Health service makes $2.3 million profit

For the first time in its
existence, the Health Services Authority has made a profit, revealing that it
made $2.3 million in the last financial year.

Despite finally being in the black,
the public health service is still seeking to recoup some $40 million in
outstanding debts from patients who have failed to pay for treatment over the
past decade, chairman of the authority’s board Canover Watson said.

The authority, which runs the
Cayman Islands Hospital, allows for about $12 million in bad debts annually,
Mr. Watson said, adding that if those debts had been paid in the past 12
months, the health authority would have made a $14.3 million profit during the
financial year that ended on 30 June.

The latest financial results are a
major turnaround for the public health service, which three years ago had an
operating loss of about $15 million.

Mr. Watson admitted that the Health
Services Authority had been plagued by “turmoil and disarray” in past years and
described its previous finances as the hospital’s “Achilles heel”.

“That is behind us now,” he said.

In a press briefing on Wednesday,
outlining the health authority’s strategic five-year plan, Mr. Watson said
there had been a variety of reasons for the poor financial state of the health
service over the years, including a revolving door of senior management and
board members, which had led to inconsistent leadership and direction.

Between 2002 and 2006, the health
service had five chief executive officers, five chief financial officers, three
medical directors and four human resource directors, he said.

He acknowledged that the health
authority was several years behind in completing audited financial statements
and annual returns, but said it was on target to meet a 30 September deadline
set by the Public Accounts Committee to complete all its audited financial
statements.

The $2.3 million profit is a
projected amount, pending the completion of the 2009-2010 financial statements.

Turnaround

To turn its financial fortunes
around, the hospital increased corporate and community partnerships, received
funds to buy equipment, streamlined the work of administrative and non-clinical
staff, and introduced an electronic financial management and clinical
information system to better track finances and patient revenue.

It also cut back on the use of
telephones, electricity and fuel consumption, further lowering its operational
expenses.

Mr. Watson said the hospital had
also renegotiated contracts with vendors and partners to secure more
competitive rates.

Hospital staff also began
contributing 6 per cent to pension contributions, wage increases were deferred
and a hiring freeze on non-clinical staff was introduced.

No staff members were laid off in
the cost-cutting measures, health officials said.

“We did not pursue any efficiencies
or take any action that diminished the quality of care delivered to our
patients,” Mr. Watson said.

He said the hospital had also adjusted
fees to “better match the cost of providing our services” and implemented
“robust systems and effective measures to improve our collections”.

Mr. Watson said the Ministry of
Health and the Health Insurance Commission were reviewing legislation covering
fees and health insurance, which have been a “significant hurdle in inhibiting
the HSA’s ability to improve its financial overall performance”.

“The current standard health
insurance that is provided is not adequate to cover care for patients, so the
ministry is taking a fresh look at the health insurance laws to see if we can
improve on that standard health insurance plan, which will increase the
coverage and inevitably will reduce some of the bad debt and the expenses incurred
by the organisation,” he said.

Bad debts

The health authority has hired an
external collections agency to improve payments for services from patients and
changed its registration policy for patients.

“It is challenging, because at the
public hospital we are charged with the responsibility to provide service to
all, whether you can pay or not…. We are working very hard to ensure that
there are policies that mitigate the escalation of these bad debts,” Mr. Watson
said.

“The country cannot continue to
sustain that level of bad debt,” he added.

Half of the outstanding debt is
from work-permit holders, Mr. Watson, said. “This is a very transient society,
so as people come and leave, it becomes exceedingly difficult, particularly as
time goes on, to collect some of those monies,” he said, adding that there were
also bad debts incurred by cruise ship and stay-over visitors who had been
treated at the hospital.

The authority and its collection
agency will continue to try to recoup bad debts that date back several years,
CEO Lizzette Yearwood said.

She urged people with outstanding
debts to pay what they owe, so that the money could be reinvested in health
services and equipment.

Ms Yearwood said that if the bad
debts could be collected, they could help pay for services and treatments that
patients have to go off island to access, such as a cardiac catheterisation lab
and cardiology and oncology care.

“We’re not here for a profit. We
will be reinvesting those dollars and cents back into the health care here,”
she said, adding that she wanted to stress that just because the health service
is now in the black does not mean that people could stop paying their medical
bills.

Among the objectives laid out by
the authority in its five-year plan is to decrease the number of cases of chronic
non-communicable diseases like obesity, diabetes and cancer; to implement
evidence-based practice in all areas of clinical care by 2015; to have
collections match operating expenses by 2015; and to have at least 90 per cent
of the population rate the health authority as satisfactory for high quality
health care by 2015.

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1 COMMENT

  1. An excellent turn around. If the Health service finances can be brought back to the black, there is hope then that the remaining ‘not for profit’ government agencies will likewise conduct it services with a balanced budget.

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