HAGÅTÑA (The Guam Daily Post) — Ballooning costs have Guam Memorial Hospital asking for significantly more tax dollars to keep operations afloat in the upcoming fiscal year.
The hospital is expecting $124.3 million in revenue for fiscal 2024, but costs are expected to be much higher, at $195 million, GMH Chief Financial Officer Yuka Hechanova told lawmakers during a budget hearing Wednesday.
The Office of the Governor has asked for an additional $23.4 million in funding – $19.9 million from the Pharmaceutical Fund and $3.5 million from the General Fund. Additionally, the Department of Corrections is expected to pay $3.3 million for inmate and detainee services, but that still brings the hospital about $42.2 million short of what it needs.
The fallout is a consequence of skyrocketing health care costs following the COVID-19 pandemic, Hechanova told lawmakers. Nationally, about half of U.S. hospitals are in the red due to the economic fallout, she testified. Big cost increases locally come from pay increases, labor shortages and inflation driving up non-labor costs, Hechanova said.
Personnel costs increased by about 25% in fiscal 2022, Hechanova said, after a nurse pay differential and raises for administrative personnel. Hospital officials expect the annual cost of staff salaries to rise by $16.5 million.
Post-pandemic, it is also harder to keep personnel, she said. Over 40 nurses have left GMH just this year, The Guam Daily Post recently reported.
“The pandemic caused significant shifts in labor markets. … Many health care workers, it appears, just had this new outlook on the way they want to manage their careers, particularly with work-life balance,” Hechanova said. “They were burning out; they were just rethinking a lot of things.”
Since 2020, GMH has paid about $47 million for travel contract nurses, she said, only about $24 million of which was reimbursed by the Federal Emergency Management Agency. While travel nurse costs have gone down from a previous high of $225 an hour per nurse, visiting workers will still have to be brought in to GMH due to continuing labor shortages. Complicating matters further, federal reimbursements are beginning to dry up, senators were told Wednesday.
All these factors add up to contractual spending expected to increase by $3 million in the next fiscal year.
Also, inflation and supply chain issues have been driving the cost of drugs and medical equipment through the roof. Supplies and materials will cost the hospital an extra $6.8 million, and minor equipment costs will go up by $1.4 million.
And though the hospital now collects on just over half of all billings – an improvement from recent years – billings have slowed due to continued kinks with implementing a new electronic health record system and issues caused by a hacking incident earlier this year.
Shortfalls
Responding to questions from oversight chairwoman Speaker Therese Terlaje, Hechanova said if the full funding doesn’t come through, the hospital will have to defund certain areas as emergency needs arise.
Terlaje said that, according to the Legislature’s Office of Finance and Budget, the Pharmaceutical Fund isn’t expected to bring in the $33 million hospital management is seeking in its budget request.
GMH Administrator Lilian Perez-Posadas told senators the hospital’s financial situation is so dire that some pharmaceutical suppliers have stopped taking GMH’s credit.
Sen. Chris Duenas said if lawmakers were to meet the hospital’s request, it would be a significant adjustment to Gov. Lou Leon Guerrero’s fiscal 2024 budget submission.
He suggested that if the shortfall was critical, lawmakers “meet halfway” on the matter by appropriating half the money and then working quarterly with GMH officials to see how operations could be handled.
Guam Memorial Hospital Authority Administrator Lillian Perez-Posadas testifies during a GMH budget hearing Wednesday, July 12, 2023, in the Public Hearing Room of the Guam Congress Building in Hagåtña.
Yuka Hechanova, chief financial officer of the Guam Memorial Hospital Authority, testifies during a GMH budget hearing Wednesday, July 12, 2023, in the Public Hearing Room of the Guam Congress Building in Hagåtña.
A long line of medical personnel wait to buy lunch Monday in front of Guam Memorial Hospital in Tamuning. David Castro/The Guam Daily Post
