The hospital’s net assets, nonetheless, have increased by $30 million as a result of cash infusion from bond proceeds.
“Although the hospital’s operating revenues increased, going from $67.2 million in fiscal year 2006, $74.8 million in fiscal year 2007, $89.2 million in fiscal year 2008, and $93.5 million in fiscal year 2009, it’s insufficient to cover operating expenses,” OPA stated in its report.
The audit found that GMH’s operating expenses have increased from $79.3 million in fiscal year 2006 to $89.9 million in 2007, $94.9 million in 2008 and most recently $99.3 million in 2009.
“As such, GMH has been operating at a loss and incurred a $5.8 million operating loss in fiscal 2009,” OPA said.
GMH’s biggest expense was incurred through personnel costs, which amounted to $64.6 million, or 65 percent of its $99.3 million operating expenses.
The hospital’s personnel costs increased by $1.7 million, going from $62.8 million to $64.6 million, according to the audit.
“As of Sept. 30, 2009, GMH’s total employee count was 1,112. GMH continues to operate at a loss and suffer negative cash flow; its revenues continue to be insufficient to pay current expenses and payments to vendors,” OPA said.
“Because of these cash flow challenges, GMH is unable to take advantage of discounts offered by suppliers and must pay higher prices for medical, pharmaceutical, and other supplies,” the report added.
Nevertheless, OPA noted GMH’s feat last year when it achieved a long-pursued preliminary accreditation, sought for 26 years by the Joint Commission of Hospital Accreditation in October 2009.
For a third consecutive year, GMH’s financial audit received an unqualified or clean opinion by independent auditors Deloitte & Touche. The hospital’s compliance report, however, continues to be qualified because of three material weaknesses, one significant deficiency, and questioned costs of $156,000.
The hospital closed fiscal year 2009 with a $30 million increase in net assets.
“If not for government transfers totaling $12.5 million and the elimination of the unfunded retirement liability of $19.1 million, GMH would have had a net loss of $1.6 million.
“Of the $12.5 million transfer, $10.5 million is a one-time cash infusion in bond proceeds used to pay past-due contributions to the Government of Guam Retirement Fund,” the OPA report noted.
