An Audit Report on the Department of State Health Services' Public Health Laboratories Page: 2 of 48
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tate
editor's
An Audit Report on
John Keel, CPA The Department of State Health Services'
State Auditor Public Health LaboratoriesSAO Report No. 11-001
September 2010Overall Conclusion
The Department of State Health Services
(Department) did not provide adequate fiscal
and operational oversight over its three
public health laboratories. This lack of
oversight has resulted in significant
weaknesses in the laboratories' financial,
inventory control, and information technology
environments. Specifically:
The Department does not ensure that it
consistently issues bills and collects
revenue in a timely manner for the services
the laboratories provide. The Department
had not billed customers for most of the
billable tests conducted at the South Texas
Laboratory since July 2008, and it has not
ensured that it billed for all billable tests
conducted at the Austin Laboratory.
According to Department records, the
unbilled amount for the tests conducted at
the South Texas Laboratory from July 2008
until February 2010 is approximately
$440,000. The Department did not have
sufficient documentation to support its
current fee schedules and did not have a
reasonable cost allocation methodology on
which to base its fee schedules for tests
that its laboratories conduct. Statute
prohibits the Department from charging
more for a laboratory service than the costto the Department for providing the
service. However, the Department does not regularly update the laboratories'
fee schedules.
The Department has procedures in place to ensure that its laboratories' revenues
and expenditures, as well as Medicaid allocations, comply with specific riders in
the General Appropriations Act. However, the Department did not accurately
report financial information related to the laboratories' operations in its fiscal
year 2009 annual financial report. Auditors identified more than $9.1 million in
This audit was conducted in accordance with Texas Government Code, Sections 321.0131 and 321.0132.
For more information regarding this report, please contact Angelica Ramirez, Audit Manager, or John Keel, State Auditor, at (512) 936-
9500.Background Information
The Department of State Health Services has
oversight responsibilities for three laboratories:
the Austin Laboratory in Austin, the Women's
Health Laboratory in San Antonio, and the South
Texas Laboratory in Harlingen.
The Austin Laboratory has 369 employees,
Women's Health Laboratory employs 43, and
South Texas Laboratory employs 16, for a total
of 428 employees.
General Appropriations Act funding for the
Laboratory Services Strategy for the 2008-2009
biennium was $72,954,290 and for the 2010-2011
biennium was $85,696,508. The Austin
Laboratory provides management oversight of
the Women's Health Laboratory and the South
Texas Laboratory.
These three laboratories provide a wide range of
services, including newborn screenings, clinical
chemistry, prenatal testing, DNA diagnosis,
microbiological testing, environmental testing,
and the identification of bioterrorism and
chemical terrorism agents.
The laboratories also provide services to health
clinics, local health departments, and the
general public. In fiscal year 2009, the
Department reported that its laboratories
processed more than 2.29 million submitted
specimens. As the Texas population continues
to grow, so does the number and kinds of
laboratory tests provided.
Source: Department of State Health Services.
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Texas. Office of the State Auditor. An Audit Report on the Department of State Health Services' Public Health Laboratories, report, September 2010; Austin, Texas. (https://texashistory.unt.edu/ark:/67531/metapth518273/m1/2/: accessed June 16, 2024), University of North Texas Libraries, The Portal to Texas History, https://texashistory.unt.edu; crediting UNT Libraries Government Documents Department.