A new hospital: Is privatization the way forward for GMH?


All signs are now pointing to the construction of a new hospital for Guam as Gov. Lou Leon Guerrero has indicated that this is her preference.

Stakeholders, however, are saying that if GovGuam builds a new hospital, it must also create a new “operating system” for it and not just disguise old systems and concepts inside a spanking new multi-million dollar physical facility.

One proposal brought forward is to adopt the privatization model for the planned new hospital.

The Guam Memorial Hospital Task Force Report, commissioned in 2016 by then health committee chairman Sen. Dennis Rodriguez Jr., eliminated the options to “remain status quo” or to continue throwing money to upgrade the current GMH.

The report, which still remains the most comprehensive study of GMH four years after its completion, recommended the building of a new hospital for Guam under some kind of privatization model, which has lately been the trend worldwide, the latest of which is the privatization of the UK’s once public health care system.

Senator Therese Terlaje, the current health committee chair in the legislature, said the desire to build a new hospital is not really new and a new hospital has been proposed since way back 1973 by the 12th Guam Legislature, which established the Guam Economic Development Authority Hospital Facilities Finance Act.

“This has been echoed by many senators, governors and task forces, and by the community for many years, but no governor seemed willing or able to forego use of the necessary funds during their tenure, and instead proposed increased debt, increased taxes, and other options that were not acceptable to the public,” Terlaje said in an interview with PNC.

Chuck Tanner, former chief of staff to Sen. Rodriguez and one of the members of the task force which prepared the GMH report, said GovGuam should approach the GMH issue as a business decision and not as a political decision.

“There are several business methodologies to deduce the way forward; renovate or build. I am leaning toward a new facility with the information I currently have. I am sure we can get financing as there are many sources available like USDA, DOI, the JFK model, or public-private agreements if we go that way,” Tanner said in an interview with PNC.

Terlaje is also supportive of a new hospital.

“Two years ago, we were told by the administration that modernizing would increase critical care and grow revenue for future expansion. Recently, the Army Corps has pointed out that the construction of a new hospital would allow us to expand services beyond what is possible at the current location,” the senator said.

She added that outside funding to finance a new hospital could certainly be pursued.

“There were various models of financing put forth over the years, including grants, low-interest loans, partnerships, and other means, but all possibilities should be on the table and vetted fully with the goal of getting the best value for the people of Guam,” Terlaje said.

The health committee chair, however, cautioned that although she supports all efforts to increase the quality of care and expand existing lifesaving treatment and capacity, she will advocate for at least a partial redirecting of current revenues before any new taxes, bonds, or future lease-backs that shift all the costs to the future are implemented.

“To the best of our ability, a new or expanded hospital should be a gift we leave for future generations, not a burden,” Terlaje stressed.

Public/Private partnership

The GMH study lists several modes of privatization but for Tanner, full privatization is not the way to go and GovGuam should still be involved in the decision-making process.

“I think it would be challenging for the government not to have some say in health care on the island so my answer would be a public/private partnership, not necessarily a 50-50 thing. But the government should not totally divest itself. As for management, I would recommend making the Board of Trustees act as a board. In my opinion, they are too deep into operations, very little in strategy, and the administration does not allow them to be a board. If this cannot change, then scrap the board model and privatize the management,” Tanner said.

Terlaje also supports the outsourcing of the management of the hospital to ensure world-class care and maximize efficiency and value for taxpayers.

“We should avail of highly specialized types of management for hospitals and to remove GMH’s vulnerability to politics, and government bureaucracy such as recruitment, civil service, and procurement,” the senator said.


The desire to build a new hospital is apparently receiving bipartisan support as Republican senator Telo Taitague, the minority leader of the 35th Guam Legislature, also supports a new hospital for Guam.

“I agree that a new public hospital facility should be built in addition to addressing urgent repairs required at the current GMH. Policymakers — including members of the recently established Our Hospital, Our Life Planning Task Force — should consider all options including funding opportunities that may be available through federal grants, USDA loans, public-private partnerships, leaseback arrangement, or tax abatements,” Taitague said in an interview with PNC.

To help move things forward, Taitague said that GEDA, based on a request she made to its management at a January 2019 meeting, included a $150,000 funding proposal to the U.S. Department of Commerce Office of Economic Development Administration through the Guam Comprehensive Economic Development Strategy (CEDS) 2020-2025.

According to Taitague, this funding support will help GEDA seek grants to fund a consultant that can work with the administration and the 35th Guam Legislature in identifying the means necessary for either the renovation of the existing building or for the acquisition, construction, and provision of a new hospital facility, depending on the outcome of the assessment by the U.S. Army Corps of Engineers.

Taitague is also amenable to outsourcing the hospital management component, especially if this approach costs less, provides for effective and efficient use of resources and holds leaders accountable.

Don’t forget the old hospital

In the meantime, Senator Terlaje is reminding everyone that even if GovGuam builds a new hospital, it should still take care of the current hospital because building a new hospital could take many years to complete.

Toward this end, Terlaje has introduced Bill 294-35 (COR) to prioritize an additional $11 million of improvements to the current Guam Memorial Hospital facility, above less critical expenditures in the current executive budget request for FY2021.

This is in addition to Terlaje’s bill allocating $10 million to GMH which the governor this week allowed to lapse into law. The measure proposes appropriating $10 million from the Hospital Capital Improvement Fund to the Guam Memorial Hospital Authority for the purpose of funding three critical capital improvement projects

“All the revenue we receive as a government is meaningless if we cannot provide a safe place for our community during the most vulnerable times of our lives. Patients and their families deserve to walk into our hospital without seeing a leaking roof and wondering if the electrical panel, air system, or medical record system will put them at risk,” the senator concluded.