Four years of audited accounts for BHB to be public by December, finance boss says
Four years of audited accounts from the Bermuda Hospitals Board are expected to be made public by the end of December, the organisation’s chief financial officer has said.
Bill Shields predicted that records up to 2020 will be available and added that the BHB was also “working hard” to complete the process for fiscal years 2021 and 2022.
Publication of the records would help to address a statements backlog, which earlier attracted criticism amid concerns about the visibility of public spending.
The board released unaudited internal management accounts data in February 2020 from fiscal year 2017 up to and including the third quarter of 2019-20.
It said at the time that the quango would “continue to provide internal management accounts data quarterly and update information online“ but none has been uploaded since.
Mr Shields told The Royal Gazette this month: “We entered into the pandemic response after February 2020, and our focus during this time has been getting audited financials completed.
“We have made good headway and we anticipate the audited statements up to 2020 will be public this year through our annual report as the audits for these years are now complete.
“We are working hard to complete the auditing process for 2021 and 2022 so they too can go through the required process.
“Given that management accounts are not the final statement and, as questions today highlight, may not be the final picture of our financial position, we are looking forward to being in a position when we can return to the schedule of reporting our audited financials each year.”
James Jardine, then a governor-appointed senator, told the Upper House in February 2020 it was “totally unacceptable” that audited accounts for the BHB — the island’s biggest quango — had not been prepared and issued since 2014.
He said then: “It is important to have those accounts up to date at this time because the hospital represents 42 per cent of our cost of healthcare on this island.
“If we are going to be talking about reducing the cost of healthcare on the island, we should be looking at the operations of our hospitals.”
Heather Thomas, the Auditor-General, highlighted later that “the requirement for the Bermuda Hospitals Board to produce audited consolidated financial statements on a timely basis is a cornerstone of public accountability and transparency”.
It is understood that the BHB’s 2017 annual report is complete and ready to go through the legislative process before publication, with reports for fiscal years 2018, 2019 and 2020 also under way.
Mr Shields’s comments came after the Gazette asked about information published in the February 2020 accounts data.
The unaudited figures showed that trades receivables — amounts due to the BHB from the Government, insurance companies and self-pay patients for services — at the end of December 2019, which was the close of the third quarter, was about $60.6 million.
But the data reported trades receivables figures of $51.4 million, $40.5 million and $19.5 million at the end of fiscal years 2019, 2018 and 2017, respectively.
Mr Shields explained: “The figure in the management accounts was revised by the year end and our audited financial statement now indicates there has been more fluctuation than a trend up.”
He added: “Looking at the audited financial statement, the net receivables at March 31, 2020 was $28 million.
“While it was $19 million in 2017, it was $30 million in audited FY19, so an actual decrease year on year.”
The CFO said earlier that at June 30 this year, there was 9.6 days’ worth of cash in hand to run BHB facilities — about $10 million — but $4 million was ring-fenced.
Ms Wilson said in March that cash on hand was at 5.6 days last December but in the previous year the figure was 41 days.
She added: “Most hospitals aim for 60 to 90 days.”
Bill Shields said that the Bermuda Hospitals Board’s working capital was not “substantially changed” from the figure of 9.6 days’ worth of cash in hand — about $10 million, with $4 million ring-fenced — recorded at the end of June.
But the BHB’s chief financial officer added that amount was "sensitive to variations in cash flow at any given time, and is therefore supplemented by our overdraft facility when needed“.
He added: “There is room for optimism, however. The improving numbers of tourists brings an overseas revenue stream and also increases the probability of illnesses or injuries.
“This income was wiped out through Covid, and while we would not want any visitor to be unwell or injured while on island, it does happen and the payments for these services contribute to our bottom line.
“As Bermuda also improves economically, this will help the overall financial picture.”
Mr Shields said: “We work very closely with Government as we continue to manage the economic situation.
“It should also be noted that the introduction of the capped-revenue model introduced in fiscal year 2020 actually has provided a much needed level of assurance around expected revenue through the pandemic.
“Our revenue would have fluctuated much more if we had been reliant on fee-for-service and this would have been devastating for BHB and our services.
“While the limited available revenue is very challenging, and we have worked very hard to reduce costs to meet it, it also was a known level of income which has ensured we have been able to continue to deliver services through lockdowns and restrictions.”
Responding to whether a delay in receiving payments was partly responsible for the BHB running low on cash, Mr Shields said: “Our cash position has been declining since fiscal year 2018, when we had a cut to our subsidy payment from Government and then a reduction in diagnostic imaging and then outpatient fees.”
He added that the impact of responding to the Covid-19 pandemic was “a major factor in depleting our available cash since March 2020”.
Mr Shields said: “The depletion of our cash means that delays in payments impact us more as we do not have the working capital available to cover temporary shortfalls due to delays in cash flow, which can happen with Government and insurers, and the longer term non-payment of bills, which can happen with individuals who are not insured.
“So while delays in payments impact our cash balance, the impact is greater because of the longer deterioration in our cash position rather than being the sole cause of it.”