Healthcare corp. arrears now at $5M

The Commonwealth Healthcare Corp. now owes its employees and various vendors over $5 million, according to chief financial officer Alvaro Santos yesterday.

A large bulk of the amount-over $2 million-is owed medical supplies vendors of the Saipan hospital and the two health centers on Rota and Tinian, he said.

Unpaid power and water bills now amount to $1.8 million while allotments to personnel is close to $800,000. Nearly $400,000 is still owed employees for their housing allowance, representing four months of delay.

Personnel allotments include health and life insurance, retirement plan, allotments for the credit union, among others. Santos admitted that because these items are automatically deducted from their employees’ paychecks every payroll, the money should have been remitted to respective vendors in a timely manner.

As a result, Santos said the corporation now plans to issue payroll and remit personnel allotments altogether, admitting that delaying the remittance of the latter is improper and illegal. If not enough funds are identified to cover personnel allotments, payroll will not be issued until enough funds are scraped together.

The U.S. Department of Labor earlier confirmed an ongoing investigation at the corporation, believed by many to be related to the delayed payroll and non-remittance of personnel allotments. Santos declined to comment on this.

The corporation needs at least $30 million to operate in a fiscal year. With only $5 million in seed money allocated to it this fiscal year, it is pretty hard to sustain operations and the needs of the corporation, which has about 600 employees on three islands.

To ensure the continued survival of the corporation, Santos said they are planning to ask the government to continue to subsidize the agency for at least three more years.

“We will ask for continued subsidy from the central government for three years down the road until we finally establish everything and become self-sustainable. In our meeting with the governor, he made the commitment that he will do his best to keep us afloat until our reform measures are put in place,” Santos told Saipan Tribune.

According to Santos, payroll and personnel allotment alone cost $1.6 million a month. In two weeks’ time, an emergency workforce reduction is being planned to reduce the personnel cost per payroll by $250,000.

Corporation board chair Jack Torres said last week that overtime pay alone remains “high” in the organization’s personnel cost, with about 1,700 hours of overtime per month.

Santos confirmed this, saying they are now evaluating to see if there’s really a need to incur such a huge overtime cost.

He also cited the monthly medical supplies expenses, reaching close to $300,000 every month.

“Imagine these huge expenditures with only $5 million seed money? Running a hospital is an expensive enterprise, that’s a fact,” he said, noting the standard salaries of doctors that are mostly in double and triple digits.

Santos said among the notable discoveries he found since assuming the CFAO post was the “perennial dependency” of previous hospital employees on local appropriation from the central government. “One of the problems we’re trying to rehabilitate now is the perennial dependency on the local budget. In the past, they were heavily dependent on what will come from the government and there was little effort to collect what is rightfully collectible, little efforts to charge many consumable supplies,” he added.