Despite $66.6M in Covid funds, GMH mired in financial chaos
OPA: Hospital's account receivables hit $302 million
By Pacific Island Times News Staff
Guam Memorial Hospital received a total of $66.6 million in federal Covid-19 funds from 2020 to 2022, raising its operating revenues that came with a corresponding increase in spending during the pandemic, according to the Office of Public Accountability. Around the same period, the government of Guam’s general fund subsidy for GMH was cut by $7.3 million, or 25 percent, going from $28.8 million in fiscal 2021 to $21.5 million in fiscal 2022, the OPA’s audit said. “Although total operating revenues increased by $23.9 million (or 22 percent) in FY 2022, all operating expenses likewise increased by $15.3 million (or 8 percent)," OPA said.
GMH racked up its expenditures on nursing, professional support and medical staff divisions "to prevent, prepare for, and respond to Covid-19."
Expenditures were made on contract travel nurses, physicians and medical supplies, pharmaceuticals, food supplies, electricity and oxygen, the audit said.
Auditors found that contractual services for administrative support, fiscal services and medical staff collectively increased by $13.4 million (or 79 percent) during the period covered by the audit.
“Fiscal services had the highest increase of $3.9 million (or 457 percent) due to the revenue cycle management consultancy; followed by administrative support by $2.7 million (or 99 percent) due to electronic health record implementation, repairs, and demolitions; and medical staff by $6.7 million (or 51 percent) due to more physician hiring and increase in salaries,” OPA said. The streams of financial aid from the CARES Act and the American Rescue Plan kept GMH afloat during the pandemic. However, the end of the public health emergency this year cut the amount of cash support for the government hospital. “GMH ended FY 2022 with a decrease in net position (net loss) of $1.8 million, from negative $255.6 million in FY 2021 to negative $257.5 million in FY 2022. Total assets grew to $89.5 million in FY 2022, an increase of $9.3 million (or 12 percent) from FY 2021’s $80.2 million, primarily due to increases in patient accounts receivable, net by $9.8 million.
Citing analysis by independent auditors Ernst & Young, OPA said GMH’s recurring losses and negative cash flows from operations heightened its reliance on GovGuam to support its operations. “For FY 2022, GMH incurred losses from operations amounting to $61.2 million and negative cash flows from operations of $57.8 million. However, GMH generated a net change in cash of $298,000, which increased the FY 2022 cash balance to $3.5 million from $3.2 million in FY 2021,” the OPA said.
OPA noted that GMH grants credit without collateral to its patients, many of whom are Guam residents and are insured under third-party payor agreements.
As a result, gross patient account receivables increased by $46.4 million (or 18 percent), going from $255.9 million in FY 2021 to $302.3 million in FY 2022.
However, the allowance for uncollectible accounts of $252.8 million in FY 2022 also increased by $36.6 million (or 17 percent) from FY 2021’s total allowance of $216.2 million.
“GMH’s mandate to provide healthcare to all patients regardless of one’s insurance coverage or ability to pay has resulted in the continual growth of patient receivables," OPA said.
"For the last five years, self-pay patients received an average of $25.6 million of care per year, of which GMH collects an average of 31 cents per dollar billed to self-pay patients. The likelihood of collecting these self-pay accounts, which have an outstanding gross receivable of $74.3 million as of FY 2022, is low," OPA said.
The top three highest increases in gross patient AR by percentages are: 1) collection agencies and others by $12.2 million (or 131 percent); 2) Medicaid Assistance Program by $11.8 million (or 91 percent); and 3) self-pay patients by $30.8 million (or 71 percent).
GMH billed $253 million in claims in FY 2022 compared to $209.2 million in FY 2021, an increase of $43.8 million (or 21 percent).
Collections increased by $17.5 million (or 18 percent) from $98.6 million in FY 2021 to $116.1 million in FY 2022.
Collections from Medicare, Medicaid, and MIP (3Ms) and third-party payors increased by $9.2 million (or 22 percent) and $10.4 million (or 24 percent), respectively, while self-pay collections decreased by $2.1M (or 16 percent=). Increased collections were attributed to the increase in patient billings and patient census.
The collection percentage over billing was 46 percent compared with 47 percent for FY 2021.
GMH has worked successfully with the Office of the Attorney General for collection referrals and DRT for garnishments of tax refunds.
GMH collected $6.3 million for FY 2022 and $8.6 million for FY 2021 from accounts referred to DRT.
Total liabilities increased by $7.9 million (or 2 percent), from $360.9 million in FY 2021 to $368.8 million in FY 2022. The major factors for the increase are due to increases in other post-employment benefits liability by $21.3 million (or 11 percent), accounts payable trade by $8.6 million (or 77 percent), and due to GovGuam by $4.8 million (or 160 percent).