Avery Chumbley says he didn’t feel like a captain taking over the Titanic when he accepted the role as chairman of the financially beleaguered state hospital system in 2009.

"I’m not the pessimist," the Maui resident said earlier this week. "I view it as an opportunity to create a sustainable health care delivery system for the state, with an integrated model of complete care. We do have to shift the way we’re doing things."

And so Chumbley, who has been on the board of Hawaii Health Systems Corp. since 2007, has been working to facilitate that shift, even as the system continues to bleed money at an alarming rate.

Hawaii Health Systems comprises 14 mostly rural "safety net" hospitals and long-term care facilities and is the fourth-largest employer in the state, with more than 4,000 employees. At the moment, its board is seeking a $14 million emergency appropriation from the state Legislature to help sustain its operations, but more than that will be needed if it can’t figure out a way to make all its ends meet.

Chumbley, for his part, has been addressing that challenge as a volunteer, even in his new role, since July, as acting president and chief executive officer, following the departure of former state health director Bruce Anderson, who had held those two posts since April 2011.

"This is not a permanent thing," Chumbley said. "We are going to be looking for a new CEO."

Besides, Chumbley does have two regular jobs — one as president of the Wailuku Water Co.; the other as a principal of the 400-acre Makani Olu Ranch in Waikapu. Wailuku Water, Chumbley said, was created as part of the dissolution of C. Brewer & Co. Ltd., which Chumbley joined as a laborer right after moving to Maui in 1982 to help build its Maui Tropical Plantation, a visitor attraction for which he later served as general manager, for more than 20 years.

Makani Olu Ranch, said Chumbley, raises cattle, horses and other animals, and also offers "trail rides, youth camps training — all sorts of ranching activities."

Chumbley moved to Maui after a brief career at Bendix Aerospace Electronics, in Champaign, Ill. He didn’t like "the coat-and-tie" job he had there, he said, so applied to work as a whitewater rafting guide in Alaska. When that didn’t materialize, he moved to Maui, where his father had been stationed in the military during World War II.

"I can remember him talking a lot about the beauty of Maui and the kindness of the people and the culture," he said.

Chumbley, 58, is a graduate of Rantoul Township High School and of Parkland College, both in Illinois, and also studied at the Ford Marketing Institute in Michigan and at the University of Hawaii.

In 1992 he was elected a state representative; from 1994 to 2002 he was a state senator. He also is a former director of the Maui Economic Development Board.

He lives with his wife Mary Jay in Waikapu.

QUESTION: What exactly was the disagreement with Bruce Anderson, who left as Hawaii Health Systems Corp. (HHSC) president and CEO in early July?

ANSWER: I wouldn’t characterize it as disagreement. I would just say that given the direction that the organization was headed in, we were differing on how to do certain things and what we needed to do. Both sides agreed that it was probably time for something different.

Q: It seemed awfully coincidental, in that it seemed to come right around the time when there was discussion about the doubling of costs that were projected for the hospital system’s computer upgrade (to $100 million over the next five years). Was it related to that?

A: No. Unfortunately, with the Electronic Medical Records Initiative that was undertaken, we significantly underestimated the scope and the complexities of the project in the beginning. We learned from that process that we didn’t have a very robust IT system within our hospitals, so part of the overall five-year plan is an underlying IT system improvement.

Q: Well, who was the guy who low-balled it? Anybody responsible for that taking a hit?

A: No. I don’t want to say any one person was responsible. When the presentation was made to the board, there was some reluctance from the staff to really identify as much of an investment as necessary. And so, you know, we just underestimated it.

Q: How does the upgrade interrelate with the IT upgrade for statewide offices generally?

A: I think it’s a perfect comparison. Sonny (Sanjeev Bhagowalia), the statewide tech guy, he was saying that 3-5 percent of your total annual revenues should be dedicated toward technology improvements, and up until this project, HHSC had only done Band-Aid expenditures to its IT systems. So part of the increasing costs was just bringing to maturity that IT function within the hospitals, and the need for not only hardware, software and current technology processes, but staffing to support it as well.

Q: So you’re basically starting from scratch, probably.

A: Well, we operate off of a system that’s almost 30 years old. And that system, they no longer provide service to it, support services.

Q: Is this $14 million emergency appropriations request of the Legislature related to the IT thing or is this just a general deficit-covering request?

A: The $14 million emergency appropriations request that we presented to the Legislature last week, Monday on the 5th — and then that afternoon I met with Bruce Coppa (Gov. Neil Abercrombie’s chief of staff) and Kalbert Young, the budget and finance director — was made up of several components.

The first one is $1.3 million of collective bargaining shortfall that was not appropriated in fiscal year 2013, and then $7.2 million of collective bargaining shortfall that was not appropriated for fiscal year ’14. Then there’s the impact of the federal budget cuts, and that was about $2.6 million, and what that is is the 2 percent across-the-board Medicare reductions in payments. Then we were hit by sequestration, and that was an additional $2 million.

Q: What is the annual deficit in general?

A: If you’re doing it on an accrual basis, we’re projecting that we’re going to have a reported loss of about $28 million, including the $14 million. We have operating revenues of about $535 million.

Now one thing to understand about the revenues is that the general fund subsidy from the state represents only about 14 percent of the total revenues to HHSC, and that the remaining 86 percent comes from other pie sources, for example, commercial insurers — that would be like HMSA, Kaiser, HAH (Healthcare Association of Hawaii) — they make up about 25 percent of that balance. Self-paid and others make up less than 10 percent.

And then government payers — this is an important one, and this is part of our problem, Medicaid — which is Medicaid and Medicaid Quest — and then Medicare, represent 65 percent. Now, those are typically the lower paying reimbursables, meaning they don’t even pay for the cost of the service. When you look at service lines in the private hospitals — Queen’s and HPH (Hawaii Pacific Health), Kapiolani — they have the more lucrative, higher revenue-generating service lines. We tend to be more the safety-net hospitals. And our uncompensated care is probably a lot higher than the private hospitals.

Q: In what way does someone end up at a state hospital versus, you know, Queen’s or Kapiolani? Is it simply a factor of geography?

A: No. It’s a factor, primarily, of do you have insurance coverage or not. Uncompensated care makes up a large portion of our operating expenses.

Q: In that regard, are you guys expecting things to change with the onset of Obamacare?

A: You know, it’s going to make it more difficult for us to operate because, in a way, the whole payer formula is changing, so you see a reduction in Medicare and Medicaid payments. That’s a negative to us. Hawaii has one of the highest percentage of insured residents practically of anywhere in U.S., so we won’t see some of that being switched over to the private payers, like hospitals will across the mainland.

Q: As far as the state hospitals go, it seems there are some costs that could be controlled, except you’re locked in in some ways. Like your labor costs.

A: Our labor costs are considerably higher than the national average for hospitals, and higher than state private hospitals. The national average probably runs about 51 percent. The state hospitals are running around 49 percent. Ours runs about 76 to 77 percent.

Now, HHSC has lower salaries than probably the private hospitals and the mainland hospitals, the base salaries, but when you add in all of the benefits-associated costs, ours go higher. Because you got the 21-21-14 package, based on benefits alone.

Q: What’s 21-21-14?

A: Twenty-one days vacation, 21 days sick leave and 14 holidays.

Q: How can you get away from that?

A: We need to work with the union leadership to create some flexibility in how we staff and run, from an employee standpoint, these hospitals.

You know, most of state government doesn’t function under a 24/7, 365-day model. We have to have people on staff all the time. And when you have high sick leave or you have people on vacations, and you have a lot of absences, you have to double staff.

What we’d like to see is some overtime rule changes, some staffing changes … it all goes down to your work rules: How do you create work rules with a collective bargaining unit that recognizes the uniqueness of the 24/7, 365 hospital-type operation?

It’s interesting: We’ve got over 4,000 full-time-equivalent employees; 89 percent of those are represented by one of two unions, either UPW or HGEA, and there’s seven collective bargaining units that make up that 89 percent. Now, HHSC is seated at the table when the state negotiates the contracts, but we’re one, where the governor gets three votes and the counties all have one.Unfortunately, we don’t control the purse strings. So when you go into collective bargaining, how can you bargain when you don’t control what you can put on the table?

Q: I see. That’s another limitation.

A: Yeah.

Q: What about Gov. Neil Abercrombie? Has he made any commitments to you about anything in this regard?

A: He has. First and foremost, he’s willing to support our request for an emergency appropriation. He came out with a press statement on that, and we were all encouraged by that. … He has a vision of creating a more sustainable model for the hospital system while not losing the focus of the delivery of those safety-net services to our rural communities. And I think that’s what’s encouraging. We just need to get all of the stakeholders, which includes the doctors, the nurses, the unions, the community at large, and everybody together and reach a common understanding about how do we make these significant changes without just outright eliminating people’s jobs …

Q: What was the problem earlier this year with selling off some of the hospitals to Phoenix-based Banner Health?

A: You’re mischaracterizing it. It wasn’t about selling off the hospitals; it was about entering into a public-private partnership. And unfortunately I don’t think we did enough to really educate the large community and the employees about how critical this was, the opportunities that it would create.

Q: How long has the hospital system operated at a deficit? Has it been every year?

A: It’s been every year.

Q: And how do you do that?

A: (Laughter) You keep pushing the ball forward.

Q: By coincidence, we received a letter just today from someone who was alleging that to save money at your long-term care facilities you guys are, like, doing the laundry a little less often, backing off on termite treatment and fixing roof and window leaks, and maybe preparing less nutritional food.

A: Absolutely not. We will not compromise the quality of care and the services that are given to all patients in any facility. The assertions that we’re cutting some of the corners to save a dollar here or there are not true.

Q: What about if these changes you’re suggesting don’t occur? What’s going to happen?

A: We have to change. We have to do things differently for long-term sustainability. It’s clear that the state just doesn’t have the ability to continue to fund and support HHSC in revenues and capital in the way that it has in the past. The state budget is being challenged every single day, and they just don’t have the appetite to do more. Either we have to change the way we’re doing it and look for public-private partnerships, we have to become part of a larger system, or the state has to step forward and commit a substantial amount of money for both capital improvements and operations expenses in order for us to survive.