Saipan Tribune

Sunday, May 19, 2013

Friday, October 26, 2012

CHC turn-around seen in two years

Corporation turns in first annual report

Exactly a year after the Commonwealth Healthcare Corp. took over the public hospital's operations, CEO Juan N. Babauta turned in yesterday to Gov. Benigno R. Fitial and the Legislature the organization's mandated annual report, which highlighted not only the challenges it encountered but the accomplishments it made and the promise of a bright future for the Commonwealth Health Center.

Packed in an 18-page document titled “Commonwealth Healthcare Corporation: A Year in Transition,” Babauta believes that CHCC is beginning to come together and is in a much better position to improve healthcare services in these extremely difficult times.

Babauta said that turning around a hospital usually takes about three to four years and it would be impossible for the new corporation to make it happen in just a year, especially when the root problem is its financial condition and system.

“It has been a year of transition for the CHCC and a tremendously very difficult one. In fact, we still are in a transition. Normally, it takes a hospital in such financial condition about three to four years to turn around, which means CHCC has a ways to go yet. However, CHCC is indeed making some progress even under these difficult circumstances,” Babauta told the governor in his letter yesterday.

The corporation officially took over CHC's operations on Oct. 24, 2011.

Since that time, the corporation has made significant strides to improve its revenue, Babauta said, from just under $600,000 monthly in October 2011 to $1.5 million a month at present. He projects revenue to hit $2.5 million a month by December in the wake of several actions taken by the corporation.

In its first year, the corporation cut down on the number of personnel, reduced travel by 20 percent, controlled operational expenses, increased Medicare reimbursement, updated the billings and accounts receivable system, completed updates on the charge master that increased hospital fees, and other ways that boosted CHC revenues and collection.

Babauta said the corporation also acquired a $2-million boiler for the hospital; addressed federal labor citations that resulted in the payment of back wages to employees; was successful in the establishment of the new Kagman Community Health Center; and acquired equipment and medical tools to satisfy Medicare citations, among others.

At present, the hospital is working on upgrading its CT scan from a single slice to 16-slice system. It also recently acquired new defibrillators.

Most notable, Babauta said, is the high performance award for the hemodialysis unit after it scored 30 out of 30 points in the Medicare's Quality Incentive Program. In 2010, the unit scored only 18 out of 30 points, which resulted in the assessment of a 2-percent penalty on the reimbursements for hemodialysis services.

Starting in fiscal year 2013, the corporation will start to directly receive the indirect cost from all federal health programs. The Office of the Governor used to handle these grants.

Babauta also mentioned the line of credit obtained from the Marianas Public Land Trust and the approval of an additional line of credit to further help hospital operation.

Babauta said these are just among the accomplishments of CHCC, besides the establishment of several hospital policies and procedures to ensure the proper delivery of services and the formation of specific committees for certain tasks as well as the formation of a management team.

“There are many issues and challenges which remain and the CHCC has a long way to go in making changes needed to make the claim that the services and healthcare [are] 'excellent' or graded as an 'A.' However, there can be no denying the progress which has been made despite the financial situation and absence of planning in establishing the corporation,” said Babauta, who believes that the survival of the hospital without the necessary funding “is really a miracle.”

Strategic plan

Babauta's report cited six goals that will serve as the corporation's strategic action plan for the next three years. These include stabilization and improvement of the financial condition and operations of CHCC; improve hospital and clinic care; implement the RPMS electronic health record to meet the Stage 1-3 requirements of Medicare and the JDE financial management system; pursue the use of telehealth and telemedicine; promote programs to focus on quality and preventative care; and rectify disparities in healthcare financing.

Lack of planning

The report disclosed that when CHCC was inaugurated on Oct. 24, 2011, the lack of planning immediately became evident. The lack of transition planning, coupled with the financial difficulties of the government, made for a challenging start for the corporation.

Babauta disclosed that CHCC started without articles of incorporation, no draft bylaws for the operation of the board, no applications for the designation of CHCC as a provider of healthcare services for Medicare and Medicaid, and no financial assessment that will show beginning balances, accounting system, inventory of assets and liabilities, and no procurement and personnel rules and policies in place.

“In summary, there was next to no transition planning for the CHCC and no orientation planned or provided for the CEO or the board of trustees. An overview of the operations and finances would have been helpful. But none was provided,” said Babauta.

CHCC problems

There were three major sources of problems cited in the first year of operations of CHCC. These include finances, planning for the corporation, and inexperience of the management team to deal with the magnitude of the financial shortfalls and the problems resulting from a lack of planning for the organization.

He cited the lack of budget-from $38 million in the past allocated to the Department of Public Health to just $5 million in seed money in 2011. Fortunately, he said, the Executive Branch understood the situation and provided funding to make payroll. However, he said, the absence of funding plunged the CHCC into a “valley of despair.”