Cost-cutting drive to keep hospital in operation – The Royal Gazette | Bermuda News, Business, Sports, Events, & Community

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Cost-cutting drive to keep hospital in operation

Health administrators are being forced to drive down costs at the King Edward VII Memorial Hospital in a bid to keep it up and running.

The Bermuda Hospitals Board 's top accountant warned that healthcare provision will not be "viable" unless further cash savings are made – a view shared by frontline staff who said the hospital's funding was "perilous", "atrocious" and "dire".

Bill Shields, the BHB’s chief financial officer, was speaking after it was revealed that the board suffered an unforeseen $38 million reduction in its income this year – more than ten per cent of its annual operating budget.

The loss was largely attributed to the impact of the Covid-19 pandemic.

Mr Shields said in a written statement: "BHB has experienced a reduction in actual and forecast revenue from Government of $22 million, and from overseas residents of $10 million, due to the economic impact of the Covid-19 pandemic and additional expense of $6 million arising from unplanned Personal Protective Equipment purchase.

"This means all expenses must be scrutinised and reduced for the organisation to remain viable."

The $10 million loss from “overseas residents” was a reference to tourists who needed healthcare while on holiday on the island.

The Covid-19 pandemic shut down Bermuda’s tourism industry this year and cut off a lucrative source of revenue for the BHB.

Funding for the island's only hospital underwent a major overhaul last year in what Government claimed would be "a more efficient way to fund BHB".

The Government said early last year: "Through collaboration and a review of current hospital expenses, it was determined that there was a feasible pathway to a revenue target of $330 million with incorporation of a more aggressive plan, including implementation of an efficiency improvement programme within BHB.

"The solution to streamline BHB’s funding and the revenue target were discussed in detail with BHB prior to a decision being finalised by the Government.

“BHB is the most affected party in this change so their input and engagement is pivotal.

The Government added: “A revenue target of $330 million was agreed on the basis that it will cover the cost of operating the hospitals safely in this fiscal year – 2019/20 – to deliver the necessary healthcare to insured and subsidised populations and that it is an interim solution to enable forward planning towards a more comprehensive and sustainable funding mechanism."

Non-unionised hospital staff were the latest casualty of cost-cutting measures.

More than 100 BHB employees were asked at a recent meeting to take a five per cent pay cut, with payments to pensions and social insurance reduced.

One hospital medic told The Royal Gazette that, while hospital workers accepted that cuts had to be made, management had mishandled the situation – and were to blame in part for budget problems because of a failure to run the hospital efficiently.

The source questioned why senior staff – including top administrators – had not taken a bigger percentage pay cut so that lower paid staff could maintain their regular wage.

The insider scoffed at Government suggestions that the new format of "streamlined" funding had made the BHB more cost-effective.

And the source also accused BHB officials of using strong-arm tactics to push through the wage reduction.

The insider said that expatriate workers were told that, if they rejected the pay cut, future work permit applications "would not be looked upon favourably".

But the source said the threat was withdrawn after a staff protest.

The insider said: "That's basic discrimination. But what's so insulting is the fact that they've tried to dress up the pay cut as if it hasn't happened.

“They say it's only five per cent and then patronise us by saying that we won't actually see a reduction in our wage because we won't be paying a monthly pension contribution – so according to management, we're even.

"But of course we're not even – because all this time our pensions will be sitting in the dark doing absolutely nothing. In fact it's more like a ten per cent pay cut than five per cent.

"Everyone knows that Covid is having an affect on the economy and that we all have to make sacrifices. We also know that finances at the hospital are just atrocious, dire – it's not rocket science. But the board has gone about this in totally the wrong way."

A second healthcare provider who spoke to The Royal Gazette also accused the board of incompetence.

The healthcare worker said: “It’s very much a case of the care providers doing all the heavy lifting while the executives take home the hefty paycheques.

King Edward VII Memorial Hospital (File photograph).

Scott Pearman, the BHB deputy chief executive officer, said: "BHB management is in discussions with this group and has requested that they take a five per cent pay reduction to help the organisation remain viable.

"BHB has also proposed to the group that they take a pension holiday, that is, suspend payments to their occupational and contributory pension accounts and social insurance holiday up to 30 June, 2021 in line with the Government model."

A list of questions sent to the Ministry of Health and to the BHB were not responded to last night.

A spokeswoman for Kim Wilson, the health minister, said that she would respond today once offices reopen after the Remembrance Day holiday.

She added: "This is a complex issue which requires a comprehensive response."

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Published November 12, 2020 at 1:00 pm (Updated November 12, 2020 at 2:18 am)

Cost-cutting drive to keep hospital in operation

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