Jack Wagner

HARRISBURG — Pennsylvania’s chief fiscal watchdog said Thursday that he will expand his look at the state’s six psychiatric hospitals after finding that two contracted employees were paid hundreds of thousands of dollars in a single year while one hospital’s officials didn’t ensure that contracted doctors worked the hours for which they billed.

Auditor General Jack Wagner said he is expanding his audit because the state Department of Public Welfare has not acknowledged the seriousness of the mismanagement at Torrance State Hospital in Westmoreland County.

The case “is an example of what can go wrong when government contracts result in the outsourcing of public services to the private sector and its senior management fails to properly monitor the conduct of vendors,” Wagner said in a statement. “Because DPW failed to adequately monitor the health care contract and to execute its management responsibilities in coordination with Torrance State Hospital, Pennsylvania taxpayers have lost in this venture.”

The department responded that it puts significant emphasis on accountability and responsible management.

“We have already begun and will continue to take appropriate steps to address the relevant issues brought up in the audit,” the agency said in a statement, pointing to its nine-page response published with the auditor general’s audit report.

Wagner said the contractor, Liberty Healthcare of Bala Cynwyd, was paid more than $400,000 in the last fiscal year for the full-time services of a psychiatrist who also owned and operated his own private business on the side.

The services of the hospital’s chief medical officer cost more than $350,000 in each of the past two fiscal years, Wagner said. At one point, the chief medical officer supervised the contracted psychiatrist while working for the psychiatrist’s private business, which Wagner called an apparent conflict of interest.