Hospital subsidies are projected to have risen by 17 percent last year due to long term patients and high utilisation of health care services.In 2010 the Bermuda Hospitals Board (BHB) estimated that subsidies for King Edward VII Memorial Hospital (KEMH) would be $85,621,000, but in last Friday’s Budget it was revealed that these costs rose to a projected $100,644,000.This amounts to $15,023,000 more than the original estimate and is on par with the increases in hospital costs seen in 2009.According to a BHB spokeswoman, the hospital subsidy is based on how many people used the services.She said it was challenging to predict how many people would stay in hospital and for how long, but said BHB had managed to reduce the amount of long stay patients by 50 percent in order to curb these costs.Long stay patients are those, including seniors, who are unable to leave the hospital due to not having a safe environment to be released into.They many no longer need acute hospital care, but often pay a per diem rate, which puts cumulative pressure on subsidies.“The hospital subsidy is based on utilisation because the costs for King Edward VII Memorial Hospital are based on a fee for service.“This means the subsidy is impacted by how often people who are covered by Government insurance use our services, how long they stay in the hospital, and how ill they are.“At the beginning of the year this is estimated, but if utilisation is greater than that budgeted then the figure rises. Should utilisation drop, then the subsidy would not be used up.”The spokeswoman said it was important to note that the subsidy alone is not an indicator of healthcare costs to the entire healthcare system.She said: “If utilisation dropped because people were going elsewhere or overseas for tests and treatment, the hospital subsidy would get lower, but costs to the healthcare system would still be rising.”She explained that length of stay impacted cost, but said BHB had been working hard to reduce long stay at the hospital.Over the course of this year they have succeeded in reducing the number of long stay patients by 50 percent in the hospital, she said.“However, utilisation overall was still higher than estimated. The wellbeing of our community is and will continue to be the biggest driver of healthcare costs and hospital utilisation.“BHB continues to work hard to control healthcare costs, but as our subsidy is based on people accessing our services, there is always likely to be some variation between estimate and final figures, whether it is higher or lower.”In addition to KEMH costs, the Budget stated that $39,578,000 was spent on Mid-Atlantic Wellness Institute in 2010/2011.Government has planned to cut costs to the mental health care facility by $1 million to $38,578,000 in the next financial year.