The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Value-Added Tax’s (VAT) design is “nothing short of stupid”, a leading physician warned yesterday, warning it would further weaken the Bahamian healthcare industry’s global competitiveness.

Dr Duane Sands, who is running for the post of Free National Movement (FNM) deputy leader, told Tribune Business that the entire medical community was “very concerned” about VAT’s impact on their industry for a variety of reasons.

With $127 million worth of health insurance premiums estimated as paying for treatment outside the Bahamas, Dr Sands said the Government’s VAT design threatened to merely increase the “unacceptable” export of healthcare from this nation.

And, with the 7.5 per cent levy being added to both doctors’ bills and insurance premiums (the latter from June 30 next year), he added that health underwriters were being “incentivised” to send Bahamian patients abroad for care.

Private healthcare in the Bahamas will be ‘VAT-able’ from January 1, meaning that its users will have to pay the 7.5 per cent levy, while its public healthcare counterpart - Princess Margaret Hospital and the government-run clinics will be ‘exempt’.

Dr Sands said the result would be a reduction in demand for private healthcare, with Bahamians only seeking treatment from this source when they had to.

And, in turn, this would drive even more persons to an already over-burdened public healthcare sector that might, as a result of VAT, lose the services of leading physicians and surgeons.

Warning that many private medical practitioners might have “to make hard decisions to keep their businesses viable”, Dr Sands said this would reduce the time they had available to work in the public sector - further starving it of capacity.

Pointing out that the Government’s VAT policies seemed at odds with plans to promote the Bahamas as a medical tourism destination, Dr Sands said concerns over “the unintended consequences” for healthcare were being dismissed as nothing more than ‘special interest’ lobbying.

“The issue of VAT on top of almost every other tax, licence and assessment is something that is very concerning to the professional medical and consulting establishment,” he told Tribune Business.

“Already we have a challenge of being competitive with South Florida hospitals. Whether you’re talking about 45 per cent, 35 per cent duty rates on medical equipment, if you add on top of that 7.5 per cent VAT to insurance premiums and all medical evaluations, and healthcare in south Florida is not VAT-able, we will expatriate a significant part of the private healthcare market.”

He added: “We are now saying to insurance carriers and patients, even if we start where we are, which is an unacceptable export of medical services, that we are going to give a 7.5 per cent incentive for people to access healthcare in South Florida.

“It is stupid. What we are truly going to do is make it a whole lot more difficult for patients to get access to healthcare are home. And we are going to drive more people into a public healthcare system that lacks the capacity to accommodate them.”

A September 2014 presentation by Sanigest International, the Government’s Costa Rican consultants for its proposed National Health Insurance (NHI) scheme suggested that just under 50 per cent of the $270 million in private health insurance premiums paid annually in the Bahamas - some $127 million - funded healthcare abroad.

“Immediately, you are going to make access to healthcare more difficult for people already strapped for cash. It is nothing short of stupid,” Dr Sands told Tribune Business of VAT’s likely impact on the Bahamian healthcare industry.

“The impact on providers and professionals is that people will only access healthcare when they have to.”

The well-known surgeon said among those impacted by a likely fall-off in demand for healthcare would be BISX-listed Doctors Hospital, private laboratories and imaging facilities, and private practitioners.

“They will find themselves in a situation where they have to make very difficult choices to retain the business viability of their practices,” Dr Sands said.

“What you have is a scenario where people have to pay exorbitant electricity bills, food costs. Salaries are not keeping pace. The first thing to go will be insurance. Businesses are going to jettison various insurance benefits.... This [VAT treatment for medical services] is going to demand a second look.”

Dr Sands said private physicians like himself, who provided services in the public sector, might have to cut back on the latter due to the extra attention they will have to pay to their businesses.

As a result, VAT’s impact will be to reduce professional capacity in the public sector.

“You are creating a situation where the public sector lacks not only clinical capacity but professional capacity,” Dr Sands told Tribune Business. “It will have a VAT-induced challenge of professional capacity.”

Dr Sands said this issue went to the heart of Bahamians having quality, affordable access to healthcare. He added that such concerns were being widely discussed within the Bahamas Medical Association (BMA) and among private practitioners.

“This thing has not been carefully thought out, and the unintended consequences that are being raised are being dismissed, as we are only a ‘special interest’ and only concerned about a bottom line,” Dr Sands told Tribune Business.

“I guess for those who conceived of this plan it’s ‘damn the torpedos’.”

Suggesting that VAT training and education efforts to-date have been inadequate, Dr Sands said “few professional entities” had registered for the new tax.

“Bear in mind that business in the Bahamas shuts down on December 15,” he added. “They [the Government] are running out of time, and don’t appear to be very concerned despite the rating agency shooting across their bows over Bank of the Bahamas.”