• By Mar-Vic Cagurangan

GMH expenses exceed revenues by $33.3 million

GMH patients migrating to GRMC

The Guam Memorial Hospital closed fiscal 2018 with a net loss of $3.3 million, according to the Office of Public Accountability, which found that GMH’s operating expenses exceeded its operating revenues by $33.3 million.

“Operating activities resulted in negative cash flows of $19.0 million and $106.3 million of patient accounts receivable was determined uncollectible,” OPA said. “In addition, GMH’s deficiency on delinquent and unpaid retirement contributions, interest, and penalties to the Government of Guam Retirement Fund was $1.2 million as of FY 2018.”

Apparently losing many of its patients to the privately-operated Guam Regional Medical City, GMH has seen a decline in traffic in the past four years.

“GMH experienced a reduction in patient count since the opening of the Guam Regional Medical City in July 2015,” OPA said in a recent audit report. “Total patient count decreased by 29 percent from 46,000in FY 2015 to 32,000 in FY 2018.”

The scandal-ridden GMH, run by the government, used to be only hospital that served the local community, mostly the non-insured. The lack of certain specialty medicines at the 158-bed facility, however, compelled may patients to seek treatment at off-island hospitals.

GRMC, a 136-bed acute care facility, provides a full range of medical services including emergency and urgent care as well as specialty clinics that include cardiology, oncology/hematology, hyperbaric wound care, neurology and pulmonology among others.

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The government recently enacted a law expanding the health care network for GovGuam employees and retirees to include GRMC and other

private clinics.

GMH provides healthcare to all patients regardless of one's coverage or ability to pay, and without collateral.

Collection is mainstay problem at GMH. “With only 49¢ collected for every $1 billed to all patients, the Medicare reimbursement rate at only 76 percent of the costs of delivering care; and 76 percent of patient accounts receivable estimated to be uncollectible, GMH is in constant need of government subsidy,” OPA said.

Audit found that of $149.9 million in FY 2018 patient services, $43.4 million were contractual adjustments based on costs not reimbursed by the 3M’s and third-party payers (health insurance companies) and $19.4 million was determined uncollectible from self-pay patients.

“This means, only 58 percent (or $87.1M) were determined collectible, of which only $75.8 million was collected as of FY 2018. While it appears that the majority of what was determined collectible was collected, the $75.8 million collected was only 49 percent of FY 2018’s grand total billings of $153.8 million, before any adjustments,” OPA said.

The audit also noted that although GMH has been increasing its fee rates by 5 percent every year since 2015, the rates are still outdated because most of the rates were established in the early 1990s. “Legislative approval is required for any fee increase that exceeds the 5 percent threshold,” OPA said.

To keep afloat, GMH continues to rely on subsidies. In FY 2018, GMH received $4.5 million more in capital grants and contributions – $3 million more from GovGuam and $1.5 million more from federal grants. The additional funds, however, are restricted for acquiring, improving, replacing, or expanding capital assets and not to be used for operations.

"In FY 2018, operating expenses decreased by $8.6M mainly because of decreases in the personnel costs of professional support and fiscal services; retiree healthcare costs and other pension benefits; and depreciation," OPA said. "Despite decrease in operating expenses, GMHA’s operating revenues were still not enough to cover total operating expenses."

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