Guam Hospital Avoids Deficit In 2016 Due To Funds From Bond

Money allowed GMH to pay past-due liabilities, catch-up on bills

By Kyla P Mora

HAGÅTÑA, Guam (Pacific Daily News, May 1, 2017) – Guam Memorial Hospital avoided operating at a deficit in fiscal 2016 thanks to a $49.9 million Section 30 bond, according to an audit by the Guam Office of Public Accountability.

The audit, conducted by independent auditors Deloitte and Touche LLP, rendered a clean opinion. GMH closed fiscal 2016 with $40 million net position increase, a major increase over its $3.4 million net loss in fiscal 2015.

The Section 30 bond allowed GMH to treat fiscal 2016 as a catch-up year and pay past-due amounts and other liabilities, according to the audit report, which was released Monday.

However, GMH continues to incur operating losses, according to the audit due to its patient payer mix:

  • Medicare, Medicaid and MIP;
  • third-party payers or insurance companies; and
  • self-pay patients. 

Medicare, Medicaid and MIP comprise 59 percent, or $93.6 million, of GMH's $156.3 million in gross billing. Third-party payers and insurance companies comprised 27 percent, or $41.7 million.  Self-pay patients made up 13 percent, or $21 million.

Because less than 30 percent of payments come from third-party payers or insurance, GMH requires government subsidies to fund Medicaid, Medicare and MIP underpayment, as well as uncompensated care for self-pay patients, the audit stated.

In fiscal 2016, GMHA received $67.5 million in subsidies from GovGuam:

  • $49.9 million from Section 30 bond fund;
  • $7.2 million from the Healthy Futures Fund;
  • $3.8 million from the GMHA Pharmaceutical Fund;
  • $851,000 from the GMHA Healthcare Trust and Development Fund and;
  • $5.7 million from the General Fund. 

In fiscal 2016, GMHA had an operating loss of $29.2 million before subsidies, a $3.4 million increase from the previous year's operating loss of $25.8 million.

Operating revenues increased by $14.7 million, from $84.2 million in 2015 to $98.9 million in 2016. But operating expenses increased from $110 million in fiscal 2015 to $128.1 million in fiscal 2016, the audit stated. The increase was attributed to the Government Accounting Standards Board pension adjustment of $15.1 million, a $2.4 million increase in supplies and materials, and a $587,000 increase in costs for contractual services.

To address losses, the audit stated, GMH raised hospital fees by 5 percent in April 2017, and plans 5-percent increases annually. The authority also plans to reapply to increase Medicare reimbursement rates, negotiate with Guam insurers and contract a collection agency for self-pay receivables.

Pacific Daily News
Copyright © 2017 Guam Pacific Daily News. All Rights Reserved

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