Bermuda Hospitals First Quarter 2015-16 Update

Bermuda Hospitals Board (BHB) today updates the community on its activities to improve quality and save costs.

Chairman, Jonathan Brewin, comments: “BHB continues to work towards its vision to provide safe, high quality, people-centered, compassionate care every day. Benchmarking is essential for this process and Accreditation Canada surveyors visited BHB late in May to measure how well we meet the same standards that are used for hospitals in Canada. We were pleased to hear many BHB strengths verbally reported from the surveyors along with a general reference that they would be happy to receive care in our facilities. The surveyors’ final report will be made public later this year as has been done in previous years.

“Before I move onto other matters, I would like to note that as has been recently Gazetted, I will be standing down as Chairman at the end of June. I would like to thank my fellow Board members, the Executive Team, management and staff of BHB for their tireless commitment and hard work for the two and a half years I have held this position. It was an immensely difficult, personal decision to stand down. I have recently taken on an exciting opportunity in St George’s and have found that I don’t have the time to attend to BHB matters as is needed. Peter Everson, who has served on the Board as Chairman of the Finance Committee, will take on the Chair position from 1 July and I wish him and BHB the very best.

BHB Financial Update

“We have spoken about BHB’s financial position for some time. This is an evolving situation as hard work by BHB staff members has successfully cut costs from the organisation already. Two years ago we expected to run out of cash by the end of the 2013. By controlling costs through budget cuts, vacancy freezes, and contract reviews, we have extended that deadline well into this fiscal year. In the last fiscal year alone, 18% was saved on operational costs including for example, $1 million saved through a review of billing systems, $4 million saved on new equipment purchases, around $6 million saved through supplier contract reviews and $3 million saved in support and administration services. At the same time, revenues for inpatient and outpatient services declined. Outpatient revenue decreased 5%, due to BHB’s voluntary introduction of diagnostic clinical guidelines, and unpaid patient bills rose from $6 million to $8 million. In total, revenue dropped from $312.6 million to $299.6 million and, despite the success in reducing costs, the excess of revenue over expenses dropped $2.4 million from $15.5 million to $13.1 million. This is a small surplus for a hospital. This is not a profit, but money that is used to re-invest in care and services. Without it we cannot afford to maintain our ageing facilities and equipment, we cannot invest in new treatments, technology and equipment, and we cannot invest in staff from basic cost of living increases to ensuring safe staffing levels. The surplus we make has to cover all these costs as well as, absorb the increases in international medical costs, which run at about 6%, and put money aside to cover any unforeseen matters.

“The Modernization Project was introduced in my last update. It is a major project involving over 90 change initiatives that dig deeper into BHB operations for efficiencies and clinical improvements. A number of savings have already been successfully realised, relating to reviewed contracts and a reduction in staffing through natural turnover that has saved BHB $1.2 million in recurring costs. Over the last two years $24 million has been cut from the wages and benefits costs to BHB, this has been through some attrition, the senior management restructure, wage freezes for two years and the implementation of the physician salary review and resultant recommendations. We look forward to releasing information about other initiatives as we progress.

“Attached to this update are the unaudited financial figures for the fiscal year 2014-15. While we await audited financials for previous years from the Auditor General, we will continue to provide financial updates to the community.

“While the commencement of paying for the ACW last June has added cost to BHB, the financial issues BHB faces cannot all be directly attributed to the new acute care wing. BHB has had to absorb major losses over the last few years, due to the economic predicament of Bermuda. BHB no longer receives a full payment from the Government for the cost of running the Continuing Care Unit, so it has to subsidize from other areas. The impact of the revenue caps, which were in place from 2012 to 2014, was a loss to BHB of about $20 million. There has also been a write off of the amount Government owed BHB for Government insured patients at a cost of about $30 million. This is, quite simply, a reflection of Bermuda’s economic reality. Everyone is struggling and trying to do their best to manage with very limited resources. BHB is determined to make itself financially sustainable so that it can meet all its obligations, including those of the new ACW. This is why it has commenced with the Modernization Project, and why we remain very grateful for the support of Government as we go through a process of change that will leave no stone unturned in seeking every possible efficiency and saving, while ensuring safety and quality are never compromised.”

Clinical Improvements

“I would like to note that BHB has now hired a second oncologist, Dr Christopher Fosker, as we seek to strengthen cancer services on the island. The importance of Dr Fosker’s appointment relates to BHB’s ability to provide a consistent and continuous service. His experience in radiation oncology will also support Bermuda Cancer and Health’s radiation therapy plans so that more people can stay at home for their cancer treatments.

“I also want to congratulate Continuing Care Unit (CCU) staff for the safe transfer of their residents to the fourth floor of the General Wing of KEMH in the Cooper and Perry Wards. Residents have settled in well. Plans are now underway to demolish part of the CCU building. I would stress the chapel, Heddington Gym, the Day Hospital and Lymphodaema services are not in the parts of the building to be demolished and will continue where they are.

Quality Performance

“The Board is committed to providing information that allows people to judge the quality of care at BHB. It is with some pride that staff at BHB met all the quality benchmarks set by the Board in the last fiscal year. This was despite the major move of services, the damage caused by hurricanes, and the organisation’s focus on reducing costs, which it has done successfully over the last three years.

“We will be releasing BHB’s quality metrics in our first ever Hospital Week, during the first week in July. We will then continue with regular release of quality and patient satisfaction data so that people have updated information about the performance of Bermuda’s only hospitals. This will be a big step forward in transparency and openness in Bermuda. We believe it will also help people better understand how hospitals operate and manage quality.”

Attachment 1: 2015 Financials.pdf

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