The Cayman Islands Health Services Authority expects to end this month with $90.3 million in “doubtful debts” – hospital bills which have not been paid for at least a year and which have less chance, in the authority’s view, of being collected.
On June 30, 2015, the figure for doubtful debts, often called “bad debts,” stood at just over $70 million, meaning those debts increased by about $20 million in one year by the authority’s estimates.
The $90 million figure contained in the authority’s financial statements is about $10 million higher than the HSA expected to end with by June 30, 2016. A year ago, government financial planners estimated the total bad debt would be around $80.5 million by this time.
According to future estimates, the doubtful debts amount would not be reduced or even contained over the next 18 months of the 2016/17 budget. By Dec. 31, 2017, the provision for bad debts in the HSA budget was expected to be more than $108 million.
During the 2012/13 budget, the provision for bad debts at the HSA stood at $45.8 million.
Health Services Authority Chief Executive Officer Lizzette Yearwood has repeatedly warned lawmakers that the bad debt troubles would persist in the “near term.”
Ms. Yearwood said the hospital system had been “more consistent” in enforcing payments since 2014, particularly with patients who underwent elective surgeries.
However, the total allowance for unpaid receivables dates back to more than a decade ago, and some of the bad debts date from the 2004-2005 era.
Government officials have acknowledged the bad debt accumulation, at least in the public hospital service, is partly due to a decision made several years ago not to take debtors to court.
The unpaid debts increased to their current level following a government decision to “scale down” collection efforts by the Treasury Department’s debt collection unit, Financial Secretary Kenneth Jefferson confirmed.
“Perhaps as far back as 2010, a decision was made by the then-government that … the unit was told not to pursue the collection of debts through the courts,” Mr. Jefferson said.
Mr. Jefferson said other efforts were being made to collect the amounts due. He said that can take the form of telephone calls to the debtors and writing letters to them to remind them they are due to pay the government. The government, in certain cases, can place a charge against a property for payment of a past-due medical bill.
The government’s own evaluation in relation to the unpaid debts in the public hospital system noted: “This position is not sustainable.” The government advocated addressing the health authority debts as a “high priority” via a system redesign to ensure bad debts do not continue to accumulate.
That acknowledgement came in 2014.
About the only thing government can do, according to Acting Auditor General Garnet Harrison, is write off the debts – accept that they will never be collected and agree to lose the money.
“If the full provision is eventually written off, the Health Services Authority will have written off at least $120 million in receivables in the last nine to 10 years,” Mr. Harrison confirmed in a previous report to the Legislative Assembly.
“Ultimately, the financial performance and position of the Health Services Authority reflect the rising cost of providing healthcare and the challenges in collecting its revenues.”