BHB – a collision of medicine and money?

From a strict dictionary perspective, the public needs to know BHB’s diagnosis, the triage process that is being adopted by the BHB team and the prognosis for recovery.

In more general terms, what are the real problems at BHB, how they are being addressed and what the financial and medical chances of success are.  This column will focus on the financial health of BHB.

Recent discussions about the closure of the Urgent Care Centre in St George’s were focused on medical, social, financial and political perspectives.  

What has been missed is another critical perspective, the overall financial health of BHB — the ‘Bermuda perspective.’

The ‘Bermuda perspective’ is that according to a speech given jointly by BHB Chair Jonathan Brewin and CEO Venetta Symonds to Hamilton Rotary on September 10, 2013 — “We knew the financial position of the hospital was going to be pressured due to the economic issues in Bermuda.  

Problem

But the scale of the problem should concern us all.  

If nothing is done, BHB will run out of money by the end of Spring 2014. 

If we do not act, over the next five years BHB losses could run in excess of $200 million.” They added “According to the terms of the public private partnership, there will be a $40 million one-off payment to be made at substantial completion, and payments that will total $26.7 million in the first year and continue for 30 years.”  

The initial $40m is intended to be paid by funds raised by the Bermuda Hospitals Charitable Trust (BHCT) – the Why it Matters Campaign.

If BHB (or the BHCT) does not have the cash to pay in 2014, the payments will fall to the Consolidated Fund, which is already challenged with a significant annual deficit.  

Note also that government is the effective guarantor for the entire $300m principal that is due to Paget Health Services!  

If the guarantee is triggered, the gross national debt will increase from an estimated $2.25bn to $2.55bn, which exceeds the existing debt ceiling!  

A previous column explained the consequences of continued deficits.

The BHB is heavily dependent on government for financing.  

Using the 2011 BHB financial statements, $200m (80 per cent) of BHB operating revenue comes from the government or government related entities including youth, aged and indigent subsidies, the Future Care Fund, the Mutual Reinsurance Fund and GEHI.  

In total it is estimated that BHB accounts for at least 40 per cent of all healthcare costs in Bermuda.  

Therefore any financial concerns for BHB become financial concerns for Bermuda and the entire healthcare sector.

For additional emphasis, the Minister, Chairman and CEO have hinted at several other financial concerns… the cap on BHB revenues, continued extended care for seniors, financial governance, the Healthcare Partners Limited (HPL) subsidiary, the lack of current financial statements, inequity amongst medical staff salaries, new ambulances…the list goes on.

We normally think of triage in the context assessing patient needs.  =Triage also explains the process of assigning priorities to projects in the instance of limited resources.

As a former BHB Board Chair and Chair of the BHB Finance Committee, I worked with the current Chairman and CEO.  I do not envy them and the BHB team for the difficult choices they must make.  Whatever they decide, Bermuda is ill placed for them to trigger the $300m principal guarantee to Paget Health Services!!

BHB – a collision of medicine and money? 

Anthony Richardson is the former Accountant General of Bermuda.