The House Health Committee is calling for a management and financial audit of the corporation that operates the state’s network of private hospitals, citing concerns that the network that includes the Hilo and Maui Memorial medical centers is in a "financially perilous" situation.
The resolution also cites concerns that taxpayers are now paying more than $100 million per year to support the network operated by the Hawaii Health Systems Corp., and state taxpayers are being asked to fork over ever-increasing subsidies to keep the system afloat.
In a move that underscores the financial challenges of the state hospital system, the Maui Region HHSC board announced Friday it has voted to cut $28 million from the region’s budget for the year that begins July 1. That amounts to about 9 percent of the Maui region’s proposed $299 million budget.
The hospital will make "immediate cuts" to nonclinical contracts as well as 50 to 75 nonclinical administrative positions, according to a news release issued Friday announcing the cuts.
At the center of these developments is a controversial proposal lawmakers are considering to allow Maui Memorial, Kula Hospital and Clinic, and Lanai Community Hospital to enter into a partnership with Hawaii Pacific Health to transition one or more of those facilities into a new nonprofit corporation.
Hawaii Pacific Health operates Kapiolani Medical Center for Women & Children, Pali Momi Medical Center, Straub Clinic & Hospital and Wilcox Memorial Hospital on Kauai.
Avery B. Chumbley, a former state senator and a member of the Maui Region board of HHSC, drew a connection between the budget cuts on Maui and the proposal to create a nonprofit to run the Maui hospital.
"We knew this day was going to happen, and while we understand the state cannot continue to fund our financial shortfalls, for three years we have asked the legislature to allow us to move forward on a public/private partnership so we could avoid this very day," Chumbley said in a statement issued to the media.
The cuts might affect services at Maui Memorial, Kula and Lanai, according to the statement. The announcement said services such as heart, surgical and intensive care units, oncology, obstetrics and gynecology, and physician call coverage are being reviewed for possible cuts.
The Hawaii Government Employees Association, the state’s largest union, has opposed the creation of a new nonprofit to run those hospitals. The union has about 800 union members working at Maui Memorial, and about 50 more at Kula.
The union supports the audit and told lawmakers they should not consider privatizing state-run hospitals until the audit is complete.
In testimony submitted to lawmakers on the audit proposal, the union argued that "the Legislature must ensure that the HHSC is prudently spending its appropriated funds and must accurately assess the entire system’s current financial state."
The House Health Committee approved House Concurrent Resolution 161 on Friday, and the measure now advances to the House Finance Committee for further consideration.
The resolution ordering the audit was co-sponsored by seven of nine House Democrats who voted against the Maui privatization bill on the House floor earlier this month, suggesting opponents of privatization are advancing the audit in lieu of any privatization proposal.
The lawmakers who sponsored the audit resolution — and also voted against the privatization bill — are Reps. Richard Onishi, Ty Cullen, Aaron Johanson, Derek Kawakami, Nicole Lowen, Dee Morikawa and Takashi Ohno.
Dr. Linda Rosen, chief executive officer of Hawaii Health Systems Corp., said HHSC is not objecting to an audit, but she doesn’t believe it should delay the Maui initiative.
Rosen cited a Comprehensive Independent Review and Evaluation of HHSC done by Stroudwater Associates in 2009 that was requested by the Legislature, and recommended the system transition to a nonprofit model similar to what is being proposed on Maui.
"So, it’s not a new idea and audits have been done, and we’re not against an audit, but we believe that the financial situation that HHSC is in today is not something that would be remedied by changes that would be discovered by an audit," Rosen said.
The hospitals in the Maui region of HHSC see 45,000 people in their emergency rooms each year and serve 11,000 inpatients.
