A state Senate committee passed a bill Wednesday that would allow for the privatization of eight public hospitals operated by Hawaii Health Systems Corp.

Two-thirds of HHSC’s 12 struggling "safety-net" facilities on Maui, Lanai and Hawaii island have been exploring a public-private partnership with Phoenix-based Banner Health, a nonprofit that generates $5 billion in annual revenue, to improve the quality of health care services on the neighbor islands.

Amendments were made to Senate Bill 1306 that now require the entire Legislature to approve any deal involving a private entity and also preserve workers’ right to negotiate as state employees. The original bill would have removed the Hawaii Government Employees Association and United Public Workers’ authority to keep members as civil service employees.

"It’s a very large financial stake on the taxpayers. It’s a big financial question to transfer any assets to the private sector," said Senate Committee on Health Chairman Josh Green, who amended the bill. "As a physician and legislator, it’s incumbent upon me to make sure that people in Hawaii get the best care possible. We’re also mindful of the economics on our state budget and taxpayers."

Green said the measure would enable private entities, including out-of-state or in-state operators, to acquire parts of HHSC.

"This is by far the biggest issue in the Legislature. I would encourage our local health care providers to consider approaching HHSC for partnership," he added.

Banner Executive Vice President Ron Bunnell said without legislation allowing the nonprofit mainland operator to take over multiple facilties, there is no vehicle for a deal to move forward.

The facilities are Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital, as well as Hilo Medical Center, Kona Community Hospital, Hale Ho‘ola Hamakua, Ka‘u Hospital and Kohala Hospital.

"We would really propose three regions as one single region. We need that level of scale to control costs and to improve quality," Bunnell told the senators. "Banner’s position hasn’t changed. From the very beginning we said we needed regional scale. We’d be willing to operate all of HHSC, but we need at least those three regions to move forward."

Meanwhile, the House Committee on Consumer Protection and Commerce moved along a measure that would establish a task force to study the feasibility of a public-private partnership.

The facilities need roughly $400 million in capital improvements, half of which would need to come from the state, Bunnell said. In addition, Bunnell said, the state would need to continue to pay the more than $80 million in operating subsidies for at least three years. That would gradually phase out over 10 years.

Banner hasn’t had discussions with HHSC’s hospitals and long-term care facilties on Oahu and Kauai, but would consider a collaboration with North Hawaii Community Hospital, Bunnell said.

"We would look at those, but we don’t need them," he said. "We have adequate scale with the other three regions."

But senators prodded the executive for more information on what abolishing the public hospital system in lieu of a public-private partnership would mean for services and employees.

"Change is always the big unknown and it’s scary for people," said Senate Health Committee Vice Chairwoman Roz Baker. "There’s not a lot of concrete information, which makes it even more scary."

Maui Memorial Chief Executive Officer Wesley Lo said, "It’s always a risk trying these things. We need to be able to pay our nurses and all our staff. We need to find a model that will do that."

Registered nurse Susie Uwekoolani, who has worked at Maui Memorial for the past 27 years, said workers are fearful about a potential takeover because they haven’t been given any clear information.

"Are they going to be cutting services that will be vital to the community? I just don’t understand the impact. We haven’t heard anything," she said. "There’s fear of not getting hired if Banner does take over. The health care is going to change. We have no idea what that’s going to be. You’d feel a little more comfortable about the unknown (if there were more information)."