SIC continues probe into LBJ financial woes

Senators continued to dig deeper into the actual reason the only medical center in the territory is facing a financial crisis, yesterday, Day Two of the Senate Investigative Committee (SIC) hearings, with the LBJ Medical Center’s $16 million in accounts receivable and lack of funding for Emergency Medical Services (EMS) just two of the issues raised.

Yesterday’s witnesses were chief executive officer Mike Gerstenberger, board chairman Moananu Va, and hospital chief financial officer Viola Babcock.

Babcock was the only new witness sworn in yesterday, while the other two were still under oath from Tuesday’s appearance before the SSIC.

Gerstenberger told the committee that the hospital this week sent a request to the Executive Branch asking that the other $1.5 million of the $3 million loan from the Workmen’s Compensation Account be released. The first half of the loan was released last month.


One of the main issues that has come up in previous Fono hearings over the past weeks  deals with the $16 million in accounts receivable, and it surfaced again yesterday as the SIC probe into why the hospital is unable to collect this money.

Gerstenberger explained that the “gross total” of accounts receivable is $16 million and about 60% or so of that amount will be written off.

However, he explained that the biggest part of this deals with the “uniqueness of hospital billing” everywhere, including LBJ.

For example, he said that if the master price for a service — like an EKG — is $100, the patient pays only the required facility fee of $10 and the balance — or $90 — is written off.

When it comes to Medicare, an example would be — on a $100 service, the hospital would bill Medicare for $100, but Medicare pays only about 37% of the charges on average. So Medicare would pay LBJ $37 and the hospital writes off $63.

Gerstenberger reminded the committee that most LBJ patients pay only the $10 facility  fee, while the balance of the service being provided is written off. He also said that based on the $16 million “gross total” LBJ estimates they will collect some $2 million to $3 million.

As for patients with long standing bills, Gerstenberger said the hospital since last year is working diligently to collect some of this money. For example, if a patient comes in and still owes a bill, that individual is required to pay 10% of the outstanding fee.

However, the hospital will not turn away any emergency cases.


Sen. Velega Savali Jr. raised questions as to the status of funding for EMS and payment for its personnel. He said that the entity has been transferred around — from LBJ to DPS and back to LBJ — and the funding issue only came up when money was needed.

“This has been a very painful issue for me,” he said and asked for the latest development on EMS.

Gerstenberger said he only learned this week that a budget in the range of $800,000 was allocated for EMS personnel costs, but not for other expenditures. However, no money has yet been transferred to LBJ to cover expenses for EMS, who have been paid by the government untill now.

However, he said he was surprised to learn from the media that EMS personnel didn’t get paid on Monday ( government pay day) and it was only two weeks ago that personnel files for EMS were delivered to the hospital.

As to who is paying for gas expenses for ambulances and other EMS vehicles, Gerstenberger said “it’s not LBJ” and he didn’t know who was paying for those expenses. He said any clinical needs for EMS are being assisted by the LBJ emergency services department.

The EMS is currently overseen by Sa Mavaega whose official title is director of Plant Services, which includes Maintenance, Janitorial, Security and Laundry divisions.

Samoa News notes that none of the witnesses were asked what the reason or rationale was for having the director of Plant Services oversee the EMS. A story in yesterday’s Samoa News reported that some EMS employees were unhappy with the assignment, asking what would a Plant Services person know about emergency services.


Responding to committee questions, Gerstenberger said the hospital’s in-house legal counsel has handed in his resignation effective this Friday.

The legal counsel is Kevin Kornegay, who was previously with the Attorney General’s Office. His pay has been the subject of recent criticism by the Fono because of his high salary, even though many cases are still being handled by the Attorney General’s Office.

Although the hospital needs to fill this position once it becomes vacant, Gerstenberger said that due to the hospital’s financial situation, the position will remain unfilled.

The committee also asked about any recent terminations at the business office, to which Gerstenberger replied that there was one recently, but it was not related to the issue from last summer where some $200,000 had been found misappropriated. 

In yesterday’s story on this case, Samoa News incorrectly reported that the four employees allegedly involved were terminated. Instead, they had resigned, but the attorney for the four individuals said in court filings that the former employees were forced to resign.

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