CHC to lawmakers: Give $10M annual subsidy for several years

Commonwealth Healthcare Corp. chief financial officer Alvaro Santos told members of the House of Representatives yesterday to provide a $10 million annual subsidy to CHC for “several” years to help sustain its operations and continue to provide services to indigent patients, on top of an $11.58 million line of credit and loan package that the full House didn’t act on by late yesterday afternoon.

The $10 million requested annual subsidy is still way below the $38 million government subsidy to the hospital before it became a corporation in fiscal year 2012.

The Fitial administration gave the corporation $5 million in seed money and expected the hospital to collect $18 million in revenues in 12 months.

Santos said besides still being baffled by the insufficient $5 million seed money, he said it was an “illusion” or a “dream” to think that CHC could collect $18 million in a year.

He said between October and March 31, CHC was able to collect only $5.7 million, even as CHC works on improving its billing and collection.

“That annual subsidy (of $10 million) will help keep the hospital afloat. Personally I am not crazy about the line of credit. It’s good but it costs money but right now, we don’t have a choice,” Santos told House members.

If CHC draws down $10 million from that line of credit, the interest alone would cost $660,000 and Santos said the hospital could have used this amount to pay hospital supplies.

Santos said the hospital also has to take care of indigent patients as well as previous obligations of the hospital.

He later told reporters that even hospitals in Guam and Hawaii, long after they became corporations, still continued to receive subsidy from the central government.

Since last year, CHC has always teetered on the edge of a shutdown because of lack of funds.

Rep. Ray Yumul (R-Saipan), during the session, pointed out that CHC should not be made to pay for the past obligations of the hospital prior to it becoming a corporation.

He said prior obligations of the hospital should be shouldered by the Department of Finance, and not the corporation.

Santos mentioned some $7 million in prior years’ obligations, along with some $2.1 million in unpaid employer contribution to the NMI Retirement Fund.

The discussions was a prelude to what Santos said would be CHC’s request to the House Ways and Means Committee and the full House as they deliberate on FY 2013 budget.

Santos made the request for annual subsidy before the House discussed late yesterday afternoon a conference committee bill allowing the Marianas Public Land Trust to give up to $10 million line of credit and $1.58 million loan to CHC.

House minority leader Joseph Deleon Guerrero (R-Saipan) and Rep. Frank Dela Cruz (R-Saipan) started raising questions, again, of whether the $11.58 million was “public debt” or not.

The discussions went on until Speaker Eli Cabrera (R-Saipan) called for recess without acting on the conference committee report on House Bill 17-278.

Moreover, only 17 of 20 members were present, and the House leadership might not be able to muster at least 15 votes to pass the bill that a six-member conference committee from the House and Senate worked on for weeks.

The Senate also postponed its session yesterday afternoon to today because of transportation issues for some senators.

Senate President Paul Manglona (Ind-Rota), however, said the CHC line of credit bill will be taken up today.

The $11.58 million line of credit and loan includes the $3 million that MPLT already provided to CHC, as well as a $1.58 million loan for the hospital’s electronic system, leaving up to $7 million in additional line of credit.

The bill was bouncing back between the House and the Senate since December, and lawmakers’ inability to pass it swiftly drew criticism from CHC doctors and other medical personnel.

Sen. Ralph Torres (R-Saipan), co-chair and spokesperson of the six-member Conference Committee on House Bill 17-278, said the joint panel agreed to secure future interest from MPLT to assist CHC so they can continue in providing healthcare for the CNMI.

The governor placed CHC under a state of emergency, again, on Friday to allow for reprogramming of funds and for CHC to continue to contract with International Consulting Services LLC for medical billing services without going through standard procurement rules-all to help prevent a hospital shutdown.