The hospital’s fourth quarter report has brought to light the fact that the previous Chief Financial Officer, Viola Babcock, advanced $4.3million from Medicare due to cash needed for payroll, a move labeled by the present Chief Executive Officer Taufete’e John Faumuina as a “mistake”.

In an interview with Samoa News yesterday, the hospital CEO said that this move has had a huge impact on their cash flow and hospital operations and in “his eight years as CEO in previous years” he had not been aware that advancing Medicare funding was even possible.

Said LBJ Hospital’s current Chief Financial Officer, Pauline Gebauer, in their report in the last quarter of Fiscal Year 2014, “LBJ does have challenges in many area.” The report says the hospital is billing Medicare for the eligible population, however the hospital is not receiving their reimbursements. “Why? [because] in FY 2013 the prior CFO negotiated an advance of about $3.4million due to cash needed at that time to pay the payroll.”

“In this repayment plan, LBJ bills Medicare and Medicare offsets the advance against our billings.” Gebauer said, hence the hospital’s cash flow received from this is nil until the hospital is done paying back the advance —which will be by midyear 2015.

According to the hospital CEO, it was a shock to him when he was appointed as a board member and they were told by the former CEO that the hospital had borrowed money from Medicare. “I was shocked this was possible, but the situation must have been real bad for the former CFO to ask for an advance,” he said. Samoa News asked as to how much is left of this “advance” but the CEO said it was unclear, however he referred this specific question to the CFO.

Samoa News followed up this specific question with the CFO, however, as of press time there has been no response. “I don’t know how much is left,” said Taufete’e.  Asked as to the affect this has on the hospital operations, Taufete’e said it has had a huge impact, as there is no more money coming from Medicare until mid next year.

Samoa News had other questions about the 4th quarter financial report — asking the CFO for clarification. However, Gebauer told Samoa News that “what is in the report is in the report.”

For example, in the 4th quarter report, Gebauer states that in a “typical hospital operation of about 150 bed acute setting, a budget in the three digits is the average amount needed to run an operation of this size. We are almost there and will continue to expand this budget area as we work through all the many challenges that exist.”

Samoa News notes the CFO does not clarify what she meant by “a budget in the three digits”, which could be $100- $999, for a day, an hour, or a week.

Samoa News will have more on the 4th quarter report tomorrow which identifies its cash flow challenges and Medicaid billing methodology— which it says is another of its big challenges, as the “currently Medicaid billed population” is actually three times more than what is presumed as the eligible resident population.

Other areas covered by the 4th quarter report is the Moss Adams Audit opinion which focused on the hospital’s billing system and financial reporting package — with their main emphasis on billings and the accounts receivable arena, as well as not having a strong payroll processing system.

It also pinpoints the lack of qualified personnel to carry out its necessary financial duties. Gebauer says in part, “…if we don’t have the qualified staff to do the necessary work, we can implement all the systems we want, it will still have the same results.”