Despite questions about the Commonwealth Healthcare Corp.’s finances, the Marianas Public Land Trust has full confidence it will not lose a single penny if the full $3 million line of credit approved for the hospital is released.
This was what MPLT vice chair Maria Frica Pangelinan expressed during Friday night’s board deliberation on the matter, disclosing that the $3-million line of credit is fully guaranteed by the CNMI government’s general fund.
According to Pangelinan, despite the hospital’s cash flow situation, “all other conditions and demands put in the [line of credit] agreement will be overridden by the guarantee by the general fund.”
“I don’t really worry about the conditions and compliance [with the agreement] because there is guarantee on the general fund [for this $3 million]. Honestly, other than the hiring of a [chief financial officer], I don’t have any problems [releasing the funds to the hospital],” she told colleagues during more than four hours of meeting Friday night.
With a CFO already onboard, there’s no reason to doubt that the corporation is moving forward in its commitment to improve its financial management. Pangelinan said it’s the corporation CEO and CFO after all who are answerable to the MPLT.
Pangelinan said that, based on her review of the data, the past $3 million line of credit provided to CHCC was used only as a “safety backup.”
She said the projected deficit of CHCC this fiscal year remains “manageable.”
Based on the financial review by MPLT consultant Bruce MacMillan, the corporation—after paying the $3 million in full last April—was left with only some $2,600 in the bank.
He also disclosed a “hold off” of some $3.5 million cost reimbursement from Medicare due the CHCC and the mounting receivables from patients and insurance.
Saipan Tribune learned that CHCC had promised that once the $3.5 million cost reimbursement from Medicare is received, the money becomes a reserve fund for the payment of the line of credit on or before its due date.
Each month, CHCC spends $1.8 million on payroll alone. Coupled with other expenditures, the CHCC’s expenses total $2.2 million monthly.
Compared to monthly collections—such as in April and May—the revenue each month was between $600,000 and $700,000 only.
McMillan said the MPLT loan primarily serves as a “lifeline” to keep CHC afloat. He expressed confidence in the ability of the new CFO to turn around the financial management of the corporation.
McMillan estimates that in order for the new CFO to develop a long-term financial planning for the hospital, some four months are needed to have a full grasp of everything at the corporation.