Hospitals deal promising but tread carefully

State legislators are considering whether to allow the transferring of eight neighbor island public hospitals in financial trouble to an investor-owned mainland health care company.

It appears to be a necessary move as funding and facilities deteriorate, but nevertheless, is risky with a host of emerging questions. Any move in that direction should be limited to a private-public partnership that would maintain the hospitals’ public inclusion as well as quality, affordable health care.

Banner Health, a Phoenix-based, investor-owned nonprofit that generates $5 billion in annual revenue, has proposed to "assume the operation" of the eight hospitals among the Hawaii Health Systems Corp.’s 12 struggling "safety-net" facilities — five on Hawaii island, two on Maui and one on Lanai.

"We’d be willing to operate all of HHSC, but we need at least those three regions to move forward," Ron Bunnell, Banner’s executive vice president, told the Senate Committee on Health.

Banner has not had discussions with HHSC hospitals and long-term care facilities on Oahu and Kauai, according to Bunnell.

Legislation is needed to allow a private company to acquire parts of HHSC. Senate Bill 1306 has been amended to require any deal with a private entity preserve workers’ right to negotiate as state employees; importantly, the bill as amended would allow the Hawaii Government Employees Association and United Public Workers to keep members as civil service employees. How this would affect the cost of taking the hospitals from public to private emerges as a factor, since labor and civil service benefits are a hefty chunk of operating costs.

The HHSC board is scheduled to meet Thursday to take a position on the bill. The Maui Memorial Medical Center, one of those affected, already supports it on the condition that it reflect a report prepared for HHSC several years ago. That report, prepared by Stroudwater Associates, a health care consulting firm, recommended "a sharing of governance authority between HHSC and a chosen partner." It found that such a partnership would be "the most effective one for meeting the needs of people served by HHSC over the short and long terms."

The House Committee on Consumer Protection and Commerce has altered a similar bill to establish a task force to study the feasibility of a public-private partnership. That would amount to a mere postponement; the Stroudwater firm already has given its stamp of approval, having studied the situation from the public point of view.

Still, many questions and details linger — so lawmakers will need to nail down answers as the partnership bill advances, as it should.

Particularly concerning is the lack of forthcoming "concrete information," even for those to be directly affected, such as registered nurse Susie Uweko- olani, a 27-year employee at Maui Memorial.

"We haven’t heard anything," she said Wednesday. "There’s fear of not getting hired if Banner does take over. The health care is going to change. We have no idea what that’s going to be. You’d feel a little more comfortable about the unknown (if there were more information)."

Banner’s willingness to pursue such an arrangement remains to be seen. Bunnell said the facilities need about $400 million in capital improvements, half coming from the state. He added that the state would need to pay more than $80 million in operating subsidies for at least three years.

But Hawaii Budget Director Kalbert Young is spot on in asking why the state would continue funding operating support subsidies and capital improvements for the new owner(s).

"The new entity(ies) would appear to be largely unencumbered and should have the ability to be self-sufficient," he testified, adding that financial advantages to the state and taxpayer must be shown "in order for such an arrangement to be tenable."