By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital yesterday revealed plans to “directly insert” itself into financing affordable healthcare by late summer 2025 with “insurance-like pricing” up to 50 percent less than existing coverages.

Dennis Deveaux, the BISX-listed healthcare provider’s chief financial officer, told the Grand Bahama Business Outlook that it aims to make access to quality medical treatment less costly and more accessible in a climate where companies are enduring premium increases of between 9 percent to even 25 percent to maintain group coverage for employees.

To achieve the promised savings, and keep healthcare costs down, he said Doctors Hospital will focus on “wellness” initiatives designed to keep insured patients from needing higher-priced tertiary care in hospitals. And it is also aiming to remove potential barriers and deterrents to accessing primary care by eliminating the “fee for service” reimbursement method for physicians, thus controlling patient co-payments and deductibles.

Revealing that Doctors Hospital plans to “directly insert ourselves into the healthcare financing landscape” by the time construction on its new Grand Bahama hospital is completed in late summer 2025, Mr Deveaux explained: “We’re going to take risk. Our risk, though, is going to be not only in dollars collected versus dollars paid out, but our risk is going to be in the capacity being built and ability to manage utilisation.

“Utilisation in healthcare means keeping people well, keeping them out of the hospital if they don’t need to be there. So if we manage our risk well we actually believe we can deliver a product that allows most Bahamians somewhere in the range, not of $600 or $600 en route to $1,000, but we believe there is an opportunity in the range of $500 a month to deliver full and traditional healthcare insurance-like pricing for all of the things that most Bahamians would need.

“How do we do that? We focus on wellness, we do not use fee for service in wellness offerings, we don’t have mitigants at the point of getting well.” Mr Deveaux identified such “mitigants”, or healthcare deterrents, as the co-pays and deductibles that patients must pay to access care. 

These fees, sometimes as low as $20 or $50, could still deter Bahamians from seeking primary healthcare and result in patients with hypertension or diabetes ending up in hospital emergency care and facing costs of up to $75,000 because they were not treated early enough.

“We believe that if we can incentivise physicians, not with fee for service, and fee for service says ‘the more you do, the more you get paid’,” Mr Deveaux explained. “We believe that if we can incentivise physicians to do the work when patients are healthy that we can ultimately bring them back up the cost curve of healthcare in The Bahamas and that we can actually beat the average.”

The Doctors Hospital financial chief said it was becoming increasingly difficult for retirees to afford health insurance coverage priced at between $1,400 to $1,500 per month even if they were well, adding: “They cannot afford it on a fixed income.”

And, with business operating costs constantly escalating, he added: “As businesses become less profitable given the tax environment, they are unable to shoulder the premium load they currently carry today and are likely to reduce the richness of the benefits they offer.

“When we talk to chief executives and chief human resource officers, they’re trying to figure out how they can keep that premium expense from growing by 25 percent a year, and get it down to 12 percent or 16 percent.”

Healthcare affordability, and insurance coverage, has become a growing concern for many Bahamians due to ever-escalating costs. “Doctors Hospital in its 2024 financials 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 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, for the 12 months to end-January 2024.

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 in its annual report.

“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.”