company for his claims that Government was not doing enough to address the spiralling costs in the health care system.

Dr. Gibbons said on the contrary, Government was now focusing on providing incentives toward channeling resources toward more out patient care and away from more expensive in-patient hospital care.

He was responding to statements made by Argus Insurance Group chief executive officer Gerald Simons who criticised Government in a Royal Gazette story for not establishing a mechanism for controlling health care costs, and for not getting groups together to address the issue.

"He seems to be oblivious to the incredible amount of work done over the past few years and the amount of work being done to reduce the cost of medical care and to ensure access,'' Finance Minister Grant Gibbons said.

Dr. Gibbons said Government had commissioned the 1996 Health Care Review.

Subsequently, consultants Arthur Andersen had reviewed the 104 recommendations the study had made and outlined proposed methods for reducing costs and improving the system.

The major recommendations have been toward providing incentives for more home care for the elderly and reducing the costs of overseas and patient services provided outside of King Edward VII Memorial Hospital.

Today, the elderly consume 80 percent of health care expenditures, and of that 54 percent of those costs go toward hospital care, Dr. Gibbons said. One of the issues the studies found was that one-third of all elderly patients occupying extended care beds at the hospital could be cared for either at home or at a nursing home facility.

Government was currently working on providing incentives within its insurance schemes to encourage more outside hospital care for the elderly, he said.

"It's probably better and more appropriate care,'' he said.

A pilot study is currently underway by BF&M Life Insurance Co. Ltd. to make reimbursements for home care provided through the hospital.

Another focus in cutting costs will be on overseas care and in the provision of local diagnostic testing and ancillary services.

Andersen has projected the costs of overseas services will increase 800 percent in the decade ending 2000. There has also been a "tremendous increase'' in the cost of local health care services provided outside of the hospital he said.

Government's health insurance scheme was moving to set up preferred provider relationships in which costs would be set with a selected number of health care service providers. If patients wanted to use an alternate provider, they would have to pay the difference in any extra costs.

On the local front, Government was moving toward setting standards for local providers. One strategy would be to ensure there were no conflicts of interests which could occur when a physician owns a diagnostic or testing lab and might be encouraged to order extra tests to boost revenue.

In response Mr. Simons pointed out that he was "very much'' aware of the Arthur Andersen study, having met with the consultants who prepared it.

"I'm pleased to hear that Government will be giving high priority to the concerns I raised,'' Mr. Simons said, adding that they had been raised by his predecessor for years.

But he added that the Andersen report has not yet been made public. Argus hoped the study would call for a formal oversight body consisting of the major participants involved in the delivery, regulation and financing of the health care -- physicians, Government and the insurers to address these problems in a coordinated fashion because the problems could not be addressed by any single body.

Mr. Simons added that the elderly are finding costs of health care outrageously high -- set an average rate for the entire community, so the young and healthy would help to finance the care of the elderly and parents and grandparents.

The rising cost of health care hit home to many employees and employers this week, who saw their premiums paid to insurance companies such as BF&M rise by as much as nine to ten percent.

BF&M explained that the increased cost was due to a ten percent inflation rate in the medical services sector, whereas Bermuda's inflation rate last year was 2.2 percent.

HEALTH HTH GOVERNMENT GVT