The Tribune

• But says: ‘We want COVID to go away’

• Pandemic care, testing one-third of income

• Access boost via 50% patient deposit slash

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital has seen a 75 percent year-over-year increase in demand for its services based on top-line revenue growth during the first six months of its 2022 financial year, a senior executive has revealed.

Dennis Deveaux, the BISX-listed healthcare provider’s chief financial officer, told Tribune Business that this increase - driven by a combination of COVID and non-COVID related care - gave an indication of “what is possible” in terms of full-year profits while emphasising: “We want the pandemic to go away.”

He added that revenues through Doctors Hospital’s second quarter, which closed on Saturday, had risen year-over-year by 25 percent even when income earned from providing COVID-19 treatments was stripped out. Mr Deveaux said this was a sign that demand for the provider’s non-COVID services had returned and has now reached above pre-pandemic levels.

Revealing that COVID-19 care and testing presently accounts for about one-third of Doctors Hospital’s top-line income, he told this newspaper: “Because of the initiatives we put in place to grow organically, we’ve seen demand for existing services above pre-COVID levels. Our core non-COVID stuff has come back and is actually higher than

pre-COVID levels...

“I think our revenues, if you were to pull out COVID-19 for the first quarter of the current year through to the second quarter, they will have grown by 25 percent and that’s pulling out COVID-19.” The Doctors Hospital chief, though, warned that the “true measure” of its financial resiliency amid the pandemic will be year-over-year comparisons with second quarter results from 2020.

That is because the 2020 first quarter, which covers the period from the beginning of February to end-April, contained a five-week period on the back-end when the BISX-listed healthcare provider lost money while it adjusted its business model to cope with COVID-19 and the loss of business from suspended surgeries and care in other areas. As a result, the 2021 first quarter figures are up against relatively weak prior year comparisons.

Mr Deveaux told Tribune Business that he expected the company’s second quarter results, which will feature the period from May to end-July, to be “fairly robust”. He attributed this to Doctors Hospital’s operational and financial resilience, which had enabled it to both withstand COVID-19 and undertake expansion initiatives to position the company for future growth.

“You would see that the demand for our services, if measured by revenues, has increased by approximately 75 percent year-over-year if you add COVID and non-COVID,” Mr Deveaux said. “It’s early yet, and we’re barely approaching half-way through the [financial] year, but I think we do not anticipate a decline in the need for our services.

“What we know is the 75 percent year-over-year increase in demand, that gives the best indication on the top-line of what is possible.” Doctors Hospital enjoyed record profits of $12.439m for the year to end-January 2021, but Mr Deveaux said the BISX-listed healthcare provider would rather COVID-19 “go away” despite the extra financial boost it is providing.

“We want the demand for COVID-19 services to go away,” he added. “We know COVID testing is key and it’s an enabling service, but we want demand for COVID care to go away. We want that need to go away.”

Doctors Hospital saw profits for the three months to end-April more than double, increasing by 139.5 percent year-over-year to hit $4.29m compared to $1.791m for the prior year, as the latter was hit by the initial pandemic lockdowns and suspension of certain non-COVID surgeries and procedures.

Total revenues for that period jumped by 62.4 percent, rising from $16.241m during the same three months in 2020 to $25.354m. Net patient service revenues rose by 62.9 percent, hitting $25.354m as opposed to $15.568m, which outstripped the 52.9 percent jump in total costs to $22.091m.

Felix Stubbs, Doctors Hospital’s chairman, said in his first quarter report to shareholders that the major bottom line gains had come from Doctors Hospital West where the majority of New Providence’s hospitalised COVID patients are being treated.

The Blake Road location saw profits rise to $2.977m compared to $674,464 for the same period last year, a more than four-fold growth, but the bottom line at Doctors Hospital’s main Collins Avenue facility increased more gradually, growing from $1.116m in 2020 to $1.313m this time around.

“Consolidated net patient revenue increased $9.786m or 62.86 percent over the first quarter last year,” Mr Stubbs said. “The impact of COVID-19 inpatient admissions at Doctors Hospital West and the introduction of a new molecular biology laboratory, which performed inpatient and outpatient COVID-19 testing, were significant factors in revenue growth. Total inpatient days were down 5.39 percent compared to the same period last year.

“Consolidated expenses increased $7.641m or 52.87 percent over the comparable period last year, which was driven predominantly by variable costs incurred in delivering increased services during the period, such as salaries and benefits, medical services and medical supplies.

“Salaries and benefits grew as a result of the creation of the molecular biology lab, staff bonuses, hazard premium expense and profit sharing. Medical services and medical supplies vary based on the level of services provided. As patient service revenues grow these expenses are expected to increase as well.”

Mr Stubbs added that there was “a significant increase in bad debt expense, which correlates to the significant increase in trade receivables”. He revealed that Doctors Hospital had reduced patient deposit requirements by 50 percent, which had inevitably resulted in larger accounts receivables balances representing monies owed by patients and insurance companies.

Accounts receivables owed by “third party payers” such as insurance companies grew by more than $5m during the three months to end-April 2021, rising from $15.401m to $20.993m. Those figures are net of a $5m provision for debts that Doctors Hospital doubts it may be fully able to collect.

“The company continued its initiative of reducing its traditional upfront deposit requirements to allow access to critically needed care without the large financial impediment,” Mr Stubbs said. “Deposit requirements were reduced by 50 percent. The changes taken by the company has invariably led to larger trade receivable balances and higher provisions against the related balances.”