OPA: CHCC may not have means to keep operating
The Commonwealth Healthcare Corp. incurred an operating loss of $5.6 million and a massive $14.7 million in bad debts in 2013, a report from the Office of the Public Auditor said.
The OPA released Tuesday its financial audit of the corporation, which showed the dismal performance of the medical institution.
“This means that CHCC may not have the resources to continue operating in the foreseeable future. Recurring and increasing losses and negative cash flows may create an unsustainable position for CHCC that may result in its inability to pay vendors, employees, and meet other essential operating costs,” OPA said.
According to the report, CHCC’s operating revenues and expenses amounted to $29.6 million and $35.2 million respectively, with an operating loss of $5.6 million for the year ending Sept. 30, 2013.
The corporation’s operating revenues and expenses amounted to $29.7 million and $34.1 million respectively, with an operating loss of $4.4 million for the year ending Sept. 30, 2012.
The OPA report further said that CHCC’s net position decreased significantly due to bad debts of $14.7 million.
According to www.investopedia.com, a bad debt is a “debt that is not collectible and therefore worthless to the creditor. Bad debt is also usually a product of the debtor going into bankruptcy or where the additional cost of pursuing the debt is more than the amount the creditor could collect.”
For both fiscal years 2012 and 2013, CHCC has not recorded accumulated capital assets; however, it incurred machinery and equipment expense of $1.3 million, which will eventually be recorded as fixed assets, net of depreciation.
CHCC had total assets of $19.24 million and $16.64 million as of Sept. 30, 2013, and 2012, respectively, composed of cash, receivables, due from CNMI, and inventories. CHCC’s total liabilities as of Sept. 30, 2013, and 2012 were $20.9 million and $16.4 million respectively.
CHCC, meanwhile, has vowed to address its financial woes and other concerns, and one concrete step for it to take is hire a chief financial officer.
CHCC chief executive officer Esther Muña recently said they are looking to hire an individual who is a former finance chief of a hospital. She did not give further details.
The corporation earlier inked a financial management contract with the Pacific Health Officer Association, or PIHOA, to help with the corporation’s finances.
Muña said they are also looking for a controller to help with the more detailed operations of the hospital such as account payables, working with financial auditors, and assisting the finance chief.
As of now, Cora Ada is the acting CFO.
I have been telling you guys to get rid of Esther Muna. The lady just don’t have the knowledge to run the hospital. Please do something now before it’s too late.
Besides a Chief Fiancial Officer (and other positions) they need a CEO that has past experience in a “real” Hospital. I hace stated many times in the past in both papers that in Hawaii they brought in companies to straighten out their mess in many of the Hospitals on the Bog Island and also Oahu. According to online news in the past these hospitals were brought up efficiency in less time than the two year contract agreement. One Hospital on the ih Island, Kona area was put in shape in less than 1 year and they renewed the CEO contract 1 year before due date.
What I have read in these cases, these people worked on a base salary with an incentive once the Hospital was running in the black.
It is very doubtful that CHC could ever run in the black but I would think that it could run on a break even or slightly below which is much better than it has ever been.
BUT without billings going out within in days instead of months and years much income will be lost and as in any business it will result in total failure.
The CHC must be run as a business and not a family employment agency fo people with the correct name and political affiliation.
The hospital’s budget now can’t sustain its operation and we all know this. How is hiring a CFO going to help the matter now? Why not start with auditing duties and salaries of nonessential employees because we can do without three assistants or deputies but we cannot live without three less clinical employees (nurses, lab techs, doctors etc).
How will a CFO help? The same way it does at CUC. The hospital is set up as a corporation to keep what it collects and to run on a budget it makes based on its income. The hospital budget is not the amount the CNMI government pays it in subsidy. It is that plus what it bills and collects. Theoretically, the hospital is better off than CUC because it gets paid a subsidy by the central government (but it also has to do Public Health functions). CUC, on the other hand, has to use money from private ratepayers to subsidize the central government’s non-payment of its power and water bills. Captain and pal are correct. Muna is the problem. That ad the ridiculous idea of having a board with less power than the CEO. The hospital needs a competent, professional CEO and a real Governing Body.
While they’re at it, the Legislature needs to require the hospital to continue to permit private clinics to accept Medicaid. In the meantime, Esther needs to get off her butt and send the letter extending the authorization.
Medicaid is from the FED’S, the question arises,
By whose authority is designating who may accept MEDICAID? Is it in fact Muna? (or the Fed’s)
IF in fact it is the CHC CEO, then that is a big mistake to takle the others out of the system.
Captain, all I have to rely upon right now is this:
http://www.saipantribune.com/index.php/use-medicaid-private-clinics-end-march/