Bermuda Hospitals 2014 Update

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

Chairman, Jonathan Brewin, comments: “The Board committed to keep the community updated on activities regarding its only hospitals. While people were kept very much informed of the big move into the new acute care wing in September, now that major project has passed, we wanted to give a short review of the hospitals’ 2014 activities at the beginning of 2015.

“The last three months of 2014 were exceedingly busy for BHB. We perhaps take for granted that hospital services at MWI and KEMH have continued without interruption. But few hospitals would have to deal with a major move of acute services and two hurricanes within a month of each other, while also working to ensure Bermuda is prepared in the face of three major infectious diseases – the most deadly of which was ebola, but also a respiratory disease called EV68, and, of course, influenza. At the same time it was gratifying to see the appointment of an experienced, highly skilled new Director of Oncology, Dr Sien Aung, and a new, world class cardiologist in Dr Joseph Yammine join the BHB medical staff. And we were very excited to see the two new labour and delivery operating rooms opening in Maternity, to help make the birthing experience safer and in line with the very highest standards of quality.

Post-Storm Repair Work and Impact on CCU

“Post-storm repair work is still underway. Storm damage to the existing KEMH General Wing, Montrose Cottage, Continuing Care Unit and Mid-Atlantic Wellness Institute led to administrative staff on the fifth floor of KEMH, the substance abuse team at MWI, the Employee Health Services Team in Montrose Cottage, and about 40 residents who had been on the second floor of the Continuing Care Unit all being temporarily displaced. Montrose and KEMH repair work will complete shortly and work at MWI is continuing. Following a review of the CCU service and its needs, the Board has decided that the CCU roof will not be repaired. It will be more cost-effective for the service to move into space on the fourth floor of KEMH that was made available following the new acute care wing opening. This space is being prepared for occupation, and CCU residents will move into those areas in the coming months and the CCU facility will be demolished.”

Accreditation

“Congratulations must go to Turning Point – our substance abuse service – which regained a specialized accreditation with CARF (the Commission on Accreditation of Rehabilitation Facilities) at the end of last year. The Board is very proud of BHB services that seek to measure themselves against the best international standards of quality. The entire BHB organisation is on the countdown for the next on-site survey from Accreditation Canada, which will take place in May 2015. Surveyors will interview staff, patients and outside partners, as well as reviewing medical records, as they test patient safety standards throughout all BHB operations at MWI and KEMH. They measure how well BHB meets the same patient safety standards that Canadian hospitals are measured against, and so is an important way BHB can benchmark its services. ”

Modernization Project

“Less visible, however, was the establishment of a new Modernization Project in the last quarter of 2014, which is the outcome of the financial sustainability strategic planning process that was communicated last year and aims to introduce changes to ensure long term sustainability of quality hospital services in Bermuda. I have spoken before about BHB’s financial challenges and the need for us to have a long term plan to become financially sustainable. BHB must continue to reduce costs and our current target is to make $40 million in savings. This is in addition to a ten per cent saving from last year’s overhead expenditure budget. Fifteen per cent has been cut from this year’s budget, we are looking for another 10% savings in the in-coming year and up to 20% savings are expected as part of a review of vendor contracts. Employment benefits will also change at BHB from 1 April 2015. Staff will pay the legislated maximum in payroll tax contributions of 5.25%. Previously they paid 4.75% with the remainder paid by BHB. In addition to the payroll change, senior staff and physicians will pay 5% towards their pensions, with the amount matched BHB, rather than a 4%-6% split. But more needs to be done for us to meet our targets, especially as revenues are declining, and we are feeling the impact of no longer being reimbursed in full for CCU services.

“BHB is aware of the concern in the community regarding rising health care costs so all its efforts are targeted at ensuring it is as efficient as possible so to help control the continual escalation in premiums and costs. For example, it has voluntarily introduced utilization controls on its Diagnostic Imaging and Laboratory services over the last year, to ensure only clinically appropriate testing takes place and this has resulted in a reduction in its billings in these areas.

“With great challenge comes great opportunity and as a Board we believe this is the time to leave no stone unturned in weeding out inefficiencies and focusing on the most effective and efficient service possible. As part of the sustainability work last year, over 80 opportunities for savings were identified. These opportunites and more will maximize efficiencies and focus resources on the patient, as well as seeking to update legislation from the 1970s that doesn’t reflect today’s healthcare needs. The Modernization Project will take these opportunities, review them and others with multiple stakeholders including staff, unions, physicians, local and overseas partners, the Ministry and Bermuda Health Council, then draw up plans and implement opportunities if approved by the Board.”

“Examples of projects that are underway include the establishment of an acute stroke rehabilitation care plan that will improve outcomes for patients and help them to leave hospital sooner. A team is seeking to establish more efficient staff scheduling to reduce use of overtime and casual workers. BHB is also looking at establishing more efficient scheduling to maximize usage of Operating Rooms (ORs). The first completed project was the restructure and downsizing of the senior management team to ensure the right mix of skills and expertise to rapidly implement the changes needed over the next two years.”

CEO, Venetta Symonds, comments: “For the last eight years, BHB was seeking to grow services and revenue, and build a new acute care wing. Today, BHB is facing new challenges – BHB must save costs, make clinical services and back office operations more efficient, and modernize legislation, amongst other deliverables, in order to make enough surplus to meet community, clinical and financial obligations. If we do not, BHB will fall deeply into debt, and will add to the already stretched financial burden of the country.

“The status quo is not an option, and we need to streamline and reshape BHB, its services and guiding legislation around the modern needs of Bermuda. Effective change starts at the top, so the senior management restructure was the first step. It reflects the need for a stronger clinical voice and a smaller decision-making team. ”

The new senior management team comprises: the Chief Executive officer, Chief of Staff, Chief of Psychiatry, Chief of Nursing, Chief Financial Officer, Chief Operating Officer (KEMH) and Chief Operating Officer (MWI).

“There will be a reduction of four senior management posts over the next two years. This fiscal year, the positions of Chief of Human Resources (CHR), Chief Information Officer (CIO) and Vice President of Nursing will be disestablished. The CHR and CIO responsibilities have already been transferred. The Vice President, Nursing has been on secondment to the Bermuda College for a few years, and this will end on 31 March 2015. The Chief Operating Officer (MWI) position will be merged with the COO (KEMH) position over the next two years. From 2017 there will be one Chief Operating Officer.

Mrs Symonds finishes: “Change is not always easy and while I am saddened that we are saying good bye to skilled and experienced senior managers who have diligently worked alongside us and given so much, this is an important step for us to take. There are clear opportunities for us to better shape services around patient needs as we move BHB towards sustainability, and continue to drive up quality as we increase efficiencies. In healthcare, the most efficient processes tend to be the safest and highest quality, as they eliminate unnecessary duplication and unnecessary processes that have the potential for error or delays. In the weeks and months ahead we will be working closely with Government, the Ministry of Health, Environment & Seniors, the Bermuda Health Council, payors and other stakeholders as we work our way through different projects. This is not about finance alone. This project will help us establish a new benchmark of quality and efficiency that will help sustain healthcare services for Bermuda over the long term.”

Financial Update

Mr Brewin concludes: “We are looking forward to receiving the final audited financials for 2011-12, 2012-13 and 2013-14 in the near future from the Auditor General. There have been a number of reasons for the delay, one of which was a significant Audit Review for 2011-12 which was completed last fiscal year, and for which a summary was publicly released by BHB in October 2013. BHB has been working with the auditors since on all three year’s financial statements. We will be issuing all three together once they are received. In the meantime, an unaudited financial summary of BHB’s current position in included in this update in order to keep the public updated on our position. As is clear, our revenues are declining, even as we successfully cut costs. BHB services, which include acute care, long term care and mental health, makes up less than half of the cost of healthcare of Bermuda (44%) according to the last Bermuda Health Council Report. The new Acute Care Wing is a significant added cost for BHB to manage, but the challenges we face at the hospitals are also caused by much deeper and more complex issues related to Bermuda’s healthcare system and the increasing age and poor health of the population, which we will continue to work with the Government, Bermuda Health Council and other stakeholders to address.”

Financial highlights (see attachment below for Balance Sheet and Income Statement):

• Revenues year to date (YTD) at 31 December 2014 continue to fall and are currently $9.5 million less than last YTD, with both inpatient and outpatient revenues down

•The BHB budget was cut 15% compared to 2013-14:
o Salaries were $14 million over this reduced budget YTD, although down by $7.3 million from last year’s figure YTD.
o Other operating expenses are $1.2 million under budget YTD and, excluding the cost of the new acute care wing, $4.4 million less than last fiscal YTD

Attachment 1: Financial Summary (Unaudited to 31 Dec 2014)

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