Rate increases for treatments at Guam Memorial Hospital were approved by the board on June 17. The increases are likely to be implemented Aug. 1.
Phillip J. Flores president and chairman of BankPacific and chairman of the board of GMH told the Journal “Basically it averages to 5% across the board. We’re comfortable with 5%.”
He said GMH had tried to rationalize and reorganize. “When you have a growing number of people who don’t pay you know you can’t fix it by operating efficiencies.”
Reorganization was stymied Flores said. “Rightsizing the number of employees is very difficult because of the interference of the Civil Service Commission.” The hospital had also submitted a reorganization plan to the legislature which Flores said he had heard would not be approved by the 45-day deadline of July 22. “It is partially staffing and partially a privatization plan for services such as housekeeping and security. It would save between $800 000 and $900 000 in operating costs and improve services.”
While the hospital attempts to improve its financial standing and guarantee a funding stream from the legislature William I. McMillan chief executive officer and administrator of the hospital said the hospital is adding to its revenue stream as allowed by the Guam Code Annotated.
Based on fiscal 2003 the hospital had an operating shortfall of $10.6 million. The hospital has the ability by law to raise rates to meet its operating costs. “We’re constrained here ” McMillan said. “We would have to raise our rates 65% to generate the shortfall. It’s just a non-starter. Can you imagine what that would do to private health care costs on-island? The market can only tolerate a small rate increase.”
He said the increase had not been applied to all billed items particularly those that would likely not attract payment. “It’s not an across-the-board fee increase. It’s in six different departments — 4 000 to 5 000 different line items with a higher paid component.” McMillan said the increase would take effect once the changes had been made. “We charge on a line item basis all of which need to be adjusted by hand.” He said the increase would likely impact insurance companies. “I’m sure they’re going to raise their rates.”
The board will consider the hospital’s fiscal 2005 budget at the August meeting. Flores said “It’s a look-see. I don’t know if we’re going to pass it.”
The hospital McMillan said has gross revenues of about $100 million per year with net revenues of $63 million to $65 million. “We write off about 40% of what we generate in gross revenues” he said due to uncompensated care — patients who could not or did not pay. “We are consistently falling behind between our operating expenses and net patient revenues.” He said about 100 000 people on Guam have health-care coverage of some sort and about 50 000 were uninsured. “Through our health-care summit [in March] we tried to make the point that it’s a community problem.”
McMillan said allocations from the Guam legislature had been erratic. “There were two years where we got nothing. In 2002 we got $65 million but it went to pay off a Bank of Guam loan. What we are trying to say is we need a consistent subsidy. If you want an attractive building a parking lot that’s lit floors that are even and shiny — it’s a societal cost.” He said mainland hospitals usually had a subsidy to meet shortfalls.
Sen. Lourdes A. “Lou” Leon Guerrero chairman of the Committee on Rules & Health of the 27th Guam Legislature said “Since 1995 forward we have not subsidized the hospital. At one point we were going to give them $6 million but Gov. Gutierrez said we are not going to take it. The legislature has on its own given subsidies to the hospital.”
She said authorized borrowing of $27 million for the hospital to pay down its debt had a debt service of $3 million to $4 million per annum. “The general fund is subsidizing that service.” The hospital had also received $13 million to $14 million in tobacco monies she said. “I was the one who called him [McMillan] up and said “‘Have this Healthy Futures Fund money [$3.8 million last year] and don’t raise the fees.’ I was trying to maintain the cost of health-care premiums.”
McMillan called on the legislature and the community to fund the hospital and suggested a tax possibly property tax to do so. “The best thing for Guam is a very modest increase in property taxes devoted exclusively to the hospital. It’s immaterial to me where the money comes from but there needs to be additional investment by this community in its hospital.”
To move forward McMillan said the hospital should develop fund-raising strategies to raise more than the $40 000 to $50 000 a year raised by the Guam Memorial Hospital Volunteers Association. “We need to have a foundation or some other enterprise raising a million or 2 million per year. We need to have a building fund and get it endowed we need to go to the high-worth individuals in the community.” MBJ
