By Mar-Vic Cagurangan
The Office of the Attorney General has launched a criminal investigation into the Guam Memorial Hospital’s consulting services contract with MedHealth Solutions, which was greenlighted by former Attorney General Leevin Camacho.
The hospital’s beleaguered deal “involves alleged improper use of procurement law and alleged improper expenditures, collections and disbursements of public monies,” Attorney General Douglas Moylan said, citing an audit report released last week by the Office of Public Accountability.
GMH officials defended the contract, pointing out that the “legality of its terms” was approved by the OAG before it was executed.
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GMH noted that the OAG’s participation in the contracting process was highlighted in the OPA report.
“That is not this AG. Our internal review shows no one is left with this AG Office that was involved with GMH,” said Moylan, who was elected attorney general in November 2022, succeeding Camacho.
“Also, the facts are still under review and I am not convinced the information (GMH) may be relating is entirely correct,” he added.
Moylan said GMH had a resident legal counsel with a “separate autonomous authority.”
He declined to comment when asked if his predecessor would be investigated as well.
“OPA reports are received and reviewed by my Government Corruption Division. We do not discuss the particulars of ongoing investigations,” Moylan said.
“However, we ask anyone who knows of wrongdoing or may believe they may have criminal liability to contact us. Better such persons contact us first before we investigate and may be forced to charge them," he added.
The OPA reported that GMH paid MedHealth Solutions for billing and collection services based on an unreasonable compensation formula, leading to $4.9 million in questioned costs.
The questionable compensation and poor performance were among the several anomalies red-flagged by the public auditor. The OPA said MedHealth received “preferential treatment” despite being a “nonresponsive bidder."
However, GMH argued that the OPA’s audit findings “do not fully reflect the extent to which GMH benefitted from the contract, and the lengths to which GMH went to ensure its procurement and the resulting contract complied with Guam law.”
“GMH worked with the Office of the
Attorney General on this contract, and
once it was approved, the hospital acted in accordance with that approval,” GMH said in a statement released this week.
Hospital officials said it procured MedHealth’s services “to enhance the efficiency of the hospital’s collections division.”
“GMH has historically struggled with its finances due in large part to the challenges it faces with collections. The purpose of this contract was to address those challenges and improve collections,” GMH said.
Among MedHealth's tasks under the contract, according to GMH, was to train collections staff in identifying inefficiencies and taking corrective
measures to bolster internal processes.
However, the OPA said MedHealth Solutions LLC's unreasonable fees were not commensurate with its performance during the contract period from 2021 and 2022.
While the hospital’s financial audits showed increases in gross patient revenues during fiscal years 2021 and 2022, OPA noted that GMH collected only around 47 percent to 48 percent of gross patient revenues during the contract period.
During the years before MedHealth's contract, OPA noted that GMH’s revenue collection rate averaged between 58 percent and 59 percent.
An affidavit of ownership disclosure signed on July 21, 2020 listed Rene Ramos, Paul Pineda and Glen Hermes as MedHealth’s owners.
GMH canceled the contract after finding that the company had an expired license. According to the Department of Revenue's record, MedHealth's license expired in August 2022.