l. Certificate of Need issued to contractor; and 2. Health Services Administrator assumed responsibility and commenced full-time management of the health care system; and 3. Completion of those “steps agreed to by the parties" in a Transition Memorandum. While the documents appears to Schlehuber be did in in 1 and 3 were not available, the transition effect assume as the Health Services responsibility October 1, Administrator, 1980. Fred A copy of the agreement is provided in Appendix F. The initial contract term is until September 30, 1982 with provision for successive five year renewals. The contract is ambiguous in certain areas and will present problems in administering an effective and efficient health care delivery system. There already appear to be differences between the contractor and certain government officials with regard to the degree of control/responsibility the contractor has in the delivery of health care. As discussed previously, this may be a moot issue if the proposed organizational structure is adopted as the contract in its present form would not be compatible and would have to be amended. C. Finances For FY 1981, the proposed budget for the Department of Health Services is $3,035,500. Marshall Islands A copy of the preliminary draft is provided below. government $1,920,000 of this total. is showing While DOT jis budgeting is the funding done on a The source for national and departmental basis, once approved, the funding method appears to be in the "recovery pot" approach. presently breaks down. It is at the operational level that budgeting Spending is done with little regard to line item budget and is a function of who gets to the “money pot" first and how long funds are available. It is understood they ran out of money after 10 months in FY 1980. Related to the problems presented by this approach is the apparent lack of accounting and finanical reporting at the operational level. Reports are sent to Trust Territory and summary financial information is available. It does not apear, however, to be tied into the budgetat the operational level. There is little, example, there if any, accounting for receivables and payables. is $334,000 payable for referrals that the (For hospital