For the first time in its existence, the Health Services Authority has made a profit, revealing that it made $2.3 million in the last financial year.

Despite finally being in the black, the public health service is still seeking to recoup some $40 million in outstanding debts from patients who have failed to pay for treatment over the past decade, chairman of the authority’s board Canover Watson said.

The authority, which runs the Cayman Islands Hospital, allows for about $12 million in bad debts annually, Mr. Watson said, adding that if those debts had been paid in the past 12 months, the health authority would have made a $14.3 million profit during the financial year that ended on 30 June.

The latest financial results are a major turnaround for the public health service, which three years ago had an operating loss of about $15 million.

Mr. Watson admitted that the Health Services Authority had been plagued by “turmoil and disarray” in past years and described its previous finances as the hospital’s “Achilles heel”.

“That is behind us now,” he said.

In a press briefing on Wednesday, outlining the health authority’s strategic five-year plan, Mr. Watson said there had been a variety of reasons for the poor financial state of the health service over the years, including a revolving door of senior management and board members, which had led to inconsistent leadership and direction.

Between 2002 and 2006, the health service had five chief executive officers, five chief financial officers, three medical directors and four human resource directors, he said.

He acknowledged that the health authority was several years behind in completing audited financial statements and annual returns, but said it was on target to meet a 30 September deadline set by the Public Accounts Committee to complete all its audited financial statements.

The $2.3 million profit is a projected amount, pending the completion of the 2009-2010 financial statements.

Turnaround

To turn its financial fortunes around, the hospital increased corporate and community partnerships, received funds to buy equipment, streamlined the work of administrative and non-clinical staff, and introduced an electronic financial management and clinical information system to better track finances and patient revenue.

It also cut back on the use of telephones, electricity and fuel consumption, further lowering its operational expenses.

Mr. Watson said the hospital had also renegotiated contracts with vendors and partners to secure more competitive rates.

Hospital staff also began contributing 6 per cent to pension contributions, wage increases were deferred and a hiring freeze on non-clinical staff was introduced.

No staff members were laid off in the cost-cutting measures, health officials said.

“We did not pursue any efficiencies or take any action that diminished the quality of care delivered to our patients,” Mr. Watson said.

He said the hospital had also adjusted fees to “better match the cost of providing our services” and implemented “robust systems and effective measures to improve our collections”.

Mr. Watson said the Ministry of Health and the Health Insurance Commission were reviewing legislation covering fees and health insurance, which have been a “significant hurdle in inhibiting the HSA’s ability to improve its financial overall performance”.

“The current standard health insurance that is provided is not adequate to cover care for patients, so the ministry is taking a fresh look at the health insurance laws to see if we can improve on that standard health insurance plan, which will increase the coverage and inevitably will reduce some of the bad debt and the expenses incurred by the organisation,” he said.

Bad debts

The health authority has hired an external collections agency to improve payments for services from patients and changed its registration policy for patients.

“It is challenging, because at the public hospital we are charged with the responsibility to provide service to all, whether you can pay or not.... We are working very hard to ensure that there are policies that mitigate the escalation of these bad debts,” Mr. Watson said.

“The country cannot continue to sustain that level of bad debt,” he added.

Half of the outstanding debt is from work-permit holders, Mr. Watson, said. “This is a very transient society, so as people come and leave, it becomes exceedingly difficult, particularly as time goes on, to collect some of those monies,” he said, adding that there were also bad debts incurred by cruise ship and stay-over visitors who had been treated at the hospital.

The authority and its collection agency will continue to try to recoup bad debts that date back several years, CEO Lizzette Yearwood said.

She urged people with outstanding debts to pay what they owe, so that the money could be reinvested in health services and equipment.

Ms Yearwood said that if the bad debts could be collected, they could help pay for services and treatments that patients have to go off island to access, such as a cardiac catheterisation lab and cardiology and oncology care.

“We’re not here for a profit. We will be reinvesting those dollars and cents back into the health care here,” she said, adding that she wanted to stress that just because the health service is now in the black does not mean that people could stop paying their medical bills.

Among the objectives laid out by the authority in its five-year plan is to decrease the number of cases of chronic non-communicable diseases like obesity, diabetes and cancer; to implement evidence-based practice in all areas of clinical care by 2015; to have collections match operating expenses by 2015; and to have at least 90 per cent of the population rate the health authority as satisfactory for high quality health care by 2015.