The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital has obtained two Royal Bank of Canada (RBC) loan facilities worth a collective $11.858m to fund expansion plans in "a rebounding Bahamian economy".

Joseph Krukowski, who is stepping down after 14 years as the healthcare provider's chairman, told shareholders in its annual report that the loans have financed the acquisition of two properties located at East Bay Street and Oakes Field respectively.

The East Bay Street property, to be called Doctors Hospital Harbourside, will house a "first-of-its kind" nursing facility offering extended care and rehabilitation services. The Oakes Field location has been acquired for "future development", and to exploit continued growth at the nearby University of The Bahamas (UB).

"We have been hard at work analysing our business model and the environment to determine which service lines and geographic locations are best positioned for development in a growing and rebounding Bahamian economy," Mr Krukowski told shareholders.

"Based on the findings of the professional analysis, we moved to expand our footprint initially into eastern New Providence with the development of a new facility. Doctors Hospital Harbourside will house the first-of-its-kind in The Bahamas Skilled Nursing Facility, providing much needed Extended Care and Comprehensive Rehabilitation.

"This newly-renovated facility will also feature Medical Residences, where patients travelling to Nassau for out-patient services as well as the visiting family members of in-patients can secure affordable accommodation to be as close as possible to the provision of care or their loved ones."

As for the BISX-listed provider's other real estate acquisition, Mr Krukowski added: "This year we also acquired a property in the Oakes Field area in close proximity to the University of the Bahamas so that we are positioned, when the time is right, to support that rapidly expanding collegiate community."

Both acquisitions were financed from one RBC loan facility, worth $4.235 million. The second credit line, worth $7.623 million, will finance the renovation and equipment acquisition for Doctors Hospital Harbourside, with this cost pegged at $5 million.

"The balance will be drawn as needed for future software upgrades and renovations at the main facility," Doctors Hospital's annual report said, referring to the Collins Avenue hospital.

The BISX-listed healthcare provider's focus on renewed expansion comes despite the continued drag presented by its Blake Road-based facility in western New Providence, which produced a $1.046 million net loss for the year to end-January 2018.

This represented a 12.9 per cent reduction on the Bahamas Medical Centre's $1.2 million net loss, as Mr Krukowski unveiled restructuring plans for the facility - including a name change and the closure of one of its buildings - in an effort to stem the financial bleeding.

"Following a thorough audit of the business model and performance, we have made some changes that we are confident will have an immediate positive impact," the outgoing chairman said. "We have closed the traditional gym as well as the Emergency Room/ Urgent Care centre.

"The Hyperbaric Oxygen Therapy department is moving to the main hospital to better serve our inpatients and outpatients. Rehab Services will relocate to Building A. And will include appropriate gym equipment to complement the offerings. This enables us to close Building C, which will reduce operating expenses. As we repurpose Building C we will consider all options...

"We also undertook a rebranding exercise to change the name from Bahamas Medical Centre to Doctors Hospital West. This deliberate change allows us to leverage the significant positive branding of our main hospital by letting the public know very clearly that the facility on Blake Road is a part of the Doctors Hospital Health System."

Doctors Hospital's main Collins Avenue facility continues to carry Blake Road, although its own profits slumped by 27.8 per cent year-over-year - from $4.778 million to $3.451 million. As a result, the BISX-listed healthcare provider's total profits for the year to end-January 2018 fell by 32.8 per cent - from $3.578 million to $2.405 million.

Capital spending for the current financial year is budgeted at $6 million, an increase upon the prior year's $4.87 million, and will be financed through internal cash flow as Doctors Hospital seeks to upgrade equipment and facilities.

"For the year ended January 31, 2018 net patient revenue increased 2.4 per cent or $1.248 million," Doctors Hospital said of its Collins Avenue facility. "Patient days increased by 1.5 per cent from the previous year. The continued growth in patient days over the last three years is primarily in the intensive and intermediate care area.

"Total admissions to the facility were 4,041 in fiscal 2018 compared to 4,114 in the previous year. The continued flat admission numbers and increasing patient days are indicative of the trend toward a rising severity of illness. The average daily census increased to 33.6 patients per day from 33 in the previous year. Outpatient services also grew by a net of 6 per cent."

The healthcare provider's expenses increased by 5.6 per cent or $2.71 million, with 41 per cent of the rise attributed to bad debt expense. The direct cost of increased sales accounted for a further 28 per cent, with the remainder driven by increased costs of doing business.

"Bad debt expense, as a percentage of patient service revenues, increased to 4.6 per cent for the year ended January 31, 2018, compared to 2.5 per cent the previous year," Doctors Hospital said. "This represented an increase of $1.154 million or 84.6 per cent. The previous year benefited from a write-back to bad debt expense of $878,363.

"Days revenue in accounts receivable at year-end (AR Days) for fiscal 2018 stand at 55 compared with fiscal 2017 at 50 days, and net receivables as a percentage of net patient revenue increased to 14.9 per cent from 14.1 per cent. These increases are a result of a rise in self-pay inpatients and slower payments in the same category."