State legislators defer hospitals’ privatization

Legislation that would enable the privatization of eight struggling public hospitals has been gutted and replaced with a task force to study once again a public-private partnership for the Hawaii Health Systems Corp.

Two-thirds of the roughly dozen "safety net" facilities on Maui, Lanai and Hawaii island have been exploring a deal with Phoenix nonprofit Banner Health to acquire parts of HHSC to improve the quality of medical services on the neighbor islands.

A 2009 legislative study recommended a public-private partnership be forged within two to three years "in light of the financial status of both HHSC and the state." The public hospital system posted an operating loss of $143.5 million last year, while the state contributed $73.4 million in general fund subsidies.

"HHSC has been studied over and over again," said Wesley Lo, Maui Memorial Medical Center chief executive officer. "We don’t even want a task force because what’s the sense of studying something when you already have one by experts? Health care is in a crisis right now: Reimbursements are going down, we’ve got aging facilities, doctors are leaving. If we don’t change the way we do business, we’re not going to have any health care."

The legislation would have given HHSC the green light to negotiate with Banner or other private organizations to potentially lease facilities or enter into operating agreements that could bring new cash flow to the rural facilities.

But lawmakers said they needed more information on what abolishing the public hospital system would mean for services and employees.

"There’s no clear answers on what the impact would be on employees at the hospitals or answers about what the state’s ongoing subsidy would need to be," said Senate Health Committee Chairman Josh Green. "In the interest of protecting taxpayers dollars, we’d need to have that answered for sure. We have thousands of employees who would have an uncertain future. We do have to better fortify HHSC, but hurrying to a decision could be dangerous."

The facilities being considered were Maui Memorial Medical Center, Kula Hospital, Lanai Community Hospital, Hilo Medical Center, Kona Community Hospital, Hale Ho‘ola Hama­kua, Kau Hospital and Kohala Hospital.

Banner Executive Vice President Ron Bunnell said without legislation allowing the mainland operator to take over multiple facilties, there is no vehicle for a deal to move forward.

"It’s not going to pass this year. The question is, Will it be able to pass next year?" he said. "That’s too far in the future for me to make a commitment as to whether we would be in a position to operate those hospitals."