What's worse, GMH CFO Alan Ulrich says, while the standard is for the island to have 100 days of operating expenses set aside, Guam’s only civilian hospital has just six days’ worth. This, GMH management explains, is why their increased budget request is critically necessary.
The Guam Memorial Hospital, although improving with its quality of care, is buried in debt. The newly hired administrator Joseph Verga and CFO Alan Ulrich say this $20 million dollar debt is a serious threat to the hospital’s Joint Commission accreditation and they mean business.
"Losing our accreditation would be catastrophic in a lot of ways. Not only could it affect Medicare and Medicaid reimbursement, insurance reimbursement, but it also will serisously, seriosusly affect the quality and safety of care provided at the hospital," emphasizes Verga. "Not to say that could the hospital continue to survive? I think probably yes, but what kind of hospital would survive?"
Although The Joint Commission does not award accreditations based on financial stability, Verga notes that this deep hole GMH is in does put patient safety at risk, which is where the Joint Commission comes into play."It's the adequate resources issue. There are no Joint Commission standards that specifically relate to debt and money. This is very afiscal as far as they're concerned. They're all related to patient care processes to safety. But there is a concern related to the potential adverse effect on patient safety related to the constant struggle for resources," says Verga.
In addition to threats to Medicare and Medicaid and infrastructure support, other operational costs will go up as well, which in turn would mean more money out of taxpayers. And as if a looming $20 million debt isn’t enough, another searing reminder of how volatile the situation is, Ulrich says GMH’s cash on hand is only a fraction of what it should be."I have six days of operating cash and typically it’s less than six days. We are on a shoestring cash here at the hospital. A typical hospital should have 100 days of cash on hand and I should have $20 million in the bank, not less than a million dollars in the bank," Ulrich explains.
So how do we solve all these financial woes? Adjust the budget to reflect what GMH’s true needs are, says Verga. For next fiscal year the hospital submitted a budget request to lawmakers of $144 million dollars, $51 million more than this year’s budget. But, Verga says, by no means is it excessive. In fact, he adds, this year’s budget is already short and the fiscal year has not even ended yet."What this budget does not only funds those inadequacies but funds the needs of the hospital. This budget does not include huge salary increases or things of that nature," says Verga. "And what we're saying is, now is the time to step up and once and for all to decide we're going to correct this situation or we're not."
Verga emphasizes that not all of the $144 million will come from the general fund. Many other funding sources are factored into that amount, such as money owed to the hospital and other revenue streams. He also says it includes funding through other sources that would require changes to the law, such as increasing GRT, reallocating a portion of the tourist attraction fund to GMH as well as alcohol and tobacco taxes."We're coming at this from a perspective of maintaining a good, accredited safe hospital; eliminating the debt; balancing the budget; continuing to fund services; and putting the hospital on financial stability once and for all," Verga notes.
Verga says he hopes to begin a series of public hearings by next week in which GMH management will provide a detailed explanation, with graphs and numbers, of why the 2014 budget is desperately needed.