Debt Owed By Guam Hospital To Vendors Is The Worst It’s Ever Been

Governor wants to borrow money to resolve outstanding bills, renovate facility

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, July 13, 2016) – Owing money to vendors has been a persistent problem over the years for Guam’s public hospital, but some vendors say the current situation far exceeds the past.

“Oh yeah, it’s the worst,” said Glen Noket, president of AG Supplies, a business that provides Guam Memorial Hospital with medical supplies. “This is the worst I’ve been in.”

Noket said his company has been doing business with GMH for about three years. Currently, he has put a hold on services to the hospital.

That’s until GMH can pay down its debts owed to AG Supplies, which, according to Noket, is about $300,000 for 2015 and $45,000 for 2016.

Noket said he’s had to take out bank loans to pay off-island vendors that supply his company.

Some employees are “not getting paid, and our kids are starving,” he said.

GMH owes $19.67 million in vendor payables, according to a hospital list of outstanding vendor payables as of July 11.

Nearly $12.4 million of that total is owed to local and off-island food and medical supply companies, as well as local clinics.

Another $4.3 million is owed to GovGuam agencies such as the Government of Guam Retirement Fund, Department of Revenue and Taxation, and the island’s power and water utilities. Calvo’s Select Care is owed more than $3 million.

GMH owes money to about 180 vendors and clinics. The two businesses, J.C. Marketing and M.D. Wholesale, are owed the most with $1.1 million and $1.4 million respectively. Representatives from those companies who are authorized to speak to the media couldn’t be reached for comment as of press time.

Borrowing bills

Gov. Eddie Calvo has introduced a proposed measure to borrow millions to renovate the hospital and raise taxes for a new health care program. Sen. Dennis Rodriguez, D-Dededo, also introduced a borrowing measure with Bill 340-33.

Rodriguez’s bill is currently moving forward in the Legislature, while the governor’s bill has stalled in committee.

Now, the Calvo administration and hospital are focusing their support on the senator’s bailout bill, given the severity of GMH’s debt crisis.

Like AG Supplies, other companies such as Island Equipment Company and Diagnostic Laboratory Services, which are owed $661,045 and about $562,500 respectively, are also seeing the hospital’s debt pile up to unseen levels.

According to Cynthia Henson, the Guam and Saipan director of the Hawaii-based Diagnostic Laboratory Services, the amount owed to the company by the hospital is at its highest amount in the 20 years the two entities have been doing business together.

The business’ local lab is one of many vendors the hospital has promised to pay pending the passage and enactment of Rodriguez’s bill, Henson said.

Henson added that the company’s central laboratory in Hawaii has been contacting Benita Manglona, GMH’s chief financial officer, advising her to at least make small monthly payments.

“We were promised that we were going to be paid all of it when they get the loan. So we’re just waiting,” Henson said. “We’re requesting at least a little bit of payment every month.”

“We’ve been servicing them for the past 20 years,” she added. “Even though they get behind they’re able to pay us somehow.”

Henson said if the local lab didn’t belong to the bigger company in Hawaii, the Guam lab probably wouldn’t have survived this long dealing with GMH’s debt problems.

Henson added the company is able to stay in business because they service several other clients, such as the public health department and Seventh-day Adventist Guam Clinic.

“If GMH is the only one, for sure we would close, but we have other clients on island,” Henson stated.

Cynthia Pizarro, the chief financial officer for Island Equipment Company, which supplies medical gases such as oxygen and nitrogen to the hospital, said the $661,000 is the most that the hospital has ever owed to the company.

There has been a financial impact to the company, but it hasn’t gotten to the point where employees and payroll are affected, Pizarro said.

“Of course, it would really help us if we got paid on a regular basis,” she said.

Like the local laboratory, Pizarro said her company has a small payment set up with the hospital.

“Yes there is an impact, but at the same time they’re working closely with us, giving us partial payment when they can,” Pizarro said. “We have an arrangement — when they can, they do whatever they can to make payments.”

Both the laboratory and Island Equipment continue to provide services to the hospital despite the rising amount owed to them.

Henson and Pizarro made similar statements, noting that their service is focused on making sure patient care doesn’t stop.

“Our mission is to provide service to the community, that’s the only government hospital that will take patients,” Henson said, “We hate to cut them off. Other companies have been cutting them off, but we hate to cut them off because it’s service that’s offered to the patients.”

Pizarro said they’re not only thinking about GMH, but also the people impacted if they no longer provide their service.

“The end users of the supply at GMH is more important to us,” Pizarro said.

For Noket, however, who’s already had to put a hold on services to the hospital and has taken out bank loans to pay his off-island suppliers, he may have to pursue a legal remedy, especially if the banks decide to come after AG Supplies, he said.

“It’s going to come down to I’m owing the banks. They’re going to take me to court, so I have to seek legal action too,” he said.

‘Important financial data’

Vice Speaker Benjamin Cruz, D-Piti, on Wednesday said the hospital was withholding “vitally important financial data,” such as the hospital’s patient receivables, discounts, monthly collections and billings.

“No one gets a blank check for millions of dollars without being honest about why you really need it,” Cruz said in his press release, referring to the latest hospital bailout bills. “When a law signed by Gov. Calvo himself and (Freedom of Information Act request) aren’t enough to get the data we need, I can only conclude two things: GMHA either doesn’t have the data and someone should be fired, or they don’t want us to see the data, and we should be worried.”

Under Public Law 31-36, patient receivables, discounts and monthly collections are supposed to be regularly updated on Guam Memorial Hospital’s website every two weeks.

However, the last update was July 2015.

“The exact information I’m asking for was published consistently on GMHA’s website from June of 2013 to July of 2015,” Cruz stated in the release. “Why has it stopped and who wins when we are making decisions in the dark?”

Cruz and Pacific Daily News have filed FOIAs with the hospital seeking the latest documents related to the public law. The hospital has not yet fulfilled the request.

“Guam law says that if we don’t pass a budget, senators don’t get paid,” Cruz said, referring to the fiscal budget the Legislature has to work on and pass every summer. “Maybe it should also say that if GMHA’s financial staff doesn’t provide the financial data required under Guam law, GMHA’s fiscal team shouldn’t be paid either.”

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

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