‘$3M additional funds will be available for healthcare corp.’

Once it finally and completely separates from the central government, the Commonwealth Healthcare Corp. could expect a $3-million infusion from existing federal health programs.

The $3 million, currently being received by the central government as indirect cost, is provided by granting agencies for the administration of their federally funded health initiatives.

According to corporation chief executive officer Juan N. Babauta, this is among the reasons why the corporation supported the idea of having the Division of Public Health under the organization’s umbrella.

The division exclusively handles federal health programs. Having it under the corporation will entitle it to get the annual indirect costs.

Director for Medical Affairs Dr. Michael Deary and the hospital’s inpatient pharmacist, Anthony Raho, are pushing, however, for the complete separation of the division from the hospital as the two have entirely different missions and functions.

Deary and Raho pointed out that under the then-Department of Public Health, the functions of the Commonwealth Health Center and the Division of Public Health were separate components of the department. When the corporation took over, all these functions were absorbed by the organization.

Raho and Deary said the Division of Public Health focuses entirely on health programs that are mostly federally funded and receive substantial assistance. In combining the division with CHC’s functions, they fear the adverse negative impact this may have in complying with federal mandates and standards. Each federal health programs, they said, has strict requirements and guidelines set by the granting agency.

They said that because CHC’s operations entirely depends on local revenue and appropriation, any shortfall in the local budget may drag down the division because federal programs will be reviewed and assessed with the hospital’s performance.

According to Raho, in most public hospitals in the U.S. mainland, the division is treated as a separate entity from the rest of hospital functions.

Raho said the current setup puts “undue burden” on the corporation.

The corporation’s plan to cut expenditures across the board is also a factor that may impact the division’s performance, he added.

Babauta believes otherwise.

“I don’t see that it is creating undue burden on the corporation. In fact, in many ways, it is helping by virtue of federal grant from the programs. Whether or not we separate these two, the burden is still there. The challenge of bringing the hospital up to speed and the streamlining will still be there,” said Babauta.

He believes that combining the division with the hospital will give the corporation more flexibility that will allow it to use the indirect costs from federal programs for general purposes such as upgrading facilities.

At the same time, combining the division is a model that everybody is now looking at very closely in the region, Babauta said.

“They are anxious to see if this model works so it’s really up to us to demonstrate that we can make this work as opposed to some view if we separate them,” he said.

He said the central government is also not in favor of creating another department, in case the division is separated from the hospital.

Deary remains doubtful, though. “I’d love to see this work but I don’t think the numbers can do it,” he said, believing that indirect cost from federal programs still caters to specific purposes.