Hospital patient subsidy claims were the cause of a $15 million budget overrun by the Ministry of Health last year.

The overrun drove total spending to $194,803 million.

The subsidy claims ran up to $15,000,279.

King Edward VII Memorial Hospital (KEMH) received a two percent increase for its 2010/11 budget from Finance Minister Paula Cox yesterday.

Funds allocated to the hospital were increased from $122,954,000 to $125,199,000.

The amount mirrors the two percent increase awarded to the Ministry of Health yesterday from $177,802,000 in 2009 to $181 million.

The number of grants given out by the Ministry dropped by 20 percent.

Health permanent secretary Warren Jones said the subsidy was bound to rise as it was based on the number of patients seen at KEMH.

"The subsidy is based on utilisation," he said. "You walk into the hospital, you get the service the law says we must provide; the Bermuda Hospitals Board estimates how much the subsidy will cost.

"During the course of the year the hospital comes back and says utilisation is higher than the original estimate. [They say to us] 'so we're going to need more than was given'.

"The real number of the subsidy will not be known until the end of the fiscal year. If you go back over the years, the real number of the subsidy is higher than the estimate because it is based utilisation."

The overrun in the subsidy area of the hospital is the largest in the last four years.

In 2008, subsidy claims rose $1,292,302 over the budget estimate of the previous year; in 2007, $4,031,338, and in 2006 the subsidised claims ran over-budget by $750,280.

Government, by law, is mandated to pay the subsidies, which include help for the indigent, aged, youth, geriatric, outpatient, a clinic and haemodialysis.

Last year the subsidy for the aged saw the largest increase, rising by more than $8 million.

Youth subsidies went up by $2,793,739, the outpatient subsidy by $2,836,374, the indigent by $478,450 and haemodialysis by $374,060.

That meant the subsidy, which provided $26,939,668 for the BHB in 2009, had to be raised to $34,983,748. Next year, however, the budget reduces back to $26,939,668.

Other increases in the Ministry's budget included the addition of the National Office for Seniors and Physically Challenged which was transferred to the Ministry of Health in August 2009.

This will add an additional $1,264,000 to next year's budget.

Yesterday, Health Minister Walter Roban announced that because of the development of Government's ambulatory care wing, its Health and Vector Section will be relocated by this spring.

He added: "In order to ensure consistent delivery of our programmes and to introduce new and necessary services to the community, Ministry grants have been cut by 20 percent and internal budgetary allocations will be assessed and reallocated to ensure key new programmes are implemented.

"We do recognise the value that our grants provide, but in light of the present economic situation, we believe this to be a way to share the load and ensure that where we must, new services and programmes take precedence."