The Cayman Islands public health authority has failed to maintain legally required cash reserves for at least the last five years, while at the same time writing off millions in unpaid patient debts, according to auditors.
The Cayman Islands Auditor General’s Office found the authority was $21.5 million short of the cash needed to cover at least 90 days of operating expenses as of June 2016, according to financial statements made public last week. The Health Services Authority Law states that the operating expenses for three months – roughly $26 million – must be maintained.
The authority has not followed its own law relative to the cash reserves in consecutive years dating back to at least 2012, the Auditor General’s Office has reported. Cash shortfalls varied but recently have increased from $5.3 million in 2014, to $19.2 million in 2015, to last year’s $21.5 million.
“Due to [the HSA’s] cash collection rates, it has consistently been unable to maintain the level of cash it needs to meet this legal requirement,” Auditor General Sue Winspear said Tuesday.
As of last year, the Health Services Authority had an estimated $90 million in bad debts – amounts owed by patients that were charged more than a year ago.
In March the authority acknowledged the write-off of $8.2 million of that amount, which was approved by its board of directors last October. The amounts in that debt write-off were for patient bills charged between June 2010 and September 2013.
According to auditors, the vast majority of the uncollected hospital bills making up the $90 million total will never be collected.
“These amounts are owed by customers who have neither insurance coverage nor sufficient coverage, which are estimated to be 75% to 100% uncollectable,” the health authority’s financial statements note.
Despite that, the authority announced in October that it would seek to recover more than $50 million of the unpaid debts via the services of a debt collection agency it planned to hire. The authority board chairman, Jonathan Tibbetts, told the Legislative Assembly’s Public Accounts Committee in September 2016 that officials believed only about $10 million of the outstanding $90 million debts could reasonably be collected.
For instance, Mr. Tibbetts told the committee that the authority had been trying to claim unpaid bills from former patients who had died years ago.
“As far as anything over six years old, it’s already known that it’s uncollectable,” Mr. Tibbetts said. “Some people [owing debts] are deceased … it’s going to be next to impossible to collect.”
Details of when the write-off will occur and how much in receivables will be abandoned by the government is still being “negotiated,” Mr. Tibbetts said, but any further write-offs will happen by the end of this year.
The public hospital system has long taken the position, formalized in 2010, that it would not sue local residents to collect on past-due healthcare payments. In some cases, liens have been placed on local properties to recover the amounts, but no lawsuits have been filed.
A large portion of the unpaid debts has been accumulated by public hospital system patients who have not made good on payments for services or pharmaceuticals. Some of the amounts were also due from private insurance companies that had not reimbursed the HSA for services.