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Public hospitals to cut services to make up $48M shortfall

By Kristen Consillio

LAST UPDATED: 06:37 p.m. HST, Apr 29, 2014

The hope of a private entity rescuing the state's troubled public hospital system was crushed after lawmakers shelved a privatization bill in a key committee on Friday.

Instead, the Legislature granted Hawaii Health Systems Corp. $102 million for 2015, though the organization had requested $150 million, leaving a $48 million shortfall, mostly due to unfunded collective bargaining increases, said Alice Hall, HHSC's acting president and chief executive officer.

The financially struggling 12-member system, which acts as the safety net for communities where medical care is lacking, had hoped for legislation to partner with or be purchased by a local nonprofit provider such as Hawaii Pacific Health, The Queen's Health Systems or Kaiser Permanente Hawaii.

HHSC officials say it can no longer sustain the increasing costs of health care and continue providing the same level of services.

"The state can't afford to come up with more and more money and we can't absorb these costs," Hall said. "We're going to have to explore all plausible ideas on how to cut expenses which may include cutting services and reductions in force. We believe all our services are essential but we must examine all options in order to make up for the huge deficit that we're anticipating for next year."

The public hospitals are particularly challenged this year with the rollout of the federal Affordable Care Act, which places a greater demand on providers as patients increase due to more people gaining health insurance. 

The organization is already under pressure because of lower reimbursements from many of its patients covered by government insurance programs, Medicare and Medicaid, and private insurers shifting payments from volume based to quality based, as well as new regulations.

HHSC's facilities, some of which are more than a century old, also need an estimated $1 billion in capital improvements, she said. 

"The way our system is set up right now is not sustainable," Hall said, adding that HHSC will ask for an emergency appropriation for 2015. "We did come up with what we think is the best solution, but then it died at the last minute. These are major changes and it takes a long time for people to be comfortable with major changes."

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Ronin006 wrote:
Simple solution - privatize.
on April 29,2014 | 05:32PM
EducatedLocalBoy wrote:
Ronin006, the HHSC are made up of neighbor island hospitals, except for 3 Oahu hospitals. Ben Cayetano split off the HHSC from the rest of the State government and created a semi-private entity and freed it from many governmental restrictions based on the Republican notion that by privatizing the neighbor island hospitals those hospitals can make money and not be dependent on State subsidies. As usual with almost all of Cayetano's ideas he was wrong.
on April 29,2014 | 05:54PM
localguy wrote:
EducatedLocalBoy - Would love to hear how you have all the answers and right ideas.
on April 29,2014 | 06:27PM
EducatedLocalBoy wrote:
Localguy, I have been involved in City & County and State government matters for my whole 34 yr. career. I remember from my own personal work experience these things happening.
on April 29,2014 | 09:08PM
frontman wrote:
HHSC officials say it can no longer sustain the increasing costs of health care and continue providing the same level of services..................obamacare, thank you.
on April 29,2014 | 05:35PM
ellinaskyrt wrote:
Wrong. Long before Barack Obama became president, HHSC was suffering greatly financially. Its problems reflect what had been happening for decades in terms of health care costs. What HHSC is going through is similar to what caused Hawaii Medical Center to close (except that HMC's financial difficulties were inherited from St. Francis).
on April 29,2014 | 05:50PM
EducatedLocalBoy wrote:
Frontman, you and Ronin006 make ignorant statements. The HHSC hospitals were originally owned by big corporate giants. Those corporate giants dumped the hospitals because they weren't profitable and told the State either you take it over or we will close them down. If the HHSC hospitals were shut down, there would be NO hospitals on the neighbor islands except for Wilcox on Kauai. So the State was blackmailed into taking over the hospitals due to blackmail by big business. Obamacare had nothing to do with it.
on April 29,2014 | 05:59PM
Kalaheo1 wrote:
The article above disagrees with you: "The public hospitals are particularly challenged this year with the rollout of the federal Affordable Care Act, which places a greater demand on providers as patients increase due to more people gaining health insurance."

It also mentions "unfunded" collective bargaining raises, and the the fact that apparently Medicare and medicaid don't pay enough to keep a hospital running.

I do agree that it's extremely unlikely that any private company would want to buy that mess.

on April 29,2014 | 06:14PM
ellinaskyrt wrote:
All of those things (collective bargaining contracts, reduced reimbursement from not just Medicare/Medicaid but private insurance as well) are issues that all Hawaii hospitals - privately owned, included - were dealing with for years before the advent of Obamacare. The article says "particularly challenged" which is NOT the same thing as saying "Obamacare caused HHSC to go into dire straits."
on April 29,2014 | 06:52PM
EducatedLocalBoy wrote:
Kahaheo, you assume that the article is correct. Remember, this article was created by the reporter merely repeating what she was told by Alice Hall, f/k/a Alice Rhodes, who is a life long State government lawyer, who is giving the government's point of view. Alice was not in Hawaii when the corporations were going to shut down the neighbor island hospitals unless the State took them over. One thing you said which touches on a valid point is that HHSC relies virtually on Medicare and Medicaid for its income. Very few HMSA covered patients go to HHSC hospitals (HMSA reimbursement rates are significantly higher than Medicare reimbursement rates). Rather, the overwhelming amount of HMSA patients fly to Honolulu to receive medical treatment, even those patients who need emergency care. Those patients are flown to Honolulu on air ambulances. The collective bargaining pay scale is the pay scale for public employees. They are paid significantly less than private sector employees -- especially nurses, all of whom are on the Hawaii Nurses Assn. (HNA) union scale which is about 1.5 to 1.75 times that of nurses who are employed by the State.
on April 29,2014 | 09:24PM
localcitizen wrote:
Sorry, but you're dead wrong on that point. For a patient to fly on the extremely expensive air ambulance, the patients insurance company has to pay for it. They won't if those same services are available on that island. And all hhsc facilities are contracted with hmsa so hmsa has no reason th pay extra to send them to honolulu
on April 30,2014 | 07:58AM
jomama wrote:
Except....those patients have insurance. Don't believe everything Kristen Consillio writes
on April 29,2014 | 09:49PM
localguy wrote:
EducatedLocalBoy - And your references to back up your claims are where?
on April 29,2014 | 06:28PM
EducatedLocalBoy wrote:
Localguy, I now see that your previous statement in response to my statements may have been sarcastic. If you don't believe that I personally experienced these things, I suggest that you call people like Calvin Masaki, the retired State Health Department (DOH) administrator who was a key person who was involved in the transition from the community hospitals division of the DOH to the HHSC.
on April 29,2014 | 09:32PM
jomama wrote:
Nothing to do with Obamacare, duh
on April 29,2014 | 09:47PM
EducatedLocalBoy wrote:
HHSC should have never been created in the first place. One of the big cash drains on the HHSC is duplication of administrative employees, which is huge. HHSC was originally part of the State Dept. of Health (DOH) & used DOH's and the State's administrative infrastructure to operate it. In addition, as I mentioned above, the HHSC hospitals were already virtually bankrupt and about to close when the State was blackmailed into taking them over. Republicans, who are also bible beaters, would say "let's employ economic Darwinism and close the HHSC hospitals up and let the rural folks die. After it's god's will that they die when they do -- it's part of his master plan."
on April 29,2014 | 06:09PM
localguy wrote:
Science has already proven there is no God. Universe came in to existence on its own. There is no supreme being watching over each and ever living thing in the Cosmos. Never was.
on April 29,2014 | 06:29PM
PoiMoBettah wrote:
EducatedLocalBoy...your thinking and people like you is whats wrong with this whole thing.
on April 29,2014 | 07:04PM
CEI wrote:
Guys, guys please dial it back a little. No need to trade all these hateful posts for such a small matter. Just know that this problem with HHSC is a preview of what is in store for the entire nation when Barry Care finally is fully implemented. Costs will skyrocket in order to keep the bloated government healthcare bureaucracy afloat. If you think there is needless duplication and too many administrators now you haven't seen anything yet. Also know that when cuts are made it will be cuts to patient care first and the bureaucracy last.
on April 29,2014 | 10:31PM
HD36 wrote:
Pharmaceutical companies are making out like bandits under Medicare D. They can significantly overchage and have the ex cheerleader sales rep tell the doctor all kinds of off label uses for the drugs. In return, they pay him a large speaking fee ror relaying some benefits. Even though it may be a speaker call. Even if Pfizer pays a $1 billion dollar fine, they still net $3 billion, and nobody goes to jail even though prescription drug adverse effects are the 4th leading cause of death behind stroke, cancer and heart disease. The hospital has to take a cut from this scam because that's where the money's at.
on April 29,2014 | 11:38PM
Sandybeach wrote:
State of Hawaii has the death penalty. Not for being a criminal but for being ill. A word of advice for Ms. Hall. Nothing is sustainable. Everything changes.
on April 30,2014 | 06:18AM
cojef wrote:
Bankruptcy in the making, only a matter of time. Currently 45 million individuals out over 300 million do not pay Federal Income Taxes. When it exceeds 50% of the population, all hell will break loose. Remember also that, 10% pays over 90% of all the income taxes collected.
on April 30,2014 | 07:29AM
inverse wrote:
Not true, if you live on Oahu or if you live on the outer island and can afford to get to Oahu via air ambulance and you have good health insurance, you can get one of the best medical treatments anywhere in the world. Burn's might be one exception as Hawaii cannot afford to maintain a burn center since the population is not large enough. But for births there is Kapiolani and for trauma, Queens. Of course they are private hospitals on Oahu and nothing to do with HHSC.
on April 30,2014 | 12:14PM
localcitizen wrote:
You're not seeing the actual situation here Obamacare, which was backed by the hospitals and insurance companies to create more insured people, at our collective costs, and is increasing actual revenue to the hospitals. Obamacare helps, is helping, hospitals. So don't blame it for the actual problem here It's simple mismanagement of the hhsc hospitals. I don't mean to generalize here, as I understand some are well run. But mmmc is so horribly mismanaged its ridiculous! Get good management in and it will print money for the rest of the system The idea of restricting the buyers was incredibly crazy. No reason for that except to maybe force a marriage.
on April 30,2014 | 07:39AM
inverse wrote:
Wasn't too long ago HHSC management spent over $100 million for an electronic medical record system that has since been plagued by problems and delays and it turned out they now have to spend almost the same amount for it to be fixed. The Veterans Adminstration offers an electronic medical record system, VisTA for FREE but HHSC decided to hire a contractor to build it from scratch and it failed miserably like UH and the computer system or the State tax department of the Hawaii Health connector that both hired CGI to be FAILED systems. Of course the VA system is not perfect but if HHSC managment were fiscally prudent and responsible, they would have gone with the free system and then spent a controlled amount of money to plan and develop to make VisTA useful to HHSC. Your are correct management is key and in the private sector HHSC would have gone bankrupt and all upper management fired long ago. However HHSC has semi-autonomy LIKE UH, DOE, HCDA, HTA, HART etc. and no matter how bad they get, they always have Hawaii State taxpayer money to bail them out. See any patterns here?
on April 30,2014 | 11:24AM
WhyBother wrote:
Not necessarily true. If more people are insured via ACA, hospitals could indeed lose more money IF many of those newly insured are under medicaid and hospitals are forced to take more patients at a loss. If all the newly insured were paying customers, that would be a different story, but a large portion of ACA's newly insured are medicaid.
on April 30,2014 | 11:32AM
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