l. Certificate of Need issued to contractor: and 2. Health Services Administrator assumed respondibility and commenced full-time management of the health care sistem; 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 as the Health Services assume responsibility October 1, Adminiskrator, 1980. Fred Alfcopy 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 Bnd efficient health care delivery system. There already appear to be differgnces between the contractor and certain government officials with regard to [the degree of control/responsibility the contractor has in the delivery of §ealth 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 Hel 1th Services is $3,035,500. Marshall A copy of the preliminary draft is provided| below. Islands government $1,920,000 of this total. is showing DOL is the funding While budgeting is done on a The source for frational 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 fto line item budget and is a function of who gets to the “money pot" first Jand how long funds are available. It is understood they ran out of money affer 10 months in FY 1980. Related to the problems presented by this approach is the of accounting and finanical reporting at the operational level.} Apparent lack Reports are sent to Trust Territory and summary financial information is ayailable. It does not apear, however, to be tied into the budget at the opera jonal level. little, example, there if any, accounting for receivables and paypbles. is $334,000 payable Vn There is for referrals that fhe (For hospital