Representatives of two leading island health insurers have backed calls for changes in the way that medical services are regulated and delivered in Bermuda.

John Wight, chief executive officer of BF&M Ltd, agreed with a recommendation by the island’s Fiscal Responsibility Panel that the private medical care sector must come under some form of regulation. The panel expressed concerns about both the cost and quality of the care provided, of diagnostic testing and of pharmaceutical products (see main story).

“It is important to examine where costs come from,” Mr Wight said. “If we don’t regulate medical service providers, then we are not addressing certain drivers of healthcare costs in our community that may result in residents paying co-pays that are unaffordable for many people to pay, for example.

“Regulation is appropriate for health insurers and, correspondingly, it is appropriate for medical practitioners. It is one of many areas where transparency is necessary to reduce the cost of healthcare. In and of itself, regulation is not the complete answer but it is one of the many parts of the healthcare delivery model that needs to be addressed.”

For example, he said, patients should know in advance how much the provider will charge, and what the copay will be. “Different physicians charge a wide range of prices for the same procedures, which many people don’t realise. A person’s out-of-pocket expenses can vary due to a lack of transparency in pricing between medical practitioners. The better the transparency, the better off the consumer will be.”

Mr Wight’s colleague at BF&M, Michelle Jackson, said regulation would have an impact on healthcare costs. “Good quality medicine and good quality care is often the most effective way of managing the cost of healthcare,” said Mrs Jackson, senior vice-president, group lines, health and life, at BF&M.

“Quality care means not re-treating people, not redoing treatment. We have to look at prevention and managing care instead of dealing with unmanaged care. We talk about managing costs, but quality care goes hand-in-hand with that. From an insurer’s perspective, good quality care is often the most effective care.”

Peter Lozier, executive vice-president of group at the Argus Group, said that managing the delivery of healthcare services is critical.

“If there is broadened coverage, but you don’t manage utilisation, the result is actually an increase in costs,” Mr Lozier said. “By proper utilisation, I mean ‘how many times do you need to go to the doctor? How many laboratories are needed on the island? How many x-ray machines do we require?’ Because if you have 50 extra x-ray machines, they are going to get used, and that means you have overutilisation if you don’t put controls in place. You put management around that coverage in order to ensure that utilisation is appropriate.

“We don’t have a Bermuda standard of care for services. We have physicians who have trained in different jurisdictions and they may differ, for example, about how many ultrasounds are needed in a particular case. We don’t have a regulatory body to say what that right number is. What we have is overcapacity and duplication of services. When you have those two things, healthcare costs will rise.”

Mr Lozier called for active case management of a patient’s medical needs.

“Private insurance companies do it,” he says. “Argus has full-time case managers. If a person comes to us and says they are overweight, or diabetic, we put them into active case management — our nurse might put them into a weight loss programme or a diabetes reversal programme. On an island-wide basis, we need to actively put the most at-risk individuals into a programme, help them gain access to the right services, and the overall cost to themselves and the system would be reduced dramatically.”

He also called for changes in the reimbursement model for medical services from the current fee-for-service model to what is known as “value-based pricing”.

“Today, we go to the doctor and we pay a fee or the insurance company pays a fee,” Mr Lozier explained. “In a value-based model, service providers are reimbursed for the outcome of the services they provide. If you make people healthier, you earn more.

“Such models exist virtually everywhere but Bermuda. All jurisdictions in Canada give a bonus for outcome data. There are a series of measurements for the health of the population and if you do a good job in a region, you receive a bonus. The same is true for doctors — they earn more fees for outcomes.”

However, not everyone is convinced that there is a policy answer to rising healthcare costs. Don Mills, chairman and senior partner of Halifax-based Corporate Research Associates and a partner in local firm, Total Marketing and Communications, says demographics will have their say.

“You’re not going to prevent the cost of healthcare from rising on the island with an ageing population,” Mr Mills said. “Costs will go up significantly in the next ten years. They will skyrocket; no other outcome is possible. It’s a numbers game. The number of seniors cannot go up by 50 per cent and there not be significant increased cost. There’s no way to avoid it.”

Mrs Jackson said the island must take steps to address rising costs — only then will we find out whether they work. “We can’t afford not to,” she said. “The question is whether we can take the actions we need to address the issues now. Will healthcare costs be lower in 2026? Will the system be sustainable? If we don’t take action now, the projected costs will be higher.

“There is not one magic silver bullet. A variety of things must be done, you have to look at the system as a whole. That means each member of the system, each stakeholder. We receive premiums, and pay claims, so we are part of the system — and so are the hospital, doctors, dentists, government.”

Mr Lozier said: “There is no place on the planet where healthcare does not have an inflationary factor. Bermuda, along with every other developed nation, has healthcare inflation and it often outpaces the economy. But by taking steps — case management, value-based fees — at least we can keep it in check. We can’t stop it, but we can keep it in check.”