With COVID-19 in our midst, Guam Memorial Hospital's ongoing cash crunch hasn't been getting as much public attention recently.
But thanks to the persistence of the Office of Public Accountability and the external auditors hired to look at the Guam Memorial Hospital Authority's finances, we have a new reminder that GMH continues to be in a precarious standing financially.
The OPA's release of the audit of GMHA's fiscal 2019 finances on Monday brings back into focus concerns expressed at the end of nearly each budget year that GMH's viability to continue operating remains under clouds of doubt.
It's not new that GMH is left to carry the burden left behind by patients who leave the hospital with no means or intent to pay for the services rendered.
A total of $18.1 million was determined uncollectible from self-pay patients in fiscal 2019 alone.
If the hospital were a business, it would have filed for bankruptcy by now.
Each year, more patients leave the hospital with unpaid bills, many of which remain unpaid – if not for the garnishments of tax refunds.
But patients who are unable to pay aren't the only ones who have left the government hospital with unpaid bills.
Patients covered by Medicare, Medicaid and the Medically Indigent Program accounted for $97.2 million – or 55% of GMHA’s gross patient revenues in fiscal 2019, but GMHA collected only $33.4 million, or 34%, in the audited budget year. An average of the last five years indicates GMHA collected reimbursements of only 44 cents for every $1 billed for the "3M" patients, the report states.
Health insurance companies were billed $51.3 million, or 29%, of GMHA’s grand total billings in fiscal 2019, but the government hospital collected only $35.2 million, or 69%, the audit found. An average of the last five years indicated GMHA collected only 71 cents for every $1 billed to third-party payers.
Certain health insurance companies have disputed some of GMH's billings, so both sides need to hash out their differences.
Unpaid patient billings amounted to $187.6 million in fiscal 2019, a $47.6 million increase from $140 million in fiscal 2018. Without a reversal of this situation, GMH does face financial challenges that get heavier each budget year and could one day be insurmountable. It also faces costs related to its aging building – including a leaky roof – and a possible replacement of the entire structure that could cost an astounding $731 million based on the U.S. Army Corps of Engineers' estimates.
While GMH's predicament is understandable, to a certain degree, we also would like to see the government hospital take proactive steps to try to live within its means.
Raiding withholding tax money
As a result of overspending, GMH has had to disregard some of its legal responsibilities.
Without sufficient funds, GMHA did not meet its obligations to fully pay income taxes that had been withheld from employees' paychecks. The hospital authority also failed to remit all of the retirement fund contributions it was supposed to send to the Government of Guam Retirement Fund.
In the audited budget year, GMHA’s liabilities for delinquent and unpaid taxes with the Department of Revenue and Taxation was $5.3 million. And it had accrued unremitted retirement contributions of $747,000.
Past withholding taxes, primarily for 2018, were not remitted or not timely remitted due to poor cash flow, the audit report states.
In fiscal 2020, GMHA was committed to paying the principal amount for this obligation, the audit states. Operational funds were used to pay these taxes and the principal balance was paid in full as of June 2020, according to the audit. Also, the $747,000 GovGuam Retirement Fund retirement contributions were remitted as of October 2019.
It's good GMH has cleared these issues, but this isn't the first time GMH failed to timely remit withholding tax payments and retirement fund contributions.
GMHA's financial challenges were also exacerbated by its failure to hold down expenses it could control. For example, GMH's operating expenses increased by $7.1 million "primarily due to increases in fringe benefits of $6.3 million, from changes in pension expense, contractual services of $3.9 million, and supplies and materials of $3.5 million," the audit report states.
The government hospital increased its full-time employee count by 78 people, to 1,025 in fiscal year 2019. Fifty of the 78 are nurses. Still, even with the hiring of nurses, overtime cost for nursing increased. The increase in staffing in nursing and professional support came at a cost of nearly $1.5 million in overtime and other pay, the audit report states.
When the COVID-19 pandemic is over, and the flow of federal funds toward helping GMH turns into a trickle, we will again hear the hospital's cries for a bailout.
We will also then hear politicians promise to help GMH survive its financial troubles.
And then there will be another issue of the day, and the distraction will obscure GMH's troubles from public view.
Without systemic changes, the hospital's financial woes will keep happening.
The auditors' concern about the hospital's ability to continue operating might just be a question of when.
Auditors could one day say: "I told you so."