Healthcare corp. faces $15M shortfall on its 1st year alone

Barely three months after its takeover of the Department of Public Health, the Commonwealth Healthcare Corp. is already expected to incur an estimated shortfall of $15 million by the end of fiscal year 2012.

This was one of the reasons why his administration awarded the healthcare corporation a government lot in an effort to boost its revenue generating efforts and sustain its operations, said Gov. Benigno R. Fitial.

The corporation was appropriated only $5 million seed money this fiscal year. Corporation chief executive officer Juan N. Babauta described this amount as “unrealistic” compared to what DPH used to receive.

“The shortfall started even before the budget law was passed. The $5 million given to the corporation is a far cry from DPH’s operating budget of nearly $28 million. The corporation, since Day 1, is already in deficit,” Babauta said yesterday.

Last week the corporation submitted to the Legislature a $38.5-million supplemental budget request for fiscal year 2012. This submission was boosted by the corporation’s desire to tap the $18 million “identified resources from the hospital” that have was not appropriated by the Legislature in the budget law.

Babauta conceded yesterday that the $38.5 million supplemental budget may not pass the Legislature at this time because of limited government resources.

“Obviously, the Legislature is not going to pass it [$38.5 million]. But that budget is reflective of what it is now. We are going to go through [with the Legislature] on this budget proposal item-by-item to see where we can make the cuts across the board to make it realistic,” he said.

Records obtained by Saipan Tribune show that the corporation’s $38.5 million supplemental submission include the following projected costs:

-$24.6 million personnel cost for 599 positions;

-$8.4 million for hospital supplies;

-$775,798 for professional services;

-$345,456 for office expenses;

-$33,600 for rentals;

-$3.8 million for repairs and maintenance and others; and

-$308,000 for travel.

Babauta said the healthcare corporation could lower the $38.5-million budget proposal to $25 million. “The realistic budget is somewhere around $25 million to $26 million and we’re going to work on this figure.”

There’s also a big possibility, he said, that their current workforce of over 600 will be cut after a review of all units and sections at the hospital.

He said the corporation may eliminate or terminate a specific service at CHC to avert incurring huge deficits within the fiscal year.

“We hate to do that, but financially, we cannot carry that burden anymore. We cannot continue to operate in deficit,” added Babauta.

Fitial expressed support for the idea of providing a $10 million credit line for the healthcare corporation from the Marianas Public Land Trust. A bill on this effort has been recently filed at the House of Representatives.

The law that established the corporation allows the organization to borrow money, guaranteed by the government.

“We’re also asking a letter of credit from MPLT so it will provide short-term requirement to the corporation,” said Fitial, adding that the awarding of the Navy Hill property and the MPLT credit line will help the organization address its serious financial concerns.