The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government could encourage more than $500 million in new investment by privatising the Bahamas’ healthcare infrastructure, a well-known physician arguing this model would remove “a noose around its fiscal neck”.

Dr Duane Sands, who is also the FNM’s deputy chairman, told Tribune Business that the Christie administration would find it “impossible” to properly implement its proposed National Health Insurance (NHI) scheme under the current healthcare model.

He suggested that the Government instead seek to privatise its physical healthcare infrastructure by selling it to the likes of Bahamian pension funds and trade unions, which are seeking higher investment returns than those currently offered by bank deposits.

Such institutional investors would also bring large client bases with them, and Dr Sands said the Government could also enter into contracts committing it to using these privatised facilities for a defined period under specific commercial terms.

Describing this as a “win-win situation”, Dr Sands said his proposal could potentially lead to the private sector injecting between $500-$700 million into the Bahamian healthcare industry, upgrading medical facilities and their equipment.

Investors’ desire for a return on their outlay would also give them an incentive to control costs, Dr Sands added, while relieving the Government of a multi-million dollar fiscal burden.

He also described the Government’s renewed NHI implementation push as “awfully peculiar”, given the current economic and fiscal constraints, and fears it will create “an unsustainable burden” on many Bahamians.

“I have suggested publicly that government ownership of healthcare makes no sense,” Dr Sands told Tribune Business. “Government ownership of infrastructure, the clinics and the hospitals, is a noose around its fiscal neck. We have to change the model.

“They don’t have the headroom to introduce new things at this time. We have a number of pension plans in this country with huge amounts sitting in the bank, earning 1-1.5 per cent in interest. I’m saying we ought to privatise the healthcare system by selling it to pension funds, the trade unions.”

Dr Sands also proposed creating a Bridge Authority-type entity to oversee a privatised Bahamian healthcare industry, ensuring rigorous standards were strictly enforced and adhered to.

Staffing and equipment could also be provided via the private sector, he explained, with the Government “agreeing to use their services for a specified time period and for direct returns”.

“They would create an infusion of $500 million, $600 million, $700 million into the economy, and get away from the notion that the Government controls this thing and uses it for job placement, and because they own it they can’t maintain it,” Dr Sands told Tribune Business.

“It’s a win-win situation, but it means the Government has to give up ownership of this significant part of the economy. That’s my recommendation for the way forward, and if the Government do it properly, you will have a huge sector of the economy vested in controlling costs.”

This was because the investment returns for owners of a privatised Bahamian healthcare system would be dependent on containing cost overruns and total system-wide spending.

The key, though, is for the Government to relinquish control; something Dr Sands acknowledged was unlikely. “Right now, it is too enticing to control that many jobs and real estate,” he added, “and contracts for maintenance and security. It’s too appealing for a government to let that go.”

As for revival of the Christie administration’s NHI plan for comprehensive, universal healthcare access, Dr Sands described it as “almost like deja vu”.

“We had these discussions at great length before, and they are being resuscitated in an even more fiscally challenging environment,” he told Tribune Business. “I don’t know what fiscal sleight of hand is going to take place, but I find it awfully peculiar.”

The first Christie administration passed the National Health Insurance Act just prior to the 2007 general election, but never enacted the regulations to implement it. That initiative took place at a time when Bahamian economic growth had near-peaked, but its reawakening is coming against a backdrop of a weaker private sector and multiple fiscal challenges.

“If on one hand you’re saying you are going to go to the people and ask them to pay through the nose for VAT and everything, but on the other hand you say you are going to introduce an entitlement that is going to cost them, you’ve got a timing problem,” Dr Sands told Tribune Business.

“Nobody denies there’s a need. The question is: Do we have the wherewithal to introduce a comprehensive healthcare programme with the same model we have been using? The timing seems awfully odd.”

The FNM deputy chairman then went further by describing the Government’s proposal as “absurd”, given that when combined with the planned Value-Added Tax (VAT), the scheme will have a “huge impact on the pocketbook of the average man”.

“I think with the existing model it is impossible and an unbearable burden,” Dr Sands said of NHI, arguing that it could be too much for the economy and consumer to bear when added to the Government’s overall fiscal reform plans.

Suggesting that this was an issue the Government seemingly had no interest in debating, Dr Sands said his previous $750 million estimated price tag for NHI had changed little. With the $100 million investment in the Princess Margaret Hospital’s Critical Care Block, and a $20-$30 million spend on emergency room upgrades at the Rand Memorial Hospital in Freeport, he pegged the scheme’s likely costs at somewhere between $600-$700 million.

That is still almost triple the $235 million cost placed on NHI back in 2006. And even that estimate was questioned then, given that the Blue Ribbon Commission report that underpinned NHI pegged total Bahamian healthcare costs at $343 million in 2001 - a more than $100 million variance.

“You will rigidly have to define what you are going to be providing, and stick to it,” Dr Sands said, warning that failing to do this would create “an insatiable appetite” for healthcare among Bahamians. This would threaten NHI costs with spiralling out of control.

“The problem with NHI is that it wants to be all things to all people, and charge nothing for it,” Dr Sands told Tribune Business. “The selling card for this was: ‘No more cook outs’.

“At this time, the Government can barely pay its recurrent expenses, barely pay salaries, so to offer this programme, I think it’s going to line up with the Mortgage Relief Plan if they continue down that line.”