In this episode of Kandit’s show, Two Sides of the Lightbulb with Carlos Pangelinan and Troy Torres, former Guam Congressman Michael San Nicolas joins a discussion about Therese Terlaje’s legislation that would mandate a public private partnership (PPP) to run Guam Memorial Hospital.
Mr. Pangelinan is a finance major who, among his other career highlights, was a financial manager at GMH, ran Guam Regional Medical City’s finance office, and most previously headed up the Guam Department of Public Health and Social Services’ Medicaid and public welfare divisions.
Mr. San Nicolas is, by trade, a finance executive. Prior to his service in the Guam Legislature and the U.S. House of Representatives, where he also served as vice chairman of the powerful Financial Services Committee, he was an investment banker.
I contributed almost nothing to this conversation.
Here are the salient points they made:
- Generally supportive of PPP; not a new concept.
- Short history of Guam PPP.
- The Philippines model of PPP that allowed public projects to be financed by a private partner with the cash to build or operate things is a superior model, but Guam’s senators need to understand the premise of how this works.
- The catch: The private partner needs to make a profit.
- Does the Terlaje PPP bill solve GMH’s underlying financial problem?: This is a public hospital that provides care to people who can’t pay their bills to GMH.
- Pretend GMH is a restaurant with 10 customers:
- 6 customers promise to pay using Medicare, Medicaid, or MIP (known in the government as the 3Ms)
- 2 customers promise to pay using their private insurance
- 2 customers promise to pay out of their pockets
- What ends up happening (THE REAL MATH):
- The 3Ms can only pay two-thirds of the check for those 6 customers
- Not all the private insurance companies pay what they’re supposed to pay for the 2 customers
- The 2 self-pay customers pay only a sliver of their check
- Concerns over risk – the guarantee of the private partner making back the money they invest – would keep credible investors away from GMH PPP because of the real math. Credible investors would instead put their money into a less risky investment, like U.S. Treasuries.
- We don’t invest enough money annually into GMH as a government. GMH needs an annual and adequate subsidy because of the real math.
- PPP could end up favoring parts of GMH that make money and screwing over critical operations that lose money.
- GMH used to have a money-making dialysis center, but doctors once upon a time convinced the government to shut it down on the lie that it wasn’t making money.
- How do we turn $0 into $2?
- Simple solution for a private partner: Go after people who don’t pay. But how do you get people to pay their bill if they don’t have the money?
- Have to deal with the uninsured and the underinsured.
- Have to address the lack of medical providers.
- This legislature needs to think a lot bigger.
- An annual GMH subsidy: An issue of political will – from where do you take the money?
- The intentions with this bill are good, but the realities are stacked against this as a solution on its own.
- Evaluate with greater vision in mind.
- The math is stacked against GMH.
- PPP should be for new GMH with specific parameters.
- PPP gives an opportunity to be creative.
- Let’s see what Republicans do, because they’re seasoned and smart.
- Legislature should invest in a person or firm that understands finance for this particular programmatic issue.