Public hospitals need fixing ASAP

Even with its public hospitals system desperately fragile and ailing, the state continues on an inexplicable course that hacks away limbs and squeezes away precious life. What’s sorely needed instead is an unflinching diagnosis that gets to the heart of the problem and holds up some hope for recovery.

As it stands now, the Hawaii Health Systems Corp. — comprising 12 publicly run acute-care hospitals, clinics and long-term care facilities — is bleeding money profusely. In an all-too-familiar drill, HHSC is again pleading with state legislators for millions in emergency funding. The most recent — and most ominous — warning came Sept. 19, with HHSC officials positing a worst-case scenario of closures next year if more state funds aren’t released.

HHSC relies on state money for 15-20 percent of its $650 million yearly budget. The bulk of its money comes from patients and their insurers; still, public funding ballooned to $120 million in 2014 from $35 million 10 years earlier.

The hospitals’ requested $150 million for the current fiscal year had been cut to $102 million by lawmakers. But even after layoffs and other drastic cost-cutting measures, the hospitals are facing a $30 million deficit in 2015; hence, the emergency request.

The most dire threat involves closure of either Leahi Hospital or Maluhia, both long-term care facilities that take in the state’s most vulnerable populations, many of whom have no other options.

Though the latest alarm involves the two Oahu hospitals, most of HHSC’s facilities are in rural, low-populated areas that struggle to support high operational costs. The ripple effects of cutbacks at HHSC hospitals such as Maui Memorial, Kona Community and Hilo Medical Center should worry the general population of health-care providers and patients who rely on those facilities.

It’s not just a matter of paying HHSC’s rising costs for vendors, operations and maintenance of seriously-old buildings; if only it were that simple. The heart of the problem is a fatally flawed government model that cannot, and will not be able to, stay afloat because public-union pay and government-costs of doing business will rise unceasingly, while Medicaid reimbursements and other lifeline financial streams continue declining.

No doubt the revenue equations are complex, and the quality of care provided is not under criticism. But having the bulk of employees — health workers, maintenance, clerical and other staff — at ever-escalating civil service labor costs requires readjustment. What’s needed overall is a much-more agile model that enables flexibility in work shifts and jobs adaptation, for example, and a cost-competitive core that can procure health care equipment, innovations and services much more efficiently.

Shamefully, legislators have known about this impending implosion for years, at least since late 2009, when a state-commissioned report outlined in dire detail the myriad, intractable problems with this broken public model. It estimated, for instance, that privatization of the workforce would save about $50 million annually.

Clearly, lawmakers need to pursue transitioning HHSC’s dysfunctional model to a public-private one. But only half-hearted efforts were made in recent years — and though lawmakers finally seemed poised for initial steps this spring, a crucial bill died in the final days of session. Senate Bill 3064 SD 2, HD1 would have allowed for transition of the HHSC to a new health care management system as a nonprofit corporation or public benefit corporation. It also sought to create a transition committee to aid the governor in implementing and negotiating a new health care management system.

It behooves the next governor to take control of this unsustainable HHSC situation, and set the tone for long-term remedy; the issue rightly emerged during Thursday’s gubernatorial forum on PBS.

The very nature of the public-hospitals systems as the final safety net for the sickly very poor means some taxpayer subsidy, of course, but that does not — should not — preclude a financially stable model.

The gubernatorial candidates must outline their strategies to fix this problem, and come the new year, lawmakers must galvanize to save this patient.