MPLT approves $4.58M for CHC

Instead of waiting for the Legislature to pass a bill that will give the Commonwealth Healthcare Corp. an $11.8 million line of credit, the Marianas Public Land Trust board decided yesterday to invest in the corporation, giving it a $4.58 million line of credit.

That “investment” is in the form of a $3 million revolving line of credit for CHC’s operational and capital needs and a $1.58 million loan for CHC’s electronic health care initiative.

MPLT board chair Pedro R. Deleon Guerrero told Saipan Tribune yesterday that once a final agreement is signed between parties by Thursday, the corporation can draw down any amount from the credit line.

“We approved the direct line of credit to the corporation without going through requiring withholding interest. Both MPLT and CHC agreed to this amount and they can make a direct payment with some of their assets, which they offered as collateral,” Deleon Guerrero said.

Among the collaterals offered are the newly acquired Navy Hill property worth $1.2 million and assignment of income from all sources, including accounts receivables, Medicare and Medicaid payments, and all general income sources for the period that the line of credit is in effect.

Deleon Guerrero disclosed that MPLT sat down with corporation officials on Friday to review its financial records and determined that the maximum amount permissible to invest in CHC is $3 million.

“On this reduced amount, MPLT found out that they have the capability to pay. We looked at their books and reviewed their projected collections and we are convinced that they can meet [the repayment terms],” he said.

Once the corporation pays the $1.58 million for the health electronic project within the year, it will automatically add up to the $3 million initial credit line approved yesterday, bringing the revolving credit line to $4.58 million, Deleon Guerrero said.

The electronic health record system project will allow the corporation to avail of over $5 million in incentives and bonuses from the federal government. Deleon Guerrero said because the records project is federally funded, he is confident in the ability of the corporation to “reimburse” the amount to MPLT.

He said the $4.58 million line of credit is just the beginning; the corporation may get a higher credit line in the future as they continue to pay.

“If they [corporation] sign the collateral agreement by Thursday, and if the money becomes available by that day, then we will issue the check to the corporation. This is a challenge for them and they accepted the challenge. I hope the corporation will continue to become aggressive [in its collection efforts] and enforce good financial management and they can make it. We’re hopeful that the corporation can make it,” he added.

The corporation owes over $2 million to various suppliers and vendors.

“MPLT expects a sound return on its investment, which also assists the corporation and its hardworking doctors, nurses, and staff during this most critical transition period,” Deleon Guerrero said. “The trustees remain committed to generating net interest income for the general fund while considering possible investments [that] also assist the community.”

Rep. Ray Basa (Cov-Saipan), author of the controversial $10.58 million line of credit bill that the Senate substituted, said it is sad that the House and Senate failed to agree on the bill to help CHC.

“Had the Senate passed the House version of the bill, we would have helped CHC weeks ago, and not wait for the governor to declare an emergency. We lawmakers could have helped take care of CHC’s financial problems,” Basa told Saipan Tribune.

When the Legislature failed to pass House Bill 17-278, CHC wanted to proceed with the loan agreement directly with MPLT without pledging security at this time due to the circumstances requiring an immediate infusion of capital to address payroll shortages and vendor payments, among other critical financial issues. The hospital is currently under a state of emergency.

Only four MPLT trustees led by Deleon Guerrero signed yesterday’s MPLT resolution, after the Senate rejected on Wednesday night the re-appointment of Alvaro Santos as a member of the MPLT board.

Santos was recently hired as CHC’s chief financial and administrative officer.

The Senate, by a vote of 6-2, rejected Santos’ re-appointment over the MPLT decision, when he was chairman, to buy a private property for MPLT without approval of the majority of board members and therefore a breach of fiduciary duty.

Only Senate floor leader Pete Reyes (R-Saipan) and Sen. Luis Crisostimo (Ind-Saipan) voted “yes” to re-appoint Santos to serve a second term of six years on the MPLT board. Sen. Ralph Torres (R-Saipan) was absent.

Currently, the four MPLT trustees are Deleon Guerrero, chairman; vice chair Peter Q. Cruz; treasurer Melchor J. Mendiola; and trustee Gregoria Fitial-Omar.

Sen. Frank Cruz (R-Tinian), chair of the Senate Committee on Executive Appointments and Government Investigations that recommended the rejection of Santos’ re-appointment, said the panel is still reviewing Fitial-Omar’s re-appointment.

MPLT’s Deleon Guerrero said yesterday he hopes that Fitial-Omar will be confirmed by the Senate.

“We haven’t received a formal communication yet from the Senate that they rejected Mr. Santos’ reappointment. Mr. Santos has been a very active and productive member of the MPLT board. We will miss him tremendously,” Deleon Guerrero, a former House speaker, said.