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Assuming government would pay lead to huge shortfalls

By Fili Sagapolutele PAGO PAGO, American Samoa (The Samoa News, Jan. 23, 2012) – Lyndon B. Johnson (LBJ) Medical Center chief financial officer Viola Babcock last week told the House Health/Hospital Committee that the close-to $3 million that ASG owed in fiscal year 2011 needs to be paid to help the hospital, which is seeking more than $15 million in its FY 2012 supplemental budget.

Babcock, along with LBJ chief executive officer Mike Gerstenberger and hospital board chairman Moananu Va, were called last Wednesday before the House committee to answer questions on the supplemental budget request.

One big concern for the committee is why the hospital, currently faced with serious shortage of needed cash infusion, is seeking a supplemental when the new fiscal year has only begun its second quarter of FY 2012, and the hospital was given an approved budget of just over $35 million.

House Vice Speaker Talia Fa’afetai Iaulualo said that by looking at the hospital’s financial information, it appears that nothing has changed in the budget numbers compared to the previous fiscal year.

Both Babcock and Gerstenberger pointed out that the big change is the fact that ASG didn’t pay up all of its required subsidy in FY 2011, adding that the hospital incorrectly assumed that it would receive the unpaid subsidy in FY 2012.

Gerstenberger said that in discussions with staff at ASG Treasury and Budget Office it was LBJ’s "assumption that in the new fiscal year [FY 2012], the subsidy that we’ve not routinely been paid in the last fiscal year would be paid in the current fiscal year."

However, he said perhaps LBJ was "naive to assume" they would be getting the rest of the unpaid FY 2011 subsidy as well as getting the full monthly subsidy of $345,000 in the new fiscal year.

Babcock said that close to $3 million in subsidy for FY 2011 was not paid, which also cost the hospital almost $3 million in matching funds for Medicaid, bringing a total shortage of close to $6 million in FY 2011.

She explained that this shortfall was carried into FY 2012, with the hospital still owing vendors and all of that debt came forward.

"So now the law, as we understand it, says they cannot pay FY 2011 encumbrances with FY 2012 funds. So the first part of the supplemental budget is to receive the funds that should have been paid in FY2011," she said. "We need to have that whole amount owed and that part of the supplemental budget really needs to happen."

For the current fiscal year 2012, Gerstenberger told Samoa News on Jan. 11 that the total appropriated for the first four months of fiscal year (October to January) is $1.41 million but LBJ has received only $762,000 with no payment received yet for January. (At the time of the House hearing, the January payment had still not been received by the hospital).


Also part of its supplemental request, LBJ is seeking $475,686 for the Emergency Medical Service (EMS), which was returned back to the hospital from the Department of Public Safety effective Jan. 1, 2012, via an executive order issued by the governor late last month.

Gerstenberger told the committee that it was the hospital’s understanding that there was no approved budget for EMS in the current fiscal year, but Iaulualo said the Fono did approve funding and suggested that LBJ look into this matter with the executive branch.


The largest supplemental request for the hospital is $10.1 million for the off-island medical referral program and Gerstenberger told the House committee that there was no funding allocation for FY 2012.

LBJ’s report to the government states that in FY 2011 the off island medical referral program committee approved 98 cases and the estimated total cost of this care was $6.39 million.

In the first two months of FY 2012, the referral committee approved 39 cases and if that figure (39) is extrapolated to 12 months, the total number of approved cases in FY 2012 will be 156, the report states.

Assuming the FY 2012 average cost per case is the same as that calculated for FY 2011, the total cost to provide care for the 156 patients is estimated at $10.1 million, LBJ’s report said.

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