A STATE AUDIT of UMass Memorial Health released earlier this month by Auditor Diana DiZoglio’s office asserts that the health system should have used more than $6 million in COVID relief grants from the state to prevent its maternity unit in Leominster from closing in 2023.

The closure, which UMass Memorial attributed to workforce shortages and declining births, has since left maternity patients farther from a labor and delivery unit – resulting in a number of ambulance and emergency room births – and has strained the region’s emergency medical services, CommonWealth Beacon reported in September.

The state auditor’s office reviewed UMass Memorial’s activities between July 1, 2020, and June 30, 2023, and found that the private, nonprofit health care network in Central Massachusetts could not provide evidence of how it spent $6.2 million in COVID-related grants it received from the Executive Office of Health and Human Services (EOHHS) during the investigation period.

The hospital system says the money was used on bonuses for frontline health care workers.

The issue appears to be a spat about accounting records, but it highlights the struggles health providers had during the height of the first COVID waves, when frontline medical personnel were stretched thin, and how the business of health care has made it increasingly difficult to deliver services like maternity care across the state.

UMass Memorial has pushed back on the audit’s findings, arguing that DiZoglio’s office overstepped by attempting to dictate how the hospital network should manage its funds.

Despite UMass Memorial’s claims that the funding was used for bonus payments authorized under the grant agreement, the auditor has maintained that the health care system did not provide accounting records as evidence of those expenditures.

Although UMass Memorial likely will not face consequences, the audit makes several recommendations and encourages the hospital to adopt procedural changes and reassess maternity care in the region.

“By not investing this money in its maternity center workforce, [UMass Memorial] has created a health disparity for its patients, of whom 20 percent are MassHealth members, because of a lack of access to maternity care in the Central Massachusetts region,” the auditor’s report said.

After the investigation concluded, lawyers for UMass Memorial told DiZoglio’s office the funds were used to reimburse itself for employee appreciation bonuses it allocated to thousands of front-line workers during the height of the pandemic, when hospitals around the country struggled to retain medical staff. UMass Memorial added that the bonuses fell under the “increased cost of workforce” category of allowable uses of COVID funds.

“While reimbursement for bonuses may be permitted, the general public, whose tax dollars were spent, would likely have been better served had this money been used to ensure community access to critical healthcare services, such as maternity care,” the auditor’s report noted.

UMass Memorial provided the auditors with a spreadsheet detailing $10.6 million in bonuses, but DiZoglio’s office said that didn’t constitute proof of payments made to the employees, nor was it proof the bonuses were funded by the $6.2 million grant. Payroll records would have been an acceptable form of documentation. The report also pointed out that the spreadsheet was created on December 3, 2024, well after both the date the information was requested and the audit period.

UMass Memorial countered in its formal response that the auditor “never submitted requests to UMMH for such ‘accounting records’ and it is unclear what those would be other than the previously provided materials.”

Steve Lisuaskas, the deputy auditor under DiZoglio, said in an interview that a spreadsheet generated after-the-fact and provided by UMass Memorial’s lawyers was insufficient evidence.

“I am highly confident that … UMass Memorial knew exactly what we were looking for, and chose not to provide, or more worryingly, never had payroll records they are required to keep for their grants,” he said. “Providing an Excel spreadsheet, which you and I could develop on our own, and purporting it to be a payroll record is not how audits work.”

In response to the auditor, UMass Memorial said it had not prepared any documents related to the use of the funds initially because the Executive Office of Health and Human Services never provided specific guidance on how to keep track of the expenditures.

The hospital system also argued in its formal response that the closure of the maternity ward at UMass Memorial HealthAlliance-Clinton Hospital in Leominster was not due to COVID, and directing pandemic relief funds to keep it open would not have been permissible under the grant agreement.

But EOHHS clarified, in response to the audit, that supporting maternity care “would likely have been a permissible use of the funds,” and said maintaining accounting records was a requirement of the grant agreement.

The auditor’s office added that the 2021 American Rescue Plan Act, which funded the state grant in question, authorized “premium pay” and “grants to employers with essential workers,” which could have applied to maternity care workers UMass Memorial struggled to recruit before the closure.

Regional leaders like Fitchburg mayor Sam Squailia took to social media to share the audit and lament the maternity unit closure.

“The closure of UMass Leominster’s maternity unit was a terrible hit to Fitchburg families and families across North Central Massachusetts,” Squailia wrote on Facebook. “When public money is involved, communities deserve a clear paper trail and a plan that protects access first. Families should not be driving farther to deliver a baby.”

UMass Memorial argued that there was a public benefit to the bonuses, which rewarded and retained more than 13,000 frontline workers – including nurses – during the pandemic.

The auditor’s office said it does not question the validity of the bonus payments, but rather “how UMMH chose to reimburse itself for them rather than preserving services for the public.”

The audit states that the maternity unit closure was “just one example of a loss of a service that may have been prevented if grant funds were used in a different way.” In its response to the audit, UMass Memorial wrote that the auditor “provides absolutely no basis for this vague assertion.”

In addition to the 2023 maternity unit closure, UMass Memorial shuttered its pediatric unit at the Leominster campus in 2018. Community Healthlink, an affiliate of UMass Memorial, shut down a program in October that provided mental health services for adults in Fitchburg. Additionally, UMass recently closed two primary care programs – one in Leominster in September 2024 and another in Worcester in March, citing financial strains.

UMass Memorial’s response to the auditor stated that it was “inappropriate and an abuse of [the auditor’s] authority to attempt to dictate how a private entity should manage its funds and operations.” In response, DiZoglio’s office emphasized that UMass Memorial’s use of state funding is subject to audit.

DiZoglio’s office made multiple recommendations for UMass Memorial, including maintaining detailed accounting records and audit trails when state or federal funding is received, using those types of grants to invest in the operations of essential services, and reassessing the need for maternity care in the region.