The state's public health laboratories are in financial disarray, according to a report released by the state auditor's office this morning.

The audit says the Department of State Health Services has failed to "provide adequate fiscal and operational oversight" of its three public health labs — which have not properly billed customers or collected the revenue they're due.

The South Texas Laboratory, for example, has not billed customers for most tests conducted since July 2008, the auditors note; the unbilled amount is roughly $440,000.

Meanwhile, auditors identified more than $9 million in accounts receivable that the department should have reported, but didn't, in its 2009 annual financial report.

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Other problems the auditors found with the labs include:

  • They can't prove that they process specimens within the proper time frame.
  • They have no plan to protect lab inventory in the event of an emergency.
  • The department doesn't always inspect hazardous material as required.

"Auditors cannot provide assurance that the information in the Department's testing and billing applications is complete or accurate, or that the Department adequately limits access to confidential information to only those individuals who require that access," the report notes.

Christine Mann, a spokeswoman with the department, said the issues outlined in the audit are the result of the agency's implementation of a new billing system, which officials are doing in several phases. (The South Texas lab is last on the list.) She said the agency has recovered nearly half of the $440,000 unbilled from the South Texas lab and is working to get all systems upgraded quickly.

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