February 18, 2003

For the last five years Guam Memorial Hospital’s operating expenditures have climbed dramatically going from $61.6 million in 1997 to $80 million in FY 2001. Operating revenues on the other hand have risen at a slower pace going from $55.8 million in 1997 to $73 million in 2001 (see graph for details). Subsidies from the Government of Guam have bridge the operating gap, which were $9.4 million in 2000 but only $5.7 million in 2001. In 2000, GMHA also benefited to the tune of $ 3.2 million in the forgiveness of penalties and interest on past due withholding taxes under the government’s tax amnesty program. Of the subsidies received in 2000, $1million was the result of four “emergency declarations” by the Governor of Guam.

Without these subsidies the independent auditors Deloitte Touche who conducted the audit have raise doubt as to the ability of GMH to continue as a “going concern”.

As of September 30, 2001 GMH had liabilities of $64.7 million and only $28 million of cash and receivables to pay those liabilities. The major components of the $64.7 million owed were to trade vendors for $6.1 million, a bank note payable of $20.8 million, $2 million to GPA, and $16.4 million to the Retirement Fund. Of the amount owed to the Retirement Fund $7.7 million is being paid in quarterly installments of $401,000 plus interest. GMH is paying its debt to GPA at the rate of $46,000 monthly plus interest.