GMH incurs largest loss in over a decade

by Ken Quintanilla

Guam - Brought in last year to stop the financial hemorrhaging, Guam Memorial Hospital chief financial officer Siva Karrupan has resigned from his position. GMH management confirmed that Karrupan submitted his resignation Monday, but according to his contract he technically remains employed for 60 days. Karrupan, however, is currently on personal leave.  

The CFO turned in his resignation just 48 hours before the Guam Office of Public Accountability released an audit of the hospital's flatlining finances. Hospital management confirm Karrupan resigned, citing personal reasons. The acting CFO is now Jun Infante, who will have a major task ahead of her as the hospital experienced its largest loss in over a decade totaling $28.7 million for Fiscal Year 2011.

It's no secret the Guam Memorial Hospital has faced financial challenges for some time, but a scathing audit today from the OPA not only further confirmed but showed the agency experienced its largest loss in over a decade, totaling $28.7 million. GMH acting administrator Rey Vega says a recent audit outlining the financial highlights of Guam's only civilian hospital are due to seeing more self-pay patients that have doubled over the years which is a direct reflection on the economy.

"Those are numbers and we see the numbers as the way they are presented," he told KUAM News, "but the factors that are affecting this one is the self-pay twice as much doubled. And because of the economy, the self-pay is actually a no-pay."

The report noted 46% of GMH's patient revenues came from Medicare, Medicaid and MIP, which Vega says has significant contractual adjustments of $38.9 million (about 57%). Auditors also report that GMH stopped remitting not only the employer's share, but also employees' share of retirement contributions to the Government of Guam Retirement Fund. Cumulative unpaid retirement contributions including interest and penalties now stand at $15.1 million, which is a 69% increase from Fiscal Year 2010.

Vega says he will look into the additional findings, but does acknowledge changes are necessary including implementing more cost containment measures, changing its system such as outsourcing its billing and collection. "Well the challenge...is the self-pay, we will continue to service the population, we will not compromise the care and that has been the mission of the Guam Memorial Hospital," he noted.

Additionally, the report stated that employee income tax withholdings of $6.4 million were unpaid as of September 30, 2011, which incurred interest and penalties of $585,000 due to nonpayment of withholding taxes. Committee on health chair Senator Dennis Rodriguez, Jr. meanwhile is concerned considering the change of management early last year promised improvement. "When this new management came in and the old management was replaced, the people of Guam were promised that major changes would happen there and we would see a turn around in finances because we know the hospital has been challenged financially. Obviously, you see now that that's not the case," he said.

Rodriguez notes that the change up occurred in February or about half way through the fiscal year, but it still left a lot of time to do some sort of turn around. And although he hadn't fully read the report, Governor Eddie Calvo recognizes the GMH Board of Trustees and management have a lot to fix. He said, "You also have to understand that the amount of subsidies that have gone to that hospital as compared to previous years has gone down dramatically. When I was the chairman of Ways and Means, we put 6.9% of Gross Receipts Tax collections into the hospital for subsidization, as well we floated certain bonds that gave them monies for capital improvement projects. So over the past few years, the legislature and all its wisdom has reduced the subsidies to this hospital."

Calvo says he does look forward to working more with the board and the Legislature to ensure the hospital is given enough resources and encourages the hospital to streamline more innovatively. Senator Rodriguez meanwhile has since requested the OPA do a supplemental audit that deals directly with the direct payer agreements and will hold an oversight hearing with GMH next month.