AIS: System should cut ‘bad debts’

Implementation delays, not technology, to blame, says company

The Cayman Islands public hospital patient swipe-card system, known as CarePay, would help reduce the healthcare system’s bad debts if it were fully put in place, the company contracted to implement the system said last week.

The CarePay card system, installed at the Cayman Islands Health Services Authority by Advanced Information Systems (AIS) Cayman Ltd. between 2011 and 2012, following the approval of a contract in December 2010, has been scrutinized in recent months by lawmakers who have sought information regarding how much the company is being paid and details of its beneficial ownership.

Police investigation

Separately, a police investigation regarding the swipe-card contract bid process was ongoing Monday, with former Health Services Authority Board Chairman Canover Watson due to report back on police bail. Mr. Watson was arrested on suspicion of corruption-related offenses and alleged money laundering activities in August. He had not been charged with any crimes as of press time.

On Friday, after being contacted by the Cayman Compass in July about local lawmakers’ concerns, AIS Cayman Ltd. representatives responded with a lengthy email detailing the benefits their system brought to the Health Services Authority and the Cayman Islands National Insurance Company.

“For the first time, patients could see details and value of all that provided by [the] Cayman government for their benefit on their check out statement,” read the email sent by AIS chief operating officer Stacey Halsall-Peart on behalf of AIS chief executive Douglas Halsall. “We were well on our way to the national rollout [to expand the card swipe system to other health insurance providers], which would have addressed the perennial bad debt problem.

“[The] Cayman Islands Health Services Authority, Cayman Islands National Insurance Company and the AIS teams overcame the many unforeseen challenges in work flows, to optimize efficiency and patient convenience and, after interfacing to other internal systems … brings us to the point where we can now bring on the private sector insurance carriers and provide 24/7/365 real-time claims processing, at no additional cost to [the Health Services Authority].”

Such a move would perhaps cause the Health Services Authority to exceed a $2 million projected reduction in its annual unrecoverable debts, Ms. Halsall-Peart noted.

Bad debts

As of June 30, the Cayman Islands Health Services Authority reported its “bad debts” – payments owed by patients that were more than a year old – at $55 million. By mid-2015, that number was expected to grow to nearly $70 million.

In 2011, health services officials acknowledged they were allowing patients who owed the hospital system money to get payment plans for debts that were more than five years old. That practice was identified as having “negative implications” for accounts receivable and bad debts, the authority’s then-chief information officer opined.

Continuing to allow for payment plans would complicate hospital finances and was expected to delay, at the time, the implementation of the CarePay swipe card system.

“The CarePay swipe card system can adjudicate claims 24/7/365 for [the Health Services Authority] and inform [the health services] of the amount to be collected from the patient,” Ms. Halsall-Peart’s email reads. “It cannot physically collect this money from the patient.”

The email quotes former Health Services Authority Chief Information Officer Dale Saunders as advocating the introduction of CarePay to other healthcare providers whose patients used the hospital system back in 2011.

“Without the facility to adjudicate private sector claims online, real-time … as was initially planned, the Cayman Islands Health Services Authority will never realize this promised reduction in bad debts,” Ms. Halsall-Peart wrote. “We have steamlined CINICO, but CINICO is one of seven [locally operating healthcare insurance companies].”

‘Daunting problems’

In June, during a meeting of the Legislative Assembly, Health Minister Osbourne Bodden said a number of daunting problems faced the Cayman Islands Health Services Authority as the public health agency tried to collect on massive unpaid patient bills.

Mr. Bodden listed among those difficulties the fact that the payment system used by the public hospital was not able to collect patient deductible payments for services outside of regular business hours.

In other words, if someone used hospital services and their insurance company paid only 80 percent of the bill, the hospital would not have immediately known that if the visit was made after hours. “This was the issue that the real time software was expected to correct,” Mr. Bodden said.

In a follow-up email addressing the point that the system does not work after 5 p.m., Ms. Halsall-Peart wrote: “We don’t currently process private sector claims, this should have been phase 2, so that part of the processing is still manual and not online real time. The provider has to therefore call the private insurance company to receive approval. After 5 p.m., when the insurance company is closed, they cannot call for approval. This is where the majority of the bad debts originate.”


Most public healthcare system patients who are insured through the Cayman Islands National Insurance Company, or CINICO, do not have to pay a deductible on health services, so it is not a problem. However, some do owe payments for hospital services, and most other private insurance companies charge deductibles for hospital services.

Health Ministry Chief Officer Jennifer Ahearn said at the time that while it had always been the intention to extend the swipe system to private sector insurers as well, that had never happened.


The contract for the CarePay swipe-card system was awarded on Dec. 21, 2010, to AIS Cayman Ltd., an agent of St. Lucia-based Health Adjudication Systems, for a five-year period. According to the contract, a copy of which was obtained by the Cayman Compass, AIS Cayman Ltd. was to receive US$1.37 million for initiating and implementing the computerized card swipe system. In addition, it would receive from CINICO and the health authority 4 percent of the value of every swipe card transaction approved for payment.

The 4 percent charge on the value of each claim was split between CINICO, which was responsible for paying 1.5 percent of it, and the Health Services Authority, which would pay 2.5 percent, according to the contract.

Five-year agreement

Bid documents for the project obtained by the Compass indicated the total costs over the five-year agreement were estimated at US$13.6 million (CI$11.15 million), including the US$1.37 million for the set-up expenses. Annual payments from the contract were estimated at US$2.4 million per year.

“I want to find out who the ultimate beneficial owner of this company is. There’s a lot of money being paid for this company and we don’t know who it’s going to,” Finance Minister Marco Archer said during a June meeting of the Legislative Assembly’s Finance Committee.

AIS officials responded to these claims in the Friday email to the Compass: “Examinations of the figures to date will reveal that transaction fees are averaging US$1.5 million per annum and not the US$2.4 million that has given the minister concern, or [the figure] that was used for comparing our bid against our competitors. This is about the same as CINICO was paying to [another provider] for a batch processing system.”

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  1. 55 MILLION owed – and expected to grow to 70 MILLION in a year ?? The Government might as well admit that it is providing FREE medical treatment to anybody who walks through the door and does not have medical insurance. In publishing these figures and admitting their total incompetence in managing Accounts Payable, the CIG is effectively telling everyone in Cayman that if they do not pay for whatever treatment they receive at George Town Hospital, they can simply walk away from their debt, with no expectation of subsequently being taken to Court for recovery of what they owe.

  2. We always seem to be playing catch up catch up. To systems that seem to be antiquated and doesn’t offer value for money.
    Why don’t we get rid of the medical insurance system ? Why ? Because the reason that it was created for is not working. People don’t have proper coverage. People don’t have coverage for dental unless they work for Gov’t .They don’t have eye care , what about eye surgery? Medical is a joke. At the end of the day Gov’t will loose money because if preexisting is the excuse of the insurance company then what excuse will Gov’t have ? The bill is incurred.
    Medical coverage should be affordable and cover 80% of your bill. It should cover anyone who pays for said coverage. There should not be a clause or a waiver not to pay because your daddy or mommy had it. If it does then the bill will not or cannot be paid simple.
    Will it not be better and more profitable if Gov’t collects a premium and use it to maintain medical , dental and eye care?
    At the end of the day wasn’t this outstanding bill still owed to Gov’t on the refusal of the ins. co to pay????
    Then Gov’t should collect the premium .

  3. I would assume that the largest user was CINICO??? Of that 55m bad debt it would be interesting to know what the breakdown is: CINICO vs private insurance vs individuals and Caymanians vs Expatriates.

    With that data in hand one could then proceed to plug the biggest hole, then move onto the next biggest.

  4. Dear friends,

    I am not qualified to speak about the details behind the accumulation of bad debt or the questions surrounding the procurement of the CarePay system from AIS. Those discussions are better left to auditors and inspectors. Regardless of what transpires in those inquiries, I hope that the concept of a real-time claims adjudication system is not discarded from the strategic goals of CINICO and the Health Services Authority. If implemented properly, such a system can cut the cost and inefficiencies of healthcare by 25%, and morethat’s tens of millions of dollars per year in savings from the HSA and CINICO budgets. Patients will also find the system much more convenient and easy to understand than the current billing system that quite often leaves patients in a financial quandary because they did not understand the true and total costs of their care.

    As outlined in the Compass article, ‘AIS: System Should Cut Bad Debts’, there are a number of problems with the current AIS-based CarePay system that need to be resolved. In addition to those listed, the CarePay system must be deployed alongside a transition to bundled payments, which was not the case when the system was originally implemented. The current line item adjudication rules are too complicated to reliably program and maintain in a software application. Bundled payments are the norm at the new Health City Cayman Islands hospital. HSA and CINICO could collaborate with, and learn from, Health City on the development of bundled pricing.

    Results are more important than good intentions, but some degree of credit should be given to CINICO and HSA executive leadership for supporting the HSA Board’s courageous attempt at CarePay and real-time claims adjudication. That courage is a great reflection on the willingness of the Cayman people to undertake a challenge that no healthcare systems in the US have been willing to face. The Cayman Islands do not need to follow the dysfunctional role model of the US. You can be much better. Furthermore, while there will always be room for improvement, you should be proud of the overall healthcare system that you do provide through HSA and CINICO, especially considering the lack of direct taxation to fund healthcare, the small population of the Islands that works against the efficiencies of size, and the geographic isolation of the Islands. Even though the first attempt at real-time claims adjudication has not been completely successful, the benefit from that attempt is not all lost. The lessons learned from this first attempt at sailing the uncharted waters of CarePay can make the next attempt much more likely to succeed.

    If there are irregularities in the procurement process of CarePay, and problems with the technical performance of AIS, I hope that those irregularities and problems can be solved– even if that includes a retender of the contract– without discarding the strategic goal of real-time claims adjudication. The benefits of a properly functioning system to the HSA, CINICO, and patients will be enormous, and the Cayman Islands will be a role model for healthcare systems across the globe. I encourage you to call upon the seafaring nature of your personalities and remain determined to sail these waters.

    Thank you for letting me share these thoughts and thank you for letting me serve in past as the CIO of the Health Services Authority.

    Dale Sanders