Public health board ‘reluctant’ to forego unpaid patient debts

The Health Services Authority, which runs the Cayman Islands Hospital, is owed $94.5 million in unpaid medical bills. - PHOTO: TANEOS RAMSAY

The Cayman Islands Health Services Authority Board has been “reluctant” to write off tens of millions of dollars in uncollected debts during recent years, leading to the accumulation of $94.5 million in bills that are unlikely to be paid but which remain on the government’s books, legislators heard Tuesday.

The Legislative Assembly’s Public Accounts Committee heard from HSA Chief Financial Officer Heather Boothe that attempts made during 2012-2016 to collect more than $4 million in unpaid hospital bills ended up with a 3 percent success rate.

Now, the HSM law firm has been hired in order to take healthcare debtors to court if they do not pay, but Ms. Boothe said government officials are still negotiating with the HSM partners regarding the methods they will use in collections.

Auditor General Sue Winspear told the committee that the $94.5 million in bad debts represented more than three-quarters of the total receivables due to the public hospital system as of June 2016.

“It is worth noting that the HSA has generated accumulated [operating] deficits of $70.4 million since it came into existence [in 2002] and … its ability to continue operating reflects the significant equity injections of $138.3 million over the [15] years,” Ms. Winspear said. Those equity payments were made by the government.

Public Accounts Committee members pressed Ms. Boothe for answers on why the health authority was continuing to attempt to collect debts that were more than a year old, if it believed those were largely not collectable.

Committee Chairman Ezzard Miller asked whether HSA finance staff made recommendations to the board to write off certain debt amounts.

Ms. Boothe replied that there had been recommendations made, but they were not always accepted.

“You didn’t collect it for a whole year … why is it not written off?” Mr. Miller asked. “Why aren’t you making a recommendation to the board to write it off instead of letting it accumulate to this level?”

“The board might be reluctant to write off the debt; they prefer to try to see if there’s anything collectable,” Ms. Boothe said.

“We want to reassure the board that we have done absolutely everything to collect it before it’s written off,” HSA Chief Executive Lizzette Yearwood told the committee later in the day.

Mr. Miller asked why, if the hospital system thought the money was collectible, it was being classed as a “bad debt.”

“You say all of this is bad debt, but you hope to collect it,” he said.

Bodden Town West MLA Chris Saunders noted that there was a large jump in accounts receivable [amounts due] to the HSA between 2014 and 2016 that seemed to be unexplained.

“It took 12 years [2002-2014] to accumulate $69 million in accounts receivable, but it took us two years to increase that amount by $53 million [to $122 million],” Mr. Saunders said.

Ms. Boothe said there had been difficulties with adjudicating healthcare claims with one of the hospital system’s major insurance companies during that period, which caused the unpaid bills to increase. She did not name the company.

Ms. Yearwood later identified the company as government-owned Cayman Islands National Insurance Company (CINICO), which was in the process of switching its third-party insurance provider at the time.

“If the accounts aren’t being adjudicated, obviously they aren’t being paid,” Ms. Yearwood said.

Ms. Boothe also told the committee that the number of unpaid debts amassed annually by the hospital system had dropped by about half from $15 million for 2015/16 to $7 million in 2016/17.

Mr. Saunders was incredulous.

“These numbers aren’t adding up,” he said. [The] confidence level for me has not been met.”

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  1. “You didn’t collect it for a whole year … why is it not written off?”
    Some of the questions just shock you with how, lets say, incompetent they are.

    “…we have done absolutely everything to collect it before it’s written off”. Unless “absolutely everything” is spelled out in great details, I seriously doubt that absolutely everything was done.
    Let look what Auditor General Alastair Swarbrick writes (Compass April 23, 2015):
    “… 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.”
    I want to repeat: “…in the absence of properly designed controls and effective controls..” That was in 2015. Has anything changed?
    Here is more:
    “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. ” Has anything changed?

    Also, read this comment written on May 7, 2008-“Health Care In Cayman – 18 Million Reasons To Worry” in response to the Cayman Compass May 5, 2008 article (could not find it)
    Emotions aside, there were very valid points made and the same names are mentioned in today’s and 2008 pieces.

    In the beginning of my accounting career I used to work in a health clinic collecting receivables. I know what it takes to collect unpaid debt, no special tricks here, just do you job. Pretty much everyone paid, unless they disputed, once they were contacted by a phone or mail.