GMH gets $25M to pay down loans - KUAM.com-KUAM News: On Air. Online. On Demand.

GMH gets $25M to pay down loans

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by Krystal Paco

Guam - It's good news out of the Guam Memorial Hospital as the long awaited $25 million loan has finally come to fruition.

It's not a full recovery for the Guam Memorial Hospital's flatlined finances, but it's a start.

Reporting good news at a press conference held this afternoon, GMH administrator Joseph Verga announced their $25 million loan is in and will provide much needed relief to outstanding debts.

"Of the $25 million, $10.5 million will be used to retire the existing debt with the Bank of Guam. That was an existing loan that GMH had made several years ago. As you will recall $4.3 million of those funds will be used to pay off the Perry Point debt in full. This payment will eliminate the threat of the hospital's Medicare payments being garnished due to the debt to Perry Point."

As we've previously reported, it was last July the U.S. Department of Treasury garnished the hospital's Medicare payments on behalf of Perry Point at over a million dollars a month.

Fortunately, today's payment to Perry Point eliminates the possibility of history repeating itself.

"As you know the Perry Point debt caused the garnishment to happen this past summer. If we had not paid that debt off today, I was told that by the middle of this month which was our new deadline to pay off that debt then that garnishment was going to kick in again," he said.

But how about the remaining balance?

"The balance of the $10.7 million will be used to pay vendors in full or partially. This will be determined on critical patient care and service needs of the hospital and the amount of debt owed to the vendors," he said.

Verga states the listing of vendors to receive payments will be available by the end of the week.

Meanwhile, with a total $19 million in debt at the start of the New Year, Verga says we're not done paying our dues just yet as he reports an estimated $4 million may be owed to the department of revenue and taxation for withholdings for Fiscal Year 2011.  

"Let me be clear: this does not solve GMH's financial problems. All this money is going to deal with the debt. It's not a windfall. It's not going to operations. It's not going to salary and wages. It doesn't mean Its helping our cash flow. We still have issues with resources and cash flow. But what this does do is enable us to help that situation by making sure that we can stay current or try to stay current with our vendors who give us the best prices," he said.

$2 million in Compact impact funds annually will be used to pay down the $25 million loan in addition to $1 million allocated annually from the Healthy Futures Fund.

Meanwhile, GMH officials are slated to appear before lawmakers on Wednesday for an oversight hearing.

The hearing gets way at 10 a.m. at the Legislature's Public Hearing Room.

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