The Commonwealth Healthcare Corp. board voted yesterday not to renew the contract of CEO Juan N. Babauta due to alleged failure to provide adequate leadership and strategic direction to the corporation, leaving its facilities and employees in disarray.
The board adopted by a 6-0 vote yesterday the committee report that enumerated Babauta's many alleged failures.
His $96,000 per annum contract is expiring on July 9.
Trustees who voted to get rid of Babauta were board chair Joaquin Torres, vice chair and committee panel chair Pedro Dela Cruz, members Anthony Aguon, Roy Rios, Anthony Raho, and director for Medical Affairs Dr. Sherlene Osman. Babauta was the sole trustee who did not cast a vote during yesterday's meeting.
The vote comes after an extensive performance evaluation on Babauta's performance, including exhaustive interviews not only with the CEO but also some staff and corporate officers. A survey was also done among hospital employees.
Based on the committee's findings, Babauta failed to develop and adopt standard operating procedures for the corporation, to the detriment of the agency and its staff.
In the area of revenue and financial management, Babauta was found ineffective in maintaining a uniform system of accounting; failed to issue monthly financial reports as required; and failed to adopt and maintain financial controls and policies, resulting in either mismanagement or loss of hospital revenue.
Panel chair Pedro Dela Cruz said that Babauta's leadership failed to remit personnel allotments such as FICA, local taxes, and Medicare, which when compounded totals millions of dollars, putting the corporation and its employees at substantial legal and financial risk.
Board members expressed worry yesterday on the impact of these unremitted personnel allotments, especially at this time of filing tax returns.
According to Dela Cruz, former CFO Alvaro Santos did nothing to address this “serious problem.” Dela Cruz said these matters were discovered only after Esther Muña, the corporation COO, was named permanent CFO.
It was also found that Babauta-despite the reduction-in-force being implemented-kept hiring people, some of them unqualified. New positions were created, according to the report, and that Babauta even gave salary increases of as much as $1,000 to $15,000 to “selected” people, causing low morale among other employees.
According to Dela Cruz, among those who were given “unjustified salary hikes” were some corporate officers, directors, and managers. He declined to name them.
Because of the failure to adopt adequate procurement procedures, a substantial amount of hospital supplies and equipment are unaccounted for, the panel said.
Since the corporation's takeover of the hospital in 2011, a permanent and qualified chief financial officer has also not been hired.
The board passed yesterday a resolution endorsing the immediate announcement and hiring of both CEO and CFO for the hospital.
Babauta was blamed for the continued suspension of the MIAP program, preventing indigent patients from accessing subsidized medications. He was also criticized for not coming up with a business plan and for failing to cooperate with the Marianas Public Land Trust on the hospital's line of credit.
Board's decision pre-determined
Babauta, who kept silent throughout the short board meeting yesterday, said later he was not surprised by the board action, describing the trustees' move as “pre-determined.”
He said he was already made aware by a board member some two weeks ago that “I don't have the numbers [anymore].”
Despite the board's decision, Babauta said he does not feel bad about it. “I don't feel bad about it because I am happy with what I have done and I will continue to do whatever I can to serve this hospital and the people of the CNMI,” he said.
Babauta vowed to continue working until the end of his contract.
While listening to the committee report, Babauta said he couldn't help but remember the “litany of failures” cited by the Center for Medicare and Medicaid Services about the hospital.
He said that to date, CHCC has developed and implemented over 30 policies and procedures that address the CMMS citations.
Babauta said he did hire some personnel without the proper vacancy announcement and gave salary increases to some but described these decisions as necessary in order to recruit and keep critical personnel at CHC.
He pointed out that CHC lost its revenue cycle manager to another government agency after being offered a higher salary. A quality management manager, he added, was also hired and given a high salary so as not to lose the staff to a Guam hospital.
“The lack of advertisement [for some positions] is a judgment call on my side. I have to get somebody onboard.for those critical posts, in consultation with the [former governor],” said Babauta.
Babauta said that CHCC paid in full the FICA deducted from its employees just two days ago while the nonremittance of local taxes was due ongoing negotiations between the CHCC and the Department of Finance to offset the payment of these taxes from the $1.9 million appropriated for CHCC in fiscal year 2012.
On the issue about MPLT, Babauta said this is now moot following the corporation's recent full repayment of $3 million to the agency.
Babauta said that CHCC's collection now averages $2.5 million a month and is projected to generate $32 million by the end of the fiscal year.
Babauta reiterated yesterday the many accomplishments and progress noted by the corporation since it took over the hospital operation from the then Department of Public Health, which used to have a $39-million budget compared to the $5-million seed money provided in 2011 when the corporation started.