The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital is planning to invest $4.2 million in capital improvements to its business during its 2014 financial year, the previous year’s bottom line having been impacted by a $1.135 million ‘start-up’ loss.

The BISX-listed healthcare provider’s annual report for the year to end-January 31, 2013, disclosed that its core Collins Avenue operation actually generated a 4.6 per cent ‘like-for-like’ net income increase to $1.859 million.

However, Doctors Hospital’s overall bottom line dropped by 49.6 per cent year-over due to the costs associated with re-opening the Bahamas Medical Centre (the former Western Medical Plaza) on Blake Road.

The net loss associated with the Bahamas Medical Centre more than-tripled year-over-year, hitting $1.135 million compared to $340,314 during the 2012 financial year.

This had the effect of dragging Doctor’s Hospital’s overall net income down to $723,756, from $1.436 million the year before, but shareholders have no reason to panic. Losses such as those associated with the Bahamas Medical Centre are normal during the first few years of ‘start-up’ operations, as various investments and expenses must be incurred to get it into a position where the company can be profitable.

This was a point underscored by Doctors Hospital’s chairman, Joseph Krukowski, who told shareholders to view the results produced by the Collins Avenue and Blake Road facilities “separately”.

Acknowledging that the results for Doctors Hospital Health Systems (DHHS), the BISX-listed parent, “fell short of our expectations” for the 2013 financial year, Mr Krukowski said the Bahamas Medical Centre was expected to ‘break even’ within two years.

“Doctors Hospital (Bahamas) [the Collins Avenue operation’s] net profit did record improvement, resulting from increased revenues,” Mr Krukowski said.

“However, the loss for the Health System was generated by the Bahamas Medical Centre, which as already noted is in a start-up mode having opened in late September 2012.

“It is expected that it could take 18-24 months to arrive at a break even position. But as revenue grows we would expect to see a commensurate improvement in net income.”

Pledging that the Board of Directors was watching the Bahamas Medical Centre’s progress, Mr Krukowski said the facility was “generating considerable interest” in both the Bahamas and elsewhere.

And, while long-held expansion plans for Collins Avenue “remain on the table”m, Mr Krukowski said these would be implemented in a phased approach once the overall economy is strong enough to support it.

Meanwhile, Doctors Hospital’s planned $4.2 million in capital investments for the 2014 financial year represent a 23.3 per cent, and 46 per cent, improvement respectively on the 2013 and 2012 totals.

Some $3.4 million will be injected into the Collins Avenue hospital this year, with the $0.8 million balance to go on the Bahamas Medical Centre.

These sums compare to the $3.406 million invested in its operations by Doctors Hospital last year, of which $1.755 million went on equipment and renovations for the Bahamas Medical Centre, and $2.877 million the previous year.

Capital expenditure for both prior years came from Doctors Hospital’s internally generated cash flows, and it went on “purchases of property, plant, equipment, intangibles and facility improvements”.

Elsewhere, Doctors Hospital said it was too soon to determine whether the increase in outpatient and emergency services in the 2013 financial year, which made up for an incoming patient drop, would become a trend.

Referring to its Collins Avenue facility, it said: “For the year ended January 31, 2013, adult patient days decreased by 29.6 per cent from the previous year.

“Almost 70 per cent of this decrease was in the Intensive and Intermediary Care Units. Total admissions to the facility were 4,061 in fiscal 2013 compared to 4,317 in fiscal 2012, representing a 5.9 per cent decrease over the prior year. The average daily census decreased to 29.5 patients per day from 32 in the previous year.”

Total expenses at Collins Avenue rose only slightly, by 0.8 per cent or $307,685 over the previous year, and declined as a percentage of total revenues from 96.1 per cent the previous year to 95.9 per cent this time around.

“Bad debt expense, as a percentage of patient service revenues decreased to 2.9 per cent for the year ended January 31, 2013, compared to 4.4 per cent the previous year. This represented a decrease of $640,250, or 32.8 per cent,” Doctors Hospital said in its annual report.

“The number of days revenue in accounts receivable at year-end (AR Days) for fiscal 2013 stand at 47.5 compared with fiscal 2012 at 42.2 days. The increased census for the last two months of the year is responsible for the majority of this increase.”

At the Bahamas Medical Centre, revenues generated during its first four months of operations rose to $486,032 compared to $90,605 for the previous 2012 full year.

“The revenue is projected to gradually improve nextyear with increases in day day surgeries and the start of surgical programs for international patients mid-2013. The facility is budgeted to be near break-even by the end of fiscal 2014,” Doctors Hospital said in its annual report.

“Total expenses were $1.621 million in fiscal 2013 compared with $430,920 in fiscal 2012. Expenses were $694,000 prior to opening, and within that amount $410,000 was spent to ready the facility for opening.”