OBA Expresses Concern Over Health Costs

July 31, 2012

[Updated with video] The last released Bermuda Hospitals Board [BHB] statements were from 2009/10 and as the BHB is one of the largest operations funded by the Government, this year receiving $142.5 million, it is unacceptable that the public cannot see how the BHB is spending the people’s money, Shadow Minister of Health Michael Dunkley said this morning [July 31].

Senator Dunkley continued on to say: “The Health Minister is on record saying health care costs are rising at an unsustainable pace, and we agree.

“Where we differ with the Minister is on his statements in the National Health Plan and elsewhere that private sector and overseas care are the major causes for these rising costs.

“The National Health Accounts show without question that the Government itself is the largest driver of our skyrocketing costs.

“From 2009 to 2011, spending by the Ministry of Health and the Bermuda Hospitals Board rose 26% compared to a rise in private sector spending of just 8%. In other words, Government health costs rose at a pace three times greater than those in the private sector.”

“In 2010, the hospital made a profit of $18.3M, and they made roughly the same profit in 2011 – a figure we extracted from the National Health Accounts released by the Minister last week,” said the Senator.

“Over the past decade, it would seem that the Bermuda hospital business model has changed from a community-based, not-for-profit institution to a for-profit model. There is nothing wrong with the hospital making a small profit, but the increase has come from increasing fees rather than increasing efficiency.”

OBA Candidate Andrew Simons also spoke at the press conference saying: “The government must get a better handle on health care costs in Bermuda. It is not enough for the hospital to continue to raise prices in order to balance the books.”

Senator Dunkley’s full statement follows below:

Good morning and thank you for coming.

I am joined this morning by my colleagues Louise Jackson, who speaks on health matters in the House of Assembly as well as being the Opposition spokesperson for Bermuda’s senior citizens.

Also with us this morning is Mr. Andrew Simons, a member of the OBA’s shadow board for health and OBA candidate for Constituency 17, Pembroke Central.

This morning we’d like to focus on the just released National Health Accounts report for the year ending 2011.

The report painted a very disturbing picture of soaring health care costs that are already pushing family and personal budgets to the breaking point.

The Health Minister is on record saying health care costs are rising at an unsustainable pace, and we agree.

Where we differ with the Minister is on his statements in the National Health Plan and elsewhere that private sector and overseas care are the major causes for these rising costs.

The National Health Accounts show without question that the Government itself is the largest driver of our skyrocketing costs.

From 2009 to 2011, spending by the Ministry of Health and the Bermuda Hospitals Board rose 26% compared to a rise in private sector spending of just 8%.

In other words, Government health costs rose at a pace three times greater than those in the private sector.

When we look more closely at the 2009-2011 figures, we see the hospitals accounting for approximately two thirds of the increase in Bermuda’s total health care spending.1

I have two points to make about the health cost picture presented in the National Health Accounts:

Bermuda cannot hope to have a constructive discussion about the cost of health care if the Government can’t acknowledge where the problem lies which, clearly, is in areas of spending directly under its control.

Bermuda cannot hope to have a constructive discussion about its health care costs if stakeholders are not given all relevant information needed to have that discussion. In this instance, we are without the financial statements from the Bermuda Hospitals Board, which latest figures show is responsible for 43% of Bermuda’s health costs.
Why are they important? Because they can show in detail areas within hospital operations that are driving up costs so shockingly.

The last released BHB statements was for the financial year ending 2009/10.

This is unacceptable.

The Bermuda Hospitals Board Act 1970 requires audited reports to be released to the Minister within six months after the end of the Financial Year. It also requires a report on operations of the Board during that year.

We are now 10 months on from the latest date the Minister should have received the report and statements for 2009/10 and still at this time the Minister, as he or she is required under the Act, has not tabled copies of the Report.

My colleagues in the House of Assembly have been asking for the release of this report for months, and we’ve received nothing from the Government but stalling.

We were told in April the report was at the printers and then earlier this month that they were still gathering information.

This does not bode well – Government apparently withholding information that is essential for the best understanding of a situation that has such serious implications for people’s health care and the financial strength of the Island.

The Bermuda Hospitals Board is one of the largest operations funded by the Government, this year receiving $142.5 million.

That’s more than any other Ministry in Government.

In our opinion it is totally unacceptable that the public has not been able to see how the BHB is spending the people’s money.

In 2010, the hospital made a profit of $18.3M, and they made roughly the same profit in 2011 – a figure we extracted from the National Health Accounts released by the Minister last week.

Over the past decade, it would seem that the Bermuda hospital business model has changed from a community-based, not-for-profit institution to a for-profit model. There is nothing wrong with the hospital making a small profit, but the increase has come from increasing fees rather than increasing efficiency.

An appendectomy, for example, cost $2000 in 2008 before the introduction of the Chargemaster billing methodology in 2009. On April 1st 2009 that cost went to $6000.

Here is another example: a normal delivery of a baby was $2000 before Chargemaster, but went to $3000 after.

One final example, anesthesiologists saw fees increase from $25 per unit to $125 per unit.

These are the kinds of cost pressures facing Bermudians entering the hospital today and an indication of unsustainable pressures that continue to build within the system.

So why have hospital costs been going up at such a staggering rate?

We have illustrated one reason in the Chargemaster billing system introduced in 2009. The Government said this change would be “cost neutral,” but once the plan took effect, hospital in-patient fees went up by roughly 30 percent.

Another reason is the potential for over-utilization and abuse within the system since insurers must pay whatever fees the hospital charges.

What is remarkable is the Minister of Health saying the new National Health Plan will be the answer to reining in costs. But in the National Health Plan hospital costs get barely a footnote.

Imagine designing a new healthcare system for Bermuda that does not deal with what accounts for 43 percent of Bermuda’s healthcare costs.

This, to us, is being neither realistic nor sensible.

The National Health Plan calls for government to take over and administer a much higher portion of the Island’s healthcare—for example, proposed changes would require all Bermudians to have a basic healthcare plan insured and administered through government. And yet it’s clear that Government’s overall healthcare costs are rising much faster than private-sector costs, and they’re much less efficient in administering them.

When it comes to controlling healthcare costs, the government clearly needs to get its own house in order before making dramatic changes to our overall healthcare system.

-

Andrew Simons’ full statement follows below:

Good morning and thank you for coming.

Heard on the doorstep

As I have canvassed from Angle St to North Shore, I have heard two complaints about healthcare.

Folks who are working say that rising health insurance deductions cut deep into their pay check. People who have lost jobs explain the tough choices they make between: high H.I.P. premiums, rent, food, and child care. Many people take a chance and skip payments; an un-lucky accident or health problem, could saddle them with a $20,000 hospital bill, ruining them financially.

They ask me: “Why do I pay so much, and why have premiums gone up so quickly?”

A large part of the answer is high fees charged for hospital services in Bermuda. The National Health Accounts released last week show that the Bermuda Hospitals Board accounted for 43% of total health expenditure in Bermuda, and two-thirds of the increase since 2009.

What is the relationship between government and the hospital?

Every year, the hospital proposes a fee schedule, a price list as it were, to the Bermuda Health Council and the Minister of Health. Every service or combination of services at the hospital has a price. The Ministry and the hospital can negotiate these prices. However, once the Minister approves the fee schedule, insurance companies, private (like Argus and BFM) and public (like H.I.P. and G.E.H.I.), must pay in accordance to the schedule. In some cases the charge for the same treatment, in the hospital, has more than doubled in just a few years.

So what?

The effect on private insurance companies is straightforward. When insurance companies pay higher claims they charge higher premiums, which affect everybody.

The effect on government coffers is more significant than higher premiums. The government-run insurance operations also pay higher claims, so they must either increase their premiums to pay to those claims or run deficits, which the taxpayer ultimately funds. Note that the recently released financial results for G.E.H.I., H.I.P., and Futurecare, show mounting losses.

In addition, the higher fees charged at the hospital erode the ability of taxpayers to continue subsidising health care for the young, old and indigent; these subsidies have been in place for more than 40 years. In 2011, higher fees pushed the cost of these subsidies to $150.2M[1], an amount greater than what government provides to support tourism [$35]; public transportation [$23M]; financial assistance [$37M]; child & family services [$20M]; youth, sport, & recreation [$12M]; the Bermuda Housing Corporation [$7M]; and the fire service [$14M], combined.

Conclusion

The government must get a better handle on health care costs in Bermuda. It is not enough for the hospital to continue to raise prices in order to balance the books.

Higher prices at the hospital hit the average person in many ways:
1. The average person pays more for health insurance
2. Government, as an employer, must pay more for its share of health insurance premiums
3. Government must cover the cost of deficits incurred G.E.H.I., H.I.P., and Futurecare
4. Government must pay more for the youth, aged, and indigent subsidies.

All of these increased government expenditures raise government borrowing needs and reduce its ability to provide other social services.

-

Share via email

Read More About: , , , ,

Category: All, News, Politics, Videos

Comments (21)

Trackback URL | Comments RSS Feed

  1. Justin says:

    This is what I've been saying all along. Everyone wants to blame the insurance companies, but they are only charging higher premiums because the costs continue to rise. However, nobody is talking about the doctors who live in Fairylands, drive BMW's and wear Rolex watches… Why?

    Like(0)
    Dislike(0)
    • Hmmmmm says:

      Excellent comment.This is smoke and mirrors at its best from the OBA. This healthcare issue is very complex but to borrow one of their favourite phrases: "follow the money" and you will see that NONE of it goes to or through the Government's coffers. Insurers, doctors and others who truly profit from these high costs are to blame. Even the introduction of competition in diagnostic imaging and other services has failed to bring down costs because of this mafia-style approach. If anything, the Government should pull the rug out from under all of the charlatans involved in this scheme with some heavy regulation of costs. That's what a labour government would really do; not continue this BS of lining the pockets of physicians and others.But that would take courage.

      Like(0)
      Dislike(0)
      • Just the Facts says:

        It's clear you know nothing about how healthcare is financed in Bermuda. Your description is a fairy tale. Why don't you actually read the statement? It's all accurate. Government, its poor administration and out of control hospital costs are what's driving healthcare costs through the roof, not private insurers.

        Like(0)
        Dislike(0)
        • Politely Pompous says:

          NO...WE the public need to take a lot of responsibility for the huge costs of health care in Bermuda.

          First of all, people need to stop using the ER as their primary physician. I'll never forget the time I was there with a family member with a serious health concern, and a young woman was there with a rash that the doctor thought was poison ivy. This was around 8 in the morning-another hour and so she could have been at her physician's, but even that wasn't necessary. Try checking with her pharmacist and maybe treating it with some hydrocortisone cream and then see what happens...she said herself she didn't feel ill so it wasn't life-threatening!All of that drives up the cost of health care!

          Also, people go to their doctors for minor complaints instead of seeing if they abate on their own...every little ache and they're at the doctors where he'll run a multitude of tests at your request and find nothing. Then we ask why doctors wear Rolexes, live in nice neighbourhoods and drive nice cars?! Because of us!

          Next: people over-use diagnostic testing. When you go to the doctor, and he runs tests he's just ticking off boxes on a form-he has no idea of how much these tests cost. I do, because I worked in health insurance...they are expensive. Blood tests run in the hundred of dollars per test! That isn't an exaggeration. Why do you think some physician's offices have gotten smart and opened labs with their practice? They know they pull in big bucks! The doctor figures while they're at it, they may as well tick off as many boxes as they can and get all sorts of things tested for which is often unnecessary. In many jurisdictions, you can't do that-you can only test for what's relative to that visit. So, if you go and have say, an eye infection, they can't check your liver, kidneys, uterus, prostate, hormones levels, thyroid or just any random thing that has nothing to do with an eye infection. Here, doctors can.

          Also, many people insist on ultrasounds, MRI's , etc. when they're not necessary and the physician agrees-mostly just to ease hypochondriatrics who want to make sure nothing is wrong. All these unnecessary tests cost the hospital money in having additional staff, wear on the machines, reading the scans, etc. People need to use these tests only when necessary.

          People also get prescriptions that aren't needed-most of us only pay the 20% co-pay so we ask for different things and most times our doctors just agree-again, they have no idea of how much these prescriptions cost. A well known example is patients insisting on antibiotics for viral infections and the physicians giving in. This comes up with a lot of other medications as well. That affects health care costs as well.

          I know I'm probably missing something, but you all get the point. For such a small country, Bermuda has a HUGE number of physicians and they're all busy and doing well. You'd think most Bermudians were half-dead with the amount of doctors we have, visits people pay to them, tests that are done, prescriptions that are issued, etc. etc. When you go to the doctors office, look around-most people look perfectly fine. Of course, not all illnesses are clearly visible, but a lot of time people jump up and run to the doctor for every minor thing. People say 'I have insurance, so I'm using it' not understanding that all that drives up the cost of health care, so we must take responsibility for that.

          BTW, In fairness I want to address part of the comment by Mr. Dunkley, where he said: "Over the past decade, it would seem that the Bermuda hospital business model has changed from a community-based, not-for-profit institution to a for-profit model"...

          I don't know if he was a fly on the wall or what, but I was once at a meeting of insurers at the Hospital about four (or a little more)years ago. One of the heads said almost those exact same words-he said that the Hospital is a community hospital, but that they were attempting to try and make bigger profits by running it more closer to the U.S. model, which are mainly privately run. This was around the time hospitalists were being brought in and before the Hospital started changing the way it billed inpatients from everything being all-inclusive to billing items such as tests, medications, etc. separately. They did mention that their aim was to bring in bigger profits, so I guess they were successful on that. However, I stick by what I say-we need to stop overusing Hospital services when it's not necessary!

          Like(0)
          Dislike(0)
          • Politely Pompous says:

            Before anyone points it out, I probably should have said uterus or prostate in the above post...let me make it clear-I DO know that you can only have one depending on if you're male of female!

            Like(0)
            Dislike(0)
      • Mad Dawg says:

        The government already regulates the costs. That's the problem. Can't you understand the simplest thing? It's the government that is escalating the cost of medical procedures.

        And you blame the OBA, because they ask a question about it.

        Grow up.

        Like(0)
        Dislike(0)
  2. navin Johnson says:

    same with Belco...just raise the rates to make up for shortfalls

    Like(0)
    Dislike(0)
  3. Amazed says:

    It is not clear from thia article when Mr. Dunkley is speaking about the Government and When he is speaking about the BHB.

    Like(0)
    Dislike(0)
    • Just the Facts says:

      I can't speak to whether Mr. Dunkley was unclear or not, but the Government has oversight of the hospitals through the Bermuda Hospitals Board, which the Government appoints. It's a quango, just like the BLDC and WEDCO. No matter how you slice and dice it, the buck stops with the government.

      Like(0)
      Dislike(0)
  4. RHONDA says:

    but I though the OBA was for smaller government....less regulation..

    Like(0)
    Dislike(0)
    • Mad Dawg says:

      It's the government that regulates the cost of medical procedures. Is it too difficult for you to understand?

      Like(0)
      Dislike(0)
  5. PLP FO LLLLLLLLLLLLIIIIIFFFEEEEEEE says:

    AY OBA! MIND YA BEEZWAX! ILL PAY WHAT I WANT FOR HEALTH INSURANCE, AND IF I CAN'T, THE P.LL.PPPPPP's GOT MY BACK! AND WHAT?! THEY AINT SKANT LIKE U GUYS!
    IF I WANNA HER FROM UUUU, I'LL VOTE FOR YOU!

    Like(0)
    Dislike(0)
  6. Pastor Syl Hayward says:

    @ Rhonda: but I though the OBA was for smaller government….less regulation"
    I don't think that is or was ever part of the OBA platform. I think it was something said by a blogger to mislead the public.

    In any case, my understanding of what was said by Mr. Dunkley and Mr. Simons is that, contrary to Government's claim that insurers and overseas treatment have driven up the cost of healthcare, the most recent healthcare report shows clearly that it is the hospital that has driven costs up. Graph #1 from the National Health Accounts 2012 (in brief)says "Bermuda Hospitals Board accounted for 43% of total health spending. Overseas care accounted for 14% of private health spending."

    Here is another quote:
    Bermuda Hospitals Board expenditure FYE 2005 - FYE 2011 (BD$, '000)

    2005 2006 2007 2008 2009 2010 2011*
    BHB Operating Costs 155,027 171,012 187,134 215,458 225,242 254,118 294,010
    BHB Revenue 158,243 172,378 187,386 212,260 233,743 272,445 294,010
    Surplus 3,216 1,366 252 (3,198) 8,501 18,327 -

    From tables 5 and 5a

    It is very interesting too, that hospital revenue and expenditure equal one another so closely in 2011. Unusual, I would call it.

    This is not OBA spin or scare-mongering. The report is public, available to all and quite clear.

    Coupled with the recent news that the recent head of the hospital is under an investigation of some sort, my enquiring mind has started wondering what actually has been going on.

    Like(0)
    Dislike(0)
    • Sandgrownan says:

      You know who is a doctor don't you.....

      Like(0)
      Dislike(0)
      • Mad Dawg says:

        I know of one who started with nothing and miraculously made a hundred mill or so before retiring to the Vinyard.

        Like(0)
        Dislike(0)
    • Come Correct says:

      Lol she can't read a graph why try...

      Like(0)
      Dislike(0)
  7. Concerned says:

    What I would like to know is why so many Locum Doctors - isn't that more money spent than with permanent Dr's. I know of patients who have had at least 10 - 13 dr.s since they have been in hospital in a two year period. What's the juice on that?

    Like(0)
    Dislike(0)
  8. Keepin' it Real...4Real! says:

    Round and round the drain we go..oh my gosh the waters lowwwwwwwwww.......

    Like(0)
    Dislike(0)
  9. Triangle Drifter says:

    The wheels of the PLP green bus are falling off. Every week a new crisis which has been brewing for sometime breaks open into public domain like a untreated syst &it smells as bad.

    Like(0)
    Dislike(0)
  10. William says:

    it is less expensive to fly to the Philippines to go to the dr's ,
    than to seek care in many other countries of the world.
    ...
    How considerate of the Bermudian government to have kicked the workers from that country to the curb.

    ....are you thinking about what i am saying ? go ahead , you got time. let me offer you a free cork for one ear so the thought doesn't go in one ear and roll out the other ...

    in defense of the Dr's that provide services , i am thankful for the help they have provided when they did. i am very happy with the help also of the Sports medicine Dr.s that i have seen or sought help from in the past.
    The hospitals of the planet have gone off the charts when it comes to the way things are done recently. i think it stems from the numerous individual billing style arrangements they now have and tests that cost plenty buh do not aid you in remedy of the problem.
    The reason for these tests etc. are to increase revenues from insurance companies .
    when you pay cash the problem is that even though you go in for a splinter in your foot that needs to be taken out , the Dr's end up explaingg how you need a colon rectal examination ,a biopsy for cancer and medication for things that are not even remotely associated with the splinter or your foot.
    This all stems from governments demanding dr's buy more insurance ,licenses , bonding , carry medical administrative contract law attorneys , test lab facilities a variety of "Interpreters of the medical procedures .. just way beyond anything related other than it being in the "Practice" of medicine.
    The government is not there helping get the splinter out ...
    How about The Government get the steel stallion and i get someone who takes the splinter out . i pay them . go home . done deal?

    Like(0)
    Dislike(0)
  11. Shirley Richardson says:

    Some of these comments sounds so foolish, especially Mr. Dunkley, the reason that health care is rising is because many people use the emergency room for everything.A lot of people use the ER, so they don't have to pay up-front to their private doctor, however the government under the new health reform law, has mandatded that Dr's can no longer charge upfront payments, also with the new perscription drug mandate, patients can request of their doctors to write perscriptions for generic medication, instead of name brand meds. these drugs has the same strength as the name brands,but a lot cheaper. Another factor in the rise of health care cost,is the fact that a lot of folk use their insurance for minor ailments, If you are in a group insurance plan on your job,when people call in sick , and abuse their sick time,this also pushes up the insurance cost. we must also consider the fact for those who do not have insurance, for those who are working you are paying for their health care as well. So stop blaming the gov't for everything, the new reforms should be a welcome relief for all of us,we can contribute to lowering the cost, by taking care of ourselves, and stop abusing our bodies, and being conscious of our own health. We are still blessed, simply because the gov't has made sure that with or without insurance, no one will be turned away from the hospital.

    Like(0)
    Dislike(0)