The bankruptcy and closure of Hawaii Medical Centers’ two hospitals is the biggest health care story of the year. Its impact is being felt in waves throughout the islands. The closure of HMC-East, which housed the only organ transplant center in the Pacific, leaves hundreds in need of organs scrambling for options on the mainland, many in a race against time. Closure of HMC-West, Oahu’s most Ewa hospital, results in increased drive times for emergency department services and has placed a burden on Oahu’s remaining hospitals and providers. The loss of roughly 1,000 jobs affects countless families in what is already a tough job market.

Although HMC’s closure captured the headlines, there were many unsung stories both of closure and survival of smaller health care facilities on Oahu. During a social gathering last weekend, one of our local politicians proclaimed that independent medical practices are a "dying breed." HMSA and Medicare have new initiatives in motion that expect providers to move rapidly to electronic medical records and prepare for the patient-centered medical home. These changes require cash resources, business acumen and attention that busy facilities can scarcely afford.

How do independent clinics survive?

A successful strategy requires knowing which functions to keep in house and which to outsource. Consider billing, for example. Benefits of contracting outside services include, in most cases, a variable rather than a fixed in-house expense because billing companies usually charge a percentage of payments. The problem is that billing is a complicated process, and 80 percent of payments are received with 20 percent of the effort. The real work comes when trying to bring in that last 20 percent, which is what a clinic needs to stay in the black. Many billing companies, especially the busy ones, don’t really go the final mile for their clients.

Management of human resources is among the biggest strategic decisions. The current trend for all but the largest facilities is to outsource this function to a company that specializes in the field. Altres is among Hawaii’s oldest and best-known PEOs, or professional employer organizations.

The PEO model allows small and midsize businesses to cost-effectively outsource the entire administration of human resources — from employee benefits and payroll to workers’ compensation and compliance — to a single provider. Under a contractual relationship known as "co-employment," the PEO and its client share employment-related responsibilities, risks and liabilities. Overall, a PEO arrangement is designed to provide expertise and peace of mind while reducing an employer’s risks and liabilities.

SimplicityHR by ALTRES serves as the human resources "back office" for 800 Hawaii businesses and their 8,000 employees. SimplicityHR provides human resources, payroll, workers’ comp and benefits administration plus health care plans and other employee benefit plans, such as 401(k) plans and flexible spending accounts (FSAs).

"We recognize the constant pressures that medical practices must endure while striving to provide quality care," said ALTRES President and CEO Barron Guss. "We take on the burden of HR administration so that medical professionals can focus on their patients, not payroll, compliance and paperwork."

Next year will bring a host of evolving changes in the American health care system. Patients, providers and health care organizations of every size will need to adapt to survive, and we can. With creative solutions in the spirit of collaboration motivated by compassion and a sense of service, we can thrive.

Ira Zunin, M.D., M.P.H., M.B.A., is medical director of Manakai o Malama Integrative Healthcare Group and Rehabilitation Center and CEO of Global Advisory Services Inc. Please submit your questions to info@manakaiomalama.com.