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Shortfall ails public hospitals

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    Nobuye Nakamura has walls and tables of her shared hospital room covered in colorful, personal reminders at Leahi Hospital.
    Gwen Yoshizawa pays daily visits to her 88-year-old mother, Nobuye Naka­mura, at Leahi Hospital. Leahi is part of Hawaii Health Systems Corp., which is facing budget cuts for long-term care.

Nobuye Nakamura, 88, has lived at Leahi Hospital for the past eight months after five falls and a fractured back left her unable to walk.

The aging hospital, part of the Hawaii Health Systems Corp., will likely be her final home, near her daughter’s house where she previously lived in Kaimuki.

You’d never know Nakamura has dementia with her well-kempt hair, light pink lipstick and pearly smile, though she requires 24-hour care that her daughter, Gwen Yoshizawa, can’t provide.

"My daughter takes good care of me. I’m very grateful to her," Nakamura said. "There’s nothing like home, but I know she can’t handle (24-hour care)."

Yoshizawa, 62, cared for her mother for seven years until she moved to Leahi.

"This is a good place to be," Nakamura said.

Leahi and 11 other facilities are at a critical stage, having to reduce costs after the state Legislature cut the hospitals’ $150 million budget request to $102 million for the fiscal year that began July 1. The shortfall is projected to grow to around $70 million the following year.

"There’s a concern it’s going to be even worse here, and at that point we may have to cut back some of the beds at long-term care," said Alice Hall, HHSC’s acting president and chief executive officer. "The next thing we’re going to have to do is look at cutting services and cutting employees. Everything’s being evaluated."

HHSC relies on state money for 15 to 20 percent of its annual $650 million budget, with the bulk of the money coming from patients.

Nakamura is among the majority of HHSC patients who pay for care via Medicaid, the government health insurance program for low-income residents, and Medicare, the program for seniors.

HHSC acts as a "safety net" for the state’s neediest population — many of the poor and chronically ill. Its aging facilities are in a unique situation with nearly all HHSC patients on Oahu — 92 percent — on Medicaid, which does not cover the entire cost of care, Hall said. For many patients the long-term care facilities are their only alternative.

"We take a lot of the patients that the private homes won’t take," Hall said, adding that if there were cutbacks "there certainly will be people who will not have a place to go — a great deal of them."

Part of HHSC’s financial problems result from its rural facilities that are unable to generate sufficient revenue to support operations.

HHSC had hoped to partner with a private entity to rescue the mostly rural hospitals that appeal for state subsidies year after year. Public funding through the general fund tripled to $120 million in 2014 from $35 million in 2004.

Earlier this year lawmakers explored legislation that would have paved the way for either a public-private partnership or the sale of some facilities to the private sector, but the bill stalled in the closing days of the session.

Without additional state support, HHSC officials have said the system won’t be able to meet payroll or make payments to vendors.

In addition to the state not giving HHSC its full budget request, Medicare reduced payments by 2 percent to providers nationwide. In total, roughly 65 percent of HHSC’s patients are covered by Medicare or Medicaid, according to Hall.

The dire situation has already forced HHSC — the largest provider of health care in the islands — to begin cutting services and staff on the neighbor islands.

It recently announced plans to close its Kalaheo primary care clinic on Kauai’s South Shore in September, citing inadequate funding and rising medical expenses. Hilo Medical Center announced earlier this month that it will eliminate 30 positions and is facing an estimated $9 million deficit this year. Maui Memorial Medical Center also plans to close its adolescent behavioral health unit to save more than $1 million annually.

HHSC hasn’t been filling open positions that were budgeted and has laid off some non-civil-service employees, as well as temporary workers, and is delaying payments to vendors, Hall said. She didn’t have a total number of layoffs, but said cost-cutting measures have reduced HHSC’s projected cash-flow deficit to $34 million.

In cutting the $48 million from HHSC’s budget request, the Legislature left unfunded union wage increases won through collective bargaining, Hall said. The hospitals now have to find money to pay for those increases, she said.

"The state says it can’t afford us. We’re in this sort of bind without having full control of labor costs," she said. "Our costs are going up while reimbursements are going down. The cycle has to change soon, or it will impact our ability to provide safety-net services to our communities."

Hawaii Health Systems Corp.
>> Most of the 12 facilities are in remote, rural and low-populated areas with insufficient business to support their high costs of operation. These facilities are referred to as “safety-net” facilities because they are often the only alternative for health care in their geographic area and serve everyone in need of medical attention regardless of a patient’s ability to pay.
>> Operating budget: $650 million
>> Deficit: $48 million in 2015, $70 million in 2016
>> How funded: 15 to 20 percent comes through state general fund appropriations; remainder is from patient revenue.
>> Employees: 4,500, includes full- and part-time employees

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