The Island’s hospitals face a tough Budget, along with an arduous financial reappraisal in the coming fiscal year, Health Minister Trevor Moniz told MPs.

With healthcare costs running high, and the Bermuda Hospitals Board facing bills for millions of dollars upon the completion of the acute care wing, BHB has been permitted an extra one percent on fees each year to raise funds.

However, Mr Moniz said that “hard decisions” in managing the public purse and national debt had meant that during this present fiscal year, Government had opted to withhold the one percent raise.

Meanwhile, the BHB has been urgently reviewing its finances to head off a potential deficit.

Public perception is that BHB has grown significantly, the Minister observed, adding that hospital revenue has surged by 50 percent in recent years, he said — but private and overseas costs rose at a similar rate.

“BHB has accounted for over 40 percent of the healthcare market for many years, and this has not changed. It currently stands at 44 percent. This stresses that it is a whole Island problem, not just the BHB. As the only hospitals on Island, BHB is always going to make up a significant portion of costs; trying to squeeze that piece alone, however, does not address the overall increase of the healthcare spend in Bermuda.”

For the coming fiscal year, Government also cut contributions to the Standard Hospital Benefit for seniors, realising some $8 million in savings.

“Given the current fiscal space, this has been a necessary measure,” Mr Moniz said. “Consequently, rather than having to budget $117 million for subsidy, you will note that the budget has been reduced to $109.5 million.”

BHB’s latest financials from January of this year show year-to-date revenues running almost $2 million lower than the revenues budgeted, at just over $239 million.

“A significant portion of this has been from outpatient revenue, which was $3.6 million under budget,” Mr Moniz continued.

Inpatient services were about $2.8 million over budget.

Expenses came in 1.2 percent higher than expected, at $232 million.

“Some of this relates to salaries and employee benefits, which is 3.1 percent ahead of budget, and the cost of general supplies which is 14 percent ahead of budget — both of which are directly related to the level of services being requested and provided,” the Minister said.

“Repairs, maintenance and other operating expenses are being well managed by staff and are generally in line with the budgets set. This has left BHB in a loss position of about minus 2.3 percent, compared with a net margin of plus 2 percent last year.”

Revenue caps for 2012 and 2013 had failed to control costs, Mr Moniz told the House — reducing income by around $20 million annually.

Touching on plans by Government to legislate against expensive overuse of diagnostic testing equipment, Mr Moniz said excess utilisation was costing Bermuda a minimum of $4.2 million each year.

“Emotional voices have been raised in this House, that warn of ‘death by delay’ when it comes to managing utilisation,” he continued.

“As a community, we need to move beyond easy and misleading catchphrases when it comes to this issue.”

BHB has contracted the firm PricewaterhouseCoopers to assist with streamlining its services, and its funding model, along with healthcare regulation, will be “a focus of attention this year”, he said.

In a nod to one of BHB’s unpopular growing pains, Mr Moniz acknowledged that in some cases, hospital patients have been hit by a disconnect between Government’s fee schedule for services and the BHB’s charge master system — resulting in some being referred for procedures that didn’t turn out to be covered by Government insurance.

“Both Government and BHB apologise to these individuals for this,” said Mr Moniz.

“Even with the efforts that were made last year to align the BHB’s charge master with the fees regulations, we are still finding that charges are being made that are not in the fee schedule. This is being worked on by both parties at this time — both teams have the focus of ensuring important services for the country must be covered for patients. It raises serious questions that further require us to ask whether the funding for our hospitals work.”

The Minister advised those with unexpected bills to contact the BHB credit department, to negotiate a low-impact payment plan.