Budget Debate 2015 v1 Page 1 HOSPITALS Mr. Chairman, The current account estimates for Head 24 – Hospitals can be found beginning on page B-137 of the Estimates Book. These estimates reflect grants and subsidies provided to the Bermuda Hospitals Board: (A) To pay the King Edward VII Memorial Hospital (KEMH) for one hundred percent of the hospitalization cost for children and the indigent, seventy percent of the cost of patients between the ages of sixty-five and seventy-five years of age, and eighty percent of the cost of care for patients over the age of seventy-five years; and (B) To fund the net cost of operating the Mid-Atlantic Wellness Institute (MWI). 2015/2016 ESTIMATES The estimates for 2015/2016 are shown on page B-154 and amount to a figure of $146.835 million, which is the same budget received in the previous fiscal year. A subsidy of $109.491 million has been allocated to pay for the billed acute care services of the Young, Aged, Indigent and Geriatric at the King Edward VII Memorial Hospital . Budget Debate 2015 v1 Page 2 The Mid-Atlantic Wellness Institute is provided with a grant $37.344 million. Mr. Chairman , I would like to start by noting that the budget under debate today, as has historically been the case, is simply the MWI grant and the amount budgeted by Government for the hospital subsidy. The latter is the estimated cost of hospital services for the youth, aged and indigent populations. It forms less than half of revenues for the Bermuda Hospitals Board, with the rest coming from private healthcare insurers, FutureCare, GEHI and private individuals. Mr Chairman, the subsidy listing in the budget represents the amount paid by Government for the aged, youth and indigent in response to the services used by these groups. In and of itself it simply states the estimated amount Government expects to pay Bermuda Hospitals Board for people covered by the subsidy. This number is impacted by increases in hospital fees, changes to eligibility criteria, increases in the number of services accessed by these groups, new fees and services being added, and increases in the numbers of people in these groups. At this time, we are not changing the criteria for subsidy eligibility, nor the amount covered. No new fees and services have been approved by the Bermuda Health Council other than some technical adjustments for the opening of the New Acute Care Wing, reflecting the new standards of care on the inpatient unit, and the implementation of the East West Ambulance Service. Budget Debate 2015 v1 Page 3 The Bermuda Hospitals Board, in its entirety, makes up 44% of the healthcare systems costs, according to the latest Bermuda Health Council statistics. While this means the majority of the costs are from outside the Bermuda Hospitals Board, this still represents the largest single portion of the healthcare system. This is because the Bermuda Hospitals Board provides the largest portion of services – both in breadth and depth – and is the only 24-7 provider of healthcare services in Bermuda. It includes a wide range of acute medical and psychiatric care services, including Emergency, Surgery, inpatient care, pathology and diagnostic imaging; it also provides a large range of non-acute care services including chronic disease management, cancer care, dialysis, physiotherapy, occupational therapy, speech pathology, long term care, wound care, day hospital, substance abuse, learning disability, acute mental health, and vocational rehabilitation services, as well as a number of community services that aim to keep people out of the hospitals, from home care, to community mental health outreach teams and group homes for mental health and learning disability. Bermuda Hospitals Board’s scope and scale often brings more focus to how much it costs the country to run, than any other area of the healthcare system. The hospital subsidy is certainly the largest portion of the health budget for the Ministry of Health, Seniors and Environment. As we review the Bermuda Hospitals Board budget, and what is being done to improve services and turn their financial situation around, we need to understand the context. There are international costs of drugs, equipment Budget Debate 2015 v1 Page 4 and supplies that we cannot control in Bermuda, but which make hospitals more expensive to stock and equip, even before you look at staffing. Where we can make a difference is in how the entire healthcare system interacts and cooperates and how individuals can improve their health and wellbeing. If we can begin to improve this, we will be able to deliver the one thing I believe everyone in our country wants – healthcare services that are accountable, high quality, available and affordable for all who need them, and financially sustainable. You cannot cure diabetes by treating its symptoms, even though symptoms need urgent treatment as they arise. A foot ulcer can heal, a heart condition can be treated, but unless the individual and his or her health care providers address the underlying condition through improved diet, more exercise and potentially drugs, he or she cannot manage the disease and symptoms will continue to get worse. So what is the underlying condition that ails the Bermuda health care system – and for this debate, critically, how is Bermuda Hospitals Board going to address them? The answer is in modernizing the system and our hospitals, ensuring maximum efficiency and effectiveness. The per capita cost of health care in Bermuda is one of the highest in the world. Public health statistics related to life expectancy and the burden of non-communicable chronic diseases demonstrate poor value for this investment. The growing prevalence of non-communicable chronic diseases such as obesity, diabetes, cardiovascular disease, hypertension, Budget Debate 2015 v1 Page 5 end-stage kidney disease, asthma, cancer and poor mental health urgently demands a more proactive, effective, efficient and integrated model for organizing, managing and funding Bermuda’s health and wellness. Furthermore, Bermuda is facing an ageing demographic, and medical inflation driven by both unit cost and volume of services in excess of growth in the economy. Bermuda Hospitals Board, as the island’s only acute care facility, has responded to the community's medical and psychiatric needs through the provision of services which in the past 40 years have grown well beyond its original mandate. Demand for services continues to grow but the rapidly rising costs of healthcare, in line with local and global trends, means the ability of the commercial insurers, Government, and private individuals to pay for these services is diminishing. If left unchecked Bermuda Hospitals Board will not be able to meet its medical and financial obligations, which will negatively impact an already poor health position. This is not acceptable for anyone. In February, 2013 the new Board of the Bermuda Hospitals Board determined that the clinical and financial concerns along with well- publicized legacy issues were impacting public confidence and committed to addressing the issues. Financially, expenses were outpacing revenues and the construction and completion of the new Acute Care Wing placed an additional unsustainable financial burden on the organization. A wide range of cost containment initiatives were implemented, and a detailed Budget Debate 2015 v1 Page 6 independent review commissioned to fully understand the hospital’s clinical and financial position. Bermuda Hospitals Board, operating within the current Bermuda health system, is challenged with unnecessary duplication of services, old and ineffective processes, and complicated patient journeys which increase patient risk. Patients cannot be discharged easily from acute care beds as the community does not have sufficient beds, duplicate tests are carried out and there is no consistency in care–all leading to delay, and adverse health outcomes. To become a high performing, high quality hospital within the Bermuda health care system requires an integrated and patient-focused health care approach. This needs teamwork by the full range of medical professionals across the system. Such teams would work with shared information and engaged patients, abetted by electronic health records and chronic disease registries, to move the locus of care from hospital to home and community, at lower cost and with improved outcomes. As a reminder, much of our legislation and structures were established almost 50 years ago, when our population was just over 50,000 people, 23% lower than today, and when chronic diseases such as diabetes, kidney disease, and hypertension were much less common. It was a time when there was relatively little competition in the healthcare market, there was no, Mammography, CT or MRI equipment, and very little access to specialty services on-island. At this time very few controls and safeguards existed in the system as there was much less to regulate, lower incidence Budget Debate 2015 v1 Page 7 of chronic disease to manage, and with fewer providers available it was easier to coordinate a patient’s care journey. Unfortunately, regulation, accountability, safeguards, controls and care plans have not evolved as the system changed to manage chronic disease. There are not adequate checks and balances in the system to ensure consistently high quality and to ensure clinically proven best practices are being followed, whether inside or outside the hospital. This is not just about accessing diagnostic tests. It includes more basic things like whether all community doctors are following the diabetes and hypertension guidelines with their patients. Are there adequate safeguards to ensure a doctor refers someone for the most clinically appropriate test for their symptoms, at the right time? Are payers, including insurers, protecting clinical best practice and patients by paying providers based on volume – how many tests they do – rather than if they are improving patient outcomes? This outdated structure and legislation is the reason our hospitals and all other healthcare providers have grown so haphazardly – responding to needs with more services, but without any guiding structures in place.