A $65 million reserve fund will be available for the hospital if costs run over the block grant to be provided by the Government, a public meeting heard last night.

Jennifer Attride-Stirling, the Permanent Secretary of the Ministry of Health, said she hoped the cash would not be needed and was confident the provider would work within its budget.

She was on a panel with Kim Wilson, the health minister, and Ricky Brathwaite, the acting chief executive of the Bermuda Health Council, at a meeting about changes to healthcare financing expected to be introduced on June 1.

The Government is to pay an annual grant to the Bermuda Hospitals Board, capped at $330 million for the coming year, to replace the existing fee-for-service arrangement.

Ms Wilson explained that the money is to be drawn from the Mutual Reinsurance Fund.

The Government will boost the MRF because it will more than triple the amount it takes directly from monthly premiums paid to health insurers from $101.97 to $331.97.

Ms Wilson added: “The administration and profit is nil, so, effectively, what we’re doing from June 1 is that the Standard Health Benefit premium will be spent on your healthcare.”

James Jardine, an independent senator who was among about 70 people at the meeting at St Paul AME Centennial Hall, asked where additional funds would be found if hospital costs exceeded the $330 million grant.

Dr Attride-Stirling replied that it would take about a year to determine an amount that allowed “some flexibility up or down, so that the hospital is not bearing such risk”.

She added: “But for this fiscal year we, together with the hospital, are confident of the figure and in the event of any slight slippage or discrepancy, the hospital has $65 million in surplus that may be required to be used. We certainly hope that’s not the case.”

She said that in the event of a national catastrophe or pandemic “of course the Government is going to step in”.

A member of the public earlier asked if patients would be affected due to the fixed budget.

Dr Attride-Stirling said: “No ... the $330 million revenue target was agreed very carefully with the hospital to make sure that, over the next fiscal year, they could continue to provide the services they have been and we are absolutely confident of that.”

Dr Brathwaite explained that a block grant method could curb overutilisation of services.

He said: “It is a fundamental part of fee-for-service systems that you are going to utilise additional things because it is advantageous for you to get more revenue for doing more things.

“It is not a secret that within fee-for-service systems, whether it be here in Bermuda or other places in the world, that there are unnecessary things that are done, there are admissions that are made to the inpatient wards that are unnecessary because they pay higher amounts of money, but that is the business of healthcare.”

He said the island’s system had been based on this way of working for “a very long time”.

Dr Brathwaite added: “It doesn’t help from a clinical standpoint, it helps from a business model so we are now putting constraints on the system and saying, look, this has to be about healthcare; this has to stop being about business.”

He said: “This cap incentivises people to do the right thing and to be more efficient in the care that they’re giving.”

The panel was asked about the extent to which insurers will obtain information about the services used by their policyholders.

Dr Brathwaite told the meeting there had been “some misinterpretation” of talks with the industry over the past two months. He said: “From the very beginning, our objective was always to make sure that each insurer had all the data that they currently are accessing from the hospital.

“There was some confusion within the ranks of insurers as to whether they wanted the data or not, considering the change in the mechanics.

“We have settled on, weeks ago, that everyone is going to have access to their data based on the services that their clients get in the hospital.”