$114 Million Operating Loss For Guam Memorial Hospital

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Auditors: Significant doubt it can continue operation

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, July 1, 2014) – Guam Memorial Hospital has been losing so much money for so long, auditors now have "substantial doubt" about whether it can continue to operate, according to a financial audit released yesterday.

Despite receiving $50 million in subsidies from the government of Guam during the past five fiscal years, the hospital posted net operating losses of $114.6 million, according to a fiscal 2013 financial audit released by the Office of Public Accountability. It was prepared by Deloitte & Touche.

The hospital's inadequate cash flow has resulted in higher prices from frustrated vendors and has threatened the hospital's ability to provide patient care, according to the audit.

Despite declining revenues, the hospital's staffing and payroll costs have remained steady, the audit states, with 1,096 people on staff during fiscal 2013.

The government in May lifted a freeze on government pay raises and merit bonuses, but the hospital cannot afford the full additional $3.6 million cost, the audit states, and has made only partial payment.

No surprise

GMH Administrator Joseph Verga yesterday said he wasn't ready to respond in detail to the audit findings, but said the auditors' concerns do not surprise him.

"I've always said that unless the government fully funds GMH, there is a concern ... whether the hospital is able to sustain services that we provide," Verga said.

Lawmakers in January allowed the hospital to borrow $25 million, but that wasn't enough to erase its debt, according to the audit.

Lawmakers last year earmarked gambling taxes to support the hospital, but the audit states the new gaming law "has not delivered the funds that were expected," and the hospital is owed $310,000 for fiscal 2013.

The hospital needs even more financial support from GovGuam, the audit states, but it also notes that GovGuam has nearly reached its limit on its ability to provide subsidies.

GovGuam must provide financial support for GMH's services to self-pay and uninsured patients, which represented 13 percent of the government hospital's billings, the audit report states.

The government hospital also will face competition when privately owned Guam Regional Medical City opens later this year. The $219 million private hospital is expected to open in October.

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