The Bermuda Hospitals Board has warned it will struggle to maintain its facilities or to pay a basic cost-of-living increase to its staff because government funding is not keeping up with medical inflation.

The BHB, which is $16 million short of the funds promised to to it by the Government in 2019, said even if the Government made good the shortfall, failures to increase the spending cap meant it had received a single one per cent increase in five years.

The health body, which manages King Edward VII Memorial Hospital and the Mid-Atlantic Wellness Institute, said it was dealing with a “challenging” budget cap imposed by the Government but patient care had not been compromised.

It emerged last month that the BHB had been short-changed by up to $31.6 million in funding over the past four years.

The BHB and the Government agreed in 2019 that it would receive an annual block grant of $322 million, made up of a government grant, Mutual Reinsurance Fund transfers and taxpayer subsidies – but that financial commitment was never paid in full, resulting in a shortfall.

David Burt acknowledged that the hospital had to run on an overdraft in his Budget address and said the Cabinet had approved a $15 million payment to BHB in the current year and would need to increase funding in the Budget for 2023-24.

A BHB spokeswoman said that patient care had not been affected by the funding situation but insisted there were concerns regarding financial allocations.

The spokeswoman said: “The financial shortfall in BHB’s funding, while challenging, has not impacted frontline care.

“As has been widely shared, BHB has made significant savings over the last few years and this, along with the use of an overdraft since 2021, has ensured the quality and safety of our care has been maintained and even improved.

“We remain reassured by the Government’s announcement that it will be making good on the shortfall but are concerned that our capped funding has been flat for four years, and in the upcoming year the total cap is less than one per cent higher against a backdrop of global medical inflation that runs about six per cent per year.

“It is this that causes us the greatest concerns going forward as it impacts our ability to repair, maintain and upgrade our facilities, infrastructure, equipment and technology, and our ability to provide even a basic cost-of-living salary increase to our hard-working staff.”

The comments came as Michael Dunkley, the shadow health minister, condemned the Government handling of funding for the King Edward VII Memorial Hospital as a “very scary mess”, which may have impacted adversely on patient care.

Mr Dunkley praised the medical expertise at the hospital but said that the poor level of ministerial budgeting was “unacceptable”.

He strongly criticised the Government for failing repeatedly to set a realistic hospital budget, and then having to top up funds.

Mr Dunkley told a press conference: “Over the past three years the PLP has been over budget, in other words has had to give more money through the fiscal year.

“In 2020-2021 they were $9 million short. In 2021-2022 it was $27 million and in this current financial year, which ends at the end of this month, it’s $18.5 million.

“That is simply unacceptable. In 2020 you could understand with Covid hitting us but at the end of 2021 and 2022 there is no excuse for being so short on the budget.”

Mr Dunkley added: “The PLP government has once again messed up on the hospital budget.

“This current financial year, out of the blue, the Minister of Health said that $15 million extra had to be funded to the hospital.

“And then we hear it was because we had a $32 million shortage in the block grant.

“No explanation how, or why? $32 million over four years was simply forgotten by the Government, or not checked-in by the hospital.

“Something is wrong here. Questions need to be answered as to why this grant fell through the cracks.”

Asked if patient care had suffered due to the Government’s handling of hospital budgets, Mr Dunkley said: “I am not going to be the judge on that because I don’t have the inside information but it is logical that that can be the case.

“And, obviously, Covid has had something to do with it too because the hospital from 2020 to about half way through 2022 had to limit things that they can do, so elective surgeries were put off.”

Mr Dunkley said that a “secret deal” done when the acute care wing was built had resulted in large annual debt payments.

He said: “Here is something that most people in the public don’t know.

“Until 2044 the taxpayer is on the hook for $42 million a year in debt payments to three different areas, two of them to the company who built it and one of them for yearly contractual obligations that they have.”

He added: “When the OBA was in power we left them with a hospital with close to $100 million in reserves.

“Under the PLP … we see that the reserves are depleted. That’s very scary.”

“We cannot even see up to date financial reporting for the hospital. There is a five years delay.“

Kim Wilson, the Health Minister, praised the BHB for how it had dealt with funding issues.

Ms Wilson told the House of Assembly: “BHB has worked hard and successfully over the last few years to ensure that care services have not been impacted by its financial challenges.

“This has meant continuing to deliver each year on a savings programme that was first initiated in 2018 and has delivered, on average, $23 million per year in savings, which represents, approximately, seven per cent of BHB’s budget.

“From June, 2019, BHB has worked under a funding model in which government funds have been set at an agreed set sum, and, since inception, this cap has been flat at $322 million.

“The obligations to pay what has been agreed has fallen short over the last few years to a total, outstanding sum, which the Government projected to be $31.6 million by March 31, 2023.

“I would first note that $15 million was provided in February, bringing the projected total outstanding sum down to $16.6 million.”

Ms Wilson added: “Cash continues to be the most pressing issue for BHB. As of January, 2023, BHB has $6 million operating cash, on hand, of which, about $4 million is restricted cash, which means it does not have reserve deposits. Clearly, this is a very much less than ideal situation.

“Costs are constantly rising. Medical supplies and drugs generally increase in cost about 6 per cent per year and the supply chain issues due to continued global uncertainty only escalate costs further.”