Former chairman says HSA was in “catastrophic” state
Details of private discussions regarding the CarePay hospital patient swipe-card contract that took place between Aug. 11-12, 2010 – four months before the US$13 million contract was agreed by government – were reviewed in Canover Watson’s criminal trial Thursday.
Watson testified there were two such discussions. One was on Aug. 11, 2010 between himself, former Health Minister Mark Scotland and AIS (Advanced Integrated Systems) Jamaica owner Douglas Halsall that occurred after a formal presentation Mr. Halsall made to government officials about his company’s healthcare patient claims system earlier that day.
The second meeting occurred on Aug. 12, 2010, between Watson, Mr. Scotland and the then Premier McKeeva Bush.
Facing an annual budget shortfall of millions of dollars in the government Health Services Authority and believing Mr. Halsall’s computerized patient records management system could help alleviate that, Mr. Scotland asked Mr. Halsall during the Aug. 11 meeting how long it would take him to “set up” in Cayman, Watson testified.
Watson said Mr. Halsall was interested, but wanted “100 percent” of the Cayman healthcare market, including both private and public sector patients who would use AIS Jamaica’s “CarePay” card system at the hospital or other local healthcare facilities.
Watson, the former chairman of the Health Services Authority, said he put Mr. Halsall in touch with a law firm that could assist him in the process of setting up a Cayman company to handle local operations.
At the Aug. 11 meeting, Watson said Mr. Halsall offered to send Mr. Scotland a draft agreement regarding a contract that government could approve. Watson said Mr. Scotland told Mr. Halsall that there would have to be a proper bidding process for such a contract, but that he was keen to get that started.
During the meeting Watson said Mr. Halsall jokingly told Mr. Scotland that if the CarePay system was put in place “you’ll be elected for life.”
“The minister was the most enthusiastic of anyone,” Watson testified.
Former Minister Scotland is not scheduled to be a witness in Watson’s trial, neither is Mr. Halsall.
Watson said Mr. Scotland invited him to a meeting the next day, Aug. 12, with Premier Bush where the three men discussed the system AIS Jamaica proposed for healthcare patient claims. Watson said the premier also appeared “quite excited” about it, but that both Mr. Bush and Mr. Scotland noted there was no money for such a system in the 2010/11 budget the government had recently approved. Mr. Bush is also not a witness in the ongoing trial.
Watson said he reminded both men during the Aug. 12 meeting that the HSA was losing “a million dollars a month” in unpaid hospital bills and that a solution to that problem was needed urgently. At that point, Watson said Mr. Scotland suggested that the system could be funded as a joint project between the HSA and the Cayman Islands National Insurance Company, rather than from the Ministry of Health itself.
Watson said he advised Mr. Scotland to do a sole-source bid for the hospital project to “speed things along,” but that Mr. Scotland and Mr. Bush indicated a local firm – Brac Informatics – had expressed an interested in bidding on the same contract. Watson said Mr. Bush indicated he “did not want the politics” of excluding the company from the bidding process because opposition MLA Moses Kirkconnell had an interest in Brac Informatics.
As the bidding process for the contract went on into early November 2010, Watson testified that he was contacted by Danny Scott, a local insurance manager representing Brac Informatics, who stated that the bid process for the healthcare contract was unrealistic because the time line for submitting the bids was too short. Watson said Mr. Scott informed him during that conversation that Brac Informatics would not be making a bid.
Assuming there would be no other interested bidders, Watson said he contacted Minister Scotland to ask him if he could seek to speed up Mr. Halsall’s bid by asking him to send Watson AIS Jamaica’s bid documents. Watson said he did so and Mr. Halsall, via his “Cayman contact,” businessman Jeffrey Webb, sent through the draft bid. The draft bid was sent to Watson on Nov. 2, 2010 – three days before the end of the bidding process on Nov. 5, 2010, the court heard.
“Why are you phoning Mr. Halsall for a response two or three days before deadline for the request for proposal [the bid documents],” Grand Court Judge Michael Mettyear asked Watson.
Watson responded that, at this stage, he did not have any reason to believe there would be other bidders and that he wanted to “move this process along … as quickly as possible.”
It has been alleged by Crown prosecutors that, after receiving the draft bid proposal from AIS Jamaica, Watson and Webb doctored the bids to “mark up” the amounts initially charged for the service by Mr. Halsall’s company. The “mark up,” prosecutors allege, went into the pockets of Webb and Watson. This allegation of defrauding the government makes up one of the six criminal charges against Watson in the trial.
Webb is also charged in the CarePay investigation, but is not currently facing trial in the Cayman Islands.
Watson denies the Crown’s allegation. He said Thursday that the AIS Jamaica draft bids did not include the costs of the company’s operations in the Cayman Islands and that Mr. Halsall sent it to him knowing those costs were not included and would be added later.
Watson explained to the jury at some length on Wednesday and Thursday why he believed there was such an urgency in implementing the CarePay contract.
The Cayman Islands Health Services Authority was so cash-strapped in late 2009 that it could not even afford basic medical supplies such as drugs and bandages, Watson said Wednesday.
“There were no solutions, no sensible solutions,” Watson said. “In fact, it was a bit of an accepted fact that the Health Services Authority would lose $10 million a year and that’s the way it was.”
The implementation of what became known as the CarePay patient swipe-card system was one way Watson proposed to prevent the government from shelling out millions per year on healthcare losses, some of which were easily preventable, he said.
Watson is also accused of directing the award of the CarePay contract to a local company he and business partner Webb controlled from behind the scenes. The Crown alleges Watson earned nearly US$350,000 from the contract while he served as HSA chairman.
During testimony, Watson noted that back in 2009 the hospital system was losing about $4 million to $5 million per year on bills that it simply was not collecting. These differed, he said, from uncollected debts or “bad” debts for which the HSA had actually charged patients.
“These [services] we just weren’t charging,” Watson said, adding that the hospital wildly undercharged for other medical procedures to the point where it couldn’t even recover costs. “Every time we charged for a Caesarian section, we lost $1,200,” he said.
In addition to missing out on money it should have been collecting, Watson said a number of serious patient safety issues existed. The building’s sprinkler system was faulty, backup generators did not work, computers and sometimes phones did not work.
“It was quite catastrophic, the position it was in,” Watson said. “I guess if something is bad enough for long enough, people start to accept that as the new normal.”
Watson’s attorney, Trevor Burke, QC, elicited that the former HSA chairman proposed a number of options to the former United Democratic Party government between 2009 and 2010 in attempting to resolve the situation.
Those ideas included the absorption of the Cayman Islands public health system into Miami-based Baptist Hospital’s organization, proposals to make civil servants pay premiums for their own healthcare coverage, suing people who did not pay medical bills, a targeted payroll tax and even the legalization of gambling to generate money for government to pay for hospital services.
All of these plans, Watson said, were rejected because of their political unfeasibility.
“The [ideas] just wouldn’t fly from a political standpoint,” Mr. Watson said.
While other ideas to save money were implemented, none of them dealt with the problem of growing unpaid hospital bills, Watson said. Enter the CarePay system, which provided real-time patient claims management via its computerized records, and its owner, Advanced Integrated Systems of Jamaica.
“Would the solution be a system that was able to verify coverage and guarantee payment at the time the service was provided?” Mr. Burke asked. Watson replied: “Yes. At that time of service the [healthcare] provider knows whether that payment was approved or rejected and, more importantly, the patient knows.”
Watson testified that AIS Jamaica presented such a system to government officials in August 2010, which is the first time he became aware of the CarePay system. He said everyone who attended that meeting, including former Health Minister Mark Scotland, Health Ministry Chief Officer Jennifer Ahearn and Watson was “thrilled” by the solution AIS Jamaica owner Douglas Halsall presented.
“This was the holy grail,” Watson said. “This was going to solve all our problems.”