The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital Health Systems yesterday told Tribune Business it was “in the third year of a downward trend”, with patient days off 25 per cent compared to 2010 as it eyes “measurable growth” from its re-opening Bahamas Medical Centre.

Responding to this newspaper’s questions following an 84 per cent drop in its half-year net income to $171,000, the BISX-listed healthcare provider said 52 per cent of the cost increases seen in its main expense items - staff and medical supplies - came from increased workforce benefits.

For the six months to end-July 2012, the first half of Doctors’ 2013 financial year, the company said sums paid to suppliers accounted for 13 per cent of the year-over-year total cost rise. As a result, it was eyeing new supply options for its “large volume” items.

The $1.333 million, or 6.2 per cent rise in total expenses, was the main reason behind the decline in Doctors Hospital’s first half and second quarter profits, as total and net patient service revenues were slightly ahead of prior year comparatives.

The top line, though, remains under pressure, with total patient days - largely in the critical area - down 7.9 per cent, resulting in a $614,000 gross revenue drop.

“Patient days are down by 25 per cent from the first half of fiscal 2010, 16 per cent from fiscal 2009 and 22 per cent from fiscal 2008. The effects of the recession did not impact the hospital until fiscal 2011. We are in the third year of a downward trend,” Joanne Lowe, Doctors’ chief financial officer, told Tribune Business.

Charles Sealy, the healthcare provider’s chief executive, said that while critical care had seen “the largest decrease” in total patient days, all other inpatient areas were down, too.

While critical care is seen as an unpredictable segment, Mr Sealy added that the patient days drop in other areas was largely due to the economy.

Unemployment equated directly to “loss of insurance”, and he said: “In addition, persons are becoming under insured as they and their employers look for ways to decrease the cost of insurance coverage.

“What this means to Doctors Hospital is the patient has to pay an increased out of pocket portion, which they cannot afford.”

While Doctors’ total revenues for the half-year were up by $435,000, or 1.9 per cent, Mrs Lowe said net patient service revenues were “in actuality” not ahead of prior year comparatives.

While they appeared to be up at $22.199 million, compared to $21.867 million last year, she explained: “The overall service lines include revenue for Doctors Hospital as well as for contracted service providers, so the revenue increase that was shown is in actuality an amount that was shared.

“The shared portion is an amount that is expensed out in our medical supplies and services line.”

On the costs front, Doctors saw salary and benefit expenditures rise by 3.1 per cent to $9.524 million, compared to $8.973 million the previous year, while medical supplies and expenses were up 10.4 per cent at $6.661 million as opposed to $6.032 million.

“Benefits (health insurance, NIB etc.) account for 52 per cent of the increase in this area, and a few salary adjustments are necessary each year in order to remain competitive, especially in clinical areas,” Mrs Lowe said.

Confirming that Doctors Hospital was “managing costs where they are within our discretion”, Mr Sealy added: “Outside of medical supplies and services and salaries/benefits, utilities, food and insurances are 13 per cent of the overall increase.

“Many vendors have automatic increases each year for services that they provide, and outside service contracts account for another 13 per cent of the overall increase. We are exploring new supply chain options for our large volume items.”

On a brighter note, Doctors has managed to slightly decrease its total $4.899 million in accounts receivables since the end-January year close, Mrs Lowe saying the company had “not lost ground” with cash flow staying constant.

While plans for the expansion of Doctors’ main Collins Avenue facility remain on hold until there “is a level of confidence in the economy to support such a venture”, Mr Sealy said the company was focusing on its Blake Road-based Bahamas Medical Centre and ensuring it received the necessary support “to garner stability”.

“A lot of effort is being spent on ensuring that we are recognised as a major player in the delivery of quality healthcare services,” Mr Sealy said.

“We anticipate that with the opening of Bahamas Medical Centre and the proposed marketing strategy we will experience measured growth over the next two to three years.

“We are getting a lot support with regards to the opening of the Emergency Room and specialties in the West to cater to the surrounding communities and those customers from our Family Islands.”

While the Bahamas Medical Centre will also focus on international patient care, Mr Sealy said Doctors Hospital also planned to partner with the Bahamian business community to develop preventative programmes, including annual physicals and health evaluations.