Comment / Bermuda shorts 5 – Lost in the triangle

Traditionally, at the start of the year, we look back on what happened in the last 12 months as we resolve to do better this time around. I decided, once again, to undertake dry January. In part this was to give my liver a rest after the HFMA UK annual conference (more of which later) and Christmas excesses. But I also wanted to get the suit that fitted me at the end of my last foray into teetotalism to once again feel like it is not cutting off the circulation from waist upwards.

Looking back, the last 12 months and, in particular the last six weeks, has been very busy, both domestically and professionally:

• I’ve moved house in Bermuda further along the North Atlantic shore and closer to work by 15 minutes
• My wife, Avril, has joined me, as has my labrador, which should mean more opportunity for long walks, lose weight and get into that suit
• As the Chartered Professional Accountancy (CPA) body in Bermuda didn’t have a reciprocal arrangement with CIPFA (my institute), I sat and passed the conversion course to become a member of the Institute of Chartered Accountants of Scotland
• I started the restructuring programme of the Bermuda Hospital Board finance department through external recruitment of a deputy chief finance officer and a number of senior appointments, which I’m sure will strengthen and enhance the effectiveness of finance in business decisions.

The coming year, as I’ve discussed in earlier blogs, continues to present challenges for BHB. We will exit the fiscal year with a deficit of around $40m and have invested significant time and resource in improved financial governance, approval of a financial recovery plan and creation of a programme management office to spearhead delivery. But the revenue outlook for next year continues to be challenging.

Like much of the developed world, Bermuda faces a demographic time bomb with an ageing, albeit largely stable, population. This means a reducing percentage of fit and healthy, working individuals paying insurance premiums to support those who consume the greatest share of resources. In solving this conundrum, government’s room for manoeuvre is constrained in a jurisdiction where there is no income tax. (This is a major part of the attractiveness of Bermuda as a place to do business for a significant proportion of the world’s insurance and reinsurance businesses.)

The government has declared its intention to introduce a sugar tax, but it recognizes that this will not be a major source of additional revenue. Our discussions so far with government have focussed on the ability to charge additional co-payments to those who already have insurance cover.

As would be the case in the NHS, introducing new charges for services patients believe they have already paid for could lead to a range of interesting debates.

It is sometimes easy to forget what is happening elsewhere in the world, especially when you are ‘Lost in the triangle’. So, as part of my continuing professional development, in December, I attended the HFMA annual conference in London. This was the first time I had attended with the perspective of an outsider.

Although many of the issues and themes were, of course, very familiar to me and it was fantastic catching up with colleagues and friends, old and new, I was struck by the challenges currently facing healthcare in the UK. While these have been there pretty much for my entire career, the size and scale of the challenge does feel unprecedented.

So what insight can I offer having been exposed to an alternative healthcare delivery system?

First, more of the same will not work. Salami slicing departments and budgets is unlikely to deliver lower cost services that are safe, while delivering an acceptable performance level.

Second, fiscal pressures on governments around the world mean that additional funding is unlikely to go as far as we might like in solving our problems.

Third, there is a key role for finance and finance professionals in identifying and communicating what optimal performance looks like and helping to deliver this.

Finally, can we credibly continue to provide all services expected by society, either free at the point of delivery, or within existing insurance premia? If not, what is the appetite to either charge for some, or all of these services, or to cease providing them altogether?

I will certainly be fully engaged in discussions with payers here in Bermuda for the remainder of this fiscal year – seeking to obtain the best possible outcome for patients and BHB. I know that many of you will be doing the same from your respective organisations across the UK. I wish you all the best in reaching timely agreement without the need for binding arbitration!

BB

Until then, good day.

Bill Shields was chief financial officer at Bermuda Hospitals Board from April 2017 to November 2022. He is now chief finance officer at Devon Integrated Care Board.

All the blogs from this series can be accessed here