OPA: Audit raises doubts about GMH’s ability to remain in operation

Guam Memorial Hospital
Guam Memorial Hospital (PNC file photo)
Financial Highlights

An audit released today by the Office of Public Accountability raises doubts about the ability of Guam Memorial Hospital to remain open.

The audit was conducted by independent auditors Deloitte & Touche.

It cites the public hospital’s “recurring losses” and “negative cash flows” which they report “raise substantial doubt about (GMH’s) ability to continue as a going concern (i.e. – meet its obligations).

Despite increased collections, the audit found that over the last five years self-pay patients have run up an average of $22.7 million in care per year,  and they concluded that the  likelihood of collecting from those self pay patients is low.

GMHA Unpaid Withholding Taxes and Unremitted Retirement Contributions

Among the other concerns noted by the audit:

  • Past withholding taxes, primarily for 2018, were not remitted or not timely remitted due to poor cash flow.

*In FY 2019 the Guam Memorial Hospital Authority’s liability for delinquent and unpaid taxes to the  Department of Revenue and Taxation was $5.3-million.

  • In FY 2019 remitted retirement contributions to the GovGuam Retirement Fund amounted to $747-thousand which was not paid until after the end of the fiscal year in October 2019.

  • Operational funds were used to pay these taxes and the principal balance was not paid in full until June of this year.

  • In February 2020, GMHA requested a waiver from the DRT Director for the interest and penalties based on GMHA’s heavy reliance on Government of Guam subsidies and negative operating cash flows. The DRT Director approved the waiver in June 2020, which will allow GMHA to direct this cash to pay critical medical supply vendors.

Centers for Medicare and Medicaid Services Approved GMHA Rebasing

In January 2019, CMS rebased GMHA’s discharge rate retroactively to October 01, 2013. In FY 2019, GMHA received $6.3M for retroactive rate adjustments for FY 2014 to FY 2016.

The rebasing narrowed the gap between actual cost per discharge and the total amount per discharge reimbursed.

However, despite the rebasing, GMHA was still reimbursed less than the cost of discharge.

In FY 2019, the cost of discharge was $15K while the reimbursement was $11K. As a result, further rebasing should occur to truly close the gap.

Increase in Net Patient Revenues

Net patient revenues increased by $12.0M to $99.1M during FY 2019 compared to FY 2018’s $87.1M.

This increase was attributable to growth in both inpatient and outpatient census, the annual 5% rate increase, new fees, and higher Medicare reimbursements due to rebasing.