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GMH financial crisis revealed

by Mindy Aguon

Critical supplies and medicine on credit hold 

Guam - The Guam Memorial Hospital is in a financial crisis that could result in a cutback of critical services for patients and a shortened workweek for employees.  During Thursday night's board of trustees meeting, the hospital's dire financial situation was laid out prompting the board to task management to develop a plan if there is a shortfall in payroll. 

GMH Chief Financial Officer Siva Karrupan detailed how the hospital has been unable to keep up with its vendor payments while at the same time meeting gross payroll.  He referred to $12 million in outstanding vendor payments.  While the hospital has made an effort to pay a small amount to each of its vendors, Karrupan says some companies have put the hospital on credit hold, demanding payments within 45 days of receiving medical supplies or pharmaceuticals.  The hospital's inability to pay vendors could impact services such as not being able to provide routine radiology procedures, said Associate Director of Medical Services Dr. Larry Lizama.  He added that GMH barely made a payment on Thursday to have clean linens for the weekend. 

Karrupan meanwhile fully believes the hospital will be able to make next week's payroll which is almost $3 million, but he stresses that the hospital has to tighten its belt and make provisions to have enough cost savings to avoid a payless payday.  The board tasked management to look at what impact a 32-hour workweek would have on the hospital by reducing the hours of administrative staff.  Nurses would not be impacted, he said.  GMH officials are looking at Saipan as a model for the reduced workweek. 

The hospital has made efforts to reduce unnecessary spending by cutting back on transcription services, hiring ultrasound technicians, and closing the Outpatient Hemodialysis Unit, but Karrupan says it's not enough to make sure that the hospital has enough funding for payroll and to make all of its vendor payments.  The $12 million outstanding obligation is a significant burden that officials can't pay down. 

The CFO added that the hospital has about $8 million in expenses every month but only collects $6.5 million to $7 million.  This means GMH is losing $12 million to $13 million every year. 

Management has until next Wednesday to develop the backup plan and submit it to the board for their review.

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