Guam Hospital’s Financial Losses Worse Over Last 3 Years

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Guam Hospital’s Financial Losses Worse Over Last 3 Years $29.2 million annual losses could become ‘political football’

By Gaynor Dumat-ol Daleno

HAGÅTÑA, Guam (Pacific Daily News, Sept. 4, 2014) – The governor's spokesman in July told the Guam Memorial Hospital administrator to send the message that the hospital's finances are "much better" than they were before the Calvo administration.

The hospital's annual financial statements paint a different picture.

They show the hospital has been losing much more money during the first three years of the Gov. Eddie Calvo administration than it did during the last three years of the Gov. Felix Camacho administration.

From fiscal 2008 to fiscal 2010, the last three years of Camacho's administration, the financially troubled hospital on average had an annual operating loss of $10.39 million.

From fiscal 2011 to fiscal 2013, during Calvo's term, the hospital on average had an annual operating loss of $29.19 million, according to financial statements from the Office of Public Accountability.

According to the financial statements, the hospital nearly broke even during fiscal 2008 and fiscal 2009, posting operating losses of $4.23 million and $5.81 million, respectively.

But its finances were much worse during the last year of Camacho's term -- posting a loss of $21.13 million -- and the trend continued into Calvo's term.

In his July 27 email to hospital Administrator Joe Verga, governor's spokesman Troy Torres suggested that Verga state that the hospital and the administration are headed on the right path in dealing with GMH's finances.

The advice from the governor's office came after Verga told lawmakers during the hospital's budget hearing that the hospital was broke.

Though things at GMH aren't where they need to be, Torres said in the email, "the trajectory is right. ... we're on the right path."

Vice Speaker Benjamin Cruz, chairman of the Legislature's budget committee, called on the governor's office to be transparent about "the millions of dollars in outstanding balance owed to Guam Memorial Hospital Authority."

Verga initially stated that the hospital was owed $11 million in GovGuam assistance, Cruz said.

The hospital relies heavily on taxpayer subsidies to remain open.

In Verga's most recent letter, emailed to Cruz Tuesday night, the hospital CEO stated that "the amount still outstanding from 2014 appropriations reported to the (GMH Board) this past meeting remains at $14 (million)."

Torres yesterday said Cruz mixed up the hospital appropriations for fiscal 2015 and its allotments for the current fiscal year.

The fiscal 2014 allotments still are being reconciled between GMH and the Bureau of Budget Management and Research, Torres said.

"This is not a matter of who's right and who's wrong, or who should get the blame and who should take the glory," Torres said, adding later: "We realize it's election season, but he really should be a lot more concerned about helping GMH rather than using it as a political football."

Cruz said he has received from Verga hundreds of pages of email exchanges between GMH and senior staff at Adelup, in which senior staffers "appeared to direct Verga with the hospital's media responses regarding finances."

"The emails portrayed GMHA management as especially concerned about how the publicity generated by hospital finances will affect the governor's political campaign," Cruz said.

Calvo is running for reelection in the November General Election against former Democratic Gov. Carl Gutierrez.

Public Auditor Doris Flores Brooks said, even if GMH receives every penny it's authorized to receive in government of Guam subsidies, it will continue to struggle if the root problem isn't addressed.

The problem is the makeup of its patient load, Brooks said.

Nearly two-thirds of GMH patients don't pay the full cost of the services that are provided to them, she said.

And the bulk of GMH's patients are under Medicare, Medicaid and the Medically Indigent Program, Brooks said. On average, the three programs pay GMH only 71 cents for every $1 that GMH bills them, the public auditor said.

"Structurally, nothing has changed," she said.

Public Health Director James Gillan, who runs the Medicaid and MIP programs, said yesterday that part of GMH's problem is its problematic billing system.

GMH continues to state that public health owes GMH $29 million for years of services provided to MIP and Medicaid patients, but that's untrue, Gillan said.

Records show the department is current with its payments to the hospital, he said.

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