Finance minister Bob Richards has defended budget cuts to Bermuda Hospitals Board operations as a one-off that will not impact clinical services.

It comes after BHB bosses appeared before the Public Accounts Committee on Thursday and warned that the growing pressures on an unsustainable healthcare system have caused serious financial difficulties. “I consider the report of their statements to the PAC to present a misleading and inaccurate picture of the situation,” Mr Richards said in a statement last night. “The Government of Bermuda is fully committed to making sure the Bermuda Hospitals Board has the means to provide appropriate clinical services.

“Our decisions on this year’s budget support for BHB operations took care to uphold this vital commitment. It was therefore extremely disappointing to hear BHB officials complain to the Public Accounts Committee on Thursday that they face a financially unsustainable situation because of difficulties created by Government.”

Speaking at the meeting, BHB CEO Venetta Symonds said that for the year 2017-18 no impact was expected on clinical service at all.

“But the situation is unsustainable and we know that and it is important for us to come forward with a plan and provide that care. We are constrained with how we can operate. What we have to work out is how we are going to affect care; we can not fix this problem.”

Despite amassing a surplus of $113 million at the end of the 2016-17 financial year, BHB faces a minimum $40 million deficit for 2017-18 owing to the Government’s $25 million cut and a $16 million shortfall on the 2016-17 government subsidy.

Chief financial officer Bill Shields warned that if the deficit was not paid back to BHB then they could run out of money by 2019-20. However, Mr Richards said it was “a very important fact for everyone to keep in mind” that there would be no impact on clinical services this year.

He also reiterated that when this year’s Budget was being put together, BHB had amassed a $113 million surplus.

“To manage and grow that money, the BHB had applied to the finance ministry to invest $50 million in ten-year Bermuda Government bonds. The application made it clear to me that the BHB did not need that money any time soon, certainly not for the next ten years.”

Mr Richards added that BHB’s investment was limited to $25 million because the bond issue was over-subscribed.

But he also noted that given BHB’s “significant surplus situation, the Government’s subsequent decision to reduce this year’s grant by $25 million was taken as a one-time opportunity to continue reducing the deficit, which, if not eliminated, would continue driving up the country’s debt, further constricting Government’s ability to meet people’s needs over the short and long terms. The decisions we’ve taken to date have put us on track to eliminate the deficit in Fiscal Year 2019/2020 — an accomplishment that will finally enable us to start paying down Bermuda’s debt and provide us with greater flexibility to meet people’s needs as they arise.”

Mr Richards also noted that BHB had been informed that the $25 million grant reduction would not be recurring, “yet the impression created by PAC testimony suggests otherwise”.

“In summary, there will be no impact on clinical services this year, or ever as far as this Government is concerned. The Government will continue to exercise prudence and care in its decision-making in order to meet people’s needs and to bring to an end the trajectories of deficit and debt that threaten our collective future.

He added that the Government will work with BHB to review the costing of the clinical services that it is required to provide to ensure sustainability at the same time.

“Rising healthcare costs are a major challenge facing the BHB, Bermuda and virtually every country in the world today.

“Managing them in ways that ensures people get the care they need at the appropriate cost is the commitment of the Government and the mandate of the BHB. With this awareness in mind, I was encouraged by the statement to the PAC by the BHB’s CEO that it was important for the BHB ‘to come forward with a plan and provide that care’.”