The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital has warned of “a material headwind” to profitability after it was forced to more than triple provisions to cover medical bill non-payment by government patients and insurers to $12.7m.

The BISX-listed healthcare provider, unveiling its annual report covering the 12 months to end-January 2024, disclosed that allowances for unpaid medical bills had jumped almost 263 percent year-over-year compared to the prior year’s total $3.5m patient provisions.

Government patients accounted for $11m, or 86.6 percent, of the provisions total after increasing significantly from $3m at the end of Doctors Hospital’s 2023 financial year. It attributed the surge to its increased willingness to “bridge bottlenecks” in the Bahamian public healthcare system by taking in more patients from Princess Margaret Hospital (PMH) to relieve that facility’s capacity constraints.

And allowances for sums owed by “third-party payers”, namely health insurers covering medical bills on clients’ behalf, also more than tripled year-over-year from $549,277 to $1.662m. The BISX-listed healthcare provider said this increase stemmed from insurers either not fully covering medical costs or raising co-payments and deductibles, which has resulted in more patients struggling to meet their share of the bill.

The $12.7m in patient-related loss provisions accounted for 95.5 percent of the $13.3m in total expected credit losses (ECL) at end-January 2024. The latter figure represented a more than doubling, or 145.8 percent increase, compared to the prior year’s $5.404m total allowances.

And the near-$8m provisioning increase was arguably the major drag on Doctors Hospital’s profitability for the year to end-January 2024, with net and comprehensive income declining by more than $860,000 or 30 percent compared to the prior year. The healthcare provider’s bottom line for the period fell from $2.81m in 2023 to $1.945m.

Warning shareholders about its “rising exposure to uncompensated care and declining payer coverage [and] reimbursement, Doctors Hospital management nevertheless confirmed it will never turn any patient in need of care away while pledging to work with the Government to address the challenges posed by uninsured persons who cannot afford to cover treatment costs themselves.

“Due to broad issues with inpatient capacity at the national level, and the spillover effects of those constraints as a driver of higher self-pay patients in New Providence, Doctors Hospital Health Systems (DHHS) saw its related provision for expected credit losses under IFRS (international financial reporting standard) nine grow to $11m versus $3m in the prior year,” the BISX-listed healthcare provider wrote.

“Notwithstanding these earnings challenges, the group continues to stand affirmatively in the gap, bridging bottlenecks in the public system and working collaboratively with the Government of The Bahamas to define long-term solutions to its capacity challenges for uninsured patients.” And the inability of the Government and public healthcare patients to cover their bills is not the only challenge.

“In addition to growing self-pay financial risk, the group saw increased exposure to declining reimbursement rates across large payers which also negatively impacted net income,” Doctors Hospital added in relation to sums due from Bahamian health insurers. “The provision against third-party accounts receivables balances increased to $1.7m in financial year 2024, up materially from $0.5m in the period prior.

“Decreased reimbursement exists when payers remit less than what is invoiced for services or when higher financial risk is transferred to members/groups in the form of higher out of pocket obligations - co-payments, deductibles - which are subsequently unmet.” This means more patients are unable to meet their share of treatment costs as insurers move to mitigate and reduce their own risk exposure.

With other provisions added to the total $12.7m allowance for non-payment by patients and their insurers, Doctors Hospital added: “Combined, the expected credit loss expense (loss allowance) for financial year 2024 was $13.3m, a material headwind to net income.”

A deeper dive into Doctors Hospital’s financial statements for the year to end-January 2024 reveals that total patient-related receivables owed to it stood at $54.705m. This represented a more than $9m, or 20.9 percent, increase on the prior year’s $45.247m.

Of that $54.705m, some $12.7m or 23 percent has been provided for. And the bulk of that figure, some $36.326m, is due from insurers, the Government and its related agencies and other third parties, while the remaining $18.379m is owed directly by patients. With $11m in allowances, Doctors Hospital is forecasting that patients will be unable to pay almost 60 percent of the total sum they owe.

Accounts receivables, largely representing monies owned for medical care by patients, insurers and the Government, have typically been an historical challenge that has weighed down Doctors Hospital’s financial performance. They have been controlled more tightly in recent years, but now appear to be on the rise again.

Dennis Deveaux, Doctors Hospital’s chief financial officer, could not be reached for comment before press time last night. However, the annual report and accompanying financial statements are the first performance indicators to be released by the BISX-listed healthcare provider for some months after it previously obtained an extension to their publication from the stock exchange.

The accounts were only signed-off and approved by KPMG, the external auditors, on November 29, 2024, which was last week. That date is almost ten months from when the healthcare provider’s 2024 year-end closed at end-January and just two months away from when its current 2025 financial year closes.

Doctors Hospital has embarked on fast-moving expansion in recent years with the addition of multiple outpatient care and other facilities across New Providence and other islands as it bids to become a truly nationwide healthcare provider.

Dr Charles Diggiss, Doctors Hospital’s president and chief executive, told shareholders that it plans to open a diagnostic and imaging centre on Village Road during its upcoming 2026 financial year that will begin on February 1, 2025. And it is targeting completion of its new Grand Bahama hospital for that same year.

“The Doctors Hospital Village Road Signature Outpatient Diagnostic Imaging Centre, scheduled for opening in financial year 2026, will be equipped with state-of-the-art imaging technology, including advanced MRI, CT scan, ultrasound, X-ray and mammography systems,” Dr Diggiss wrote in the annual report.

“This technology allows for precise diagnostics and enhances the accuracy of medical imaging. The launch of this Imaging Centre represents a transformative step forward in elevating healthcare standards and advancing diagnostic capabilities within our organisation. We are elated about the positive impact this facility will have on improving patient outcomes and enhancing the overall quality of care.”

As for the 25-bed Freeport hospital, which is under construction at the First Commercial Centre, Dr Diggiss added: “The new Rockwell hospital in Grand Bahama is set to open its doors in financial year 2026, and we couldn’t be more thrilled to begin this new chapter in healthcare excellence.

“Rockwell will feature state-of-the-art medical technology, modern amenities and specialised care units to provide the highest quality of healthcare services to our patients in the Grand Bahama community and surrounding areas.”

Dr Diggiss added that close to 18,000 persons were now enjoying improved access to healthcare at all levels. “Our strategic focus on delivering the best value to our customers by leveraging technology and expertise, through the merging of innovation and industry knowledge, is apparent through our Loyalty Advantage Membership Programme (LAMP), which has seen exponential growth in the past year,” he asserted.

“To-date, LAMP has 1,245 active paying members, 8,031 NHI enrollees, 4,500 Baha Mar associates and 5,000 Royal Bahamas Police Force members. LAMP is working toward becoming a viable alternative financing arrangement to manage care at all levels. Via LAMP, we have realised increased affordability of our services by our customers/patients. This financial access tool is one way we optimise our fiscal performance.”

Doctors Hospital management said enrollment in its LAMP scheme grew by 42.2 percent year-over-year during the 12 months to end-January 2024. It added that the plan’s evolution has driven an increased number of patient visits to its care facilities as well as a rise in laboratory tests and diagnostic/imaging visits.

“A prominent driver of the higher outpatient clinic segment remains the group’s Loyalty Advantage Membership Programme (LAMP), which presents a more affordable alternative than conventional insurance, effectively lowering barriers to access for average Bahamians,” Doctors Hospital said.