Hospital privatization plan proceeds

House lawmakers are apparently poised to approve a bill to allow privatization of Maui Memorial Medical Center and two other state-owned medical facilities, a move that faces determined resistance from the state’s largest public worker union.

The state House of Representatives gave official notice Monday that lawmakers there intend to agree Tuesday to amendments the state Senate made to House Bill 1075, a procedural step that could clear the way for the nonprofit Hawaii Pacific Health to take control of Maui Memorial, Kula Hospital and Clinic, and Lanai Community Hospital.

The state has been subsidizing the hospitals’ operations for years, and House Speaker Joe Souki said lawmakers contend privatizing the three facilities is necessary to reduce the costs to the state.

“If it wasn’t, we wouldn’t be asking,” Souki said. “We have one hospital in Maui with approximately 170,000 to 200,000 people, including the tourists. We don’t have sufficient revenue to give the people the care that they need and the quality of care that they need.”

Hawaii Pacific Health already operates Kapiolani Medical Center for Women & Children, Pali Momi Medical Center, Straub Clinic

& Hospital and Wilcox Memorial Hospital on Kauai.

The state now pays about $100 million per year to support the hospital network operated by the Hawaii Health Systems Corp., including the Maui and Lanai facilities, and lawmakers want to reduce those costs.

At the same time, the Maui facilities say they need more money. The Maui Region HHSC board last month voted to cut $28 million from the region’s budget for the year that begins July 1, which amounts to about 9 percent of the Maui region’s proposed $299 million budget.

That decision will require the Maui system to make “immediate cuts” to nonclinical contracts as well as 50 to 75 nonclinical administrative positions, according to the announcement.

Randy Perreira, executive director of the Hawaii Government Employees Association, said the union is meeting with lawmakers this week to urge them to vote against the privatization bill. He said “numerous concerns and flaws” have been identified in the bill.

For one thing, Perreira said, the Senate “inexplicably” removed language from the bill that would have prohibited Hawaii Pacific Health from layoffs of Maui hospital workers during the first six months of a takeover by the nonprofit hospital network. He predicted Hawaii Pacific Health will reduce the hospital workforce and outsource some work now done at the hospital.

“The employees are entering into a transition to private status effectively naked, without any kind of job protection, and that I find objectionable,” Perreira said. “It’s just not right and it’s a very complicated transition.”

HGEA has about 800 union members working at Maui Memorial, and about 50 more at Kula. The Maui hospital privatization effort has also been strongly opposed by the United Public Workers union, which collected thousands of signatures from people opposed to the privatization effort.

Perreira also said it isn’t clear where the state will get the money to close what would be an expensive deal. For example, the state Department of Budget and Finance estimates it would cost $114 million for the state to cash out the vacation time that state workers at the three facilities have earned.

“Where is the state going to get that money?” Perreira asked. “I can assure you of one thing … we aren’t taking IOUs. If in fact there is going to be a transition to private, our members are entitled to receive their vacation and comp time in lump sum, in cash.”

House Health Committee Chairwoman Della Au Belatti said the current version of the bill is an improvement over previous drafts. She said previous versions of the bill required the state to subsidize the operations and construction projects at the Maui and Lanai facilities after the nonprofit takes over, but those provisions were removed from the latest Senate draft.

The current bill allows Hawaii Pacific Health to ask the state for subsidies but does not require the state to agree to those requests.

Hawaii PACIFIC Health will get a “much better” reimbursement rate from HMSA for services provided to the public than HMSA pays to the state hospital system, which Perreira said is “a glaring failure” on the part of the Hawaii Health Systems Corp. The state hospitals haven’t invested as much effort as they should to try to get higher reimbursements from HMSA, Perreira said.

But Perreira predicted that even if the measure passes, the privatization deal won’t work out as well as some on Maui hope.

For example, some Maui residents are hoping for a neonatal care unit to provide better care for infants at Maui Memorial, but “it makes no financial sense whatsoever” for Hawaii Pacific Health to build such a facility on Maui, Perreira said. Hawaii Pacific Health already has the best facility in the state at Kapiolani Medical Center for Women & Children on Oahu, he said.

“That just ain’t going to happen, so I think there’s going to be some disappointment at the end of the day,” he said.