Bermuda shorts 4: Dark and stormy

by Bill Shields

20 November 2017

In April 2017, after 30 years working in NHS finance, former HFMA chairman Bill Shields moved to Bermuda as chief financial officer of the territory’s hospitals board. In this series of blogs, he documents his experiences.

Although discovered by the Spanish, Bermuda wasn’t settled until 1609 when the Sea Venture, en route to Jamestown in Virginia, was run aground on rocks by its captain (later Sir) George Somers to avoid a hurricane.

All of those on board survived and established the town of St. George’s (the oldest permanent settlement in the western hemisphere and where yours truly lives). They built a new ship, the Deliverance, from salvaged timber and the then abundant supply of Bermudian cedar on the island.

The events were fictionalised by Shakespeare in The Tempest. And today, one of Bermuda’s most popular libations is Dark and Stormy which consists of Gosling’s dark rum and ginger beer – not one of my favourites to be honest!

Bermuda has continued to be affected by hurricanes throughout its history; most recently in 2017 when the eye of the category 3 storm Nicole passed over the island. So far this season, which runs until 30 November, we have been very lucky as Harvey, Irma, Jose, Katia, Lee and Maria have all avoided the island. This is mainly due to the area of high pressure that is a major feature of our weather system.

That said, I have stocked up on supplies of tinned food, bought a gas stove and an inflatable bed to ensure I can be at our hurricane incident control centre in the hospital, which was built to withstand a category 5 storm.

We do, however, like most of the developed world, face storm clouds of a rather different nature. Bermuda has an ageing population and a falling birth rate (less than 700 births per year). Of a population of 60,000, 49,000 have health insurance, the balance being covered by subsidy, or having no coverage at all.

The last few winters have seen bed crises that, as in the NHS, have now developed into a year-round problem. Here, however, there is no Better Care Fund to draw on, there is a chronic shortage of social care provision and home care is practically unheard of.

And like most of the developed world, we are now seeing worrying increases in the diseases of affluence – diabetes, chronic heart disease and renal failure – closely linked to poor lifestyle.

Bermuda Hospitals Board’s (BHB) response has been to open unfunded ‘overflow’ beds, staffed exclusively by overtime, and agree to a reduced daily rate for those patients in need of social rather than healthcare. Unfortunately, in a system with low levels of alternative provision, this has mainly served to reduce our income, while leaving us with a significant clinical issue. And it does not provide a long-term solution for what is an increasing problem.

We also have a funding system where the tariff has many perverse incentives and disincentives. For example, there are separate remuneration systems for:

  • inpatients: funded using a diagnosis-related group (DRG) tariff based on the US system adjusted by a standard dollar value to take account of Bermuda’s higher cost of labour, import duty and delivering activity at sub-scale. Every DRG has a 15-day trim point after which a per diem of $1,350 is paid
  • outpatients: unlike the UK system, this includes 23-hour lengths of stay as well as consultations, diagnostic tests, dialysis and procedures such as endoscopy. They are funded via CPT (current procedural terminology) codes that are not as complete as their US relatives and legislation is required for any changes.

This means there is no incentive to treat a patient as a day case, if a DRG and, potentially, $1,350 per day can be earned if the patient occupies a bed. Procedures that can reduce length of stay can be economically unviable. And in some cases, no payment mechanism at all is available for a treatment that there is a clear clinical need for.

As our clinical services plan nears finalisation, it has become increasingly clear that the current funding mechanism needs attention. Even if it is not in need of complete overhaul, it certainly needs to be aligned with incentivising reduced levels of hospitalisation, moving care to a day case setting where appropriate and facilitating discharge of patients who are no longer in need of clinical intervention.

We will likely be looking at the experience of other jurisdictions in this regard and I hope to talk with as many of you as I can at this year’s national conference to get a sense of what works.

Read our other 'Bermuda shorts' blogs here:

Bermuda shorts 1: the heat is on
Bermuda shorts 2: a collection of firsts
Bermuda shorts 3: putting the focus on costs