The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital suffered a near 60 percent year-over-year net income decline over the nine months to end-October 2024 as expenses growth outstripped revenue rises amid its ongoing expansion.

Felix Stubbs, the BISX-listed healthcare provider’s chairman, in his report to shareholders said a variety of factors drove the cost surge with net income declining by more than $4.36m year-over-year to $2.941m compared to $7.302m the year before.

While total revenues for the period rose slightly, growing by 1.9 percent or just over $1.6m to $90.477m, compared to $88.821m the year before, this was outpaced by the 7.4 percent or more than $6m jump in expenses to $87.536m.

Doctors Hospital is understood to view the drop in net income drop for the period as not unexpected, given that it is still firmly in growth and expansion mode, and incurring investment-related costs ahead of anticipated revenue increases and future returns from projects such as its new Freeport hospital.

Mr Stubbs, pointing to several bright spots on the revenue side, said: “Consolidated net patient services revenue increased $3.854m or 4.54 percent over the third quarter last year. The increase in revenue is primarily a result of the uptick in outpatient activity, combined with a decline in the inpatient admissions.

“There was an increase of $4.912m or 66.53 percent on net patient services revenue from the outpatient facilities. Total inpatient days for the nine months ended October 31, 2024, were 7,997 compared to 10,794 the year prior, a reduction of 2,797 days or 25.91 percent.”

Turning to Doctors Hospital’s expenses, Mr Stubbs added: “Consolidated expenses rose by $8.121m or 9.96 percent over the comparable period last year. The increase was driven primarily by increases in personnel cost, medical supplies and other operating expenses, combined with a decrease in provision for doubtful accounts..

“Higher salaries and benefits increased $6.604m or 19.11 percent over the third quarter last year. During the year the group increased its headcount as operations were expanded with the opening of additional facilities in New Providence and Grand Bahama, as well as increases in employee benefits borne by the group.

“Higher medical supplies increased $3.837m or 52.08 percent compared to the same period in 2023. The increase in this expense is a result of adjustments made to medical supplies inventory during the prior year, combined with the increased utilisation of supplies due to the additional outpatient locations.

Mr Stubbs continued: “Higher other operating expenses increased $1.308m or 24.22 percent over the the quarter last year. The primary driving factor for this expense is as the number of locations increased, the expenses relating to operations also increased.

“Lower bad debt expense decreased $3.55m or 61.14 percent compared to the same period last year. The group made changes to its collection process, which drove a reduction in the loss rates on its portfolio of receivables, which is reflected in the decrease in the provision for doubtful accounts in the current fiscal year when compared to the prior fiscal year.”

However, at end-October 2024, Doctors Hospital’s accounts receivables - net or minus any provisions for doubtful accounts - stood at $15.4m.

“On a consolidated basis, return on sales - net income margin - dropped to 3.18 percent for the nine months ended October 31, 2024, a decline of 61.36 percent compared to the same period last year. This decrease was driven primarily by the decline in inpatient admissions, which impacted net patient service revenues,” Mr Stubbs said.

Doctors Hospital had previously warned of “a material headwind” to profitability after it was forced to more than triple provisions to cover medical bill non-payment by government patients and insurers to $12.7m during the financial year to end-January 2024.

The BISX-listed healthcare provider, unveiling its annual report covering that 12 month period, disclosed that allowances for unpaid medical bills had jumped almost 263 percent year-over-year compared to the prior year’s total $3.5m patient provisions.

Government patients accounted for $11m, or 86.6 percent, of the provisions total after increasing significantly from $3m at the end of Doctors Hospital’s 2023 financial year. It attributed the surge to its increased willingness to “bridge bottlenecks” in the Bahamian public healthcare system by taking in more patients from Princess Margaret Hospital (PMH) to relieve that facility’s capacity constraints.

And allowances for sums owed by “third-party payers”, namely health insurers covering medical bills on clients’ behalf, also more than tripled year-over-year from $549,277 to $1.662m. The BISX-listed healthcare provider said this increase stemmed from insurers either not fully covering medical costs or raising co-payments and deductibles, which has resulted in more patients struggling to meet their share of the bill.

The $12.7m in patient-related loss provisions accounted for 95.5 percent of the $13.3m in total expected credit losses (ECL) at end-January 2024. The latter figure represented a more than doubling, or 145.8 percent increase, compared to the prior year’s $5.404m total allowances.

And the near-$8m provisioning increase was arguably the major drag on Doctors Hospital’s profitability for the year to end-January 2024, with net and comprehensive income declining by more than $860,000 or 30 percent compared to the prior year. The healthcare provider’s bottom line for the period fell from $2.81m in 2023 to $1.945m.

Warning shareholders about its “rising exposure to uncompensated care and declining payer coverage [and] reimbursement, Doctors Hospital management nevertheless confirmed it will never turn any patient in need of care away while pledging to work with the Government to address the challenges posed by uninsured persons who cannot afford to cover treatment costs themselves.