specifically, the Board lacks adequate controls to protect the monies it receives,
which leaves these monies vulnerable to loss or theft, and has violated several state
procurement and travel requirements. Therefore, the Board should strengthen its
internal controls to better safeguard the monies it receives and ensure that it follows
procurement and travel requirements.
Internal controls are weak
Auditors found that the Board has not implemented sufficient internal controls to
adequately safeguard the monies it receives. Specifically, the Board does not deposit
monies in a timely manner and inadequately segregates responsibilities for receiving,
recording, and depositing its cash receipts.
Monies inadequately safeguarded—According to the State of Arizona
Accounting Manual, cash receipts totaling more than $500 should be deposited on
a daily basis. However, auditor review of the Board’s receipt log for July 2004 found
that the Board deposited its receipts in an average of 6 days. These deposits ranged
from $2,300 to nearly $10,000 and included $3,400 that board staff held in its office
for over 10 days. The Board’s business manager stated that these receipts are
locked in her office when she is not there and accessible only to her and the
executive director. However, this practice is inconsistent with State of Arizona
Accounting Manual requirements, and board staff should deposit receipts totaling
$500 or more on a daily basis.
Cash-handling procedures could be improved—In addition to making
timely deposits, the Board should enhance its cash-handling procedures to better
protect the monies it receives. For instance, the administrative assistant is
responsible for processing the mail, restrictively endorsing checks, and creating a
cash log that reflects the day’s receipts. Ideally, the cash-handling duties of the
The Board does not
always deposit cash
receipts in a timely
manner.
FINDING 4
State of Arizona
page 32
The Board has violated
multiple procurement
requirements.
administrative assistant should be segregated. Given the small number of board
staff, it is reasonable for one person to perform these tasks as long as there are
compensating controls in place. While some of these controls are in place, according
to the executive director, board staff do not reconcile the number of licenses issued
or renewed to the licensing revenue received. This increases the potential for loss or
theft. As a result, the Board should adopt procedures to reconcile monies received
by the administrative assistant to licenses issued or renewed.
Additionally, the business manager is responsible for many aspects of the cash-handling
process, including creating a receipt log, reconciling the receipt log to the
cash log, and preparing and making the deposits. However, based on auditor
observation, the business manager creates the receipt log by basically duplicating
the cash log, which she receives electronically. Additionally, while the deposit slips
and receipt log are submitted to the executive director for review, procedures do not
require that the executive director reconcile the deposit by comparing deposit slips
to the original password-protected cash log. Again, these inadequate procedures
create the potential for loss or theft of state monies. Therefore, the Board should
strengthen its cash-handling procedures by requiring that the executive director or a
separate board staff person reconcile the prepared deposit to the password-protected
cash log.
Procurement and travel policies not always followed
In addition to the internal control weaknesses, the Board has not always complied
with state procurement and travel requirements. As reflected in its December 2004
report, the Department of Administration’s General Accounting Office (GAO)
reviewed several board practices, including the Board’s procurement and travel
practices. GAO identified several violations of state procurement and travel
requirements. Auditor review of two additional contracts identified continuing
violations. Therefore, the Board should take several steps to comply with these
requirements, including sending staff to available travel policy and procurement
training, developing and implementing policies and procedures, and recovering the
overpayments for travel expenses.
Procurement violations exist—Violations identified by GAO included agreeing
to pay a vendor prior to receiving services, obtaining services from a vendor who
already had a state contract and developing different payment terms, and failing to
include the state-required uniform terms and conditions. The following examples
illustrate the numerous procurement and contracting violations that the Board
committed:
􀁺􇩃 Consulting contract—The GAO found that in fiscal year 2004, the Board entered
into a contract for computer consulting that violated several procurement
statutes and administrative rules. While the Department of Administration (DOA)
has entered into numerous contracts for these services that are available to all
state agencies, the Board opted not to use them and entered into a separate
contract without obtaining written, prior approval from DOA’s State Procurement
Office (SPO). The Board awarded a contract to this consultant for $10,000 in
fiscal year 2003. However, over the course of the contract, the Board paid the
vendor more than $11,000, which exceeded the Board’s delegated purchasing
authority.
The Board has continued to violate procurement requirements as evidenced by
its contracts with this same consultant for fiscal year 2005. In September 2004,
the Board’s executive director indicated that the Board had continued to use this
same vendor during fiscal year 2005 while a new contract was being drafted.
According to the executive director, the Board entered into two contracts with
this vendor in October 2004, each for $10,000. One contract is for computer
programming, and the other is for computer maintenance, service, and repair.
Auditors’ review of these signed but undated contracts, which were effective July
1, 2004, and other documentation revealed the following concerns:
􀂄􈑔 The Board did not competitively procure the services outlined in the two
contracts. According to administrative rule R2-7-336, state agencies and
boards should obtain price quotes or bids for the planned purchase of
goods and services. Specifically, for the purchase of goods and services
between $5,001 and $9,999, three written quotes must be obtained. For the
purchase of goods and services between $10,000 and $25,000, potential
vendors must be notified of the planned procurement and given the
opportunity to submit quotes in response to the advertised procurement.
These procedures must be followed unless SPO has approved an
impracticable, sole source, or emergency procurement. However, the
Board could not provide documentation that any price quotes or bids were
obtained or that it had received approval from SPO for an impracticable,
sole source, or emergency procurement.
􀂄􈑔 The Board appears to have split the services defined within the two
contracts to stay within their delegated procurement authority of $10,000.
Auditors compared the scope of work defined in the two fiscal year 2005
contracts to the scope of work defined in the fiscal year 2004 contract with
this same vendor and found the fiscal year 2005 contracts to be very similar
to the single fiscal year 2004 contract. For example, the fiscal year 2004
contract provided for the following services: 1) review data needs with staff;
2) develop forms, basic reports, and queries; 3) evaluate the Board’s
Office of the Auditor General
page 33
current computer network; 4) propose new hardware and software; 5) set
up network and work stations and load and configure software; and 6)
convert database and restructure tables and fields. While this partial list of
services was included in a single contract for fiscal year 2004, these
services have been separated into the two contracts for fiscal year 2005.
According to the Board’s executive director, the Board entered into two
contracts instead of one at the vendor’s suggestion and indication that
another state board has similar contracts with this vendor.
Additionally, the Board paid this vendor for work performed prior to signing the
contracts and without a documented purchase order. Specifically, the Board
paid the vendor approximately $1,150 for work completed in July and August
2004 and received invoices for approximately $1,200 for additional work
completed in August through October 2004. However, according to the State of
Arizona Accounting Manual, state agencies must prepare a purchase order to
obtain goods and services in excess of $500.
􀁺􇨠 Contract signed with inappropriate terms—The GAO also found that the Board
entered into a contract to develop a legislative action plan that inappropriately
included a clause to indemnify, defend, and hold the contractor harmless for
legal costs, attorney fees, and judgments arising out of work that the Board
authorized. This violates administrative rule R2-10-301(C), which states that
state agencies must obtain approval from DOA’s Office of Risk Management
before agreeing to indemnify a contractor.
Several travel reimbursement violations were identified—The GAO also
identified several travel policy violations. These violations included board members
and staff being inappropriately reimbursed for lodging, meals, and parking for travel
related to board activities. Based on the GAO’s review of 18 claims submitted
between July 2002 and December 2003, board members and staff were
inappropriately reimbursed approximately $1,600 for 11 claims. For example, the
executive director and one board member attended a National Association of Boards
of Examiners of Long Term Care Administrators conference in Portland, Oregon, in
June 2003. Both of them stayed an additional night after the conference ended, but
did not provide documentation to justify the additional night’s stay. In addition to
being reimbursed a total of over $300 for this additional night’s stay, the executive
director and board member were reimbursed a total of more than $160 for several
meals included in the price of the conference and for meals on the additional day.
Consistent with the GAO’s recommendation, the Board should recover any
overpayments made to its members and staff for travel expenses. The Board should
work with its Assistant Attorney General on this matter as needed.
Board should adhere to state requirements—The Board should ensure that
it follows all state procurement and travel requirements. To help ensure that the Board
and its staff follow these requirements, the Board’s executive director and
State of Arizona
page 34
appropriate staff should attend available training provided on the state travel policy
and procurement requirements. For example, DOA provides a training class on the
GAO travel policy and several training classes on procurement policies. Additionally,
the Board should develop and implement procurement and travel policies and
procedures based on the State’s requirements.
Recommendations
1. The Board should strengthen its cash-handling procedures to ensure that they
are consistent with the State of Arizona Accounting Manual and to help ensure
that its cash receipts are properly safeguarded. These procedures should
include:
a. Depositing receipts once they total $500 or more or on a daily basis;
b. Performing an independent reconciliation of monies received by the
administrative assistant to licenses issued or renewed; and
c. Performing an independent reconciliation of monies received as reflected
on the cash log to the prepared deposit.
2. Consistent with the GAO’s recommendation, the Board should recover any
overpayments made to its members and staff for travel expenses. The Board
should work with its Assistant Attorney General on this matter as needed.
3. The Board should ensure that it follows all state requirements, policies, and
procedures for procurement and travel. In order to do this, the Board should:
a. Ensure that its executive director and appropriate staff attend DOA’s travel
policy and procurement training classes; and
b. Develop and implement procurement and travel policies and procedures
based on the State’s requirements.
Office of the Auditor General
page 35
State of Arizona
page 36
1 Alabama, Arizona, Louisiana, Minnesota, Mississippi, Nevada, North Carolina, North Dakota, Oklahoma, West Virginia,
and Wyoming.
Office of the Auditor General
OTHER PERTINENT
INFORMATION
page 37
During this audit, other pertinent information was obtained regarding Arizona and
other states’ regulation of nursing care institution administrators.
States’ regulation of nursing care institution
administrators
While all 50 states and the District of Columbia license and regulate administrators,
states use three different regulatory models to do so. These regulatory structures are
as follows:
􀁺􇩉 Independent board—Eleven states, including Arizona, have established
independent boards to license administrators.1 These boards are typically
composed of members representative of both industry and the public who are
appointed by the state’s governor and are supported by their own staff and
funds. Arizona also predominantly relies on the independent board structure to
regulate health and other professions in the State. According to several board
members and representatives from trade associations, an independent board
represents their preferred option for regulating administrators and managers.
􀁺􇨠 Independent board supported by a separate state agency—While an additional
33 states and the District of Columbia have also established independent
boards to license administrators, these boards do not have their own staffs, but
are staffed and supported by a separate state agency. These states maintain an
independent board, generally composed of industry and public members, that
is responsible for approving licenses and taking disciplinary actions. However,
staff and support functions for these boards are provided by another state
agency, typically a public health agency or umbrella agency for occupational
licensing. For example:
􀂄􈑐 Public health agency—Sixteen states and the District of Columbia have
independent boards that rely on the state’s health department to provide
1 District of Columbia, Florida, Iowa, Kansas, Maryland, Massachusetts, Michigan, Missouri, Nebraska, New Hampshire,
New Jersey, New York, Ohio, Rhode Island, South Dakota, Tennessee, and Washington.
2 Colorado, Delaware, Georgia, Idaho, Indiana, Kentucky, Maine, Montana, New Mexico, Pennsylvania, South Carolina,
Utah, Vermont, Virginia, and Wisconsin.
3 Arkansas and Oregon.
State of Arizona
page 38
staff and support to the board.1 In addition to supporting the board that
licenses administrators, these states’ health departments typically staff and
support many if not most other health profession regulatory boards in the
state. For example, Michigan’s Department of Community Health not only
provides staff and support to the Michigan board that regulates
administrators, but also supports the Michigan boards that regulate nurses,
physicians, dentists, and many other health professions.
􀂄􈑏 Occupational licensing agency—Fifteen states have independent boards
that rely on that state’s professional or occupational licensing agency to
provide staff and support to the board.2 These professional or occupational
licensing agencies typically staff and support numerous regulatory boards
within these states. For example, Georgia’s Professional Licensing Boards
Division consists of over 40 boards, regulating medical professions such as
administrators and podiatrists, as well as other professions such as
librarians, foresters, and private detectives.
The remaining states use another type of agency, such as their Department of
Human Services, to provide staff and support to their independent boards.3
While statute allows for a separate state agency to provide staff and support to the
Board, this type of regulatory structure is not typically used in Arizona. Specifically,
A.R.S. §36-446.03(G) allows the Board to contract with other agencies to provide
investigative, professional, and clerical assistance. However, Arizona currently
licenses most medical and other professions through separate agencies or
independent boards. Auditors identified only one example of this type of regulatory
structure in Arizona—the Arizona State Boxing Commission, which is a commission
consisting of Governor-appointed members that relies on the Arizona Department of
Racing for staff and operational support.
Although this regulatory structure is not typically used in Arizona, various
stakeholders indicated that this regulatory approach would have both benefits and
drawbacks. For example, some board members and trade and consumer advocacy
association representatives indicated that there could be benefits from an agreement
between the Board and another state agency to provide staff and support including
“economy of scale” savings. However, it is unclear with what agency the Board could
contract. DHS officials indicated that their limited resources would preclude the
agency from taking on the responsibility of staffing and supporting the Board. DHS
also indicated that this regulatory approach may have merit, but it would not make
sense to pursue this regulatory approach for just this board when the other
professional regulatory boards in the State do not follow this approach. Finally, board
members and representatives of trade associations expressed a desire to keep the
regulation of long-term care facilities, which DHS currently performs, separate from
that of the administrators and managers. Board members further expressed concern
that DHS’ focus on facility compliance with regulations may affect its ability to
impartially and appropriately assist with the regulation of administrators and
managers.
􀁺􇩓 State agency—Six states regulate and license administrators within a state
agency and do not have an independent board.1 These states have placed this
responsibility within either their public health agency, occupational licensing, or
aging department. For example, California recently eliminated its independent
administrator’s licensing board and transferred the authority and responsibilities
for licensing and regulating administrators to the California Department of Health
Services. Department representatives reported a mixed reaction to this change
from licensees. Newly licensed administrators appreciate the agency’s quick,
efficient service, while those who have been licensed for longer periods indicate
that they miss the role of their peers in deciding on disciplinary actions.
Texas uses a somewhat different model to regulate administrators. Specifically,
while the Texas Department of Aging and Disability Services regulates
administrators, the state has also established an advisory committee to provide
recommendations on rule changes and disciplinary actions to this agency. The
advisory committee membership is similar to Arizona’s board membership.
In other states, relying on a state agency to regulate administrators is the least
prevalent regulatory structure, and board members and trade association
representatives voiced opposition to this approach. Some of these stakeholders
explained that an independent board consisting of peers is important for input
in licensing and disciplinary decisions and is more flexible and understanding in
their regulatory approach, while a state agency is perceived as much more rigid.
1 Alaska, California, Connecticut, Hawaii, Illinois, and Texas.
Office of the Auditor General
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State of Arizona
page 40
Office of the Auditor General
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In accordance with A.R.S. §41-2954, the Legislature should consider the following 12
factors in determining whether the Board of Examiners of Nursing Care Institution
Administrators and Assisted Living Facility Managers (Board) should be continued or
terminated.
1. The objective and purpose in establishing the Board.
The Board was created in 1975 to protect the public’s health, safety, and welfare
by licensing and regulating nursing care institution administrators and also in
response to federal requirements that each state must license administrators of
nursing homes in order to receive certain federal Medicaid funds. In 1990, the
Board’s statutes were amended to add the responsibility for certifying and
regulating adult care home managers, renamed in 1998 to assisted living facility
managers.
The Board’s mission is to “protect the health, welfare, and safety of Arizona
citizens who seek and use the services of nursing care institution administrators
and assisted living facility managers.” To accomplish this mission, the Board has
established three goals: 1) to improve agency operations relating to complaint
investigations to ensure consistent and timely enforcement of statutes and rules
regulating nursing care institution administrators and assisted living facility
managers; 2) to ensure that licenses and certificates are processed in a timely
and efficient manner; and 3) to ensure that agency operations are effective and
efficient.
2. The effectiveness with which the Board has met its objective and purpose and
the efficiency with which it has operated.
While the Board performs some of its responsibilities efficiently and effectively, it
needs to improve most of the functions it performs. Specifically, the Board
approves continuing education programs and ensures that licensees and
certificate holders have completed the required amount of continuing education
prior to license or certificate renewal. The Board also processes most of the
The Board performs
some responsibilities
effectively but needs to
improve most of its
functions.
SUNSET FACTORS
State of Arizona
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initial license and certificate applications it receives within the required 120 days.
Auditors reviewed information obtained from 61 license and certificate
applications received from August 2000 through January 2004 for compliance
with processing time frames established by the Board and found that the Board
processed 49 of these applications within 120 days. However, the Board did not
comply with its time frames for the remaining 12 applications, either because it
did not review the applications in a timely manner, or it did not close pending
applications when applicants failed to submit deficient information in a timely
manner. Therefore, the Board should ensure that it processes license and
certificate applications within time frames prescribed by administrative rule.
The audit also identified several additional areas in which the Board can improve its
effectiveness and efficiency in fulfilling its statutory responsibility to protect the public:
􀁺􇩔 The Board needs to investigate and adjudicate the complaints it receives in a
timely and appropriate manner. Auditor review of complaints found numerous
instances where the Board had to dismiss complaints received between fiscal
years 1999 and 2002 due to untimely investigations. Additionally, most of the
complaints received by the Board during fiscal years 2003 and 2004 were open
as of July 2004. Auditor review of 25 randomly selected open complaints found
they had been open between 260 and 680 days. To improve its investigation
timeliness, the Board should ensure that it has adequate and trained staff;
develop and implement additional complaint investigation policies and
procedures, including time frames for each stage of the investigation process,
and generate management reports on the status of open investigations.
Additionally, the Board should use letters of concern only when it cannot
substantiate complaint allegations, but has concerns about an administrator’s
or manager’s conduct (see Finding 1, pages 11 through 19).
􀁺􇨠 Further, the Board needs to improve its oversight of board operations. Auditors
identified numerous problems at the Board, including ineffective use of staffing
and financial resources, unscheduled formal hearings, and inaccurate and
incomplete data. Most of the problems could be addressed through increased
oversight and guidance from the Board, including requiring the executive
director to submit reports at least every other month on complaint and licensing
activity, staffing issues, and revenues and expenditures (see Finding 3, pages
25 through 29).
􀁺􇩆 Finally, the Board has not always complied with state requirements regarding
cash-handling, procurement, and travel reimbursement. The Board should
ensure that it complies with these requirements by enhancing its cash-handling
procedures and making deposits in a timely manner, attending training on
procurement and travel requirements, and developing procurement and travel
policies based on state requirements (see Finding 4, pages 31 through 35).
3. The extent to which the Board has operated within the public interest.
The Board has operated in the public interest in some areas, but can improve in
others. The Board also maintains a Web site, which has some helpful
information.
However, auditors identified two areas in which the public interest could be
better served. Specifically:
􀁺􇩔 The Board’s public information policies and practices should be
strengthened to ensure that consumers have appropriate access to public
information on administrators and managers. First, board practices for
responding to public requests for information are inappropriate, as board
staff either provided incomplete or inaccurate information or did not
disclose public information. Therefore, the Board should establish written
procedures that detail information available to the public, and then train
staff on how to properly respond to public information requests.
Additionally, the Board should ensure its Web site information is accurate.
Also, as resources permit, the Board should provide additional Web site
information that includes board meeting minutes; information on individuals
with dismissed or closed complaints, including the number of open,
closed, and dismissed complaints; and the nature and resolution of closed
complaints resulting in board action (see Finding 2, pages 21 through 24).
􀁺􇩁 Although required to have two “lay member” consumer representatives on
its Board, one position has been vacant for several months, while the other
position does not appear to be appropriately filled. First, one of the Board’s
consumer representative positions has been vacant from August 2003
through October 2004. Statute requires that “lay members” must represent
consumers of nursing care or assisted living services. According to a
representative from the Governor’s Office, the statute defining lay members
is one of the most restrictive among Arizona regulatory boards, and as a
result, it has been difficult to fill the positions. Additionally, the Board’s other
consumer representative position is filled by an individual who worked as a
nursing care institution administrator in the past and maintains an active
administrator’s license, although he is currently not employed as an
administrator. According to a representative from the Governor’s Office, this
information was overlooked when the member was originally appointed,
but when this member’s term expires in January 2005, he will not be
reappointed as a lay member.
The Legislature and the Board should both take action to remedy the
situation. First, the Legislature should consider revising A.R.S. §36-
446.02(B) to eliminate the requirement that the lay members represent
consumers of nursing care or assisted living services and make it easier for
Office of the Auditor General
page 43
members of the general public to serve on the Board. Second, the Board
should work with the Governor’s Office to ensure that these board positions
are appropriately filled by statutorily designated consumer representatives.
4. The extent to which rules adopted by the Board are consistent with the legislative
mandate.
The Governor’s Regulatory Review Council (GRRC) reviewed the Board’s rules
in August 2004 and determined that the Board needs to amend some of its rules
to ensure that they are consistent with statutes. For example, GRRC noted a
discrepancy between A.R.S. §36-446.04(B), which states that the Board shall
issue a certificate to an assisted living facility manager who satisfactorily
completed Department of Health Services (DHS)-approved training, and
administrative rule R4-33-402, which states that an applicant can provide
transcripts from an accredited college in lieu of completed, board-approved
training. While the Board revised its rules in 2004 to increase fees, it
acknowledges that additional rules are needed. However, as of October 2004,
the Board had not yet opened a rule docket or retained a rule writer’s services
to begin the process.
In addition to rule revisions, the Board needs to adopt a new rule that defines
the work experience it will accept to satisfy the certification requirement for
managers. Specifically, A.R.S. §36-446.04(B)(4) requires that applicants for
manager certificates complete 12 months of work experience in a health-related
field within the preceding 5 years, as board rule prescribes. While the Board
recognizes the need to define the work experience it will accept as of October
2004, the Board has yet to prescribe this rule.
5. The extent to which the Board has encouraged input from the public before
adopting its rules, and the extent to which it has informed the public as to its
actions and their expected impact on the public.
The Board followed all requirements for noticing and public comments when it
amended its rules concerning fees for administrator licenses and manager
certificates in fiscal year 2004. This included filing the formal notice of rulemaking
with the Secretary of State’s Office and providing for a period of public review
and comment. The Board does not report using any other methods, such as its
Web site or a newsletter, to encourage public input when developing its
proposed rules and regulations.
The Board has also complied with the State’s open meeting laws. The Board
has posted public meeting notices at least 24 hours in advance at the required
State of Arizona
page 44
The Board needs to
define what constitutes
acceptable work
experience for
managers.
The Board should work
with the Governor’s
Office to make sure that
lay member positions
are filled.
Office of the Auditor General
page 45
location, made agendas available to the public, maintained meeting minutes,
and has the required statement of where meeting notices will be posted on file
with the Secretary of State.
6. The extent to which the Board has been able to investigate and resolve
complaints that are within its jurisdiction.
The Board has sufficient statutory authority and disciplinary options to
investigate and adjudicate complaints. However, the Board has not investigated
complaints in a timely manner. Specifically, during fiscal years 2003 and 2004,
the Board had to dismiss 53 complaints that it had received in fiscal years 1999
through 2002, in some cases citing that so much time had passed that either
the manager’s certificate or administrator’s license had expired or that further
investigation could not be conducted. Some of these complaints involved abuse
and/or neglect and had been substantiated by DHS. Additionally, over 100 of the
126 complaints received by the Board during fiscal years 2003 and 2004
remained open as of July 2004. Auditors’ review of 25 of these open complaints
determined they had been open between 260 and 680 days. To improve the
timeliness of complaint investigations, the Board should enhance its policies
and procedures, establish complaint investigation time frames, and generate
management reports that would enable greater oversight of open investigations.
Additionally, the Board should use letters of concern only when it is concerned
about unsubstantiated allegations in a complaint (see Finding 1, pages 11
through 19).
7. The extent to which the Attorney General or any other applicable agency of state
government has the authority to prosecute actions under the enabling
legislation.
A.R.S. §41-192 authorizes the Attorney General’s Office to prosecute actions
and represent the Board. The Board is currently represented by one part-time
Assistant Attorney General.
8. The extent to which the Board has addressed deficiencies in its enabling
statutes, which prevent it from fulfilling its statutory mandate.
The Board’s statutes have been amended several times since 1998, when the
Legislature revised the designation of adult care homes and other long-term
care facilities to assisted living facilities. In its September 2003 Sunset Review
Report, the Board reported that it needed to seek a number of additional
changes to address deficiencies in its enabling statutes. These include the need
State of Arizona
page 46
to better organize its statutes and increase fees, the authority to issue cease-and-
desist orders to unlicensed practitioners, and the need to incorporate
provisions of the Administrative Procedures Act within board statutes. Despite
these stated needs, the Board did not request these legislative changes in 2004
and reports that it will not request these changes during 2005 in order to focus
on the sunset process.
9. The extent to which changes are necessary in the laws of the Board to
adequately comply with the factors listed in the sunset law.
Based on audit work, the Legislature should consider revising:
􀁺􇩁 A.R.S. §32-3201 to grant the Board authority to discipline managers and
administrators with expired licenses. This statute authorizes health
regulatory boards to suspend a practitioner’s license, rather than allowing
it to expire, until an ongoing investigation can be completed under A.R.S.
§32-3202. This authority affords state health profession regulatory boards
the opportunity to discipline licensees or certificate holders and have this
action appropriately reflected on their professional record (see Finding 1,
pages 11 through 19).
􀁺􇩁 A.R.S. §36-446.02(B) to eliminate the requirement that the lay members
represent consu