Plan proposed for a new hospital on Guam

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HAGÅTÑA (The Guam Daily Post) — For the man who created the group that brought more than a hundred more hospital beds with the construction of Guam Regional Medical City, building a new and sustainable public hospital could work — but there first has to be a solid business and management plan.

Peter Sgro
Peter Sgro

Peter Sgro isn’t necessarily talking about a for-profit business plan, but a plan that includes some level of government and community support – given the Guam Memorial Hospital Authority’s mission to provide care to the people of Guam regardless of their ability to pay.

There has to be some element of government and private partnership,” said Sgro, who has created a white paper that takes into consideration the areas of care that require attention based on the government of Guam’s history and some realities of the health industry — lack of adequate funding for proper maintenance, the hospital’s approximately $30 million annual shortfall, and its perennial shortage of nurses.

First, however, Sgro noted that a 2006 study by University of Oregon’s Megan Stratman and Matthew Spellman shows a need for 2.7 medical beds per 1,000 people under age 65 and 13 beds per 1,000 people over the age of 65.

Using that ratio, the 150 beds at GMH and 130 beds at GRMC fall short of a conservative 450-bed approximation.

Peter Sgro

That, he said, is something elected officials may want to think about. He just wants to show that there is a feasible way to build a new hospital. He proposes a facility with 350,000 square feet for a 150-bed hospital. By way of comparison, GRMC is 300,000 square feet.

Nurses, empty beds and revenue

He pointed out that even now, with about 260 beds between the two hospitals, there remains a shortage of nurses. That shortage requires careful consideration when determining the size and number of acute care beds a new hospital should have.

Decisions now in determining the right number of acute care beds should primarily be based on fostering sustainability and financial stability of the new hospital,” Sgro noted. “Empty beds do not create revenue and (are) not in the best interest of the long-term viability of the new hospital. Adding too many beds that cannot be staffed by nurses contributes to increase in (lost) revenue and unnecessary overtime costs that historically has been realized at GMH.”

The intensive care unit has 14 beds, but GMH only has enough nurses to monitor six patients around the clock. Telemetry, which is a cardiac monitoring unit, has enough beds to accommodate up to 26 patients, but again, the shortage of nurses doesn’t allow full utilization of the unit.


For decades, the underfunded hospital has had to defer maintenance that have become large projects with the potential for more problems. One example is the roof. Its slope and cracks have gotten worse over the years. No longer is it just leaking into the corners of the hospital and walls of the hallways; rain is leaking into offices and elevator shafts.

The Army Corps of Engineers team that assessed GMH in November said there are cracks in the hospital’s structure and, while they’re minor, they need to be repaired so they do not become major issues.

Sgro is proposing a kind of lease-back financing scenario similar to what GovGuam did to rebuild John F. Kennedy High School and other local schools.

The maintenance of those schools is handled by the contractor,” he said. Similarly, if the government decides to take the lease-back approach, “the hospital administrator can avoid dealing with maintenance costs (and) focus on enhancing care for the patient.”

According to his white paper: “At the end of the 32-year lease, the hospital will be transferred to the government of Guam at no additional cost.”


When the Army Corps of Engineers provided a preliminary report after it completed its inspection in November, it estimated an approximate $200 million to $300 million to renovate the existing public hospital, according to Lt. Gov. Joshua Tenorio.

Renovating the hospital, however, could mean disrupting health care services. Some GMH administrators said it could still be done with minimal disruption, but that would mean stretching out the construction timeline, which will likely increase the cost.

Sgro estimated it would cost about $317 million to build a new hospital at a different location.

If a new hospital facility is built, he proposes turning the existing facility into government offices. He calculated a conservative $1.25-per-square-foot rental cost for what GovGuam is paying now in rent for its various agencies’ offices. Based on that estimate, turning the existing facility into government offices would save $3.9 million annually, he said.

Funding Medicaid, MIP

The government is already mandated to provide sufficient funding for Medicaid and the Medically Indigent Program. However, historically that has not been the case,” Sgro noted. “Thus, in order to carry out the public purpose and to provide care to the indigent and those unable to pay, it is necessary that some form of priority be given to MIP and Medicaid payments to the new hospital.”

GovGuam historically has paid a 45 percent local match for Medicaid, but that share might decrease now that a new federal bill has passed the Senate. If the legislation is made law by President Donald Trump, the federal government’s share will increase to about 80 percent, which will ease the burden on local taxpayers and help GMH with payments for services rendered.

Sgro raised the issue of “social cases” involving people who should be discharged from the hospital but, for lack of a clean and safe environment to return to as well as lack of a caregiver, remain at the hospital.

GMH loses approximately $12 million annually,” he said. “There have been up to 12 social cases at any one time at Guam Memorial Hospital, with some occupying beds for over a year.”

$30M estimated annual loss

All of these scenarios are factors in GMH’s annual estimated loss of $30 million a year.

Which, at the end of the day, Sgro agreed had to be addressed in order for his plan — whether its building a new hospital or renovating the existing one — to work.

It’s why I addressed the maintenance issue with the lease-back program,” he said, noting that often times GMH has said it couldn’t pay for a certain maintenance upgrade because it had to choose between that and paying for medicine or paying its doctors, nurses and staff.

And it’s also why the government needs to ensure it pays for Medicaid and MIP,” he said. “These issues all have to be part of the discussion as we move forward with whatever decision is ultimately chosen.”

The Army Corps of Engineers is expected to provide a report in 2020 that compares the cost of renovating versus building something new.

Those cost comparisons will be used, according to Gov. Lou Leon Guerrero and GMH Administrator Lillian Perez-Posadas, to determine what the best option for Guam will be.

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