Lawmakers have agreed on a hospital privatization bill that will allow Maui’s struggling health care facilities to enter into partnerships with private entities.
The bill is specific to Maui but has broad implications for the rest of the state as facilities like Kona Community Hospital make it clear they would like to pursue similar ventures. Both chambers agreed to add back labor protections where workers will stay in their jobs for six months under privatization scenarios. That provision was taken out of an earlier draft of the bill. Additionally, those who are bumped from their jobs will be helped to move laterally within the civil service sector, said state Sen. Josh Green, D-Kona, Ka‘u, chairman of the conference committee handling the bill. Clarifying language also opens the partnerships to other potential bidders besides Hawaii Pacific Health.
“We had to make sure everyone — Kaiser, Queen’s, HPH — had a fair chance to bid,” Green said.
Gov. David Ige last week intervened in the legislation as it was about to be approved, sending the two chambers into conference to fine-tune the bill.
The push for partnerships is not likely to stop with Maui’s three hospitals, although other interested hospitals will have to wait for legislation enabling them to enter partnership discussions as this year’s attempt — House Bill 1112 — fails to move forward.
Kona Community Hospital, also within the Hawaii Health Systems Corporation, is faced with labor and benefits costs that approach 80 percent of net revenue, and administrators don’t feel the state’s current health care model to be sustainable. As hospitals get yearly life support from emergency state appropriations, Green has said he would be pleased to see a partnership for KCH with The Queen’s Medical Center, similar to the merger between Queen’s and North Hawaii Community Hospital in December 2013.
KCH’s projected net revenue for fiscal 2015 is $69 million, up from $65 million the year before. With some $11.6 million in efficiencies identified by the consultant Huron Healthcare last year, the hospital was set to break even in 2015, said CEO Jay Kreuzer. Instead, the facility is expected to be in the red $5.5 million from negotiated salary increases that were not funded by the Legislature, plus a new requirement to fund retiree health benefits.
“That threw a monkey wrench into the budget,” Kreuzer said. “We’re still working with the state, but their budget is limited too. It’s a concern.”
Maui’s green light to move ahead with a public-private partnership is good news, Kreuzer said.
‘We’re really excited about it,” he said. “A public-private partnership is very important to our future.”