Managing hospital finances ‘extremely challenging in the current environment’ – CFO
Managing funds at the island’s hospitals is “extremely challenging in the current environment”, the Bermuda Hospitals Board’s chief financial officer has said.
Bill Shields added that the BHB was affected by rising costs and global economic challenges in the same way as other organisations, businesses and even families.
He told The Royal Gazette the latest figures showed that as of June 30 this year, there was 9.6 days’ worth of cash in hand to run the facilities about $10 million – but $4 million was ring-fenced.
Five months earlier, at the end of January, the figures were 13.4 days of cash or $16 million, with a quarter of that assigned for specific purposes.
Mr Shields said: “Managing the finances of a hospital, especially when it is Bermuda’s only hospital, is always a fine balance of savings, efficiencies and improvements.
“It is extremely challenging in the current environment and, like many organisations and families, we are impacted by rising costs and the economic challenges of Bermuda and around the world.
“We are proud of the efforts of our staff, Government and partners in working together to help us manage costs and make savings, while continuing to keep pace with the health needs of our community, and manage the ongoing stresses and challenges of the pandemic.”
He explained: “BHB is working hard to manage its cash position to ensure a stable service for Bermuda and run as lean and focused a service as is possible, while maintaining quality and safety.”
Mr Shields said: “The story however, is not just about making savings, although this is a constant pressure to meet the restrictions in revenue that we work under and to ensure we meet required costs, as well as to maintain and repair our facilities and improve patient care where we can.”
He highlighted “major deliverables” such as the electronic medical records system, which is to cost almost $55 million over ten years.
Mr Shields said that savings from the project, which is expected to be up and running later this year, were forecast to exceed $20 million.
He explained: “From go-live, the savings start – first of all from the retirement of multiple, existing systems that the EMR will replace and improve, and from more efficient processes as we eliminate paper processes, minimise duplications and [bring about] higher quality care and safety.
“The EMR is not a project we have chosen to do at this time. It has been driven by the sun-setting of our main clinical system, which must be replaced.
“It is, however, an opportunity to modernise and replace many legacy systems, enabling us to connect across departments and locations for the first time.
“This integrated EMR helps our staff deliver care, communicate, improve the efficiency, improve quality and safety over the long term.
“We are already looking beyond the implementation to what the EMR will help us do – there will be better data in which to focus and shape services, better sharing and coordination of care that will help us manage our services more efficiently and improve patient outcomes.
“This will be a seismic transformation for BHB that will benefit Bermuda both in terms of improved quality, safety and efficiency.”
He added: “Equally, we cannot avoid certain costs, such as the renovation of our laundry department, which started this month, as the department was no longer functional due to equipment and infrastructure issues.”
Mr Shields confirmed that about $27 million a month is needed to run the island’s hospitals.
He said: “9.6 days is around $10 million, but it should be noted this figure can vary based on cash flows.”
Mr Shields added that the restricted $4 million was assigned for specific purposes, such as comfort funds for long term care residents.
He said: “Our current figure is simply our cash balance. We currently do not have emergency reserves.”
He explained that reserves “usually relate to the amount you have set aside specifically for emergencies from your cash balance”.
Mr Shields added: “The reserve ideal would be over 200 days.”
He explained: “The benefit of having a healthy cash balance is that we have available funds to plan long term improvements, repairs and maintenance with confidence that we can afford what is needed.
“It also ensures that we can continue to pay vendors and staff should there either be an issue with our revenue stream, or to pay for unanticipated costs – whether it is an unplanned project, a disaster event or a response to an urgent or emergency need.
“Through the pandemic our cash deteriorated because it was needed to purchase high levels of personal protective equipment and supplies that were critical to keep staff and patients safe.
“If we didn’t have this available cash, we could not have responded as quickly as we did.”
Kim Wilson, the Minister of Health, said in March that the board’s cash balances fell by $11 million in 2021-22.
She added then: “By the end of January this year, BHB had cash on hand of $16 million, of which $4 million is restricted cash and can only be used for specific purposes.
“This represents less than 13.4 days of cash on hand to fund operations.
“Although this is an improvement from 5.6 days in December, it is also far below last year’s figures of 41 days cash on hand. Most hospitals aim for 60 to 90 days.”
Ms Wilson added: “Improving cash balances is critical for Bermuda’s only hospitals.”
She told the House of Assembly that the trend of declining cash balances started to turn around in January because of funding increases.
Mr Shields said last week: “There has been some flattening of the decline, but cash remains low.
“In April 2020, at the start of the pandemic, we had over $50 million in cash; by April 2021 we were down to about $20 million.
“We have improved our cash position somewhat this year through strict management of expenses, and continuing to make savings, but it is still lower than last year at $11 million.”