Ongoing crisis at hospital starting to worry MPLT

In the wake of the ongoing crisis at the public hospital, the Marianas Public Land Trust is starting to worry about the viability of the Commonwealth Healthcare Corp. to repay its existing $4.58 million line of credit with the Trust and the expected $7 million in additional funds that will be made available to it once legislation is enacted into law.

In a letter to corporation chief executive officer Juan N. Babauta on Monday, MPLT chair Pedro R. Deleon Guerrero specifically cited some major incidents at the corporation that are adding weight to their fears.

Of primary worry for the trustees, according to Deleon Guerrero, is the governor’s second state of emergency declaration for Commonwealth Health Center and the request for proposal for an assessment of hospital operations, with the apparent goal of privatizing CHC.

This is in addition to the terminated contract of International Consulting Services, which was supposed to beef up the corporation’s billing and collection services, and the recent exit of the corporation’s chief operating officer, James Phillips, under less than ideal circumstances.

The MPLT board also learned from the Legislature that CHC owes its vendors for the dialysis center about $3 million, while its monthly collection averages only $1 million when its monthly operational expenses is about $2.1 million.

Further, CHC is asking the Legislature for an additional $10 million, citing $7 million in prior obligations in addition to $2.1 million in unpaid employer contributions.

“These give MPLT greater concerns as to CHC’s viability and its operation as a ‘going concern.’ Thus, this current environment has diminished the relevance of the documentation and business plan that MPLT previously needed for its due diligence process,” said Deleon Guerrero.

He pointed out that questions about the corporation’s future existence makes any attempt to formulate assumptions or plans necessary for an achievable business plan “not meaningful.”

MPLT released to the corporation $4.58 million in March this year, with $1.58 million of that amount set aside for the hospital’s electronic health record project.

According to Deleon Guerrero, the uncertainties at CHC make it difficult for MPLT to perform an objective review as to whether CHC could reasonably service not only the existing obligation, but the full $11.58 million as originally contemplated.

Babauta promised yesterday to meet with the MPLT and the corporation board members to give them financial updates and other happenings at the corporation, including the establishment of a revenue cycle management unit that is being touted as a means to boost billing and collection services.