Doctors Hospital
By NEIL HARTNELL
Tribune Business Editor
nhartnell@tribunemedia.net
Doctors Hospital’s president has blasted the Value-Added Tax (VAT) Bill’s “discrimination” against private healthcare, adding: “It’s just one more nail in the coffin.”
Barry Rassin told Tribune Business he was unsure whether the BISX-listed healthcare provider and other private practitioners would be able to withstand the negative fall-out from the Government’s VAT policy.
Given the weak economic climate and decline in the number of Bahamians covered by private health insurance, Mr Rassin said the move to ‘exempt’ all government-run healthcare facilities from VAT would inevitably drive patients to their doors.
In contrast, Doctors Hospital and other private doctors/physicians with an annual turnover greater than $100,000 will be required to levy the 7.5 per cent VAT on their patient bills.
While the private healthcare sector will receive some compensation from being ‘VAT-able’, given that it will be able to recover all its VAT input costs, the fear is that increased consumer costs in an expensive sector that is extremely price sensitive will result in declining business.
Mr Rassin told Tribune Business that Doctors Hospital was effectively being hit by a ‘double whammy’, given that the Government’s revised VAT package has also decided to make health insurance premiums ‘VAT-able’.
This means that the 7.5 per cent levy will be applied to both insurance premiums and patient bills, something the Doctors Hospital chief described as ‘double taxation’.
“It’s discriminatory to start with,” Mr Rassin said of the new VAT Bill and accompanying regulations package. “It will cause more people to obtain free healthcare, and therefore to abandon private healthcare. The burden on the Government and taxpayer will go up.”
The Doctors Hospital president said the company was attempting to set-up meetings with government officials to get answers to numerous unanswered questions surrounding VAT.
Among the unresolved issues identified by Mr Rassin were how discounts would be treated under the new tax, plus whether, and how, it would be applied to money that Doctors Hospital collected on behalf of individual doctors.
“We don’t have answers,’ Mr Rassin told Tribune Business. “It’s just one more nail in the coffin I’m afraid. They obviously didn’t understand healthcare when they wrote that next Bill.”
He added that Doctors Hospital expected patient costs to increase by a “minimum” 7.5 per cent once VAT was introduced on January 1, 2015.
This is not good news for the BISX-listed healthcare provider and its shareholders, as it comes against a backdrop of declining patient admissions and rising bad debt expense.
Doctors Hospital’s annual report for the year to end-January 31, 2014, said: “Total admissions dropped by 4.7 per cent - from 4,061 to 3,870. While in-patient care saw an increase in critical care/intermediate care, medical surgical saw a 1.8 per cent drop in activity.”
The outpatient area also saw decreased patient visits “below the level of the past two years”, something Doctors Hospital attributed to persons wanting to both save money and a reduction in numbers covered by private health insurance.
“As the economy continues to struggle, the level of insured individuals able to access private health care is shrinking,” the annual report said.
“Bad debt expense, as a percentage of patient service revenues, increased to 3.9 per cent for the year ended January 31, 2014, compared to 2.9 per cent the previous year. This represented an increase of $457,662 or 34.9 per cent, and is a direct result of increased self-pay patients in the critical care areas.”
The sums owed to Doctors Hospital by patients increased by four percentage points of the total, from 11 per cent to 15 per cent, year-over-year.
All of which could be exacerbated by the Government’s VAT policy towards private healthcare.
Apart from the tax on patient bills, Mr Rassin pointed to the numerous “soft costs” VAT would likely enforce, such as computer and software system upgrades.
Agreeing that the VAT Bill seemed designed to ‘soften up’ Bahamians, and push them towards the Government’s proposed National Health Insurance (NHI) scheme, Mr Rassin told Tribune Business: “Really, it’s double taxation.
“You pay [VAT] on the insurance premium, and then you pay on the bill. It’s going to have a very negative impact on our business.”
He added: “I don’t know if we can withstand it with the economy being down and people losing health insurance.
“I don’t know if we can sustain where we are as a private industry. I’m deeply concerned. I don’t have any good feelings about this.”
The revised VAT regulations make clear that only medical services supplied by a public healthcare facility, such as those coming under the Public Hospitals Authority (PHA) and the Government-run clinics, will be treated as VAT ‘exempt’.
This means they will be unable to recover or ‘net off’ VAT paid on their inputs, but the Bill does restrict those persons to whom ‘exempt services will be provided.
Those eligible to receive ‘exempt’ services are the indigent; children aged under 18; persons 65 and older; government employees’; and those entitled to receive them “under special criteria established by the Ministry of Health”. This so-called ‘criteria’ is not disclosed in the Bill.
Mr Rassin is far from alone in his concerns. Dr Duane Sands, the FNM’s deputy chairman and a well-known surgeon, expressed fears that the VAT Bill would result in “catastrophic disaster”, as it was seemingly designed to drive more Bahamians into an “already over-burdened” public system.
And the Bahamas Insurance Association (BIA) is concerned that the increase in insurance premium costs come July 1 next year will likely cause both individuals and companies to drop their health policy coverage.
Comments
birdiestrachan 10 years, 3 months ago
Persons who can afford to go to Doctors hospital will continue to go there .Going to the Rand and PMH is no fun. It can take one a day or two to see a Doctor for a minute or two. I pray I stay well. *I can not afford to get sick.
Islandgirl 10 years, 3 months ago
These people really are clueless. Mr. Christie, your legacy is assured. THE WORST Prime Minister in Bahamian history. You will be remembered for your ineptness, the return of corruption on a mass scale, and the remarkable ability to take us all on a trip back in time, first to the Pindling era, and then further back, to the farming and fishing village we were prior to the sixties. Congratulations. Health care is an essential service, and you well know that public health care is already overburdened. DO NOT apply VAT here. Good Lord. RESEARCH before you have us suffer any further. Lazy man.
ohdrap4 10 years, 3 months ago
Doctors hospital is shedding crocodile tears. they are experts in padding up bills.
Since services are not taxed, yes, services will go up by 7.5% or more.
As to merchants, they can reduce their profit margins a bit. Remember, they now have to compete with amazon, so the increase will not be so dramatic.
Shortly before i turned 60, my health insurer told me i could remain with the same premium for 8-9 monhs after my birthday, so ok.
Within that period, i received a letter saying that given their circumstances they would need 100% increase, but they were so concerned with my health that they would raise it 'only 60%". I dropped health insurance altogether, it would have cost more than my national insurance pension.
i paid health insurance with no major claim for 30 years, but it is not an asu.
TheMadHatter 10 years, 3 months ago
"those entitled to receive them “under special criteria established by the Ministry of Health”. This so-called ‘criteria’ is not disclosed in the Bill."
I guess it would simply be too controversial to put "Haitians" there. People might be upset that Haitians will receive the benefits.
But, then again, it wouldn't matter because people would just be upset and nothing would still change. We will all just sit here and wait to die.
TheMadHatter
sheeprunner12 10 years, 3 months ago
JUST BOYCOTT VAT .......................... DO NOT REGISTER ............ DO NOT PAY ........ THERE ARE MANY PRECEDENTS ............ ISHMAEL, LESLIE, JONES, DAME PING
birdiestrachan 10 years, 3 months ago
The Pindling error are you talking about free high school education for children in the Bahamas, college of the Bahamas soon to be university of the Bahamas. National Insurance, and the many Doctors and Lawyers who came from over the hill and the list goes on. VAT must be very necessary , that is why the Government is putting it in place, because it is very unpopular. It has taken a lot of courage to bring it forward. The same people who did not want National Insurance are ,the same people who do not want Vat, They say " I got mine and I do not care about you:" Now Island girl you go to those Children In the urbane Band and those old people whose homes were repaired and let them tell you what they think of Mr. Christie. .DR. Rasian and the Rick Lowes of the Bahamas know that Vat is necessary..
jlcandu 10 years, 3 months ago
Your Gold Rush colours are showing Birdiestrachan!!! You cannot defend the indefensible!!!! We do not need VAT!!! The reason why it is being shoved down our throats is because the governments of the day over the past 41 years have spent OUR money to benefit themselves and their families and lovers. Now the cookie jar is empty -- why?? Because they and their friends and cronies don't pay their bills/taxes.
Now they want to squeeze the rest of us to maintain THEIR status. I say "hell no"!!! VAT will bring this country's economy to its knees -- you included. And guess what? The rate will be increased to 15% come July next year!!! When you can no longer eat or pay your light bill, are you still going to defend VAT?
birdiestrachan 10 years, 3 months ago
The good Doctor will do well to decrease his profits, so that others may just get by . The Government has to run a whole Country. he only has to run a hospital, and he cries, well the truth is some Bahamians have never stop crying . consider them.,
bahamian242 10 years, 3 months ago
Sheeprunner12 you got the right idea!
Bunni 10 years, 3 months ago
It seems that PMH/CLINICS would be able to handle the extra load of persons whom would not be able to afford private health care anymore whether it be thru group medical or privately. That 7.5% across the board added to the cost of living in the country on the whole will take a tole on every one and changes will have to come to us all regarding spending/balancing your cheque book. Salary raise in the private sector does not happen every year to offset the increase cost of living you incur, therefore things will be rough.
John 10 years, 3 months ago
YES even the insurance companies are choosing not to do business with Doctor's Hospital. They are just too expensive. A number of insurance companies would rather their clients seek medical attention in the USA. Doctors Hospital needs to restructure its organization more of its revenue stays with the hospital rather than going to individual doctors. While all these doctors have become millionaires the hospital struggles to survive, patient care is affordable by the few and shareholders get pittance.
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