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CUC demands $5M payment from CHCC

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THE Commonwealth Healthcare Corp. will be hit with a daily, six-hour power disconnection if it fails to pay the Commonwealth Utilities Corp $5 million by Aug. 6.

CHCC Board of Trustees Chairwoman Lauri Ogumoro said they are working to get the money.

She said they will meet with the governor on Friday morning, “and hopefully, we will have more information from there.”

She added, “We may have to ask for an extension [from CUC] because we are trying to work this out and think we need to hear from the governor — like how soon they can transfer the money to us.”

The CUC board on July 6 sent a letter to Ogumoro stating that the CHCC should make the payment within the next 30 days.

As of June 12, 2020, CHCC had an outstanding balance of $35,742,570.93 due to CUC for utility services.

This amount continues to grow by about $400,000 per month, CUC said. 

In Dec. 2013, CUC filed a complaint against CHCC in Superior Court to recover an unpaid utility bill amounting to $9.6 million.

In May 2014, the court issued a temporary restraining order against CUC, saying that CHCC “would suffer immediate and irreparable injury should CUC disconnect any of CHCC’s utility services as CHCC would become unable to provide critical healthcare and public health services.”

In Jan. 2015, the court granted the request of CHCC for injunctive relief “and as such issues a preliminary injunction enjoining CUC from disconnecting any utility services provided to CHCC until any…further order….”

But the court also ordered CHCC to “continue to pay its current and monthly usage bills — not including late fees, interest and penalties — for the remainder of the underlying suit or until ordered by this court to do otherwise.”

In Oct. 2019, CUC Executive Director Gary Camacho discussed the outstanding balance CHCC with CHCC Chief Executive Officer Esther Muna.

Camacho reiterated the CUC concerns to CHCC in official correspondence on Dec. 20, 2019.

“However, it has become clear that CHCC has not been responsive to CUC’s concerns and requests for payment of CHCC’s long-standing and continuing obligations to CUC,” the CUC board said in its letter to CHCC.

“Though CUC has been patient in its efforts to consistently accommodate CHCC’s utility needs for the hospital, CHCC’s outstanding balance and failure to make significant payments towards this balance, [have] severely affected CUC’s ability to efficiently provide power, water and wastewater services to the overall community. It is evident that CHCC’s non-payment of its arrears balance have placed CUC’s ability to simply maintain critical operations in great jeopardy,” the CUC board added.

“Maintenance of critical utility infrastructure has been and continues to be deferred in all divisions on all islands because of CHCC’s non-payment,” the board stated.

“CUC must recover revenue to continue efficient operations with minimal impact on the utility services provides to its customers. Otherwise, the potential power and water disruption will continue to grow and present another health risk to the community. Any further impact on power and water services will only exacerbate the current public health situation in the community as sanitation via wastewater services and water services for hand washing with soap and washing of equipment and other materials is especially critical during this time.”

To alleviate the financial strain on CUC, the CUC board said it has  authorized  disconnecting CHCC for six hours a day if the healthcare corporation fails to pay at least $5 million by Aug. 6.

The CUC board noted that CHCC has the necessary infrastructure to self-generate power for the entire hospital for six hours, and is capable of generating its own power. It also has the capability of storing fuel for its generators for reserve and back-up use, the CUC board said.

“CHCC demonstrated that [in] December 2019 where it generated its own power for approximately six hours for the entire hospital grounds. CHCC has done the same following multiple typhoon events before the reactivation of CUC’s power plants generating to the hospital’s grid.”

Backup generator

Ogumoro said CHCC has “proven that we have the capability of doing that, but that is because it was for a calamity and during a natural disaster —  that is the purpose of it.”

If CHCC will use a generator as a source of power, it will need another backup generator, which is a requirement of the Centers for Medicare and Medicaid Services or CMS.

“Unfortunately, we don’t have that,” Muna said.

CHCC Hospital Emergency Preparedness Director Warren Villagomez said using a generator for normal operations could compromise a lot of things.

He noted that CHCC has a 30-year-old generator. Even six hours every day will affect the machine and the services the hospital is providing, he said.

“When you are on generator, you have to downgrade your services on a daily basis, including surgery, ER, CT scan,” he added.

Ogumoro said CHCC should explain to CUC that the only hospital on the island is a 24/7 operation and it is not like the Public School System whose lights could be switched off at night.

Earlier, Villagomez said the first phase of the CHCC solar power project had been completed, but there was a delay in connecting the system because of the ongoing pandemic.

Once connected, the solar power system will be able to provide 22% of the power needs of CHCC.

No allotments

During the CHCC budget hearing conducted by the House Ways and Means Committee on July 13, CHCC Chief Financial Officer Derek Sasamoto said  mandated allotments for CHCC had not been remitted by the central government.

Sasamoto also noted that uncompensated care reached $18 million in the current fiscal year.

He said this has become a massive liability for CHCC, which needs government support.

To pay CUC, he said, CHCC will have to cut half of the $10 million allotted for  medical supplies, or take  $5 million from the salaries of nurses and other health providers.

“We will lose our nurses and our providers and it will be another situation of not providing services [to the public],” Sasamoto said.

“We want to pay what is due but we are handcuffed,” Ogumoro said. “We are tied by our inability to collect the money from within the [CNMI] government. We cannot turn off the patients like we can turn off the power to your house. We don’t do that.”

Muna said CHCC has come up with a list of what the CNMI government owes the healthcare corporation from the services it provides outside the hospital, including inter-island medical referrals, the health services provided to the Department of Corrections, the Department of Public Safety and other agencies.

She added that CHCC likewise informed  legislators about the  matching fund from the CNMI government for Medicaid, which is 50 cents for each dollar of services.

“I brought this up to Speaker BJ Attao. Isn’t it the responsibility of the CNMI government to take care of uncompensated care?’ We are taking care of that without additional funding.”

Muna said once “we get an allotment from the government, we will split it up and [share it with] CUC. But we have not gotten an allotment.”

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