Guam Governor Proposes Borrowing $425 Million For Hospital Improvements, Debt Refinancing

Calvo envisions Guam Memorial Hospital as a Medical Center of Excellence

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, June 21, 2016) – Gov. Eddie Calvo last week unveiled legislation to borrow hundreds of millions of dollars as well as raise certain taxes to further support the operations and finance some capital improvement projects at the island’s public hospital.

The Health Care and Insurance Industries Investment Act proposes to borrow $425 million. About $125 million would likely go to the Guam Memorial Hospital Authority for renovation work, such as demolishing and replacing the hospital’s Z-Wing. Most of the borrowed money would be used to pay off and refinance other loans and bonds.

The Act would establish GMHA as a “Medical Center of Excellence,” Calvo stated in a press release.

“Support for these transformation initiatives will enable the hospital to shift its strategic focus from an acute long-term stay model to a financially solvent outpatient model through a unified system of health care coverage,” Calvo said.

Oyaol Ngirairikl, communications director at Adelup, said money to repay the new debt would come from the Section 30 money GovGuam collects from the federal government every summer. Section 30 funds come from income tax payments withheld from federal employees and military personnel.

According to the Guam Economic Development Authority’s debt abstract report as of March 2016, the government of Guam’s total debt is nearly $1.09 billion. More than $20.54 million of the government’s current general obligations debt is from another loan for the hospital that lawmakers authorized.

Gov. Calvo said investing in the hospital’s Z Wing would help address safety concerns and could provide the facility with multiple centers for heart and diabetes programs, as well as other programs.

GovGuam has just under $1.5 billion available before it hits a debt ceiling.

The measure wouldn’t threaten Guam’s debt ceiling, Ngirairikl said.

Taxpayers’ subsidizing the hospital’s operations isn’t anything new, she said. For example, she said the Medically Indigent Program earmarked $16 million in taxpayer funds this year to pay for health care for those who can’t afford it.

“It is also important to note that the goal of the improvements contained in the bill, through the creation of Centers of Excellence, is to help the hospital become more self-sustaining,” she said. “We aren’t just throwing money at the problem; we’re looking for ways to fix the problem.”

Under the measure, the Hotel Occupancy Tax would increase from 11 percent to 15 percent while the Business Privilege Tax bumps up from to 5 percent from 4 percent. Calvo’s bill also proposes an increase in real property taxes.

The bill also proposes the creation of an Employees Health Insurance Fund to establish a pool of cash that would provide health insurance to private sector employees whose employer doesn’t offer health insurance. The excess proceeds from the tax increases would directly fund the public hospital’s operational needs or the Insurance Fund.

“We estimate that over half of our brothers and sisters on Guam are either uninsured or underinsured and do not have equal access to medical care,” Calvo said, adding: “The goal of this legislation is lay the foundation for an integrated system of managed care programs, beginning with an insurance pool to assist employers offset the cost to provide health insurance for their employees.”

Vice Speaker Benjamin Cruz, D-Piti, said in a release issued Sunday that experience has taught him to “trust, but verify” when it comes to putting money into GMH.

In a letter to Hospital Administrator Peter John Camacho on Friday, Cruz said he first wants to review the status of the Urgent Care Center that was established at the hospital in January 2015.

“To verify the efficacy of previous silver bullets supported by the administration, I want to first empirically understand if GMH’s Urgent Care facility is accomplishing its goal of treating patients affordably, at least at a break-even cost to GMH itself,” Cruz wrote.

The vice speaker also cited several other pieces of legislation he and fellow lawmakers have passed in recent years to support the hospital. This current term, they allowed the hospital to increase fees, appropriated $1.75 million for utility costs and $1.6 million for equipment needs.

In the 32nd Legislature, lawmakers authorized GMH to borrow $9.2 million for a labor and delivery ward, appropriated $900,000 to renovate the hospital’s obstetrics and maternity ward, and earmarked certain gambling revenue to the Urgent Care Center.

“Despite these efforts and their great cost to Guam’s taxpayers, here we are, contemplating what some argue is a government bailout for cash flow cloaked in the sacred shroud of GMH,” Cruz said to Camacho.

Pacific Daily News
Copyright © 2016 Guam Pacific Daily News. All Rights Reserved

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