Auditor: Bad debts, employee benefits hit HSA's finances


A new auditor general’s report on the Health Services Authority cites almost $30 million in bad debts from patients and unfunded employee benefit obligations in the health authority’s 2012 finances. More recent government financial records show the unpaid bills could reach almost $70 million by the end of this fiscal year. 

The audit, released last week, states the Health Services Authority had a net loss of more than $4.6 million in 2012, more than four times the $1.1 million projected shortfall in the authority’s budget for the year. Authority officials say the deficit shrunk to $2.9 million in 2013 – the final balance for 2014 is still with the auditor general. 

In the report, Auditor General Alastair Swarbrick writes that Health Services Authority’s management and board members told him that financial controls to track revenue are not effective. He states, “In the absence of properly designed controls and effective controls, I was unable to satisfy myself that the reported patient services fees of $71.2 million are complete.” 

Health Services Authority Chief Executive Officer Lizzette Yearwood, in a written response to questions about the audit, states, “HSA has developed an action plan and is working to implement various changes to address the issue.”  

She said the action plan will address the auditor’s concerns about financial controls tracking revenues and patient debts. 

In a government Public Accounts Committee meeting last month, Ms. Yearwood said, “There’s still a culture in the public that a number of persons feel that healthcare is free.” Government financial records show the Health Services Authority could have almost $70 million in unpaid bills by the end of the current fiscal year in June. 

The audit lists $29.9 million in bad debts in 2012, a $3 million increase from the year before. The health authority wrote off $13.6 million in bad debts in 2012, $8.7 million of which “had accumulated over a period of 2 to 7 years [and] were written off after all efforts to collect were exhausted,” the audit states. 

Ms. Yearwood said that since 2012 the Health Services Authority has partnered with two collections agencies to track down bad debts. She said the authority has agreements with Sunbelt Medical for overseas collections and the Cayman Islands National Credit Bureau for local debts.  

“The results of the collection agency have not yielded much. Our internal processes usually explore multiple strategies prior to the debt being [turned over] to the outside agencies,” she said. “We will continuously enforce our payment policy to reduce self-pay balances.” 

The Health Services Authority left out retiree medical coverage from its financial statements, according to the auditor. Mr. Swarbrick, in the audit notes, states that the Portfolio of the Civil Service dropped lifetime health coverage for retirees in April 2010 when the Health Services Authority became an authority instead of part of government. Since then, the authority has paid the medical bills itself.  

Ms. Yearwood told the auditor the authority is trying to hire an insurance company to cover retirees. She elaborated in a statement this week: “We are awaiting a government policy decision regarding retiree medical benefits for staff vested with the government prior to HSA becoming an authority. However, to limit our exposure, the HSA has put in place a policy in November 2010 that persons hired after that date would not have post-retirement benefit.” 

New employees hired after Nov. 1, 2010 do not get that lifetime benefit, but the authority still has to pay for medical treatment for retirees hired before the cutoff. 

The authority received almost $14 million from government in 2012, about 16 percent of its overall revenue. That funding went to such government programs as the district clinics and school health. More than 80 percent of the Health Services Authority’s revenue for the year came from patient fees. 

A separate audit, released by the Internal Audit Unit earlier this year, faulted the authority for using three reams of standard paper each day to print financial reconciliation reports. The paper-based system costs too much, wastes space and makes finding information difficult when it could be just as easily looked up in the HSA computer system, according to the audit. 


Unpaid hospital bills could reach $70 million by the end of this fiscal year.

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  1. When did the Health Services Authority’s management and board members first identify that the financial controls in place to track revenue are not effective? I only ask because I have been hearing about these same types of problems with the HSA for many years.

    What we have currently in place for health care in the Cayman Islands is clearly not working and it is time that the government explore some other options.