Doctors targets late 2010/early 2011 expansion

By NEIL HARTNELL

Tribune Business Editor

DOCTORS Hospital is looking to begin its "planned expansion" in earnest in late 2010 or early 2011, in a bid to generate "greater growth and a significant increase in our medical tourism," having seen critical care account for 50 per cent of its year-to-date revenue growth.

Confirming that "preparation has begun" to expand its facility, the BISX-listed healthcare provider confirmed in answers to Tribune Business's e-mailed questions that it expected to obtain accreditation to facilitate its greater participation in medical tourism during 2010.

Explaining that it had the necessary cash, and cash flow, to fully pay-out the $4.123 million in long-term debt that was on its balance sheet at the 2010 financial year's start, Doctors Hospital told this newspaper: "The funds needed for planned expansion will not be required until late next year, or early the following year.

"Preparation has begun to expand the facility and enable greater growth and a significant increase in our medical tourism. This is our growing market for which accreditation and additional space is essential.

"We anticipate accreditation during 2010 and the initiation of our expansion. With continued potential global recession affecting us during 2010, this reduces our cash outlay for the next fiscal year and allows us to reduce our overhead."

Doctors Hospital did not reply before press deadline to follow-up questions submitted by Tribune Business on the precise nature of its expansion plans, although its financial results for the nine months to October 31, 2009, showed that it had spent $5.065 million year-to-date in eliminating the long-term debt it owed to Royal Bank of Canada.

The Collins Avenue-based healthcare provider's financials have steadily improved over the past couple of years and quarters, getting to the point where they are now starting to make relatively impressive reading, the company having shrugged off the strain imposed several years ago by its Western Medical Plaza expansion.

That facility's operating loss for the first nine months of Doctors Hospital's financial year was $0.2 million less than last year, of which some 77 per cent came from reduced interest costs. In response to Tribune Business's questions, the company said "only a small percentage" of Western Medical Plaza had been leased to other users. As for attempts to sell the property, Doctors Hospital added: "There are currently interested parties but no agreement as yet."

Warning that it was "budgeting for a flat year with little growth" in 2010, due to global economic conditions, Doctors Hospital was still able to generate strong top-line growth for the first nine months of its current financial year, with net patient service revenues increasing by 13.5 per cent or $4.1 million to $34.245 million, compared to the previous year's $30.168 million.

Just over $2 million of that revenue growth was driven by critical care, Doctors Hospital confirming to Tribune Business: "Critical care accounted for 50 per cent of the increase, and the Emergency Room for 20 per cent. As stated in some of our earlier reports, the population of patients treated this year were for more acute illnesses. That is dependent on the level of sickness in the community."

Critical care levels dropped in the three months to October 31, 2009, a normal trend experienced by Doctors Hospital during the summer months. Still, patient days during the third quarter fell by 13 per cent year-over-year, hitting their lowest level since 2005, although volumes in surgical hours grew by 11 per cent.

Elsewhere, bad debt expense was on the rise, hitting $1.386 million for the first nine months, compared to $966,000 for the same period in 2008. Doctors Hospital told Tribune Business: "Bad debt tends to increase with increased revenue, and last year was lower than expected. The percentage of bad debt to revenue is within our budgeted numbers and well within industry standards."

Another indicator showing strong improvement for Doctors Hospital was its accounts receivables. The collective sum owed to the company by patients almost halved over the first nine months of its current financial year, from $1.003 million to $539,000.

As for the amount owed by third party payers on behalf of their clients, chiefly health insurers, that sum had also fallen -- from $5.826 million to $4.04 million.

"The majority of the third party payers have been in good standing for the last two years," Doctors Hospital told Tribune Business.

"NIB has improved significantly this year and is in good standing. The Bahamas

Public Services Union is no longer a payer. The self-pay balance has mainly been reduced through better front-end collections, and fewer self-pay patients were treated this fiscal year."