GMH CFO Benita Manglona says it’s not unusual for vendors to threaten to put the hospital on credit hold.
Guam – With the lack of clarity on the Guam Memorial Hospital vendor situation yesterday, we sat down with CFO Benita Manglona today to get a clearer picture of their cash situation. While it may seem as though they’re falling apart, Manglona says their situation is much better than it was a year or even six months ago.
As of August 3rd, the Guam Memorial Hospital had an outstanding balance of $16.7 million owed to its various vendors. Of that amount, $1.9 million is over 30 days old, $1 million over 60 days old and nearly $12 million is more than 90 days old. We asked Manglona, as we asked GMH CEO Ted Lewis yesterday, about the hospital’s vendor situation and whether any of GMH’s vendors were threatening to cut off the hospital’s credit line.
“Well that’s not unusual. That’s been happening at the hospital for many, many years,” says Manglona.
PNC: “But is there any that might be so outsanding that they’re already threatning to cut [GMH] off?”
Manglona: “You know it was about the same time last year as well when you look at the last year’s aging of accounts payable, the vendors were owed about $11 million as well and that is taking into consideration that there was a loan that was taken out last year and so it’s not unusual for vendors to threaten to put the hospital on credit hold.”
Manglona explains that while it might seem alarming that GMH has $16.7 million in debt with nearly two-thirds of that over 90 days past due, the hospital has made significant progress even in the face of immense adversity.
For example, she points out, GMH was forced to stop billing for four whole months because of a system conversion they were not prepared for. This happened in October last year. When Manglona stepped in as CFO in February this year, she worked vigorously to catch up and thus billing resumed in late February.
She also says that around this time last year, GMH’s Perry Point debt was at about $4 million. Today it’s at $1.1 million, with $939 thousand over 90 days old.
She also says that the hospital was able to generate $2 million when it raised its rates by 5 percent in April. Of that amount, $1 million was in revenue.
The biggest problem, as CEO Ted Lewis explained to us yesterday and Manglona echoed today, is in the hospital’s Medicare reimbursement rates.
“It is known in the industry that, it’s what Ted says, it’s a cardinal sin to have your fees below Medicare rate,” Manglona points out. “For example if you bill $100 million, you don’t get all the $100 million, you’d probably get half. About 20 to 25 percent is insurance and the balance is self pay. So there’s really an imbalance in the amount of money the hospital gets back from its operations that’s why it’s been incurring operating losses because of that.”