MASSIVE CNMI HOSPITAL DEBT FIGURES ANNOUNCED

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Lawmakers committed to helping CHC meet due dates

By Tammy Doty

SAIPAN, CNMI (Marianas Variety, April 5, 2012) – Commonwealth Healthcare Corp.(CHC) chief executive officer Juan N. Babauta and chief financial and administration officer Alvaro Santos dropped a "bomb" on the Commonwealth of the Northern Marianas’ (CNMI) Legislature yesterday in the amount of $11.3 million.

The amount was revealed during a joint Senate and house Fiscal Affairs and Health and Welfare committees meeting to discuss ways to move forward the original $10 million CHC-Marianas Public Land Trust (MPLT) line of credit agreement.

Vice Speaker Felicidad Ogumoro, Covenant-Saipan, asked CHC on its current debts and ability to repay the large loan.

Santos proceeded to read off a list of debts that included $3.1 million for general medical supplies; $2.3 million to the Retirement Fund; $2.3 million to pharmaceutical companies; a $2.1 million utility bill; housing benefits of $918,857; $713,000 for laboratory supplies; and the $800,000 bi-weekly payroll scheduled for tomorrow.

MPLT Board Chairman Pedro Deleon Guerrero told lawmakers that MPLT "set aside a $10 million revolving line of credit for CHC and $7 million is ready to be released upon the Legislature’s action."

His reference to "$7 million" was a result of CHC signing a $3 million stop-gap line of credit deal with MPLT three weeks ago subsequent to Gov. Benigno R. Fitial putting CHC under a state of emergency.

Reactions

Both House and Senate members showed steadfast public support for CHC in general and the CHC-MPLT deal specifically and once again pledged to work feverishly until a deal could be brokered.

Senate President Paul A. Manglona, Ind.-Rota, and Sen. Ralph DLG. Torres, R-Saipan, attended the meeting but stayed only for a few minutes and made no statements that indicated they would support the original CHC-MPLT House bill.

Part of the hesitation with the deal among lawmakers was the concern with CHC’s ability to repay the credit line.

The terms of the CHC-MPLT deal includes a clause whereby CHC has 12-months to repay each drawdown from the date it was made.

As an example, CHC received $1 million 10 days ago and must repay the amount within 365-days or face a shut-off of the credit line.

Additionally, the loan carries an interest rate of 7 percent.

Next Tuesday the first interest payment of $6,378 is due on the $1 million drawdown.

Legislators took turns quizzing Babauta and Santos about revenue projections for which they presented a scenario of generating a maximum monthly ceiling of $2.8 million by September.

Santos explained that CHC’s collections were historically undermined by only being able to collect on 45 percent of all billings.

Babauta referenced CHC’s new contract with medical billing/collections company International Consulting Services as a significant part of the solution.

"We estimate the corporation can raise the 45 percent collection rate to 65 percent when the ICS-driven revenue management system is running at its peak," said Babauta.

As the afternoon of mind-numbing numbers and statistics began to creep toward a second hour both Ogumoro and Sen. Jovita Taimanao, Ind.-Rota, led the "how do we get this deal done."

Discussion touched upon every option to identify the quickest route to passage of the CHC-MPLT line of credit deal.

In the end everyone in attendance agreed with Taimanao that "the issue is urgent and the bill is urgent."

The 1.5-hour session ended moments later as the members reverted into a private session.

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