Performance audit, Department of Health Services, health care facilities function

              PERFORMANCE AUDIT

DEPARTMENT OF HEALTH SERVICES

HEALTH CARE FACILITIES FUNCTION

Report to the Arizona Legislature

By the Auditor General

DOUGLAS R NORTON, CPA

AUDITOR GENERAL

STATE OF ARIZONA

OFFICE OFTHt

ACJDITOR GENERAI,

LlNDAJ BLESSING, CPA

Uk I-',, 1Y AUDITOR GENERAL

July 13, 1988

Members of the Arizona Legislature

The Honorable Rose Mofford, Governor

Mr. Theodore E . Williams, Director

Department of Health Services

Transmitted herewith i s a report of the Auditor General, A Performance

Audit of the Department of Health Services, health f a c i l i t i e s licensing

function. This report i s i n response to a June 2, 1987, resolution of

the J o i n t L e g i s l a t i v e Oversight Committee.

The report addresses the need for stronger enforcement of agency

regulations. Weak enforcement by DHS threatens residents i n nursing

homes and supervisory care homes, Lax enforcement by DHS also

jeopardizes the health and safety o f c h i l d r e n i n day care. In a d d i t i o n ,

the lack of an e f f i c i e n t tracking system may impair DHS's a b i l i t y to

handle day care complaints i n a timely manner.

My s t a f f and I w i l l be pleased to discuss or c l a r i f y items i n the report.

Sincerely,

~ o u w Rs. Norton

Auditor General

S t a f f : William Thomson

Peter N. Francis

Nancy Love l l Moore

Anthony J. Guarino

Cynthia A. Kappler

ENCLOSURE

2700 NORTH CENTRAL AVE. SUITE 700 PHOENIX, ARIZONA 85004 ( 602) 255- 4385

The O f f i c e of the Auditor General has conducted a performance audit o f the

Arizona Department of Health Services, health f a c i l i t i e s l i c e n s i n g f u n c t i o n ,

i n response to a June 2 , 1987, r e s o l u t i o n of the J o i n t L e g i s l a t i v e Oversight

Committee. This performance a u d i t was conducted as part of the Sunset

Review set f o r t h i n Arizona Revised Statutes ( A. R. S.) $ 541- 2351 through

41 - 2379.

This i s the f i r s t i n a s e r i e s of reports to be issued on the Arizona

Department of Health Services ( DHS). The report focuses on the functions of

health care f a c i l i t i e s o f f i c e s under the D i v i s i o n o f Emergency Medical

ServicedHealth Care F a c i l i t i e s .

I n e f f e c t i v e Enforcement By The Department Of Health Services Threatens

The Health And Safety Of Residents I n Long- Term Care F a c i l i t i e s ( see

pages 9 through 18).

Weak enforcement by the DHS threatens residents i n nursing homes and

supervisory care homes. Though the Department has closed some f a c i l i t i e s

where care endangered p a t i e n t s , many others w i t h serious d e f i c i e n c i e s

continue t o operate undeterred. Our O f f i c e found extensive, and o f t e n

repeated, noncompliance w i t h important health and safety r e l a t e d

regulations. One nursing home repeated 45 serious d e f i c i e n c i e s during a

32- month period. Some of the v i o l a t i o n s t h i s f a c i l i t y was c i t e d f o r

include:

0 psychological and physical abuse o f p a t i e n t s

0 inadequate medical and nursing care o f p a t i e n t s

0 improper use of r e s t r a i n t s

0 d e f i c i e n t food and n u t r i t i o n services

Despi te widespread noncompl iance among long- term care fac i I i t i e s , our

review shows that enforcement a c t i o n by the Department i s rare,

p a r t i c u l a r l y use of formal intermediate sanctions.

DHS needs a stronger commitment to enforcement, and should consider

requesting statutory changes to upgrade i t s enforcement capabi I i t ies,

such as a provision to more quickly assess c i v i l penalties. As a guide,

DHS could use the intermediate sanctions recently adopted by the Federal

government for nursing homes i n the Medicare/ Medicaid programs.

Weak Enforcement Action By The Department Of Health Services

Threatens The Health And Safety Of Chi ldren In Day Care ( see pages 19

through 30).

Lax enforcement by DHS also jeopardizes the health and safety of children

i n day care. As i n the long- term care program, our sample of day care

f i l e s revealed serious, and often repeated, v i o l a t i o n s of rules and

regulations, yet l i t t l e enforcement action by DHS. For example, between

1985 and 1987 one center had 100 c i t a t i o n s for v i o l a t i n g regulations most

l i k e l y t o a f f e c t a c h i l d ' s health and safety including f a i l u r e to

adequately supervise children, use of unqualified and underaged s t a f f ,

unlocked cleaning supplies, poisonous plants on the playground and algae

covered bathroom faucets. Sexual abuse of children was also alleged on

three occasions. DHS responded to these problems by holding an

" enforcement meeting" and placing the center on a provisional license.

However, DHS took no f u r t h e r a c t i o n when the center later v i o l a t e d the

terms of the enforcement meeting. I n f a c t , DHS issued the center a

regular three- year license, despite c i t i n g i t for 11 additional serious

v i o l a t i o n s . II

One explanation for DHS's weak enforcement i s i t s lack of an aggressive

enforcement philosophy. The agency's philosophy i s to " work with

centers" rather than take strong enforcement actions against them. Also,

DHS has no guidelines mandating when enforcement actions should be taken.

In addition to a stronger enforcement p o l i c y , DHS should develop

additional sanctions to improve compliance. C i v i l penalties, bans on

admissions and postings of inspection results are sanctions that have

been used in other states and could be considered by DHS.

The Department of Health Services

Should Improve I t s Day Care Complaint Handling Procedures ( see pages 31

through 34).

DHS does not follow i t s established p o l i c i e s and procedures regarding

tracking complaints or timeliness of complaint i n v e s t i g a t i o n s . The

p o l i c i e s specify a timeframe f o r i n v e s t i g a t i n g complaints that ranges

from 24 hours to 20 working days, depending on the s e v e r i t y o f the

a l l e g a t i o n and the l o c a t i o n of the center.

To ensure that a l l day care complaints are i n v e s t i g a t e d i n a timely

manner, DHS's p o l i c i e s and procedures c a l l for the use of b ~ t ha manual

and computerized system to track complaints. The Day Care O f f i c e does

not keep i t s manual log up- to- date, and has not implemented a

computerized tracking system.

DHS's lack o f an e f f i c i e n t t r a c k i n g system may impair i t s a b i l i t y to

handle complaints i n a timely manner. For example, based on a sample

f i le review, DHS d i d not i n v e s t i g a t e 29 percent o f i t s day care

complaints w i t h i n the timeframe s p e c i f i e d i n i t s p o l i c i e s and

procedures. Further, some DHS day care l i c e n s i n g s p e c i a l i s t s were

unaware ~ f s p e c i f i c timeframes established for compiaint i n v e s t i g a t i o n s .

TABLE OF CONTENTS

Page

INTRODUCTION AND BACKGROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

FINDING I : INEFFECTIVE ENFORCEMENT

BY THE DEPARTMENT OF HEALTH SERVICES

THREATENS THE HEALTH AND SAFETY

OF RESIDENTS IN LONG- TERM CARE FACILITIES . . . . . .

Poor Patient Care Permitted by the Department . . . . . . . . . . . . . . . . 9

Greater Reliance on Enforcement I s Needed

To Reduce I n s t i t u t i o n a l Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

FINDING I1 : WEAK ENFORCEMENT ACTION

BY THE DEPARTMENT OF HEALTH SERVICES

THREATENS THE HEALTH AND SAFETY

OF CHILDREN IN DAYCARE . . . . . . . . . . . . . . . . . . . .

DHS's Enforcement Act ions

F a i l to Bring Day Care Centers I n t o Compliance ............... 19

DHS Does Not Use A v a i l a b l e Enforcement Options ............... 2 6

I n Conjunction With A Stronger Enforcement P o l i c y ,

DHS Shou l d Deve lop Add i t i ona l Sanc t i ~ n TsQ Improve Comp l i ance 29

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

FINDING I l l : THE DEPARTMENT OF HEALTH SERVICES

SHOULD IMPROVE ITS CH l LD DAY CARE

COMPLAINT HANDLING PROCEDURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1

Tracking O f Complaint I n v e s t i g a t i o n s I s Inadequate . . . . . . . . . . . 3 1

Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

OTHER PERTINENT INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5

AREAS FOR FURTHER AUDIT WORK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41

AGENCY RESPONSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43

APPEND l X

LlST OF TABLES

Page

TABLE 1 DEPARTMENT OF HEALTH SERVICES --

HEALTH CARE FACILITIES OFFICES BUDGET

FOR FISCAL YEARS 1985- 86 THROUGH 1987- 88 . . . . . . . . . . . . . . . . . . 5

TABLE 2 DEPARTMENT OF HEALTH SERVICES -

HEALTH CARE FACILITIES OFFICES AUTHORIZED STAFF

FOR FISCAL YEARS 1985- 86 THROUGH 1987- 88 . . . . . . . . . . . . . . . . . . 6

LlST OF FIGURES

FIGURE 1 DEPARTMENT OF HEALTH SERVICES

EMERGENCY MEDICAL SERVICES/ HEALTH CARE FACILITIES . . . . . . . . . 1

INTRODUCTION AND BACKGROUND

The Office of the Auditor General has conducted a performance audit of the Arizona

Department of Health Services, health facilities licensing function, in response ta a

June 2, 1987, resolution of the Joint Legislative Oversight Committee. Th~ s

performance audit was conducted as part of the Sunset Review set forth in Arizona

Revised Statutes ( A. R . S.) $ 941 - 2351 through 41 - 2379.

C

This is the first in a series of reports to be issued on the Arizona Department of Health

Services ( DHS). The report focuses on the functions of health care facilities offices

under the Division of Emergency Medical ServicesIHealth Care Facilities.

Functions and Organization

The Division of Emergency Medical ServicesIHeal th Care Facilities has two primary

functions: ( 1) to regulate emergency medical services, and ( 2) to regulate health

care and child day care institutions. Four of the Division's five offices are focused .

on the regulation of health care and day care institutions. These four offices -

Child Day Care Licensure, Health Care bicensure, Health Economics and Facilities

Review, and Long Term Care - are the subject of this report. The f i f t h office,

Emergency Medical Services, will be covered in a separate audit. The four Health

Care Facility Offices follow Federal and Arizona statutes and rules which govern

the licensing and monitoring of health care facilities and child day care centers.

FIGURE I

DEPARTMENT OF HEALTH SERVICES

EMERGENCY MEDICAL SERVICESIHEALTH CARE FACILITIES

ASSISTANT

...-.*.-... J.-*- -..-----..

UCENSURE FAClUTlLS REVIEW :- __ SER_ VIC_ ES_ _ i ____.-.---.-

Source: Department of Health Services Organization Chart

1

The D i v i s i o n i s also responsible for rate review of h o s p i t a l s and nursing

homes, and c o n s u l t a t i o n services to long- term care f a c i l i t i e s .

Child Day Care Licensure - The goal of the Child Day Care Licensure

O f f i c e i s to protect the health and safety o f c h i l d r e n enrol l e d i n chi Id

day care centers. A December 1985 r e p o r t s t a t e s that more than 54,000

c h i l d r e n are cared for i n licensed Arizona day care centers. Based on

statutes and rules and r e g u l a t i o n s , DHS regulates centers to ensure that

a s a f e , clean and healthy physical environment i s maintained, adequate

supervision i s provided, n u t r i t i o u s food i s served, and appropriate care

and a c t i v i t y i s provided.

The O f f i c e ' s p r i n c i p a l program function i s l i c e n s i n g and inspecting

centers. The number of licensed c h i l d day care centers has more than

doubled i n the past 12 years. In 1976 DHS l icensed 443 chi Id day care

faci I i t i e s . Today there are more than 900 licensed centers i n the

s t a t e . DHS issues a regular license for a three- year period,

although A. R. S. 936- 885.8 requires at least one unannounced inspection

per center annually. Each l i c e n s i n g s p e c i a l i s t i s c u r r e n t l y responsible

f o r l i c e n s i n g and inspecting approximately 130 centers. DHS also

investigates more than 900 complaints against licensed and unlicensed

centers annually.

Health Care Licensure - This O f f i c e i s responsible for l i c e n s i n g h e a l t h

care f a c i l i t i e s throughout the s t a t e , and i s organized i n t o two

sections. The Medical F a c i l i t i e s Section licenses h o s p i t a l s , home health

agencies, o u t p a t i e n t surgery f a c i l i t i e s , i n f i r m a r i e s , and health

maintenance o r g a n i z a t i o n s . The Long- Term Care Section licenses nursing

homes and supervisory care f a c i l i t i e s .

Long- term care f a c i l i t i e s i n Arizona care for approximately 1Q, 000

residents. Although the e l d e r l y c o n s t i t u t e the m a j o r i t y af long- term care

( I ) A. R. S. 536- 881.3 d e f i n e s a day care center as any f a c i l i t y t h a t r e g u l a r l y receives

compensation f o r the care o f f i v e o r more c h i l d r e n not r e l a t e d to the p r o p r i e t o r .

care residents, f a c i l i t i e s also care for the developmentally disabled,

the c h r o n i c a l l y mentally i l l and the severely p h y s i c a l l y disabled of any

age group. The level of care required of residents may range from

general supervision as found i n supervisory care homes to continuous

nursing care as provided i n nursing care i n s t i t u t i o n s ! "

To ensure that residents receive appropriate care, the Long- Term Care

Section inspects and licenses f a c i l i t i e s . In t h i s regard, the section

has two major functions: medicare c e r t i f i c a t i o n surveys and s t a t e

licensing inspections. For long- term care f a c i l i t i e s to receive Medicare

monies, they must comply w i t h Federal standards and be c e r t i f i e d . The

Federal government establishes the c e r t i f i c a t i o n c r i t e r i a but delegates

surveying t o the s t a t e . As of February 1988, 57 percent of nursing

homes i n Arizona had medicare c e r t i f i e d beds. None of the supervisory

care homes are medicare c e r t i f i e d .

I n addition to medicare surveys, the O f f i c e performs s t a t e l i c e n s i n g

inspections. S t a f f inspect more than 240 nursing homes and 188

supervisory care f a c i l i t i e s to determine compliance w i t h licensure

requirements. Licensing surveys are conducted annually, and usually i n

conjunction w i t h the medicare c e r t i f i c a t i o n survey. DHS may grant a

provisional license ( up to one year) to f a c i l i t i e s w i t h d e f i c i e n c i e s that

are r e a d i l y correctable.

Complaint i n v e s t i g a t i o n i s another duty of the s e c t i o n . S t a f f annually

investigate approximately 800 nursing home complaints and 200 supervisory

care home complaints. S t a f f also i n v e s t i g a t e r e p o r t s of unlicensed

f a c i l i t i e s .

A. K. S. 5536- 401. A. 30 and 31 d e f i n e a supervisory care home as a r e s i d e n t i a l care

f a c i 1 i t y i n which residents receive accommodation, board and general supervision,

i n c l u d i n g assistance i n the sel f - a d m i n i s t r a t i o n o f medications. A. K. S.

9536- 401 . A . 2 1 and 22 define a nursing care i n s t i t u t i o n as a health care i n s t i t u t i o n

f o r i n d i v i d u a l s who need nursing services on a c o n t i n u i n g b a s i s but do n o t r e q u i r e

h o s p i t a l care. The n u r s i n g s e r v i c e s a r e performed under the d i r e c t i o n of a

physician or r e g i s t e r e d nurse.

(' 1 Arizona receives Federal monies f o r performing Medicare c e r t i f i c a t i o n a c t i v i t i e s .

Long- Term Care - The Long- Term Care Off ice ( LTCO) i s separate from the

Long- Term Care Section, which licenses f a c i l i t i e s . LTCO provides

technical assistance, r e l a t e d support services and information to

i n d i v i d u a l s , f a m i l i e s and long- term health care providers. I t serves as

a consulting group t o nursing homes and supervisory care homes. S t a f f

provide information on nursing care, social services, n u t r i t i o n and

health education to providers d e s i r i n g assistance. The O f f i c e also

prepares an annual d i r e c t o r y to long- term care f a c i l i t i e s and a guide to

s e l e c t i n g long term care.

Health Economics And F a c i l i t i e s Review - This O f f i c e has three

sections: F a c i l i t i e s Review, Health Economics And Rate Review, and

Hospital Discharge Data. The F a c i l i t i e s Review Section reviews

architectural/ construction drawings for health care i n s t i t u t i o n s and day

care centers to ensure that national safety codes, b u i l d i n g standards and

other construction r e g u l a t i o n s are followed. These reviews are p a r t of

the s t a t u t o r y permit process. According to the Department, the section

performs approximately 310 on- site inspections each year to determine

construct ion comp l i ance .

The Health Economics and Rate Review Section c o l l e c t s and analyzes rate

review and uniform f i n a n c i a l information for h o s p i t a l s and nursing

homes. This information i s compiled semiannually i n a public r e p o r t , and

compares room rate and anci I l a r y service cost data from 73 hospi t a l s and

130 nursing homes. The Section also reviews and makes recommendations on

proposed rate increases for hospi t a t s and nursing homes.

The Hospital Discharge Data Section c o l l e c t s and analyzes data regarding

the number of procedures performed and the associated costs. This i s

compiled annually i n the Comparative Hospital Cost Report, and i s

a v a i l a b l e to consumers statewide. The Section also prepares a more

extensive analysis which i s used mainly by providers and ather government

agenc i es .

Budget and S t a f f

The Health Care F a c i l i t i e s o f f i c e s are p r i n c i p a l l y funded through General

Fund appropr i at i ons . "' The O f f i c e s ' budget f o r f i s c a l years 1985- 86

through 1987- 88 are presented i n Table 1. Table 2 shows the number of

authorized s t a f f by O f f i c e for f i s c a l years 1985- 86 through 1987- 88.

TABLE 1

DEPARTMENT OF HEALTH SERVICES - HEALTH CARE FACILITIES OFFICES

BUDGET FOR FISCAL YEARS 1985- 86 THROUGH 1987- 88

Chi Id Day Care $ 392,089 $ 495,614 $ 518,198

Licensure

Health Care

b i censure

Long- Te rm

Care Services

Heal t h Econom i cs 745,546 772,607 751 ,207

And Faci l i t i e s

Rev i ew

D i v i s i o n Total $ 2.053.701 $ 2.267.351 $ 2,290.583

Source: Department o f Health Services Budget O f f i c e .

( ' ) As mentioned, t h e S t a t e a l s o receives Federal monies f o r a d m i n i s t e r i n g medicare

c e r t i f i cations.

TABLE 2

DEPARTMENT OF HEALTH SERVICES - HEALTH CARE FACILITIES OFFICES

AUTHORIZED STAFF FOR FISCAL YEARS 1985- 86 THROUGH 1987- 88

1985- 86 1986- 87 1987- 88

Child Day Care licensure 15 18 19

Health Care Licensure 19.75 19.5 18.5

Long Term Care Services 11.5 1 I 11

Health Economics and

F a c i l i t i e s Review

Source: Department of Health Services Budget O f f i c e

Audit Scope And Purpose

This a u d i t was conducted to evaluate the adequacy of r e g u l a t i o n by the

Department of Health Services, Health Care F a c i l i t i e s , focusing on these

s p e c i f i c areas.

a The adequacy of the Health Care Licensure O f f i c e ' s enforcement af

s t a t u t e s and rules and regulations governing licensed long- term care

f a c i l i t i e s .

a The adequacy of the Chi Id Day Care Licensure Off i c e ' s enforcement of

s t a t u t e s and rules and regulations governing licensed c h i l d day care

centers.

a The Child Day Care Licensure O f f i c e ' s compliance w i t h complaint

hand l i ng po l i c i es and procedures.

This r e p o r t a l s o contains Other Pertinent Information regarding

deregulation and i t s e f f e c t s on the h o s p i t a l and nursing homes i n d u s t r y .

The section Area For Further Audit Work addresses an issue we i d e n t i f i e d

during the course of our audit but were unable to research due to time

c o n s t r a i n t s .

The methodological design and sampling procedures used to develop t h i s

report are described i n the Appendix.

This audit was conducted i n accordance w i t h generally accepted

governmental a u d i t i n g standards.

The Auditor General and s t a f f express appreciation to the D i r e c t o r and

s t a f f of the Department o f Health Services, and s p e c i f i c a l l y the s t a f f of

the D i v i s i o n of Emergency Medical Services/ Heal t k Care Faci l i t i e s , for

t h e i r cooperation and assistance during the course of our a u d i t .

FINDING I

INEFFECTIVE ENFORCEMENT

BY THE DEPARTMENT OF HEALTH SERVICES

THREATENS THE HEALTH AND SAFETY

OF RESIDENTS IN LONG- TERM CARE FACILITIES

Weak enforcement by the Department of Health Services ( DHS) threatens

residents in nursing homes and supervisory care homes. Patient health,

safety and welfare i s in danger because DHS permits poor patient care at

long- term care f a c i l i t i e s , To increase i n s t i t u t i o n a l compliance, greater

reliance on enforcement action i s needed.

Poor Patient Care

Permitted By The Department

DHS risks p a t i e n t h e a l t h , safety and welfare by permitting poor health

care at nursing homes and supervisory care homes. Although the

Department has closed some f a c i l i t i e s where poor care endangered

patients, many others with serious deficiencies continue to operate

undeterred. Consequently, repeated noncompliance with important

regulations i s widespread.

Closed f a c i l i t i e s - The Department has closed several f a c i l i t i e s where

inadequate care placed patient l i v e s in imminent danger. According to

records, the Department e i t h e r denied or revoked nursing home licenses

four times in f i s c a l year 1985, f i v e times i n f i s c a l year 1986, and f i v e

times again i n f i s c a l year 1987. Likewise, DHS was responsible for

closing three supervisory care homes in f i s c a l year 1985, f i v e i n f i s c a l

year 1986, and f i v e i n f i s c a l year 1987.

I n s t i t u t i o n s w i t h serious health problems operate undeterred - DHS

enforcement i s generally weak, however, and intermediate actions are

rarely taken against i n s t i t u t i o n s whose care endangers patients. The

f o l lowing case examples i l l u s t r a t e t h i s :

r CASE 1

During a 31 month period, from late A p r i l 1985 through mid December

1987, t h i s nursing home was surveyed eleven times. Numerous com-

p l a i n t s were made against t h i s f a c i l i t y and i t was c i t e d for 130

v i o l a t i o n s of r e g u l a t i o n s most l i k e l y to a f f e c t a p a t i e n t ' s health

and s a f e t y . A summary of the f a c i l i t y ' s problems and DHS1s

a c t i v i t i e s during t h i s period are l i s t e d below.

A p r i l 26, 1985 - During a l i c e n s i n g inspection conducted a t t h i s

f a c i l i t y , a DHS survey team found numerous maintenance and

housekeeping d e f i c i e n c i e s . There were holes i n w a l l s and c e i l i n g s ,

and the p a t i e n t c a l l system was out for an e n t i r e wing. The team

also reported that not a l l incontinent p a t i e n t s were bathed often

enough to prevent body odor. The survey team leader recommended that

a follow- up survey be completed before issuing a license to t h i s

faci l i t y .

A six- month p r o v i s i o n a l license was issued without any follow- up,

based only on the f a c i l i t y ' s plan of c o r r e c t i o n .

June 25,1985 - The Department investigated a complaint a l l e g i n g that

the f a c i l i t y was understaffed. This a l l e g a t i o n was p a r t i a l l y

substantiated.

September 6, 1985 - Care at t h i s f a c i l i t y was d e t e r i o r a t i n g and DHS

concluded there was " p o t e n t i a l . . . endangerment [ t o the] health,

safety, and welfare of the p a t i e n t s . " Patients examined by surveyors

were wet and unchanged. Dried brown fecal matter was on the f l o o r s

of at least f i v e p a t i e n t rooms and bathrooms.

One p a t i e n t was found hanging through the side r a i l s of her bed. A

body r e s t r a i n t had s l i d up around her neck.

Other serious d e f i c i e n c i e s were c i t e d during t h i s v i s i t . For

example, medical techniques important for preventing the spread o f

i n f e c t i o n were not being followed by a l I personnel . ( I ) The

f a c i l i t y also admitted 30 p a t i e n t s at a time when i t was experiencing

severe s t a f f i n g problems.

DHS scheduled an enforcement meeting w i t h the f a c i l i t y because of the

serious d e f i c i e n c i e s found. The f a c i l i t y was allowed to r e t a i n i t s

provisional s t a t u s .

December 6, 1985 - A second follow- up survey, three months l a t e r ,

revealed continued noncompliance. S t a f f i n g was inadequate and the

f a c i l i t y was s t i l l i n need o f r e p a i r . DHS scheduled a second

enforcement meeting w i t h the f a c i l i t y and issued a second six- month

p r o v i s i o n a l l i c e n s e .

January 13, 1986 - According to the health care l icensure bureau

c h i e f , the f a c i l i t y agreed to a ninety day freeze on admissions

f o l l o w i n g the enforcement meeting w i t h the department. This a c t i o n

was apparently an informal a c t i o n , however, as there i s no record of

the a c t i o n or any departmental follow- up i n the f i l e s .

( ) I n f e c t i o n can be p a r t i c u l a r l y dangerous among the elder1 y

February 20, 1986 - DHS investigated a complaint a l l e g i n g that the

f a c i l i t y was short s t a f f e d and had poor a l l - r o u n d p a t i e n t care. DHS

was unable to s u b s t a n t i a t e the a l l e g a t i o n s , but found other

d e f i c i e n c i e s . ( ' ) Floors i n two rooms were s o i l e d w i t h feces. In

one case, surveyors found no evidence that a pat ient received a

complete neurological exam ordered by a doctor. I n another case, a

p a t i e n t ' s care plan d i d not r e f l e c t a 15- pound weight loss.

The f a c i l i t y retained i t s p r o v i s i o n a l s t a t u s .

June 12, .- 1986 - DHS received another complaint a l l e g i n g u n d e r s t a f f i n g

and poor patient care. Although DHS was unable to s u b s t a n t i a t e many

of the a l l e g a t i o n s , serious v i o l a t i o n s were again found. Six

p a t i e n t s received equal portions of food and the same menu -

regardless of t h e i r d i e t a r y orders. No evaluations for weight and

d i e t a r y needs had been done for four other p a t i e n t s . I n a d d i t i o n ,

dinner did not appear to be well balanced and well prepared. The

f a c i l i t y was undergoing a change i n ownership, and consequently,

maintained i t s p r o v i s i o n a l s t a t u s a f t e r t h i s survey.(')

June 19, 1986 - A l i c e n s i n g inspection again found previously c i t e d

d e f i c i e n c i e s . On 21 separate occasions s t a f f i n g was below minimum

standards i n various u n i t s , i n f e c t i o n c o n t r o l problems were noted,

and maintenance and housekeeping p r a c t i c e s were d e f i c i e n t . Floors i n

several rooms were s o i l e d w i t h feces and other s t i c k y m a t e r i a l .

The new owners were not held responsible for repeating v i o l a t i o n s

c i t e d under the previous ownership, and DHS issued a six- month

regular l i c e n s e .

August 28, 1986 - Responding to a complaint, DHS reported s i x more

instances of s t a f f i n g below standards.

October 30, 1986 - A follow- up survey revealed that problems w i t h

food service and d i e t a r y care, f i r s t observed i n February and June

1986, had resurfaced. Surveyors were concerned that p a t i e n t weights

were f l u c t u a t i n g s i g n i f i c a n t l y . Surveyors reported " there i s

disorganization i n serving the p a t i e n t s ' meals, and no one i s

monitoring food intake o f confused p a t i e n t s . "

S t a f f i n g and i n f e c t i o n c o n t r o l problems were again c i t e d .

The f a c i l i t y maintained i t s l i c e n s i n g s t a t u s .

November 6, 1986 - According to the health care I icensure bureau

c h i e f , a t h i r d enforcement meeting was held, and the f a c i l i t y ' s owner

) DHS's i n a b i l i t y t o s u b s t a n t i a t e a complaint does not necessari 1 y i n d i c a t e a f a i 1 " re

on the agency's p a r t t o conduct a proper and complete i n v e s t i g a t i o n . I n v e s t i g a t i o n s

may be hampered by i nconcl usi ve evidence, incomplete i nformati on, unavai 1 able

witnesses, e t c .

( 2 ) According to the o f f i ce's Attorney General r e p r e s e n t a t i v e , a p r i o r owner's 1 icense

h i s t o r y cannot be t r a n s f e r r e d t o the new owner. However, a new owner i s expected to

address d e f i c i e n c i e s c i t e d previous1 y and b r i n g the f a c i l i t y i n t o compliance w i t h

s t a t e d r e g u l a t i o n s .

agreed to l i m i t admissions to two per week u n t i l i t s next l i c e n s i n g

survey. Again, t h i s was an informal agreement w i t h no record of the

agreement, or departmental follow- up, i n the agency's f i l e s .

December 31, 1986 - The second I icensing survey i n s i x months

revealed more serious noncompliance. D e f i c i e n c i e s r e l a t e d t o

i n f e c t i o n control were again c i t e d . Problems i n t h i s area were worse

than on previous occasions. I n several cases, proper precautions

were not taken t o prevent the spread of i n f e c t i o n . I n a d d i t i o n , the

f a c i l i t y wasn't determining whether p a t i e n t s received adequate

n u t r i t i o n , or i f p a t i e n t s were maintaining ideal weight ranges ( due

to a f a u l t y s c a l e . ) Maintenance services and s t a f f i n g were again

d e f i c i e n t . DHS concluded that p a t i e n t s were not receiving adequate

and appropriate m e d i c a l , n u r s i n g and personal care.

The f a c i l i t y was issued a one- year regular license a f t e r t h i s

survey. I t agreed to be surveyed again i n s i x months, but no

follow- up was conducted by DHS.

December 11, 1987 - One year l a t e r , the f a c i l i t y e x h i b i t e d the same

type of problems as before: inadequate i n f e c t i o n c o n t r o l ,

understaffing and maintenance d e f i c i e n c i e s . P a t i e n t meals weren't

s t r i c t l y conforming to d o c t o r ' s orders, and ten of 15 p a t i e n t s

observed had been losing weight over a period of one year. Surveyors

considered d e f i c i e n c i e s t o be l i f e threatening.

The f a c i l i t y was placed on a six- month p r o v i s i o n a l l i c e n s e .

Comnent: The Department took no s i g n i f i c a n t a c t i o n to curb the

repeated noncompliance exhibited by t h i s f a c i l i t y . This f a c i l i t y

repeated at least 34 serious v i o l a t i o n s during the period reviewed. I t

v i o l a t e d the same four regulations on f i v e or more separate occasions.

Provisional licenses and enforcement meetings were not an e f f e c t i v e

d e t e r r e n t . For example, the f a c i l i t y repeated 11 v i o l a t i o n s while

operating under p r o v i s i o n a l licenses.

During a 37 month period from mid October 1984 through mid November

1987, t h i s nursing home was surveyed eleven times. This long term

care i n s t i t u t i o n was c i t e d for 182 serious v i o l a t i o n s , many of them

repeated v i o l a t i o n s . A summary of DHS's f i n d i n g s and actions are

l i s t e d below.

A p r i l 19, 1985 - Operating less than a month w i t h a p r o v i s i o n a l

license, the f a c i l i t y was resurveyed due to a change of owners. A

survey team found incomplete assessments of the n u t r i t i o n a l status

and needs of p a t i e n t s . S t a f f i n g was below minimum standards for

seven out of 21 days reviewed. I n f e c t i o n control problems were

noted.

The faci I i t y was granted a one- year regular l icense based on an

acceptable plan o f c o r r e c t i o n .

A p r i l 3, 1986 - During a l i c e n s i n g survey, DHS found s u b s t a n t i a l

evidence of poor p a t i e n t care. Food and n u t r i t i o n services, c i t e d

during the l a s t survey, had apparently worsened. Two of f i v e

patients reviewed had been served meals d i f f e r e n t from what t h e i r

doctors had ordered. The n u t r i t i o n a l s t a t u s and needs of p a t i e n t s

had not been assessed, and one p a t i e n t was found to be 29 pounds

underweight. In a d d i t i o n , although f i v e p a t i e n t s had doctorst orders

for increased f l u i d intake, there was no evidence that these orders

were being followed. F i n a l l y , i n f e c t i o n c o n t r o l problems had

worsened since the l a s t survey.

Despite the inadequate care observed, DHS issued t h i s f a c i l i t y a

one- year regular license.

A p r i l 23, 1986 - A complaint a l l e g e d t h a t a p a t i e n t : 1) sustained a

r i b i n j u r y due to rough handling; and 2) was l e f t unattended and

unrestrained i n the bathroom, f e l l as a r e s u l t , and received

lacerations on the forehead and nose. Whi Ie DHS could not

substantiate the f i r s t a l l e g a t i o n , the second complaint was

substantiated. A d d i t i o n a l l y , t h i s p a t i e n t was found to be dehydrated

and s u f f e r i n g from a u r i n a r y t r a c t i n f e c t i o n . The Department

a t t r i b u t e d both conditions t~ poor medical and nursing care.

February 27, 1987 - DHS promptly responded to several complaints

a l l e g- i n g- substandard care. Most a l l e g a t i o n s were substantiated, and

the f a c i l i t y was c i t e d for psychoiogical and physical abuse of

p a t i e n t s . For example, i n one case, the f a c i l i t y delayed four hours

before n o t i f y i n g the attending physician o f a p a t i e n t i n d i s t r e s s .

This p a t i e n t was l a t e r diagnosed as having a broken h i p . In another

case, the attending physician was not n o t i f i e d of a d r a s t i c change i n

a p a t i e n t ' s c o n d i t i o n . The p a t i e n t died f i v e hours l a t e r .

DHS amended the f a c i l i t y ' s s t a t u s t o p r o v i s i o n a l for the remaining

three months of the l i c e n s u r e p e r i o d .

March 17, 1987 - Responding to complaints, DHS found psychological

and physical abuse o f p a t i e n t s for the second time i n less than a

month. This time the abuse charges were the r e s u l t of the f o l l o w i n g

v i o l a t i o n s : improper a d m i n i s t r a t i o n of nursing treatments, improper

care to prevent and t r e a t bed sores, improper use of r e s t r a i n t s ,

inadequate care of incontinence, and improper medical care.

June 12, 1987 - A l i c e n s i n g inspection found that the i n s t i t u t i o n was

s t i l l not administering adequate nursing, medical and personal care.

For example, i n many cases the i n s t i t u t i o n was not taking precautions

to prevent i n f e c t i o n from spreading. Likewise, surveyors found

changes i n a p a t i e n t ' s c o n d i t i o n were not reported to the attending

physician. Food services were again poor. No steps were taken to

ensure that p a t i e n t s were receiving enough f l u i d s to maintain

hydrat ion.

The Department issued the f a c i l i t y a t h i r d p r o v i s i o n a l license, t h i s

one for s i x months.

November 18, 1987 - Five months l a t e r , the Department resurveyed the

f a c i l i t y as the e x p i r a t i o n date of i t s p r o v i s i o n a l Iicense

approached. The survey team again found serious d e f i c i e n c i e s :

doctors orders were not being implemented, and doctors had not been

n o t i f i e d o f changes i n p a t i e n t conditions and treatments. In

addition, food and n u t r i t i o n service was d e f i c i e n t . F i n a l l y , a 24

percent e r r o r r a t e i n administering p a t i e n t medication was observed.

The Department issued the f a c i l i t y a one- year regular Iicense

following t h i s inspection.

Granting t h i s f a c i I i t y a regular l icense v i o l a t e d A . R . S . 936- 425,

which mandates that a f a c i l i t y operating under a p r o v i s i o n a l Iicense

should be r e l i c e n s e d o n l y i f a l l conditions " c o n s t i t u t i n g f a i l u r e to

comply w i t h requirements" are corrected.

Comnent: As i n the previous ease, DHS took no s i g n i f i c a n t a c t i o n to

deter continued noncompliance. Consequently, the f a c i l i t y repeated 45

v i o l a t i o n s d u r i n g t h e course of our review. P r o v i s i o n a l licenses were

again not an e f f e c t i v e deterrent - the f a c i l i t y repeated 26 v i o l a t i o n s

under i t s p r o v i s i o n a l l i c e n s e .

Further, an a n a l y s i s o f closed f a c i l i t i e s showed l i t t l e d i f f e r e n c e

between negligence e x h i b i t e d by f a c i l i t i e s closed by DHS and that

exhibited by the f a c i l i t i e s i n the cases c i t e d above. The Department has

broad d i s c r e t i o n i n determining when and what actions to take. The

program's informal pol icy i s to escalate enforcement for a f a c i l i t y when

there i s an imminent threat t o p a t i e n t s h e a l t h and safety that i s not

readi l y correctable.

I n s t i t u t i o n a l noncompliance i s widespread -. These cases are not

i s o l a t e d examples. I n s t i t u t i o n a l noncompliance w i t h regulations

important t o p a t i e n t h e a l t h and safety i s widespread. Our O f f i c e found

extensive, and o f t e n repeated, noncompliance through a s t a t i s t i c a l review

of Department f i l e s . ( ' ) We reviewed v i o l a t i o n s most l i k e l y to

threaten a p a t i e n t ' s health and safety and found:

( I) For the purposes o f our review, each r e g u l a t i o n was assigned a s p e c i f i c s e v e r i t y

l e v e l . Regulations w i t h a three, four or f i v e r a t i n g were considered t o be those

most l i k e l y t o a f f e c t a p a t i e n t ' s health and safety i f v i o l a t e d . They were the only

l e v e l s analyzed. These severi t y 1 eve1 s were appl ied t o each documented v i 01 a t i on,

a1 though t h e a c t u a l seriousness of the v i o l a t i o n i t s e l f could vary depending on the

s i t u a t i o n . See Appendix f o r f u r t h e r explanation of the methodology employed to

s e l e c t the sample and assess the s e v e r i t y o f v i o l a t i o n s .

0 Ninety- four percent of a l I nursing homes and 68 percent of a l l

supervisory care homes examined v i o l a t e d the same r e g u l a t i o n at least

once during consecutive l i c e n s i n g surveys.

0 Forty- seven percent of a l l nursing homes i n our sample and 36 percent

of a l l supervisory homes v i o l a t e d the same r e g u l a t i o n at least once

during three consecutive l i c e n s i n g surveys.

0 Thirty- four percent of the nursing homes surveyed v i o l a t e d the same

r e g u l a t i o n at least once during four consecutive l i c e n s i n g surveys.

0 Sixteen percent of a1 1 nursing homes reviewed v i o l a t e d the same

r e g u l a t i o n d u r i n g f i v e or more surveys.

0 Seventy- six percent of a l l nursing homes w i t h p r o v i s i o n a l licenses

v i o l a t e d the same r e g u l a t i o n at least once during t h e i r next

l i c e n s i n g inspection.

Despi te these widespread problems, our review shows that enforcement

a c t i ~ n by the Department i s inadequate. I t seldom takes intermediate

action to deter noncompliance.

Federal evaluators found s i m i l a r problems i n a nationwide study. I n July

1987 the United States General Accounting O f f i c e ( GAO) issued a report

i n d i c a t i n g t h a t negligence among nursing homes i s a national problem.

Using a methodology s i m i l a r to the one our O f f i c e used, the GAO analyzed

nursing home compliance w i t h Federal requirements for Medicare

p a r t i c i p a t i o n . " ' The GAO found t h a t :

Over one t h i r d of the nursing homes p a r t i c i p a t i n g i n

Medicare and/ or Medicaid . . . f a i l e d to meet one or

more of the nursing home requirements considered by

nursing home experts to be most l i k e l y t o a f f e c t

r e s i d e n t s ' h e a l t h and safety i n three or more

consecutive inspections.

Greater Reliance on Enforcement Is Needed

To Reduce Institutional Negligence

Greater a t t e n t i o n to enforcement i s needed to discourage i n s t i t u t i o n a l

( I ) Medicare i s a Federal insurance program t h a t a s s i s t s e l d e r l y c i ti zens i n f i n a n c i n g

health care c o s t s . State heal t h departments a d m i n i s t e r t h e Medicare program under

the Federal supervision of the Health Care Financing Admi n i s t r a t i o n . DHS inspects

and c e r t i f i e s i n s t i t u t i o n s wishing t o p a r t i c i p a t e i n the program, f o r a fee t h a t

covers much o f the Department's expense f o r long- term care.

15

noncompliance. The Department must make enforcement a top p r i o r i t y , and

then request s t a t u t o r y changes necessary to upgrade i t s enforcement

c a p a b i l i t i e s .

Enforcement must be made a higher p r i o r i t y - DHS has not made

enforcement a high p r i o r i t y . DHS generally does not act against a

f a c i l i t y u n t i l conditions are severe enough to warrant c l o s i n g the

f a c i l i t y . The Department r a r e l y uses intermediate sanctions permitted

by law, such as c i v i l p e n a l t i e s . I n a random sample o f f i l e s , our

O f f i c e found the Department never assessed c i v i l f i n e s f o r noncompliance,

and only once r e s t r i c t e d the admissions of an i n s t i t u t i o n . ' ) Both

sanctions are allowed by law.

The Long- Term Care program's top p r i o r i t i e s are conducting Federal and

Arizona State surveys, follow- ups, and complaint i n v e s t i g a t i o n s . The

Department devotes much o f i t s s t a f f time to Medicare a c t i v i t i e s because

of the Federal government's major f i n a n c i a l investment ( see f o o t n o t e ) .

Most remaining s t a f f hours go to s t a t e l i c e n s i n g surveys and complaint

i n v e s t i g a t i o n s , the program's other p r i o r i t y areas.

Since the Department estimates i t needs over 20 more f u l l - t i m e employees

to e f f i c i e n t l y perform these program p r i o r i t i e s , (') enforcement -

which requires a d d i t i o n a l s t a f f time for hearing p r e p a r a t i o n , hearings,

e t c . - i s l a r g e l y ignored. However, DHS must s t a r t considering

enforcement a p r i o r i t y . As our review shows, surveys and complaint

i n v e s t i g a t i o n s are of l i t t l e or no value i d no enforcement a c t i o n i s

taken and problems are not corrected.

S t a t u t o r y changes needed - Once a stronger commitment to enforcement

i s made, the Department should consider ways to upgrade i t s a u t h o r i t y to

take intermediate a c t i o n s . The Federal government recognized that such

sanctions could reduce i n s t i t u t i ~ n a l noncompliance, and recently acted to

increase sanctions a v a i l a b l e for the Medicare/ Medicaicl program. Though

DHS has some enforcement powers, i t s c u r r e n t s t a t u t e s are weak in

comparison to other s t a t e s .

( ' ) According t o the program bureau c h i e f , DHS i n f o r m a l l y r e s t r i c t s the admissions of

approximately 30 t o 40 i n s t i t u t i o n s a year.

(' 1 DHS has not analyzed a d d i t i o n a l s t a f f time needed f o r enforcement.

In response to the widespread noncompliance i t found during i t s study,

the GAO recommended that Congress enact l e g i s l a t i o n g i v i n g states new

a l t e r n a t i v e s f o r e n f o r c i n g compliance w i t h Federal requirements. The GAO

presented a l i s t o f possible intermediate sanctions for s t a t e s to use.

a C i v i l fines for each day a f a c i l i t y remains i n noncompliance

a I n i t i a t i n g bans on admission

a On- site monitoring by an agency responsible for conducting

c e r t i f i c a t i o n surveys

e Withholding or reducing payments to the f a c i l i t y

This l i s t i n g p a r a l l e l s recommendations made i n 1986 by the N a t i ~ n a l

Academy of Sciences' i n s t i t u t e of Medicine ( IOM). For example, i n i t s

report the IOM endorsed both c i v i l p e n a l t i e s and bans on admission.

C i v i l p e n a l t i e s are a useful enforcement tool because

they can be applied to less serious v i o l a t i o n s e a r l y

and o f t e n , thus discouraging more serious v i o l a t i o n s .

Penalties can also be applied to serious but i s o l a t e d

v i o l a t i o n s . The IOM emphasized, however, that

a d m i n i s t r a t i v e and legal delays need to be avoided for

c i v i l p e n a l t i e s to be e f f e c t i v e .

The advantage of admissions bans i s that " the

r e s u l t i n g loss of income provides a continuing

incentive to f a c i l i t i e s to achieve compliance." The

IOM recommended that agencies be authorized t o apply

the ban p r i o r to any hearings and appeals.

Recently enacted Federal law implements many of the recommendations made

by the GAO and IOM, and requires that s t a t e agencies develop a series of

intermediate sanctions, i n c l u d i n g c i v i l p e n a l t i e s .

Though DHS has intermediate sanctions i t can use against f a c i l i t i e s , i t s

current a u t h o r i t y i s weak i n comparison to other s t a t e s . For example,

although the Department can assess c i v i l p e n a l t i e s , the Department must

prepare for and conduct an a d m i n i s t r a t i v e hearing before i t can assess a

f i n e . Other s t a t e s have no such requirement. They can assess a f i n e

d i r e c t l y , and must only conduct a hearing i f the f a c i l i t y appeals the

f i n e . The IOM warned that a d m i n i s t r a t i v e delays could undermine a

penalty system.

Moreover; the maximum penalty assessment i s conservative i n comparison

w i t h other s t a t e s . The Department may assess a maximum f i n e o f up to

$ 300 a day per v i o l a t i o n . Other s t a t e s , i n c o n t r a s t , can assess maximum

penalties ranging from $ 1,000 to $ 25,080 a day per v i o l a t i o n .

Several states have provisions the Department could use to improve i t s

enforcement c a p a b i l i t i e s . The s t a t e laws of Wisconsin, Washington and

I l l i n o i s , for example, each c o n t a i n p r o v i s i o n s worth considering by the

Department.

e In I l l i n o i s , the health department may place a q u a l i f i e d person at a

long- term care i n s t i t u t i o n to monitor the p a t i e n t care i f a

f a c i l i t y ' s noncompliance i s serious enough. The monitor advises a

f a c i l i t y on how to comply w i t h s t a t e r e g u l a t i o n s , and reports on i t s

compliance.

e In Wisconsin and Washington, the health departments can d i r e c t f i n e s

they have assessed to be spent by the c i t e d faci l i t y to improve

services.

RECOWENDATIONS

1. The Department should reevaluate i t s s t a f f i n g needs, ( ' I i d e n t i f y

enforcement as a Department p r i o r i t y , and request the necessary

appropriation. The L e g i s l a t u r e should review the proposal and

consider funding the request.

2. The L e g i s l a t u r e should consider amending e x i s t i n g s t a t u t e s t o

strengthen the Department's abi l i t y to take intermediate enforcement

a c t i o n s .

( ' 1 New Federal 1 egi sl ati on and possible Medi care- Medi cai d rule changes should a1 so be

considered.

FINDING l l

WEAK ENFORCEMENT ACTION

BY THE DEPARTMENT OF HEALTH SERVICES

THREATENS THE HEALTH AND SAFETY

OF CHILDRENM DAY CARE

Lax enforcement actions by the Department of Health Services ( DHS)

jeopardize the health and safety o f c h i l d r e n i n day care. DHS does not

take e f f e c t i v e enforcement action against centers that repeatedly v i o l a t e

standards. DHS does not use available enforcement options due to i t s

lenient enforcement philosophy, limited number of s t a f f , and lack of

guidelines. In a d d i t i o n to a stronger enforcement philosophy, DHS should

develop additional sanctions to improve compliance.

DHS's Enforcement Actions

F a i l To Bring Day Care Centers Into Compliance

Although DHS has a v a r i e t y of enforcement options a v a i l a b l e , they are

rarely used. Results of a review of day care center f i l e s " )

i l l u s t r a t e s that the current actions taken by DHS do not bring centers

into c~ mpila nce with day care rules and regulations.

DHS does not take s u f f i c i e n t enforcement actions against centers that do

not comply with day care rules and regulations. DHS has the statutory

power to revoke or suspend a license, assess c i v i l penalties, or issue a

provisional license when deficiencies are noted. In a d d i t i o n , DHS can

hold informal enforcement meetings with center administrators to discuss

methods for maintaining compliance. However, these enforcement actions

are rarely used. DHS d i d not revoke or suspend any l i censes i n 1986 or

1987.") In a d d i t i o n , DHS has never applied a c i v i l penalty, although

) Auditor General S t a f f reviewed 188 day care f i l e s . See Appendix f o r d e t a i l s .

( 2 ) According t o DHS s t a f f , the f a c t t h a t DHS d i d not t e c h n i c a l l y suspend o r revoke any

licenses does not mean t h a t no a c t i o n was taken. DHS s t a f f contend t h a t an increase

i n the number o f inspections, enforcement meetings, and the t h r e a t o f l e g a l a c t i o n

causes some centers t o e i t h e r close v o l u n t a r i l y o r s e l l t o new owners.

t h i s option has been a v a i l a b l e since August 1985. As a r e s u l t ,

v i o l a t ions are widespread and are o f t e n repeated. ( DHS, between 1985 and

1987, c i t e d 97 percent of the centers i n our sample for v i o l a t i n g a t

least one r e g u l a t i o n considered to be most l i k e l y to a f f e c t a c h i l d ' s

health and s a f e t y . ) ( ' I

The f o l l o w i n g case examples i l l u s t r a t e DHS's lack of e f f e c t i v e

enforcement a c t i o n s .

0 CASE 1

During a 29- month period, from May 1985 through September 1987, a

center was inspected 17 times. The center received several

complaints and was c i t e d 100 times for v i o l a t i n g regulations most

l i k e l y t o a f f e c t a c h i l d ' s health and s a f e t y , many of them repeat

instances. A summary of BHS's f i n d i n g s and enforcement actions are

l i s t e d below.

June 1985 - DHS received a comp I ai n t a1 leg i ng that a 21- year- o Id

employee engaged a 4- year- old g i r l i n inappropriate sexual contact.

DHSts i n v e s t i g a t i o n discovered that the center, which had a regular

3- year license, had not maintained complete personnel records, had

not conducted adequate background checks on a l l employees, and had

not been adequately supervising c h i l d r e n . Due to c o n f l i c t i n g

testimony, DHS was unable t o conclusively s u b s t a n t i a t e that sexual

misconduct had i n fact occurred. However, DHS l a t e r learned that the

alleged p e r p e t r a t o r , for whom the center had no personnel f i l e or

background check, had p r i o r p o l i c e contact i n another s t a t e r e l a t i n g

to sexual offenses.

November 1985 - While i n v e s t i g a t i n g a complaint, DHS found that the

center was placing c h i l d r e n i n a dark unsupervised room for

d i s c i p l i n a r y purposes, an act DHS had previously c i t e d . In a d d i t i o n ,

DHS c i t e d the center for four a d d i t i o n a l v i o l a t i o n s , i n c l u d i n g one

s t a f f member supervising two rooms of sleeping c h i l d r e n , and a

s t a f f / c h i l d r a t i o of 1: 20 instead of 1: 15 f ~ 3r- y ear- olds.

A p r i l 1986 - DHS conducted an annual inspection. Seven v i o l a t i o n s

were c i t e d , i n c l u d i n g f a i l u r e t o r e g i s t e r and f i n g e r p r i n t a l l

employees.

August 1986 - DHS received a second sexual abuse complaint a l l e g i n g

that the v i c t i m , a 7- year- old boy, was forced by an 11- year- old boy

to perform o r a l sex. During the ensuing inspection, DHS s t a f f

We used the same approach i n reviewing day care v i o l a t i o n s t h a t we d i d i n reviewing

nursing homes. Each r e g u l a t i o n was assigned a s p e c i f i c s e v e r i t y l e v e l . Regulations

w i t h a f o u r o r f i v e r a t i n g were considered to be those most l i k e l y t o a f f e c t a

c h i l d ' s health or safety i f v i o l a t e d . These were the only l e v e l s analyzed. These

severi t y 1 eve1 s were appl i ed t o each documented v i 01 a t i on, a1 though the actual

seriousness o f the v i o l a t i o n i t s e l f could vary depending on the s i t u a t i o n .

observed several unsupervised c h i l d r e n wandering throughout the

basement of the b u i l d i n g and confirmed t h a t c h i l d r e n had been

unsupervised i n the small dark room where the a l l e g e d m o l e s t a t i o n

occurred. The guardian of the a1 Ieged p e r p e t r a t o r s a i d the

11- year- old- boy denied the charge but would not permit DHS s t a f f to

interview him. Although the younger b o y ' s d e s c r i p t i o n of the act was

v i v i d , due to c o n f l i c t i n g testimony and a lack of witnesses, DHS was

again unable to c o n c l u s i v e l y s u b s t a n t i a t e the complaint.

However, DHS c i t e d the center for 22 v i o l a t i o n s , i n c l u d i n g f a i l u r e to

adequately supervise school age c h i l d r e n , f a i l u r e to r e g i s t e r and

f i n g e r p r i n t personnel, and using underage employees. DHS noted that

15 teenage employees were not r e g i s t e r e d , had no references, and had

not had tuberculosis t e s t s . Ages a v a i l a b l e f o r eight of the 15 showed

that at least f i v e of them were under 1 6 . ( ' )

January 1983 -. A f t e r issuing a p r o v i s i o n a l l icense for a new d i rector

i n September, DHS conducted a follow- up p r o v i s i o n a l inspection and

c i t e d the center f o r algae covered bathroom faucets and d r i n k i n g

fountain, a broken and open u t i l i t y box, a clogged t o i l e t , and

uncovered e l e c t r i c a l o u t l e t s .

February 1987 - DHS i n v e s t i g a t e d a t h i r d sexual abuse complaint

a l l e g i n g that two g i r l s , aged 3 and 4, were abducted from the center

playground, at least one of them was sexually abused, and then both

were returned to the center.

During the i n v e s t i g a t i o n , the DHS s p e c i a l i s t noted that throughout

the inspection she observed a " f a i l u r e to provide a s a f e and

h e a l t h f u l environment and f a i lure to provide d i r e c t supervision."

DHS learned that a t the time of the alleged abduction, playground

supervision d u t i e s were not c l e a r l y defined. Two s t a f f members on

the playground claimed there were not enough teachers supervising the

c h i l d r e n . A s t a f f member s a i d t h a t a t one p o i n t , one teacher was

supervising 35 c h i l d r e n . Although s t a f f members supervising the

playground did not remember seeing anything unusual on the day of the

alleged i n c i d e n t , one s t a f f person said that people walking by on the

sidewalk often stop and v i s i t w i t h the c h i l d r e n through the chain

l i n k fence.

Interviews w i t h the alleged v i c t i m s indicated that they had been

abducted. I n a d d i t i o n , the mothers o f the c h i l d r e n t o l d DHS both

g i r l s were s u f f e r i n g from nightmares and were a f r a i d t o be away from

t h e i r mothers. However, since there were no witnesses who could

c o n c l u s i v e l y c o n f i r m that the abduction had taken place, DHS could

not substantiate that the incident had occurred.

Based on the " p a t t e r n of serious d e f i c i e n c i e s that had occurred at

the center over time" DHS held an enforcement meeting. As a r e s u l t

of the meeting, DHS issued the center a p r o v i s i o n a l license for

d e f i c i e n c i e s on the c o n d i t i o n t h a t the center achieve and maintain

( ' 1 Regulations require a l l day care employees to be a t least 16 years old. All

employees under 18 must be supervised a t all times.

compliance. I n p a r t i c u l a r , DHS t o l d the center t h a t c h i l d r e n must

be supervised at. a l l times and c h i l d r e n must not be allowed i n

unlicensed areas of the b u i l d i n g .

June 1987 - DHS v i s i t e d the center three times during June. The

f i r s t time, DHS substantiated a complaint t h a t c h i l d r e n were

unsupervised on a f i e l d t r i p , a d i r e c t v i o l a t i o n of the enforcement

meeting agreement.

During a follow- up v i s i t two weeks l a t e r , DHS c i t e d the center for

13 v i o l a t i o n s , i n c l u d i n g an unlocked storage area containing

cleaning supplies, a b o t t l e o f i n s e c t i c i d e on a desk i n the

preschool o f f i c e , bathroom faucets covered w i t h algae, poisonous

plants on the playground w i t h i n reach o f c h i l d r e n , inaccessible

s t a f f f i l e s , d i r t y carpets, w a l l s and f l o o r s , and allowing a

14- year- old v i s i t o r to supervise c h i l d r e n i n the bathroom. DHS

also noted that the center had only four games, a few sports items

and a few books for the 60 c h i l d r e n enrolled i n summer day care.

Within f i v e days DHS received and substantiated two complaints that

children were s t i l l using unlicensed areas of the center, a second

v i o l a t i o n o f the enforcement agreement. In a d d i t i o n , DHS c i t e d 12 .

v i o l a t i o n s . The center s t i l l had an unlocked storage area,

poisonous p l a n t s on the playground, and d i r t y f l o o r s and w a l l s , as

well as water leaking from the c e i l i n g . Despite the c e n t e r ' s

v i o l a t i o n s of the enforcement agreement, DHS took no a c t i o n .

August 1987 - DHS conducted a l i c e n s i n g inspection and c i t e d the

center for several repeat v i o l a t i o n s , including poisonous plants on

the playground, a leaking c e i l i n g , lack of toys and equipment, a

water fountain " covered w i t h scum," and f a i l u r e t o r e g i s t e r a l l

employees.

September 1987 - DHS conducted a follow- up inspection before

r e l i c e n s i n g . DHS c i t e d many repeat v i o l a t i o n s , i n c l u d i n g

improperly~ dacumented references, water leaking from the c e i l i n g ;

" t h i c k black scum1' on the water fountain, inadequate toys and

equipment, a d i r t y bathroom, uncovered e l e c t r i c a l o u t l e t s , and

playground l i t t e r e d w i t h trash. In s p i t e of a l l the v i o l a t i o n s and

the h i s t o r y of noncompliance, DHS issued the center a regular

three- year license.

Comnent: DHS d i d not take s u f f i c i e n t actions to enforce compliance

w i t h day care regulations. A f t e r m u l t i p l e v i o l a t i o n s and several serious

complaints, DHS held an enforcement meeting. Based on t h i s meeting, the

center received a p r o v i s i o n a l license f o r d e f i c i e n c i e s on the condition

that i t comply w i t h and maintain the day care r u l e s . Although DHS l a t e r

substantiated that these standards were not being maintained, i t took no

action against the center. DHS's issuance of a regular three- year

license violated i t s own rule"' against issuing a regular license to

centers that are not i n compl iance.

CASE 2

During a 33- month period, from March 1985 through November 1987, a

center was inspected ten times. The center received 12

complaints( 2) and was c i t e d for 51 v i o l a t i o n s o f regulations

considered most l i k e l y t o a f f e c t a c h i l d ' s health and safety,

including eight for improper s t a f f l c h i Id r a t i o s . A summary of QHS's

findings and enforcement actions i s l i s t e d below.

March 1985 - DHS conducted a relicensing inspection and c i t e d 12

v i o l a t i o n s , including one s t a f f person supervising two rooms with 33

napping children, unlocked toxic materials, broken t o i l e t f a c i l i t i e s ,

and playground fence f a l l i n g down. DHS received v e r i f i c a t i o n from

the center that corrections had been made. After a follow- up v i s i t

i n A p r i l , DHS issued the center a regular three- year license.

March 1986 - DHS conducted an annual inspection. The center was

c i t e d for nine v i o l a t i o n s , including improper s t a f f / c h i l d r a t i o s ,

inappropriate d i s c i p l i n e , unlocked storage area, and medications not

stored i n a locked container.

June 1986 - DHS v e r i f i e d a complaint that the center had improper

s t a f f / c h i l d r a t i o s ( including a 1: 18 r a t i o instead of a 1: 10 r a t i o

for 2- year- olds), and that the carpet and f l o o r s were f i l t h y . In

addition, DHS c i t e d the center for a broken f i r e alarm, unlocked

storage area and d i r t y bathrooms.

July 1986 - DHS conducted a surprise v i s i t and c i t e d the center for

improper s t a f f / c h i l d r a t i o s and a " f i l t h y bathroom."

August 1986 - DHS investigated three complaints about the center and

v e r i f i e d that i t had improper s t a f f / c h i l d r a t i o s and was not

adequately supervising c h i l d r e n . In a d d i t i o n , DHS c i t e d the center

for f a u l t y plumbing and two broken t o i l e t s .

March 1987 - After issuing a provisional license for a new d i r e c t o r

i n September, DHS conducted a licensing inspection. DHS again c i t e d

the center for improper s t a f f / c h i I d r a t i o s , food remnants on the

f l o o r and three broken t o i l e t s . DHS issued a regular three- year

l i cense .

( ' 1 DHS r u l e s and r e g u l a t i o n s s t a t e : " I n order f o r a c e n t e r t o s a t i s f a c t o r i l y complete

the p r o v i s i o n a l p e r i o d , surveys conducted by the Department must show t h a t

d e f i c i e n c i e s c i ted i n previous Departmental surveys o f t h e c e n t e r have been

corrected and t h a t t h e c e n t e r i s i n comol ete compl i ance w i t h appl i cab1 e s t a t u t e s and

these r u l e s . " ( Emphasi s added)

( 2 ) I n a d d i t i o n t o the 12 complaints, DHS r e f e r r e d two others t o i t s s a n i t a r i a n f o r

i n v e s t i g a t i o n .

September 1987 - DHS i n v e s t i g a t e d t h r e e complaints. I t substantiated

that the center had improper s t a f f l c h i l d r a t i o s , c h i l d r e n were

unsupervised, personnel were u n q u a l i f i e d , no licensed d i r e c t o r was

working at the center, the a c t i n g d i r e c t o r was abusive t o parents,

and the center was d i r t y .

October 1987 - DHS investigated two complaints and s u b s t a n t i a t e d t h a t

children were a l lowed to eat snacks d i r e c t l y from the f lsor and that

the center was d i r t y .

November 1987 - DHS i n v e s t i g a t e d t h r e e complaints and substantiated

that the center was not i n compliance w i t h s t a f f / c h i I d r a t i o s ,

a l lowed an underage employee to supervi se chi ldren, had not requi red

a l l employees to have a tuberculosis t e s t , and lacked appropriate

toys and equipment i n good c o n d i t i o n . In a d d i t i o n , DHS c i t e d the

center for holes i n the walls and baseboards i n c l u d i n g two holes 24"

by 9" and 36" by l o " , and a broken porch support that " when pushed

out allowed the roof to sag dangerously."

Comnent: Although nine of the 12 complaints received for the center

since June 1986 were substantiated and the number of repeat v i o l a t i o n s

remained high, DHS took n~ a c t i o n against the center. Subsequent to our

f i le review, the center was due for re1 icensing. DHS threatened that i t

would not issue a new license i f the center d i d not correct i t s many

p h y s i c a l / s t r u c t u r a l problems. "' According to DHS, the center made

substantial improvements and a regular three- year license was issued.

e CASE 3

During a 20- month period, between March 1985 and November 4987, a

center was v i s i t e d 26 times by DHS s p e c i a l i s t s . The center was c i t e d

53 times for v i o l a t i n g regulations considered most l i k e l y to a f f e c t a

c h i l d ' s health and s a f e t y , several of them repeat v i o l a t i o n s . A

summary of DHS1s f i n d i n g s and enforcement actions are l i s t e d below.

March 1985 - DHS substantiated a complaint that medications were kept

on a counter i n the i n f a n t room, s o i l e d diapers were stored i n open

containers w i t h i n reach of toddlers, and the center was d i r t y . The

s p e c i a l i s t noted " the center needs a t t e n t i o n i n a l l areas regarding

cleanliness and b e t t e r maintenance."

August 1985 - DHS conducted a follow- up inspection to a July annual

inspection. The s p e c i a l i s t noted that renovations were being done to

improve the f a c i l i t y . However, she warned the center t h a t c o n d i t i o n s

were in v i o l a t i o n o f the r u l e s , and c i t e d i t f o r a l l o w i n g c h i l d r e n to

climb on stacked b u i l d i n g m a t e r i a l s , lack of toys and equipment, and

inadequate indoor space.

DHS concedes t h a t i n the past i t had not r e q u i r e d t h e center t o i n v e s t a great deal

o f money and time i n t o r e p a i r i n g some o f the physical problems a t t h e c e n t e r because

it has planned t o move t o a new l o c a t i o n f o r the past two years. Thus, problems

w i t h plumbing and bathroom f a c i 1 i ti es continued.

September 1985 - DHS responded to a complaint and v e r i f i e d that

children had access to r u s t y n a i l s , washers and screws on the

playground, and there were no planned a c t i v i t i e s f o r c h i l d r e n .

December 1985 - DHS c i t e d the center for ten v i o l a t i o n s , i n c l u d i n g

unlocked medications, unlabeled baby b o t t l e s , trash on the playground

and f a i l u r e to r e g i s t e r a new d i r e c t o r .

January 1986 - DHS conducted a follow- up inspection and again c i t e d

the center for unlocked medications and a nonregistered d i r e c t o r .

June 1986 - DHS conducted a l i c e n s i n g inspection, and c i t e d the

center for lack of cleanliness and f a i l u r e to f i n g e r p r i n t a l l

employees.

August 1986 - BHS issued a regular three- year license i n J u l y .

During a follow- up inspection, DHS again c i t e d the center for d i r t y

bathrooms, improper s t a f f / c h i l d r a t i o s , and for propping b o t t l e s i n

c r i b s to feed three babies under 5 months of age.

September 1986 - A follow- up v i s i t noted that the center s t i l l had

improper r a t i o s .

January 1987 - In response to a complaint, DHS c i t e d the center for

inappropriate d i s c i p l i n e .

June 1987 - DHS eonduc ted an annual i nspec t i on and c i ted the center

for seven v i o l a t i o n s , i n c l u d i n g unsupervised c h i l d r e n , cleaner f l u i d

i n reach of chi Idren, and f a i lure to s a n i t i z e a f t e r each diaper

change.

September 1987 - DHS substantiated a complaint that the center had

improper s t a f f / c h i I d r a t i o s , and mixed toddlers and i n f a n t s

together. DHS noted that during the inspection the center had a

r a t i o of 1: 27 instead of 1 : 20 for 4- year- olds, and 1 : 14 instead of

1 : 10 for 2- year- olds.

November 1987 - DHS i n v e s t i g a t e d two complaints that the center had

improper s t a f f / c h i Id r a t i o s and that c h i l d r e n were l e f t alone on the

playground. DHS d i d not substantiate the v a l i d i t y of the complaints

because r a t i o s and supervision were correct at the time of the

inspection.

Comnent: This center i s representative of many of the day care centers

i n our sample. DHS c i t e d the center for many v i o l a t i o n s , o f t e n

previously c i t e d v i o l a t i o n s . A t no time did DHS take any type of

enforcement a c t i o n against the center.

DHS enforcement actions i n e f f e c t i v e - Both our f i l e review and the case

examples i l l u s t r a t e that DHS's enforcement actions are i n e f f e c t i v e . Our

review revealed that 28 percent of the centers were c i t e d for v i o l a t i n g

the same r e g u l a t i o n d u r i n g at least three separate inspections, while 9

percent of the centers were c i t e d for v i o l a t i n g the same r e g u l a t i o n five

- or - mor e times. In most cases, DHS took no a c t i o n against centers that

f a i l e d to comply w i t h the day care rules and regulations. Based on the

o v e r a l l number o f v i o l a t i o n s c i t e d and the number of repeat v i o l a t i o n s ,

simply c i t i n g a v i o l a t i o n i s not a strong enough deterrent to keep i t

from occurring again. Even when DHS does take some type of enforcement

a c t i o n , the a c t i o n s a r e not e f f e c t i v e . As the case examples reveal,

enforcement meeting agreements are not enforced, and centers w i t h

p r o v i s i o n a l licenses f o r d e f i c i e n c i e s are issued regular licenses even

though they are not i n compliance w i t h the r u l e s .

DHS Does Not Use

Available Enforcement Options

DHS has enforcement options a v a i l a b l e t h a t i t does not use. DHS's

current philosophy i s to " work w i t h centers" rather than t a k i n g s t r o n g

enforcement a c t i o n s a g a i n s t them. I n a d d i t i o n , DHS may be hindered by a

l i m i t e d number of s t a f f . Further, i n contrast to other s t a t e s , DHS has

no comprehensive p o l i c i e s and procedures to guide i t s enforcement a c t i o n s .

DHS enforcement philosophy i s not aggressive - DHS does not have an

aggressive enforcement philosophy. Although the Department does have

enforcement options a v a i l a b l e , the options are r a r e l y used. Instead, DHS

employs a philosophy of " working w i t h a center" to b r i n g i t i n t o

compliance. A l l l e v e l s of personnel expressed t h i s philosophy.

Personnel s t a t e d t h a t t h e i r goal i s to work w i t h centers to b r i n g them

i n t o compliance rather than taking strong actions against them. The case

examples also i l l u s t r a t e t h i s philosophy. The case examples c i t e d showed

numerous, o f t e n repeat v i o l a t i o n s , yet DHS r a r e l y took stronger a c t i o n

than c i t i n g the center for noncompliance.

I n a d d i t i o n , some s t a t e organizations representing day care centers

commented that DHS does not take strong enough enforcement actions

against centers that do not comply. The d i r e c t o r o f one s t a t e

organization s a i d t h a t because DHS does not " come down harder" some

centers do only what they have to do to comply and then " fa1 l back to

t h e i r o l d h a b i t s . "

Due to i t s current enforcement philosophy, DHS's emphasis on meeting i t s

s t a t u t o r y requirement to inspect each center annually may be i n v a i n .

Annual inspections t o i d e n t i f y problems are not e f f e c t i v e i f centers do

not achieve and remain i n compliance. As the case examples show, c i t i n g

a v i o l a t i o n does not mean that i t w i l l be corrected. The fact that at

least 28 percent of the centers i n the sample repeated the same v i o l a t i o n

during three d i f f e r e n t inspections c l e a r l y demonstrates that these are

not isolated cases. Thus, i n some cases, an inspection w i t h no

enforcement a c t i o n may be no more e f f e c t i v e than no inspection at a l l .

DHS cites understaffing - DHS a t t r i b u t e s i t s lack of aggressive

enforcement to u n d e r s t a f f i n g . According to DHS day care a d m i n i s t r a t o r s ,

i t does not have enough personnel to meet i t s inspection

r e s p o n s i b i l i t i e s , i n v e s t i g a t e complaints, and take escalated enforcement

actions. The day care o f f i c e c h i e f says that s t a f f shortages make i t

impossible to take necessary enforcement actions, which include revoking

and suspend i ng l i censes , app l y i ng c i v i l penal t i es , and conduct i ng

follow- up inspections against centers that are out o f compliance. She

says that lack of s t a f f has p r o h i b i t e d the D i v i s i o n from w r i t i n g a

comprehensive p o l i c y and procedures manual. I n a d d i t i o n , the D i v i s i o n

Director claims the shortage of personnel p r o h i b i t s DHS from dealing w i t h

p o t e n t i a l problems because a l l o f i t s resources are d i r e c t e d t o hand l i ng

current problems.

Although a d d i t i o n a l s t a f f i n i t s e l f would not strengthen DHS's

enforcement a c t i o n s , our review does i n d i c a t e that the Child Day Care

Licensure O f f i c e may be understaffed. The recommended caseload for a day

care licensing s p e c i a l i s t ranges from 1: 48 to 1: 75. "' According to

( ' 1 Auditor General s t a f f contacted many states and several n a t i o n a l associations i n an

attempt t o i d e n t i f y an acceptable caseload f o r day care l i c e n s i n g s p e c i a l i s t s . We

found t h a t caseloads vary d r a m a t i c a l l y among s t a t e s because of the d i f f e r e n t d u t i e s

performed. I n a d d i t i o n , we i d e n t i f i e d on1 y two n a t i o n a l a s s o c i a t i o n s t h a t have

taken a p o s i t i o n regarding caseloads. The Child Welfare League of America

recommends a caseload of 1 : 40, w h i l e the National Association f o r the Education of

Young Children recommends a caseload of 1: 50 w i t h a maximum of 1: 75. These r a t i o s

are recommendations but are not accepted as i n d u s t r y standards.

DHS, the current caseload i n Arizona i s 1: 130. Based on these f i g u r e s ,

the O f f i c e could be understaffed by seven to 20 l i c e n s i n g s p e c i a l i s t

p o s i t i o n s . DHS has requested funding for three to f i v e a d d i t i o n a l

l i c e n s i n g s p e c i a l i s t s f o r each of the l a s t three years, but only three

p o s i t i o n s have been approved.

DHS lacks enforcement guide1 ines - Another f a c t o r h i n d e r i n g enforcement

i s that DHS has no guidelines mandating when enforcement actions should

be taken against a c e n t e r . Although DHS can revoke and suspend licenses,

assess c i v i l p e n a l t i e s , and issue p r o v i s i o n a l licenses for d e f i c i e n c i e s ,

the current statutes do not specify when these actions should be

invoked. Further, DHS lacks comprehensive p o l i c i e s and procedures on

when to apply each o p t i o n . Thus, l i c e n s i n g s p e c i a l i s t s i n i t i a l l y use

t h e i r own d i s c r e t i o n to determine i f and when a sanction should be

appl ied.

According to some Arizona c h i l d care professionals, BHS's broad

d i s c r e t i o n has led to i n e q u i t y i n types of v i o l a t i o n s c i t e d and i n

enforcement actions taken. One organization spokesperson said a day care

licensing s p e c i a l i s t t o l d a center to do some c o s t l y remodeling. L a t e r ,

another s p e c i a l i s t said the remodeling had not been necessary. In

a d d i t i o n , our review i n d i c a t e s that p r o v i s i o n a l licenses for d e f i c i e n c i e s

are not issued c o n s i s t e n t l y . We found instances where DHS issued a

center a p r o v i s i o n a l license for one p a r t i c u l a r v i o l a t i o n yet other

centers c i t e d for the same v i o l a t i o n were not issued a p r o v i s i o n a l

l i cense .

Other states have developed comprehensive p o l i c y and procedures manuals

that mandate enforcement actions under s p e c i f i c circumstances. For

example, the Texas day care l i c e n s i n g d i v i s i o n has developed a step by

step guide to I i c e n s i n g , c i t i n g v i o l a t i o n s , applying c o r r e c t i v e

sanctions, i n v e s t i g a t i n g complaints, e t c . According to the D i r e c t o r of

the Texas program, the rnanual has promoted consistency and u n i f o r m i t y

throughout the I i c e n s i n g program. In a d d i t i o n , he said the manual i s

avai iable t o a l l day care centers so they can b e t t e r understand the

l i cens i ng process.

I n Conjunction With a Stronger Enforcement P o l i c y ,

DHS Should Deve lop Add i t i ona I Sanc t i ons t o l mprove Comp l i ance

DHS enforcement c o u l d a l s o be strengthened i f the Department had

@ additional enforcement options. Other states have developed various

intermediate sanctions, i n c l u d i n g the use of c i v i l p e n a l t i e s , bans on

admissions and postings of inspection r e s u l t s .

One a l t e r n a t i v e i s to use c i v i l penalties to punish centers that v i o l a t e

the rules and r e g u l a t i o n s . Although DHS has the s t a t u t o r y a u t h o r i t y to

apply c i v i l p e n a l t i e s , i t has not used them. DHS s t a f f claim the current

process i s too time- consuming. Current s t a t u t e s require DHS to hold a

hearing before assessing each c i v i l penalty. In a d d i t i o n , DHS can only

impose the penalty for each day the v i o l a t i o n i s documented by a

Department on- site v i s i t , and DHS must issue a p r o v i s i o n a l license to any

center assessed a c i v i l penalty.

C a l i f o r n i a has a c i v i l penalty s t a t u t e that appears to have avoided these

problems. A t the time of the inspection, the s p e c i a l i s t assigns each

v i o l a t i o n a date f o r c o r r e c t i o n and a penalty for noncompliance a f t e r

that date. Within ten days of the c o r r e c t i o n date, the s p e c i a l i s t

conducts a follow- up inspection. A c i v i l penalty i s assessed, without a

hearing, for any previously c i t e d v i o l a t i o n that has not been corrected.

The penalty i s accrued d a i l y from the deadline set f o r c o r r e c t i o n . The

penalty stops accruing when the center n o t i f i e s the day care d i v i s i o n

that i t i s i n compliance. A s p e c i a l i s t may then conduct a follow- up

inspection to v e r i f y compliance. The C a l i f o r n i a s t a t u t e includes an

appeals process. However, according to a C a l i f o r n i a spokesperson, fines

are rarely appealed. Cal i f o r n i a col lected $ 339,159 i n f i n e s i n f i s c a l

year 1986- 87.

A second a l t e r n a t i v e , used i n Texas and being considered by

Massachusetts, i s a ban on admissions. Rather than applying a d i r e c t

monetary f i n e t o c e n t e r s t h a t f a i l to comply w i t h r u l e s and r e g u l a t i o n s ,

the state bans admissions u n t i l the center demonstrates that i t can

maintain compliance. The p o t e n t i a l loss of income provides an i n c e n t i v e

to achieve compliance. Massachusetts i s also considering reducing the

capacity of centers that f a i l to follow s t a f f / c h i l d r a t i o s .

A t h i r d a l t e r n a t i v e , also used i n the Texas day care system, requires

centers t o post t h e r e s u l t s of i n s p e c t i o n s . T h i s permits parents t o see

the v i o l a t i o n s t h a t were c i t e d . Since most parents spend a v e r y s h o r t

time i n t h e center each day, i t i s h i g h l y possible t h a t they are unaware

of some problems that e x i s t . P o s t i n g i n s p e c t i o n r e s u l t s would give

parents the o p p o r t u n i t y t o see the problems i d e n t i f i e d w i t h i n each center

and to decide i f they want t h e i r c h i l d r e n exposed to them.

1. DHS should develop a stronger enforcement philosophy i n r e g u l a t i n g

day c a r e c e n t e r s .

2. DHS should document i t s s t a f f i n g needs and request funding to achieve

adequate s t a f f i n g l e v e l s .

3. DHS should compile a comprehensive p o l i c y and procedures manual f o r

the Day Care Licensing O f f i c e . The manual should include g u i d e l i n e s

governing enforcement.

4. The L e g i s l a t u r e should consider amending A. R. S. 336- 891 to f a c i l i t a t e

issuing c i v i l p e n a l t i e s .

5. The L e g i s l a t u r e should consider p r o v i d i n g DHS w i t h a d d i t i o n a l

i n t e r m e d i a t e s a n c t i o n s , such as bans on admissions, mandatory

capacity reductions and postings of i n s p e c t i o n r e s u l t s .

FINDING I l l

THE DEPARTMENT OF HEALTH SERVICES

SHOULD IMPROVE ITS CHILD DAY CARE

COMPLAINT HANDLING PROCEDURES

. DHS does not follow i t s established p o l i c i e s and procedures regarding

tracking of c h i l d day care complaints or timeliness of complaint

investigations. Tracking of complaint investigations i s inadequate and

may lead to untimely complaint investigations.

Current complaint p o l i c i e s - P o l i c i e s and procedures state that DHS

w i l l investigate a l l w r i t t e n and verbal c h i l d day care complaints. ( 1)

The p o l i c i e s specify a timeframe f o r i n v e s t i g a t i o n of complaints that

ranges from 24 hours to 20 working days, depending on the s e v e r i t y o f the

allegation and the location of the center. DHS must investigate a l l

allegations of abuse or s i t u a t i o n s that could pose immediate danger to

the health and safety o f c h i l d r e n w i t h i n 24 hours; a l l complaints for

centers w i t h i n Maricopa or Pima counties must be investigated w i t h i n ten

working days or sooner.

To ensure that a l l c h i l d day care complaints are investigated i n a timely

manner, DHS's p o l i c i e s and procedures' 2' c a l l for the use of both a

manual and computerized system to track complaints. The manual system

consists of a master l i s t of complaints which includes the date the

complaint was received and the date i t was investigated. The

computerized system should maintain information on complaints for

s t a t i s t i c a l and administrative purposes, and operate so that pending or

completed complaint investigations can be tracked at any time.

Tracking Of Complaint Investigations

I s Inadequate

DHS has not adhered to i t s p o l i c i e s and procedures regarding complaint

tracking. Although the Child Day Care Office does maintain a manual log

( ) DHS received 1,000 chi 1 d day care compl a i n t s i n 1987

( 2) E f f e c t i v e July 23, 1986.

of complaints, i t i s not kept up to date. In a d d i t i o n , the computerized

tracking system has not been f u l l y developed.

The Chi Id Day Care O f f i c e keeps a manual log that ident i f ies when a

complaint was received and when i t was investigated. However, t h i s log

i s not always c u r r e n t . According to the Phoenix team leader, the l a s t

time she reviewed the log many complaint i n v e s t i g a t i o n s t h a t had been

completed were not noted. The O f f i c e reviews the log q u a r t e r l y , so i t i s

possible that a complaint could be misplaced or f o r g o t t e n for up to three

months before being noticed.

In addition to not maintaining a complete manual log, DHS has not

implemented a computerized tracking system. When the current p o l i c i e s

and procedures were w r i t t e n , a computerized t r a c k i n g system was

envisioned. Chi Id Day Care s t a f f designed a form and have been

c o l l e c t i n g complaint information for computer input since January 1987.

However, according to the Child Day Care O f f i c e , DHS has not considered

the system a high p r i o r i t y and has not provided a computer consultant to

w r i t e the necessary program. Thus, the computerized tracking system

cannot be implemented.

One l i c e n s i n g s p e c i a l i s t pointed out that the i n a b i l i t y to track

complaints causes confusion when case loads are changed. (" She said

when a s p e c i a l i s t receives a complaint, i t i s u s u a l l y placed i n the

center's working f i l e . ' " I f a d i f f e r e n t s p e c i a l i s t i s assigned to

the center before the complaint i s investigated, the complaint could go

undetected for a long p e r i o d s i n c e the s p e c i a l i s t s normally only review a

f i l e before a r e q u i r e d i n s p e c t i o n .

DHS does not handle a l l c h i l d day care complaints in a timely manner -

DHS's lack of an e f f i c i e n t tracking system may impair i t s a b i l i t y to

handle complaints i n a timely manner. Based on the sample i n our f i l e

Special i s t s t r a n s f e r t h e i r caseloads annually.

(') I n a d d i t i o n t o the p u b l i c f i l e f o r each center, a working f i l e contains the most

recent i n s p e c t i o n i n f o r m a t i o n f o r each center. S p e c i a l i s t s use the working f i l e

d u r i n g i n v e s t i g a t i o n s and f o r follow- up work.

rev i ew '", DHS d i d not i n v e s t i g a t e 29 percent of i t s c h i l d day care

complaints w i t h i n the timeframe s p e c i f i e d i n the p o l i c i e s and

procedures. ( 2)

For example:

r DHS received a complaint that a day care center i n Maricopa county

had improper s t a f f / c h i I d r a t i o s and that personnel were not

q u a l i f i e d . According to the complaint p o l i c y , DHS should have

investigated the complaint w i t h i n ten working days. However, the

complaint was not investigated for 28 working days ( almost s i x

weeks). A t the time of the i n v e s t i g a t i o n , DHS confirmed that the

center had improper s t a f f l c h i l d r a t i o s and employees were not

q u a l i f i e d to supervise c h i l d r e n .

DHS established p o l i c i e s and procedures for complaints to ensure that a l l

complaints are investigated i n a timely manner. F a i l u r e t o meet these

guidelines may allow problems to continue.

Since complaint i n v e s t i g a t i o n timeliness i s not closely monitored, i t

does not appear that the complaint p o l i c i e s are enforced. In f a c t , not

a l l of the c h i l d day care l i c e n s i n g s p e c i a l i s t s were f a m i l i a r w i t h the

complaint handling p o l i c i e s . Interviews w i t h some s p e c i a l i s t s revealed

that they were unaware of s p e c i f i c timeframes for complaint

i n v e s t i g a t i o n s and d i d not f e e l t h a t the p o l i c i e s were enforced.

RECOBMENDAT I ONS

1. DHS should adhere to i t s p o l i c i e s and procedures regarding timeliness

of complaint i n v e s t i g a t i o n s .

2. DHS administrators should t r a i n s t a f f members on the p o l i c i e s and

procedures for i n v e s t i g a t i n g complaints.

See Appendix f o r discussion of sampling procedures.

(') According to DHS, some complaints a r e n o t i n v e s t i g a t e d i n accordance w i t h the

timeframe because t h e n a t u r e of the complaint i s not serious and e i t h e r : 1) the

s p e c i a l i s t has been to the center w i t h i n 30 days p r i o r to r e c e i v i n g the complaint,

o r 2 ) the center i s located outside of Maricopa and Pima counties. Taking t h i s i n t o

account, 21 percent o f the complaints s t i l l were not i n v e s t i g a t e d i n a t i m e l y manner.

3. DHS a d m i n i s t r a t o r s should monitor compliance w i t h the complaint

p o l i c i e s and procedures by implementing the computerized t r a c k i n g

sys tern.

4. DHS should provide the Chi Id Day Care Off ice w i t h the necessary

c o n s u l t a t i o n so a computer program can be w r i t t e n t o automate the

complaint t r a c k i n g process.

OTHER PERTINENT INFORMATION

Changes have occurred i n the regulation o f h o s p i t a l s and nursing homes i n

Arizona. In the early and mid- 1980s regulatory methods were amended or

allowed to sunset. Inpatient bed space and costs have continued to

increase a f t e r deregulation. However, the impact of deregulation on

capacity and price i s unclear.

Arizona has reduced regulatory control over hospitals and nursing homes.

The two methods used t o c o n t r o l supply and rates were sunset or were

s t a t u t o r i l y amended in the early and mid- 1980s.

Arizona oversaw hospital and nursing home supply, services and rates with

two regulatory methods: c e r t i f i c a t e of need ( CON) and rate review. Both

regulatory methods required providers t o submit to State review.

The CON process required providers to obtain approval from the Department

of Health Services ( DHS) before changing services of ferecl or expending

over a specified d o l l a r amount for construction or expansion of

f a c i l i t i e s . Providers were to substantiate the community's need for the

proposed f a c i l i t y or service changes.

The other regulatory method used was rate review. Providers wishing to

increase t h e i r rates were required to submit a rate proposal for DHS

review and to undergo public hearings. However, providers could implement

rate increases regardless of DHS recommendat ions.

The regulatory methods were changed in response to concerns over t h e i r

effectiveness. During the early 1980s, providers complained that the CON

and rate review processes were expensive and time- consuming. They also

f e l t that the processes were a r b i t r a r i l y and i n c o n s i s t e n t l y a p p l i e d . The

general pub1 i c also expressed concern by voting down health care cost

containment propositions i n a 1984 e l e c t i o n . According to hospital

industry representatives, the Legislature f e l t that t h i s indicated the

public did not support regulation. The Legislature allowed nursing homes

to be excluded from the CON process i n 1982, and i t terminated the process

i n 1985 f o r h o s p i t a l s . Also i n 1982, l e g i s l a t i o n passed that eliminated

p u b l i c hearings f o r h o s p i t a l r a t e proposals. Further, the l e g i s l a t i o n

required public hearings for nursing home rate reviews only when proposed

increases exceeded the health care consumer p r i c e index. These changes

f u r t h e r moved the s t a t e toward a deregulated environment.

Capac i ty And Pr i ces

Continue To Increase

Since deregulation, Arizona's i n p a t i e n t bed space and p r i c e s have

continued to increase. Hospital and long- term care bed capacity has

s t e a d i l y risen. I n a d d i t i o n , the p r i c e s charged f o r h o s p i t a l stays

continue to increase but at a slower pace than when regulated.

Excess bed space continues to increase - The number of excess h o s p i t a l

and nursing home beds i s increasing. Bed space capacity continues to grow

while occupancy r a t e s a r e f a l l i n g . These trends are generating excess bed

space and may be costing consumers m i l l i o n s o f d o l l a r s annually. In

a d d i t i o n , the number of f a c i l i t i e s ~ f f e r i n g high cost procedures has also

increased.

The number of h o s p i t a l beds has increased modestly b o t h b e f o r e and a f t e r

deregulation, The number of non- Federal h o s p i t a l beds increased by 934

beds between 198% and 1986. Before d e r e g u l a t i o n , h o s p i t a l bed capacity

grew .3 percent i n 1983 and 5 percent i n 1984. A f t e r d e r e g u l a t i o n , the

increase i n capacity was 1 percent for both 1985 and 1986. During the

same period, occupancy rates f e l l from 65 percent to 58 percent.

The trend of increased capacity coupled w i t h a decreasing occupancy rate

i s even more evident i n nursing homes. Although comparisons cannot be

made between pre- and post- regulation years because data i s not a v a i l a b l e ,

i t appears there has been a large increase i n bed space since

deregulation. Between 1982 and 1986 the number of non- federal nursing

home beds grew by 5,898 beds, an average annual increase o f 14 percent.

During the same period, occupancy rates f e l l from 91 percent to 71 percent.

Growing capacity combined w i t h f a l l i n g occupancy r a t e s g i v e s Arizona a bed

space surplus that may be c o s t l y to the consumer. Based on data c o l l e c t e d

by DHS,") we estimated that Arizona had approximately 3,400 excess

hospital beds and the same nrlmber of excess long- term care beds at the end

of 1986. Estimates developed for the Arizona S t a t e Health Plan 1985- 1990

suggest that a h o s p i t a l bed accrues at least $ 80,000 per year i n f i x e d

costs. I f t h i s i s accurate, Arizona's excess h o s p i t a l bed space cost

approximately $ 270 mi I l ion i n 1 9 8 6 . ' ~ ' Estimates for the f i x e d cost of

a long- term care bed were unavailable.

In addition to excess c a p a c i t y , the number of f a c i l i t i e s o f f e r i n g high

cost services since deregulation i s r a p i d l y increasing, and may have

harmful e f f e c t s . Services i n t h i s category include open- heart surgery,

megavoltage r a d i a t i o n therapy, and computed tomographic scanners.

The a n l y s e r v i c e for which accurate and e a s i l y a c c e s s i b l e i n f o r m a t i o n

e x i s t s i s open- heart surgery. Before deregulation i n 1985, seven

f a c i l i t i e s o f f e r e d t h i s procedure. By 1987 the number had grown to 16

f a c i l i t i e s . ~ t a n d a r d s ' ~ ' suggest that each f a c i l i t y o f f e r i n g

open- heart surgery should perform at least 200 operations annually to

maintain i t s p r o f i c i e n c y and prevent unnecessary d u p l i c a t i o n of expensive

equipment. By mid- 1987 o n l y n i n e f a c i l i t i e s met t h i s standard. A Phoenix

Gazette special i n v e s t i g a t i o n reported h o s p i t a l s performing a lower volume

of open- heart surgeries had death rates n e a r l y t w i c e as high as those

h o s p i t a l s performing the suggested minimum.

Hospital rates in Arizona are r i s i n g - The cost of a h o s p i t a l stay i n

Arizona continues to increase. From 1980 to 1986 h o s p i t a l costs have

r i s e n f a s t e r than i n most other s t a t e s . In a d d i t i o n , the number of

faci I i t i e s implementing rate increases against DHS' recommendat ions has

increased since mandatory p u b l i c hearings were e l i m i n a t e d .

Pub1 ished i n Arizona Hosoi t a l S t a t

. .

i s t l c s , 1974 through 1986.

( 2) Figures are based on the number of beds a t the end of 1986.

( 3) The standards were pub1 ished i n National Guide1 ines f o r Health Planning by the

Department of Health, Education and Welfare, and were developed i n the l a t e 1970s f o r

the health planning program. A1 though rules and r e g u l a t i o n s f o r t h i s program were

l a t e r repealed, the standards are s t i 11 general 1 y accepted as minimum standards f o r

p r o f i c i e n c y .

3 7

Arizona h o s p i t a l c o s t s continue to increase, but at a slower pace since

deregulation. Cost per i n p a t i e n t day i n Arizona's h o s p i t a l s rose from

$ 377 i n f i s c a l year 1981 ( a 21 percent increase from the previous year) to

$ 799 i n f i s c a l year 1986 ( a 10 percent increase from the previous y e a r ) .

Arizona c u r r e n t l y ranks f i f t h highest i n per day charges f o r h o s p i t a l

stays, compared w i t h a rank of tenth i n f i s c a l year 1980. Arizona has

been ranked f i f t h since 1983.

The number of rate increases i n Ar izona have also increased. Since the

e l i m i n a t i o n o f mandatory p u b l i c hearings, the number o f f a c i l i t i e s

implementing rate increases against DHS' recommendation have r i s e n . From

1978 through 1985 an average of 4.1 f a c i l i t i e s per year implemented rate

increases against the recommendations of DHS, w i t h an associated d o l l a r

cost of $ 3.6 m i l l i o n per year. In 1986, four years a f t e r p u b l i c hearings

on proposed rate increases were abolished and one year a f t e r the CON

process was eliminated, 28 f a c i l i t i e s implemented rate increases against

DHS recommendat ions, w i t h an associated do l l a r cost of $ 60 m i l l ion.

impact Of Deregulation Unclear

Although capacity, services and p r i c e s have continued to increase since

deregulation, i t i s not clear that these increases are the d i r e c t r e s u l t

of deregulation. I t i s d i f f i c u l t to i s o l a t e the e f f e c t s o f deregulation

from the e f f e c t s of other changes occurring i n the health care i n d u s t r y .

I t may be too soon to determine the impact of deregulation. We contacted

o f f i c i a l s and representatives of the insurance, nursing home and h o s p i t a l

i n d u s t r i e s . They indicated that the health care industry has not had

s u f f i c i e n t time to adjust to the new operating environment. An insurance

industry o f f i c i a l also claimed that the excess capacity resulted from a

r i s e i n construction that was an i n i t i a l reaction to the termination of

CON. They a n t i c i p a t e i t w i l l take several years before the market

s t a b i l i z e s enough t o a l l o w an accurate assessment o f d e r e g u l a t i o n ' s

e f f e c t s .

I t i s also d i f f i c u l t t o separate the e f f e c t s o f deregulation from other

changes c u r r e n t l y taking place i n the health care i n d u s t r y . Outpatient

care has increased i n recent years, and changes i n Medicare reimbursement

p o l i c i e s have resulted i n shorter i n p a t i e n t stays. In a d d i t i o n , insurance

and hospital o f f i c i a l s noted that insurance companies and health

maintenance organizations are n e g o t i a t i n g rates and developing new methods

to help contain health care costs. These f a c t o r s a l s o c o n t r i b u t e to

changing trends i n the i n d u s t r y .

AREA FOR FURTHER AUDIT WORK

Should The Long- Term Care O f f i c e Be Abolished?

Arizona Revised Statutes 936- 447.18 established the Long- Term Care

- O f f i c e ( LTCO). LTCO i s responsible f o r developing, implementing, and

providing technical assistance and support services to licensed nursing

care f a c i l i t i e s i n the areas of nursing care, n u t r i t i o n , s o c i a l services

and health education. I t also provides consumer information regarding

cost and location of long- term care f a c i l i t i e s . I t s estimated operating

budget for f i s c a l year 1988 i s $ 448,000. LTCO has 11 authorized

f u l l - t i m e employee p o s i t i o n s : one a d m i n i s t r a t o r , s i x consultants and

four c l e r i c a l s t a f f .

However, i t appears that the demand and need for LTCO's services may not

be s u f f i c i e n t t o j u s t i f y i t s c o n t i n u a t i o n . According to representatives

of the nursing home i n d u s t r y , most f a c i l i t i e s choose t o h i r e p r i v a t e

consultants when technical assistance i s needed. In f a c t , medicare

c e r t i f i e d f a c i l i t i e s must contract w i t h professionals for d i e t e t i c

services, specialized r e h a b i l i t a t i o n , s o c i a l services, e t c . , i f a

f a c i l i t y does not employ such personnel. I n Arizona, as of February,

1988, 57 percent o f l icensed nursing homes are medicare c e r t i f i e d and

have consultant services a v a i l a b l e . I t i s a n t i c i p a t e d t h a t beginning i n

January 1989, most nursing homes w i l l be c e r t i f i e d and have

professionaI/ consuItant contracts i n order t o q u a l i f y f o r AHCCCS monies

a v a i l a b l e for long- term care.

Further audit work, i n c l u d i n g a review of the O f f i c e ' s work load and a

survey of long- term care i n s t i t u t i o n s , i s needed to determine whether

there i s a need for the O f f i c e .

a

ARIZONA DEPARTMENT OF HEALTH SERVICES

Office of the Director

ROSE MOFFORD, GOVERNOR @ TED WILLIAMS, DIRECTOR

Mr. Douglas R. Norton

Auditor General

Office of the Auditor General

2700 North Central Avenue, Suite 700

Phoenix, Arizona 85004

Dear Mr. Norton:

Attached please find the Department of Health Servicest response

to the performance audit of the Health Care Facilities portion of

the Division of Emergency Medical Services and Health Care

Facilities.

Many of our concerns as raised in the response to your earlier

draft remain unchanged. As a result, our response is essentially

the same. Though the response is 17 pages long, we trust you

will print it in its entirety.

Realizing that this is the first of a series of audits to be con-ducted

at the Department of Health Services, we hope that our

concerns are taken as the constructive criticism they are meant

to be. We look forward to working with your staff in the future

and appreciate the role an audit function should, and must, play

in the governmental structure.

Sincerely,

Ted Williams

Director

TW/ sd

enclosures

The Department of Health Services is An Equal Opportunity Affirmative Action Employer.

State Health Building 1740 West Adams Street Phoenix, Arizona 85007

ARIZONA DEPARTMENT OF HEALTH SERVICES

RD GOVERNOR

Byp' 9r PartHW. I8dmm

DIVISION OF EMERGENCY MEDICAL SERVICES

I) TED WILLIAMS, DIRECTOR AND HEALTH CARE FACILITIES

701 E a s t J e f f e r s o n S t r e e t - 4th F l o o r

P h o e n i x , A r i z o n a 85034

July 7, 1988

Overview

In general, the Department agrees with the report's conclusions and

recommendations; however, the Department is disturbed by the inac-curate

assessment of the severity of repeated violations. In addi-tion,

the report did not acknowledge the personnel shortages in both

the Office of Health Care ~ icensure and the Office of Child Day Care

Licensure which limited rigorous enforcement. When serious condi-tions

existed, both Offices took appropriate action, allowing for

the effects sudden transfer has on elderly, ill nursing home resi-dents

and the inadequate number of day care centers in Arizona. Be-tween

these two Offices, 1858 separate complaints were investigated

in 1987 resulting in closure of 5 supervisory care homes, revocation

of 2 nursing home licenses, 50 specific legal actions and issuance

of 288 provisional child day care center licenses. Although this

may not be an enviable record, we think it demonstrates a reasonable

response in spite of inadequate resources.

Causes of " Inadequatew Enforcement

Resource Constraints - Part of the explanation for enforcement ac-tivities

which are less than ttshould be1' are resource constraints

under which the Offices operate. The Offices of Health Care Licen-sure

and Child Day Care Licensure have both experienced a dramatic

growth in the number of facilities they oversee; unfortunately, this

growth has not been matched by an increase in staff.

The number of nursing home facilities in the State nearly doubled

during the last four years. The number of other types of facilities

which the Office of Health Care Licensure must regulate has more

than tripled. Since 1980, the Office of Health Care Licensure has

been given only five new State positions. Of these, two were desig-nated

for behavioral health licensure. The overall increase in

staff in the office of Health Care Licensure has been paid from

Federal funding sources and these positions can only be used for

Medicare activities.

The Office of Child Day Care Licensure has received only 1.5 FTEs

since 1974 while the number of facilities has increased from 443 to

947. Case loads per surveyor have increased from 74 to 126. Since

1984, the number of day care facilities which the Office of Child

Day Care Licensure regulates has increased by approximately 225

without a commensurate increase in staff.

The Department of Health Services is An Equal Opportunity Affirmative Action Employer.

I)

State Health Building 1740 West Adams Street Phoenix, Arizona 85007

In response to the increasing case loads, the Offices have requested

additional staff during every budgeting cycle. In the past, these

needs have been prioritized below many other policy considerations. a

With limited staff, the Department has been forced to concentrate on

the most efficient means for ensuring the actual, versus potential,

safety of the populations served. Enforcement actions consume a

great deal of time. As an example, a summary suspension in which

the Office of Health Care Licensure is currently involved has al-ready

consumed 640 hours, not including the time which will be spent a

in hearing. The Department estimates it will require another 300

hours before this issue is settled. Under the terms of the contract

with the Health Care Financing Administration, these State actions

can onlv be funded by the State.

Without sufficient resources to undertake formal enforcement @

proceedings against facilities, the Department chose to use informal

enforcement mechanisms. In the Office of Health Care Licensure,

these informal mechanisms include voluntary restrictions on admit-ting

new patients, coordination with the counties to restrict the

number of county patients admitted to the facilities and voluntary

relocation of patients at risk. In addition, the Office of Health 4@

Care ~ icensure uses the threat of Medicare termination to informally

enforce State regulations. These activities are funded through

Federal funds and apply pressure to comply with both State and

Federal regulations.

The Office of Child Day Care Licensure has used similar informal en- rll

forcement mechanisms to compensate for chronic understaffing. The

Office has issued amended licenses which state the reasons a

facility was given a provisional license. The Office also has

denied applications for approval as Director of a center when his-tory

indicates that the applicant has been unable to maintain a

facility in compliance with licensing regulations. a

Other Factors Inhibitins Enforcement - Other factors have prevented

the Department from using formal enforcement mechanisms. Fines

levied against offending facilities are often paid from operating

revenues, reducing the amount of money available for improving the

conditions which lead to noncompliance in the first place. Closure ( I

of nursing homes is possible because the State enjoys a surplus of

beds. However, even though relocation of nursing home residents is

possible, it may not be advisable because studies indicate that sud-den

transfer of such patients increases the mortality rate 300%.

Areas of General Concern

By and large the individual facts cited in the report are accurate,

though specific errors were noted in the sections dealing with the

individual findings. However, the Department is concerned about two

aspects of this report: a tone of condemnation throughout the

report and an inaccurate assessment of the severity of repeated

violations.

choice of Report's Tone - The Department is concerned about the

tone in which this report is written for several reasons. First,

after reading the report on the performance audit of the State Fire

Marshal's Office, the Department was somewhat surprised by the tone

in which the Office of the Auditor General chose to write the report

on the Health Care Licensing function. The Fire Marshal is charged

with the same type of regulatory responsibility as the Division of

EMS and Health Care Facilities, i. e. ensuring the safety of the

users of of the state's public buildings. That report. stated

that the State Fire Marshal's Office inspects only 3% of the

facilities it should and conducts only 5% of the follow- up inspec-tions

required.

Nonetheless, that report does not address the " threat to health and

safety" posed by the Fire Marshal's poor performance. Instead, it

addresses the potential liability facing the State from the State

Fire Marshal's performance of its duties and the need for increased

enforcement efforts. In contrast, numerous places in this report

state that people's health, safety and welfare are in jeopardy be-cause

of poor enforcement of rules, even though the Offices involved

rigorously inspect all facilities annually and conduct numerous

follow- up inspections. The first six pages of the first finding

contain the phrase '' threatens health and safety1' five times. What

circumstances cause one agency's poor performance to be more

egregious than another's?

In the last two years the Office of Health Care Licensure initiated

almost fifty terminations. Most facilities corrected their

deficiencies before the termination took affect. In fact, a study

of Medicare certification activities conducted by Brown University

on ten states found that Arizona was the most stringent in inter-preting

Medicare standards. It also found Arizona to be the most

aggressive in initating Medicare termination actions.

Finally, in presenting the case examples of repeat non- compliance,

the audit team seems to insinuate that the Department either prefers

not to substantiate complaints or is incompetent of doing so. Noth-ing

could be further from the truth. Unfortunately, substantiating

complaints is extremely difficult. Even the trained investigators

in the various police departments have great difficulty substantiat-ing

some of the complaints.

Assessment of Severitv - The report over- estimates the severity of

the repeated violations. For the last two years, a national task

force has tried to define violations which constitute serious and

immediate threat. As yet, it has been unable to reach a consensus 9

on the definition. Preliminary reports of its progress stress the

need for professional judgment to gauge the severity in each par-ticular

circumstance.

In preparing its review of the Division's files, the staff from the

Auditor General's Office asked staff from the Offices of Health Care

Licensure and Child Day Care Licensure to give a single severity

rating, from 1 ( least serious) to 5 ( most serious), for violation of

each regulation number. Department staff repeatedly pointed out the

shortcomings of this technique, but we note that it was applied

anyway. Though the discussion of the actual violations that were

classified as nseriousw has been removed from this final version of 1

your report, we do note that you mentioned some of our concerns in

footnotes. We will include our comments on the previous version for

the reader's benefit.

o Although every regulation number can be violated in numerous

ways, some violations are of minimal severity and others are il

more grave, the audit team forced violations of almost every

regulation number to be of one severity rating.

o The severity of each violation noted in the sampled institu-tions

was determined by the severity assigned to the regulation

number, not the circumstance of that particular violation. #

o The severity rating, as applied by the audit team, did not dis-tinguish

between violations which noted a single incident and

violations which constituted widespread occurrences in a

facility.

0

JI

Because a given regulation can be violated in numerous ways,

many of the " repeat deficienciesM noted in the report are not

actually occurrences of the same specific violation. For ex-ample,

there are over five hundred particular circumstances

which can be cited as violations of R9- 10- 921.24.2. ( infection

control, nursing standards of care and dietary). Alleging that

repeated violations of R9- 10- 921. A. 2. are repeats of the same

deficiency is inappropriate. Further examples of this over-simplification

are drawn from the regulations the report high-lights

in its Audit Methodoloav section.

Nursina Home Reaulations

Auditor General Example 1: " Failure to Report Changes in

the Condition of a Patient to the Attending Physician -

may result in inappropriate treatment."

ADHS Comment: A. R. S. 36- 447.05. E. states, " Changes in the

medical condition of a patient shall be reported to the

patient8s attending physician."

Because there are varying degrees by which a medical con-dition

can change, violation of this statute does not

necessarily constitute an imminent threat to the patient's

health. For example, though a small skin tear should be

reported to the attending physician, lack of notification

would not present a serious risk to a patient.

Auditor General Example 2: " Failure to Investigate and

Prevent Infections in the Facility - may allow infections

to spread. I1

ADHS Comment: R9- 10- 92i. A. 2. a. states, llInvestigation,

control and prevention of infections in the facility."

Because of the way in which this regulation is written,

the Department is forced to cite inadequate nsuweillancew

as a violation of this regulation. flSurveillanceu is

defined as close observation and, in this instance, means

written documentation of treatment of infections. A

violation of this regulation does not necessarily mean

that infection is inadequately treated in the facility.

Auditor General Example 3: " Failure to Prevent Medical,

Psychological and/ or Physical Abuse of Patients - can

result from inadequate care, inappropriate supervision,

etc.

ADHS Comment: A. R. S. 36- 447.17. A. 6. states '' Each patient

shall be free from medical, psychological or physical

abuse. It

The Department usually cites this regulation when nursing

9

care problems occur ( such as inadequate turning, in-adequate

restorative programs, inadequate notification of

physicians or improperly following doctors orders). The

Department seldom identifies instances of actual

psychological or physical abuse. In cases of substan- a

tiated psychological or physical abuse, the Department has

aggressively enforced the regulations. Where isolated

staff members were involved, the facilities themselves of-ten

discharged the offending staff member. Where profes-sional

nurses are involved, the Department notifies the

Board of Nursing to initiate its enforcement proceedings. ( I

In cases of unsubstantiated charges of abuse, the Depart-ment

closely monitors the facility. At least five of the

enforcement proceedings on licenses involved suswected

abuse. In each of these cases, the Department acted

swiftly to identify and relocate the residents at risk. a

Supervisorv Care Resulations

Auditor General Example 1: '' Inadequate Supervision - in-cludes

no staff on duty at night and/ or no staff on duty

with first aid training."

ADHS Comment: R9- 10- 616. B. states, " Sufficient personnel

shall be employed to ensure the well- being of the resi-dents

and to provide effective food service, housekeeping

and maintenance service." R9- 10- 616. C. states, " At all

times when residents are present, at least one employee on

duty on the premises shall have satisfactorily completed a

eight hours of basic first aid training. Written

verification of this training shall be available at the

facility."

Over the past three year period, the Department identified

several facilities where the staff did not stay awake at a

night. The Department cited the facilities for violation

of R9- 10- 616. B. The facilities challenged this inter-pretation

of the regulation and the Department asked for

an official Attorney General's opinion. The Department

thought it unreasonable to undertake enforcement actions

for violations of this regulation during the months spent

waiting for the opinion.

The first aid requirement includes availability of

documentation of appropriately trained staff. A lack of

documentation does not necessarily mean that patients are

not being monitored by staff with proper training. In

other instances where the Department cited facilities for

violations of this regulation, the deficiency was noted

because a review of staffing files indicated the pos-sibiltv

of inadequate staffing.

~ uditor General Example 2: " Failure to Assess Appropriate

Level of Care - may result in residents who require

skilled care receiving only general supervision,"

ADHS Comment: R9- 10- 613 describes the functional level

appropriate for supervisory care. R9- 10- 615. B. requires

that residents meet admission requirements.

Patients requiring skilled nursing care are rarely found

in supervisory care facilities. Approximately four years

ago, the Department did note widespread problems of super-visory

care facilities accepting patients requiring per-sonal

or intermediate care. The Department initiated

legal actions against the offending facilities, and the

patients were relocated. The Department has aggressively

monitored this regulation since then. As a result, when

the Department cites a violation of this regulation, it

usually involves an isolated case of a patient's condition

having deteriorated, either temporarily or permanently.

Because supervisory care patients are frequently immuno-compromised

individuals, their conditions can change

rapidly. A simple cold can temporarily change the ap-parent

level of care required. It would be unrealistic

and inhumane to transfer these patients to another

facility for the brief period of time required for them to

recover. In cases such as this, the Department cites the

facility for a violation of the above referenced regula-tions

and returns to re- evaluate the resident. In the

course of these re- evaluations, the Department often finds

that the patients are in the appropriate level of care.

In cases where the patient's condition has deteriorated

permanently, the resident is relocated immediately. In a

few cases, the resident, the physician, the family and the

facility have all resisted the relocation. This causes a

delay in obtaining compliance with these regulations. @

Auditor General Exam~ le 3: " Failure to Maintain Safety

Standards - includes: 1) failure to install fire alarms

throughout the facility, 2) no grab bars in bathrooms, and

3) inadequate space based on bed capacity."

a

ADHS Comment: R9- 10- 624. A. requires that all facilities

meet State and local fire codes.

This regulation does not specifically require a fire alarm

system. Some jurisdictions require fire alarms and some

do not. Over the last four years, the Department has met 0

with the State Fire Marshal's Office and local fire

authorities to attempt to develop uniform fire protection

requirements across the state. This has been only mar-ginally

effective. As a result, the Department will

develop a checklist of fire- safety requirements for each

jurisdiction in which facilities are located. a

Day Care Resulations

Auditor General Examwle 1: IfImproper staff/ child ratios -

can result in inadequate supervision of children and in-crease

the chances of accidents and/ or abuse." ( I

ADHS Comment: R9- 5- 404 states that children shall be

grouped by age, that they shall be supervised at all times

and establishes minimum staff- to- child ratios.

Being out of compliance by having one too many children in ( I

a class is clearly less severe than having no supervisors

in a classroom.

Auditor General Examwle 2: " Failure to register employees - includes failure to fingerprint employees and to conduct

background checks. a

ADHS Comment: A. R. S. 36- 883.02 and R9- 5- 210. A- D. require

that all employees be fingerprinted and registered with

the Department within 20 days of being hired.

Many of the violations of this rule refer to inadequate

documentation in personnel files rather than lack of fin-gerprinting

or background checks.

Auditor General Example 3: " Failure to store toxic and

hazardous materials in a locked storage area - may allow

children access to substances and equipment that could

cause them harm."

ADHS Comment: R9- 5- 609. B. requires that all potentially

hazardous materials and equipment be stored in a locked

storage area.

Violation of this regulation also varies greatly in

severity. While a surveyor would cite a violation of this

regulation if a hammer were sitting on the teacher's desk,

it can only remotely be considered a severe threat to

children" health and safety.

The above discussion points out the pitfalls of a naive ranking of

the severity of violations. Unfortunately, the audit team turned

down the Department's repeated offers to assess the severity of the

individual violations noted in the file review. Had the audit team

accepted the offer, perhaps the State would have gotten more mean-ingful

information from the months of effort devoted to the file

review. It might have been possible to develop insights to the sys-temic

causes of non- compliance in the industry, such as increased

use of pool nurses, inadequate reimbursement rates from Medicare and

the counties and inadequate day care center staffing ratios.

FINDING - 1

The report on the performance audit of the Office of Health Care

Licensure points out valid concerns about the enforcement activities

undertaken by the Office. However, as mentioned previously, the

Department has been hampered in its ability to use its full

regulatory authority because of insufficient staff and concern for

the patients. Furthermore, the report addresses only part of the

entire operations of the Office, omitting investigation of the en-tire

medical facilities regulation function. It also does not

address the efforts made to improve office operations. Finally, the

report includes factual and logical errors in the case examples.

In the past four years the Office of Health Care Licensure has

changed its philosophy on survey techniques and now requires that

facilities should be made aware of everv possible infraction of

licensing regulations. As a result, violations which would not be ( I

cited by regulatory bodies in other states are often noted on in-spection

surveys in Arizona. In addition, the Office has imple-mented

an outcome oriented survey process which focuses on the

quality of life the patients enjoy. This type of survey has greatly

increased the number of violations cited over those cited in the

ltpaper- compliancews urveys used before. In short, the quality of a

the surveys conducted today is more thorough than those conducted

two years ago.

The audit report overstates the number of serious repeat offenses.

The case examples the report uses to illustrate the effects of

repeat non- compliance are similarly flawed. The facilities used as a

case examples have been more closely