A bill allowing Maui’s regional hospital system to join with Hawaii Pacific Health could pave the way for a similar public-private partnership for Kona Community Hospital.
House Bill 1075 — which would allow Maui’s hospitals to transition to operation by a new nonprofit management entity — has survived into the end stages of the current legislative session and will likely go the distance, said Sen. Josh Green, D-Kona, Ka‘u.
Green said he plans to float a bill next year encouraging The Queen’s Health Systems to enter partnership talks with Big Island hospitals. But the approach should be a measured one, with Maui as a trail balloon, the senator said.
“I don’t want an earthquake to hit the health system,” Green said. “Too much change all at once could be damaging.”
The rest of the system should watch and learn from the transition Maui is likely to experience in coming months, while finding ways to ensure that hospital work forces do not suffer, Green said.
Kona Community Hospital wrapped up an efficiency analysis last fall by Huron Consulting Group with an eye to making itself more attractive to a public-private partnership and to increase physician retention. The group identified $11.6 million in savings, including $1.7 million in non-labor, $1.2 million in labor and $543,000 in clinical cost savings. The hospital had implemented $9 million of the cost-saving initiatives as of November 2014. Data on the hospital’s projected losses or gains for the fiscal year ending in June were not immediately available Thursday afternoon.
Prior to merging with Queen’s last year, North Hawaii Community Hospital retained Huron to help it identify ways to be more efficient in the face of an average $4 million in annual losses.
The partnerships are designed to bring new life to the state’s safety net of public hospitals, which hemorrhage tens of millions of dollars annually and require repeated emergency appropriations to keep functioning.
David Okabe, chief financial officer for Hawaii Pacific Health, said in testimony that the state’s largest health care provider welcomes the opportunity to partner with Maui, where operating losses are likely to increase significantly in the coming decade. Maui Memorial Medical Center alone lost $43 million in 2014.
“Unless the state addresses the financial challenges facing the Maui Region, the repercussions will be detrimental to the entire state,” Okabe said.
The Hawaii Government Employees Association, however, strongly opposes the merger bill, pointing out that employees will be maintained only for six months — if they satisfy the new private entity’s job requirements. Concerns about job loss helped kill similar legislation last year.
Maui aside, House Bill 1112 answers the question of what happens to the rest of the state’s hospital system, Green said. That bill requires financial and management audits of the entire Hawaii Health Systems Corporation and examination of potential impacts of public private partnerships, and authorizes other hospitals to begin discussions of their own on potential mergers.
“HB 1112 allows us to tighten our belts, assess the rest of the safety net, decide what other partnerships are appropriate, and go from there,” Green said.
Both bills are now subject to tinkering and amendments as the two chambers work out their differences on the legislation.