The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The government’s failure to fund Cabinet-approved spending increases has consistently left the public healthcare system facing “significant budget shortfalls” amounting to annual eight-figure sums.

Documents obtained by Tribune Business reveal how the Public Hospitals Authority (PHA), which oversees The Bahamas’ two public hospitals plus the Sandilands Rehabilitation Centre, has frequently been starved of operating funds by as much as $28m.

Catherine Weech, the PHA’s managing director, revealed in an April 16, 2018, letter to acting financial secretary, Marlon Johnson, that much of this shortfall resulted from the government’s failure to provide the extra funds necessary to cover new industrial agreements and staffing increases in the annual May budget.

While the PHA requested almost $40m in additional funds for the 2018-2019 fiscal period, which would have taken the taxpayer’s subsidy to $253.664m as opposed to the prior year’s $213.843m allocation, subsequent budget records show just $216m was provided.

Besides undermining care quality and the delivery of healthcare services to the Bahamian people, Mrs Weech’s letter said such under-funding frequently forced the government into having to seek parliamentary approval for additional monies during the budget cycle to cover the difference.

She also told Mr Johnson that the PHA had received zero financing for capital upgrades during the entire five-year term of the former Christie administration, resulting in a battle to prevent its aged facilities at the Princess Margaret Hospital (PMH) and Rand Memorial Hospital from “falling into a state of total disrepair”.

Mrs Weech added that the Minnis administration, during its first fiscal year, had allocated just $10m to the PHA and Department of Public Health (DPH) to cover more than $80m worth of capital works contracts entered into at the Government’s behest - leaving a $70m “hole” to be filled.

She warned that the Government’s desire to move the PHA to a position where it could recover all costs within three to five years was “extremely ambitious” given that staffing expenses accounted for 74 percent of its budget, thereby highlighting the difficulties it will likely encounter in slashing loans guaranteed on behalf of all state-owned enterprises (SOEs) by $418m.

Referring to the austerity measures set in motion by the Government, Mrs Weech told the Ministry of Finance’s top official: “While we note the Government’s announcement regarding the cutting of existing budgets and appreciate the need for strategies to realign budgets and streamline costs, we in the PHA are unable to accede to this request without the negative consequences of cutting service delivery to the public.

“It is imperative to note that the PHA has had significant budget shortfalls over the years due to Cabinet-approved, contractual and/or non-discriminatory items not being funded or not included in the approved budget.

“Hence the projected fiscal deficit for this fiscal year is $28m, of which supplementary funding of $11.5m was provided to date for unpaid bills accumulated this fiscal year up to December 2017. A comparable second tranche of supplementary funding will likewise be needed to cover the deficit incurred for the second half of this fiscal year.”

Mrs Weech identified the Government’s failure to allocate funding for the increase in Critical Care Block staff and the salary increases in then-new industrial agreement with the Bahamas Doctors Union (BDU) as the major culprits behind the under-funding, even though both moves had been approved by Cabinet.

“Pursuant to the Cabinet approval for the engagement of staffing for the Critical Care Block, in January 2015 the Ministry of Finance provided $2.5m to cover the new Critical Care Block staffing cost for the remainder of that fiscal year and committed to adjust the PHA’s budget base for the full annual cost,” the PHA managing director wrote.

“To date, our budget base has not been adjusted to cover this amount. As a result the PHA had to divert funding from other critical services to the detriment of their operations to cover this shortfall. Additionally, the Critical Care Block still has not been fully staffed as intended while some staffing coverage is provided on an overtime basis and critical intensive care unit (ICU) beds have been shut down.”

The same occurred after the Government approved a new industrial agreement with the Bahamas Doctors Union in May 2017, around the time of the general election. This deal, made retroactive to July 2015, again failed to result in an adjustment of the PHA’s annual budget to incorporate some $2.6m in collective salary increases and $1.3m in greater allowances.

“Such funding shortfalls have contributed to the projected deficit of $28m for this fiscal year,” Mrs Weech wrote, noting that negotiations with other staff unions for new industrial agreements were either ongoing or upcoming.

As a result, the PHA requested over $18m extra to cover the increased staffing costs and “unfunded industrial agreement increases” in its 2018-2019 Budget request. The increase in doctors salaries also caused the Authority to seek a further $2.595m to meet the resulting rise in National Insurance Board (NIB) contributions and doctors’ “on call” allowance.

The PHA also sought an extra $3.705m to tackle the “significant deficit in the nursing ranks”, and attempt to improve patient care and reduce overtime costs, via an intern and graduate nurses’ programme. Finally, the explosion of chronic non-communicable diseases (NCDs) meant another $13.716m was needed to buy drugs, medical equipment and surgical supplies.

“If these critical items are not funded, the PHA will be forced to ration services there, resulting in increased morbidity and mortality rates,” Mrs Weech warned. However, little of the $39.82m in extra taxpayer subsidies was seemingly provided based on Budget data.

It was a similar story with capital spending, where the PHA requested some $23.533m in 2018-2019 Budget funding for “priority capital construction projects” that were supported by Dr Duane Sands, minister of health.

“It should be noted that prior to 2017-2018, the PHA had not received any capital funding for five years,” Mrs Weech wrote. “This has had a significant impact on the quality and timely delivery of services. Furthermore, the maintenance costs incurred continued to rose as we endeavoured to prevent our aged facilities from falling into a state of total disrepair.

“Also, due to inadequate funding for our preventative maintenance programme, we are unable to repair critical equipment in a timely manner and, as a direct result, patients are either unable to receive care or they had to be referred to the private sector where the cost of care is significantly higher and the PHA has had to eventually fund these costs.”

She continued: “Additionally, it should be noted that while $10m was allocated to PHA and Department of Public Health capital works under the Ministry of Finance head for the current 2017-2018 fiscal year, the balance on capital contracts entered into at the direction of the Government exceeded $80m.....

“The country’s premier urgent care facility (PMH) has long outgrown its current capacity and continues to be overcrowded and the environments of care are substandard. Other areas require major capital infusion such as our IT infrastructure in order to prevent catastrophic system failure and data loss.”

Noting the Government’s goal of moving the PHA and all state-owned enterprises (SOEs) to a position where they will be generating sufficient to cover all their costs within three to five years, Mrs Weech described this as “extremely ambitious” given its legacy staffing costs and the need for improvements in service standards and “crumbling infrastructure”.

K Peter Turnquest, deputy prime