Guam Legislature Passes Measure To Bailout Financially Troubled Hospital

GovGuam authorized to borrow $45 million to pay off overdue vendor bills

By Shawn Raymundo

HAGÅTÑA, Guam (Pacific Daily News, July 22, 2016) – In a late night vote Wednesday, island lawmakers passed legislation that would allow the government of Guam to borrow $45 million so the public hospital can pay off its outstanding vendor payables.

The measure, Bill 340-33, which Sen. Dennis Rodriguez Jr. introduced last month, passed the Guam Legislature in a 11-2 vote with Democratic Sens. Nerissa Underwood and Mike San Nicolas opposed. Republican Sens. Tony Ada and Brant McCreadie were absent from session.

Lawmakers held the vote on the bill around 11 p.m. Wednesday.

Gov. Eddie Calvo has 10 days from the date of the bill’s passage to sign or veto the measure. If he does neither, the legislation will lapse into law.

San Nicolas has been a vocal opponent of the bill, saying he believes the government shouldn’t borrow more money to bail out the Guam Memorial Hospital Authority.

Gov. Calvo’s administration and hospital officials have supported the measure, and have rallied several of GMH’s unpaid vendors to lobby senators to pass the bill.

A similar measure from Calvo, which has been stalled in San Nicolas’ finance committee, also was submitted to lawmakers last month. It proposes using about $125 million in borrowed funds to make capital improvements at the hospital.

Administration officials continued to urge lawmakers Wednesday evening to amend Rodriguez’s bill to include the capital improvement provisions from Calvo’s measure. The governor’s bill calls for the renovation of the hospital’s Z Wing as part of the government’s overall plan to create “Centers for Excellence” at the hospital, which hospital officials say will generate more revenue.

“It’s crucial that this financing package includes the capital improvement and modernization project. We have to build up GMH,” Calvo said in a press release Wednesday night. “We need to have the outpatient services so that we’re not back here in just two years.”

According to Adelup, more than 700 hospital workers had signed a petition that asked the legislative body to insert the capital improvement projects in the bill.

“We’re talking about a major improvement in cancer care, heart care, disease diagnosis, and available medicine,” Calvo said in the release. “No reasonable person can doubt this is the right thing to do.”

At the onset of Wednesday’s session, Sen. Rodriguez, who facilitated the debate of his measure, had promised his colleagues that he had no intention of inserting the governor’s provisions in the bill.

Bill 340 initially proposed to borrow $30 million to bailout the public hospital. But in a 9-4 vote, the majority of senators approved Democratic Sen. Rory Respicio’s amendment to raise the borrowing limit to $45 million.

Guam Memorial Hospital has nearly $20 million in outstanding vendor payables. It owes money to dozens of clinics, food and supply companies, and the local government for retirement, taxes and utilities.

According to Benita Manglona, the hospital’s chief financial officer, the hospital owes about another $700,000 in interest to dozens of its vendors and likely millions more in unfilled orders and special orders that are still pending.

“These are (fiscal year) 2016 orders that are still pending, and a lot of vendors don’t wish to give us supplies or materials until they get paid,” Manglona explained to lawmakers, bringing the hospital’s likely debt total to roughly $36 million.

Speaker Judith Won Pat and Sens. Mike San Nicolas, Nerissa Underwood and Mary Torres opposed the amendment.

Hospital Administrator Peter John Camacho, Medical Director Dr. Larry Lizama, Bureau of Budget and Management Research Deputy Director Lester Carlson and Manglona appeared before the legislative body during Wednesday’s session to answer questions related to the bonds and the hospital’s debt.

Respicio’s amendment

The Respicio amendment proposed the additional $15 million for hospital operations in the upcoming fiscal year. GMH recently asked the Legislature to bump up its fiscal 2017 budget appropriation subsidy to $45 million — $20 million more than what Gov. Calvo had initially requested in his executive budget this past February.

Hospital officials last week explained to Vice Speaker Benjamin Cruz, the head of the Legislature’s budget office, that the $20 million is to adequately fill in the gap between GMH’s yearly operational costs and its shortage in revenue.

The $20 million in operational expenses and $20 million debt are two separate shortages.

Prior to voting on the amendment, Sen. James Espaldon, R-Tamuning, expressed concerns with the Respicio amendment, arguing that borrowing money should go toward capital improvement projects and not covering operational costs.

Manglona and Carlson chimed in to state that they agree with the senator’s concerns and also noted the governor’s bill to borrow more money so the hospital could renovate its Z Wing and other areas.

“We are waiting for an opportunity to talk about Bill 338,” Carlson said.

Manglona stressed that they’ve been advocating for Calvo’s bill or for senators to amend Rodriguez’s bill to include the governor’s proposed borrowing amount so they could make the hospital fixes and pay the vendors.

The legislative body, Espaldon said, couldn’t make an amendment like that because they haven’t had a public hearing over such a proposed borrowing amount.

Espaldon asked if the legislative body and the hospital were essentially putting the cart before the horse by passing legislation to only borrow money for the debt, to which Carlson responded that if the Legislature ever does pass the governor’s bailout measure, they would still be able to refinance the bonds, just at a later time.

Respicio, a co-sponsor of the bill, stated that he, too, wasn’t all that comfortable with borrowing for operations, but noted that the hospital’s current debt has reached a critical level that could greatly impact patient care.

“I’m not very comfortable really, but sometimes this has to be done ... in personal finances, you have to borrow,” he said, adding: “The unfortunate reality is that the hospital is in a situation where if the vendors cut GMH off well then that trickles into a life or death situation.”

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

Rate this article: 
Average: 4 (2 votes)

Add new comment