The Tribune

By NEIL HARTNELL

Tribune Business Editor

DOCTORS Hospital is planning to invest $3.2 million in capital projects during its current financial year, as it kicks-off "phased" expansion plans with two new operating theatres following a 66 per cent net income increase for fiscal 2012.

The BISX-listed healthcare provider, in its annual report for the year to January 31, 2012, produced a two-thirds increase in its bottom line to $1.436 million, despite seeing "double digit" rises in medical supplies and electricity costs.

The cost increases were offset by patient service revenues that rose by $4.8 million or 12.1 per cent year-over-year to strike $43.933 million, a significant improvement over the previous year's $39.177 million - a figure that represented a five-year low.

For the 12 months to end-January, Doctors Hospital said its adult patient days increased 16.3 per cent year-over-year, with the "average daily census" up from 28 patients to 32. Total admissions to its hospital facility, located on Collins Avenue/Shirley Street, also rose by 10.3 per cent compared to 2011 levels, hitting 4,317.

The increased patient activity drove the company's revenue growth, with the rate of increase outweighing the rise in costs. Yet Doctors Hospital warned that fiscal 2012's 11,696 total patient days "still remain below pre-recession levels".

Writing in Doctors Hospital's annual report, Joe Krukowski, its chairman, said: "The hospital's average room occupancy, total admissions and revenue were up over the year before, all in the face of an economy that remains sluggish, and with rising costs across the board.

"While we are proud of the strides that have been made, we recognise that more work is to be done in order to return to pre-recession levels."

Mr Krukowski said increasing energy costs "continue to plague" Doctors Hospital, with fiscal 2012's rise in salaries needed to "attract and retain the most highly trained and qualified allied healthcare workers, who have more and more opportunities to choose from".

Doctors Hospital said its electricity costs for the 12 months to end-January increased by 11.7 per cent or $0.166 million year-over-year, adding: "This is the second year of double digit percentage increases."

As for staff salaries and benefits, they increased by $1.4 million or 8.6 per cent year-over-year to $18.143 million. Yet, thanks to the increase in Doctors Hospital's total revenues, they declined as a percentage of net patient service revenues from 42.6 per cent in 2011 to 41.3 per cent this time around.

Medical supplies and services also saw a 'double digit' increase, rising by $1.2 million or 10.6 per cent in fiscal 2012 compared to the previous year. But, again, as a percentage of net patient service revenues, they declined from 29.1 per cent in 2011 to 28.7 per cent.

When all this was added up, Doctors Hospital's total expenses grew by 10.3 per cent or $4.1 million year-over-year, declining as a percentage of total revenues from 97.9 per cent to 96.8 per cent.

When it came to bad debts and accounts receivables management, Doctors Hospital said bad debt expense - as a percentage of patient service revenues - increased to 4.5 per cent for the 12 months to end-January 2012, compared to 2.7 per cent the previous year.

The BISX-listed healthcare provider said this translated into an 86 per cent, or $0.9 million increase, in bad debt expense. It attributed the 2.7 per cent achieved in 2011 to "a reduction in the allowance of $0.7 million provided for during fiscal 2009".

"Self-pay patients make up 80 per cent of the expense despite improved upfront collection strategies," Doctors Hospital added. "The number of days revenue in accounts receivable at year-end (AR days) for fiscal 2012 remained consistent with fiscal 2011 at 42.2 days."

Meanwhile, Mr Krukowski said plans to expand the Collins Avenue hospital "remain on the table", and were set to be 'phased in' in line with the economic turnaround. The first phase will involve the construction of two new operating theatres.

Describing the "calculated decision" made by Doctors Hospital's Board to re-open the Western Medical Plaza facility on Blake Road, Mr Krukowski said the complex - now called the Bahamas Medical Centre - would provide emergency room, laboratory and imaging centre services to western New Providence's growing residential and business communities.

He added that the Bahamas Medical Centre would also house the International Patient Programme, and provide telemedicine services to the Family Islands.

"This significant investment, both financial and in terms of time and effort, will help ensure that Doctors Hospital Health Systems is in the best position possible to create and take advantage of new opportunities as the Bahamian and global economies continue their slow moves toward recovery," Mr Krukowski said.

"Done right, this development increases the patient pool we can draw from, and thus our revenue streams."

Doctors Hospital added that it employed net cash of $2.9 million to finance capital projects in 2012, down $1 million from the previous year's $3.9 million. All the monies came from its own cash flows, with the majority - $1.525 million - spent on replacing the Cat Scan and mobile x-ray equipment.

For the 2012 fiscal year, net income hit $1.436 million or $0.14 per share, up from $0.865 million or $0.09 per share in 2011. Some $0.4 million, or $0.04 per share, was paid out in dividends during fiscal 2012.