OPA: Guam Memorial Hospital's total liabilities increased to $421.7 million

By Pacific Island Times News Staff

Guam Memorial Hospital’s total liabilities increased from $368.8 million in fiscal 2022 to $421.7 million as of the end of fiscal 2023, according to the Office of Public Accountability.

“The increase was due to increased expenses and decreased cash flows,” the OPA said in an audit report released Tuesday.

“Current liabilities comprising accounts payable – trade of $29 million (which increased by $9.2 million or 46 percent) and due to GovGuam of $22.3 million (which increased by $14.5 million or 185 percent), made up 83 percent of the total current liabilities,” the report said.

Seven vendors were owed between $1 million and $2.7 million each.

The OPA attributed the hospital’s troubled financial predicament to a combination of factors including decreases in patient and operating revenues, subsidies from the government of Guam and collections as well as the end of federal Covid grants.

“GMH ended FY 2023 with a decrease in net position (net loss) of $40.9 million, from negative $257.5 million in FY 2022 to negative $298.4 million in FY 2023,” the report said.

GMH generated a $97.9 million operating loss due to decreases in net patient revenue by $36.7 million.

The operating loss was mainly offset by non-operating revenues of $54.7 million comprising transfers from GovGuam of $32.5 million, federal grants of $21.7 million, and other income of $474,000.

GMH continued to incur losses from operations amounting to $97.9M in FY 2023, from $61.2 million in FY 2022, an increase in losses by $36.7 million.

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The negative cash flows from operations of $71.6 million, which increased from $57.8 million in FY 2022, were mainly due to a $28.6 million decrease in receipts from and on behalf of patients, and sales, and other services.

This resulted in a cash balance of $1.3 million as of FY 2023, a decrease of $2.3 million from the prior year.

GMH receives financial support from GovGuam in the form of supplemental appropriations and subsidies.

Although GovGuam transferred $32.5 million to GMH—an increase of $6 million from the prior year— this was offset by a decrease in federal grants by $9.6 million.

Noting its large operating deficits, GMH appealed for alternate funding sources including additional subsidies to cover increases in personnel costs, contractual costs for physicians, supplies and equipment, and electricity.

OPA said personnel costs of $113.7 million make up 58 percent of the total operating expenses.

Contractual services grew by $3 million, from $38.4 million to $41.4 million, with the administration section having the biggest increase of $1 million (or 9,359 percent) due to property insurance, and the medical staff section of $5.8 million (or 27 percent).

GMH grants credit without collateral to its patients, many of whom are Guam residents and are insured under third-party payor agreements.

Gross patient receivables amounting to $358.1 million increased by $55.8 million from $302.3 million in FY 2022.

 Similarly, the allowance for uncollectible accounts of $306.5 million was likewise increased by $53.8 million, resulting in a net patient account receivable of $51.5 million.

The allowance constitutes 86 percent of its gross receivable.

The top three increases in FY 2023 receivables are from 1) collections agencies and others of $56 million (increased by $34.5 million from FY 2022), 2) Medicaid assistance program of $38.6 million (increased by $13.9M from FY 2022), and 3) account referrals to Department of Revenue and Taxation of $108.4 million (increased by $31.2M from FY 2022).

Moreover, receivables from self–pay patients amounting to $39 million decreased by $35.3 million from the prior year.

Due to GovGuam current liability account balance of $22.3 million mainly comprised of Medicaid advances to GMH amounting to $17.6 million.

The chief financial officer’s memorandum to file in April 2024 stated that the governor authorized the Department of Administration director to work with GMH to provide immediate relief through advances from Medicaid.

The advances are based on GMH’s Medicaid receivables with 50 percent recoupment. Total Medicaid advances received from April 2023 to October 2023 was $22.3 million.

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