Published: June 30, 2009 11:51 pm      

Salluzzo faces accounting questions in Tenn.

A former Conemaugh Health System executive is facing controversy for inflated income reports at the Tennessee-based health system he led after leaving Johnstown.

Wellmont Health System revised its financial statements for 2006 and 2007 this week, after new auditors found accounting issues that overstated net income by $20 million under Dr. Richard Salluzzo’s leadership, the system announced.

The audit was launched after Salluzzo, former chief executive officer at Conemaugh and its flagship Memorial Medical Center, left Wellmont to take the reins of Cape Cod Healthcare Inc. in Hyannis, Mass.

“This brings a challenging chapter in Wellmont’s history to a close,” Mike Snow, Wellmont’s president and CEO, said in a press release. “We are now fully focused on managing our operations and financial performance in this uncertain economy and continuing to deliver superior health care to our patients.”

Salluzzo said the issue is simply “a disagreement between auditors.”

In a statement released Monday, Salluzzo said the amounts listed under “accounts receivable” were interpreted differently. The category includes money the hospital expects to collect from insurance companies, Medicare and other payers. While those amounts are almost always less than the hospital’s official charges, actual payments are often hard to predict.

“It’s more art than science,” one health system leader said.

Wellmont leaders stopped far short of blaming Salluzzo.

“The overstatement occurred because of several issues and errors recording various expenses, receivables and assets,” the hospital announcement said.

“Importantly, the financial review did not identify any theft or personal gain associated with the accounting issues, nor did it indicate any issues with regulatory agencies or payors.”

Instead of $15.2 million in fiscal year 2006, Wellmont earned $2.8 million. The $9.2 million reported in 2007 was restated at $2 million. In 2008, the system lost $4.59 million. Salluzzo came to Wellmont in mid-2005 and left in mid-2008.

Conemaugh had strong financial performance under Salluzzo, board member Robert Gleason Jr. said Tuesday. He was board chairman for much of Salluzzo’s tenure.

“We had a turnaround from a loss,” Gleason said. “I remember no discrepancies.”

Salluzzo led Conemaugh from June 1999 until November 2004. During those five years, total revenues nearly doubled and all four system hospitals’ financial losses were stemmed. He led the charge on plans for Greater Johnstown Tech Park development and the acquisition of crosstown rival UPMC Lee Regional.