Healthcare Corp. says $18M ‘resources’ not appropriated by Legislature

The Commonwealth Healthcare Corp. wants to tap into $18 million in government resources its says the Fitial administration originally set aside to run the former Department of Public Health.

Corporation CEO Juan N. Babauta said yesterday that the $18 million was actually identified by the central government to go through the hospital this fiscal year.

The funding source, however, was not released to the corporation due to either the absence of “authorization” under the budget law or the Legislature failed to appropriate it.

To this end, the healthcare corporation board yesterday approved the submission of a $38.5-million supplemental budget to the Legislature for fiscal year 2012.

The Legislature appropriated only $5 million in seed money for the corporation this fiscal year.

Babauta said it’s been obvious from the very start that the arbitrary $5-million figure for seed money is not enough to run the corporation during the 12-month period.

“The driving force behind this action [of submitting supplemental budget] is to tap that $18 million resources identified but was not given to the hospital,” Babauta told Saipan Tribune.

He added that included in the $38.5-million supplemental budget was the $5 million seed money appropriated under the 2012 budget law.

“I don’t know why the Legislature did not appropriate that amount [$18 million], but my feeling is that, they stuck to the [Executive Branch] submission, which is $5 million. Now, we have to go back to the Legislature and submit this request so we can tap these resources for the hospital. That amount was part of revenue that was identified by the central government that has come to CHC but was not appropriated,” he said.

Misunderstood

Press secretary Angel Demapan said yesterday that the $18 million has been “misunderstood.”

“That figure is being misunderstood. The budget law only appropriated $5 million as seed money for the corporation. The $18 million being referred to is the estimated resources that the hospital is projected to collect through hospital charges. When collected, these funds stay solely with the hospital to fund its operations. This is why it is not appropriated by the budget law, because the hospital must collect it first. Clearly stated, the $18 million is not an appropriated figure, it is a projected resource. This should incentivize the hospital’s billing efforts because every dollar collected stays with the corporation and does not go to the central government’s general fund,” said Demapan.

If the hospital exceeds this projection and happens to collect beyond $18 million, even the additional funds collected will serve as additional revenue for the corporation, he said, which should be gearing up to be self-sustaining beyond the $5 million appropriation that was meant to “assist” the corporation jumpstart its operation.

As for a supplemental budget submission, Demapan said the Legislature would have to first identify what resources, if any, are available to be appropriated for the corporation.

$5M not enough

Acting board chair Pedro Dela Cruz said there’s no way the hospital could survive and maintain the delivery of quality healthcare services if the corporation relies only on the hospital’s monthly collections.

On average, monthly hospital collections only amount to $400,000-not even enough to cover the corporation’s $800,000 biweekly payroll cost, he added.

The collection can only pay for the monthly power consumption of the hospital, which amounts to $400,000. Until collection improves, Dela Cruz said the corporation needs the government’s help in sustaining its operations. He also cited the mounting files of receivables that is estimated to now reach $131 million.

Babauta told Saipan Tribune that the corporation received monthly allotments of $416,000 from the $5 million seed money.

When asked if the supplemental budget is permissible under the law that created the corporation, both Babauta and Dela Cruz said yes, saying the corporation is considered an autonomous agency and is therefore still part of the government.