Bank Of Guam Provides $25 Million Loan To Hospital

admin's picture

Administrator says GMH still needs $9 million to settle debts

By Dance Aoki

HAGÅTÑA, Guam (Pacific Daily News, Feb. 11, 2014) – Guam Memorial Hospital (GMH) Administrator Joseph Verga yesterday announced that a $25 million loan from Bank of Guam was made available to pay most of the hospital's debts.

Even with the loan, the hospital is about $9 million short of completely settling its debts.

GMH Medicare funding was garnished last year after the hospital failed to pay Supply Service Center, a federal wholesaler of pharmaceutical and medical supplies based in Perry Point, Md.

Of the $25 million loan, $10.5 million will be used to pay off an existing loan from the Bank of Guam. That old loan was used to bail out the hospital three years ago, news files state.

Verga announced that $4.3 million of the loan will be used to pay off Perry Point's debt -- a primary vendor of medical supplies -- in full.

"This payment will eliminate the threat of the hospital's Medicare payments from being garnished due to the debt to Perry Point," he said.

But the loan won't pay for all of the hospital's debt, which includes past-due tax payments, data management services and millions to other vendors.

"This funding, although helpful in reducing vendor liabilities, does not completely eliminate our debt and doesn't provide adequate funds for completely paying down all the debt that GMH owes," Verga said.

$19 million of debt

After the debt to the Supply Service Center is paid, the hospital still owes $19 million of debt to vendors.

Of that amount, about $4 million is owed to the Department of Revenue and Taxation for employee tax withholdings from 2011, according to hospital Chief Financial Officer Alan Ulrich.

The hospital also owes about $500,000 to NTT Data, which provides the hospital with medical information services, according to Pacific Daily News files.

A list of the vendors who will be receiving payment will be available by the end of the week.

Verga said about $10 million will be used to pay the remaining vendors, but that will leave about $9 million in debt.

The government is committing money from the Healthy Future Fund, compact-impact funds and tobacco industry settlement funds to pay off the loan, according to Pacific Daily News files.

Oversight hearing

Hospital officials will be answering questions from senators regarding the payments made to vendors during an oversight hearing tomorrow at the Legislature.

Sen. Dennis Rodriguez, D-Dededo, sent a list of 14 requests to hospital administrators regarding finances and operations.

Verga wants senators to change a law passed last year that taxes gambling activity on Guam to benefit the hospital.

Public Law 32-60 created several funds that tap the government's gambling-related revenues, such as fees and taxes, according to Pacific Daily News files.

Among those funds is the "GMHA Healthcare Trust and Development Fund," designed to help the hospital and financed by "licensing fees, business privilege tax, income tax collected from the companies involved in gaming, and a special 4 percent assessment fee on all gaming devices authorized to be licensed," according to the law.

Of the money accumulating in the development fund, 60 percent is earmarked for the hospital's new urgent-care center.

The remaining 40 percent is for hospital operations, but can only be released through an appropriation by the Legislature.

Verga has said the funds should come directly to the hospital, without the need for legislative approval.

Rate this article: 
No votes yet

Add new comment