Hospitals were down to just six days’ cash reserves last year, minister says
Less than six days’ worth of cash reserves were available to run the island’s hospitals last December, the Minister of Health revealed yesterday.
Kim Wilson said that the figure was way below the target for most hospitals of up to three months of operating expenses in hand.
But MPs heard that the Bermuda Hospitals Board’s finances started to improve this year.
Ms Wilson said: “Over the fiscal year 2021-22, cash balances have fallen by $11 million.
“By the end of January this year, BHB had cash on hand of $16 million, of which $4 million is restricted cash and can only be used for specific purposes.
“This represents less than 13.4 days of cash on hand to fund operations.
“Although this is an improvement from 5.6 days in December, it is also far below last year’s figures of 41 days cash on hand. Most hospitals aim for 60 to 90 days.”
Ms Wilson added: “There are no longer any funds in reserve deposits. Improving cash balances is critical for Bermuda’s only hospitals.”
She was speaking as the House of Assembly debated the health ministry’s budget for 2022-23.
MPs heard that the BHB stopped elective surgeries and postponed non-urgent outpatient appointments at times during waves of the Alpha and Delta coronavirus variants.
Ms Wilson said hospital revenues for outpatient and inpatient services were down, but that expenses were “well managed”.
She told MPs that the trend of declining cash balances started to turn around in January because of funding increases.
But Michael Dunkley, the shadow health minister, said: “It’s a bleak picture.”
Bill Shields, the BHB’s chief financial officer, said last year that it cost the board close to $27 million a month to run the island’s healthcare system.
He explained at the time: “BHB is not paid in advance, but in arrears later in the month via a set grant by Government, much of which is, in turn, received from health insurers.
“Our operating cash is used to pay vendors and staff, to pay for equipment and drugs, in the event that bills and payroll are due before we are paid.”
Mr Shields added last March that having 213 days’ cash on hand “would be seen as best practice for a hospital of our size”.
The Budget book showed that the estimate to cover the King Edward VII Memorial Hospital and the Mid-Atlantic Wellness Institute for the new financial year was more than $147 million – the same figure as the actual spend in 2020-21, but less than the $158 million that was the revised estimate for 2021-22.
Mr Dunkley also raised concerns about a Government guarantee for the BHB, which was listed as $787.7 million.
The figure in last year’s Budget book was $276.8 million.
Ms Wilson earlier told MPs, at the end of her statement to the House, that there had been a change in how the Government’s financial statements recorded guarantees.
She explained that the figures earlier listed the “principal” value but that the “full obligation amount” was now shown.
But Mr Dunkley said: “That guarantee in itself is damning and I would have thought that there would be more said about that rather than at the last minute of a two-and-a-half hour presentation.
“Simply unacceptable.”
MPs heard that more information about how the guarantees were recorded was expected to be provided when the finance budget is debated next week.
Mr Dunkley asked about the Bermuda Health Strategy 2022-2027, which was released last month.
He said that the Opposition One Bermuda Alliance looked forward to “significant progress” this year.
Mr Dunkley added that the strategy was “long winded on words and very short on substance”.
The House heard that the Ministry of Health headquarters had a budget of almost $15.9 million for the new financial year – about $6 million more than the original estimate for 2021-22.
But the revised figure for the 2021/22 financial year was closer to $21.9 million.
Work in the ministry will include its efforts towards universal health coverage, which was a pillar of the latest health plan.
The Department of Health has an estimated total budget of $28.7 million, which will cover community, oral and environmental health, as well as the central laboratory and administration.
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