Hospital’s collectibles at $41M

Commonwealth Healthcare Corp. board members expressed concern yesterday after finding out about the hospital’s huge collectibles, which totaled $41 million last fiscal year.
Trustees were also informed at yesterday’s special meeting that the corporation’s collection last fiscal year reached nearly $30 million.

Stunned by the revelation, board vice chair Pete Dela Cruz said he is disappointed with the management’s performance and that of the corporation’s collection agency, Guam Marianas Collection Agency.

“If we actually billed over $40 million in fiscal year 2013 and actually collected that much [nearly $30 million] how can we ask the Legislature for additional money when we have this huge amount that we are not able to collect?” asked Dela Cruz.

He also expressed alarm about a similarly huge “allowance for doubtful accounts” as well as amounts marked as written off, deductibles, and adjustments.

It was disclosed that of the $41 million billed last year, the amount paid was $8.5 million; writeoff adjustment was at $13 million; and deductibles was at $1.9 million.

According to acting corporation CFO Cora Ada, actual collection last fiscal year was at nearly $30 million. Each month, she said, GMCA’s collection averaged between $25,000 and $26,000. Management, she said, is also diligent in its collection efforts to improve the agency’s cash flow.

Because part of the huge billing amount is for Medicare reimbursement, Dela Cruz pointed out: “It’s not just the Medicare. I am talking about the private sources, co-payments, people who come in and receive medical services but yet walk out the door without clearing the bills.”

Dela Cruz reiterated the importance of the electronic health record system that would bring efficiency to the agency.

Interim corporation CEO Esther Muña said that nothing has been written off in the $41 million billed in fiscal year 2013. What’s usually put in as deductibles and adjustments relate to the Medicare rate, she added.

Board member Anthony Raho also raised concern on the growing amount of collectibles, particularly from private insurance companies. Ada said that collection from these companies is also being hampered by the “reconciling process” between parties when an account is denied or disputed.

Operating in deficit

According to Ada, CHCC incurred a $6-million deficit in fiscal year 2013, which means it spent more than what it earned. This shortfall, she disclosed, was primarily due to the corporation’s debt with its vendors.

The corporation recorded $30.4 million in total operating revenues against actual operating expenses of $37.9 million—an operating loss of $7.4 million—in fiscal year 2013.

Because CHCC also registered an additional $1.087 million in non-operating income, this lowered the deficit to $6.399 million, minus the $256,704 in net assets recorded in the beginning of fiscal year 2013.

Ada said that if the corporation successfully collects everything in its collectibles, “I believe we will be financially sufficient.”

When asked how much the corporation needs to run the agency, it was disclosed that CHCC needs between $40 million to $44 million.

“With this number, I believe we would definitely be meeting the standards of Medicare,” Ada said.

Board members agreed that, for the corporation to continue to survive, the government has to put in its share. They cited the meager budget allocated for CHCC since its inception in 2011.