Desperate for a way out of its cash-flow deficit, Maui Memorial Medical Center is in partnership talks with two of the state’s largest hospital systems.
The Wailuku hospital, facing an $11 million deficit in 2015, is anticipating "significant" shortfalls in the upcoming years, prompting it to start negotiations with Kaiser Permanente Hawaii, the state’s largest health maintenance organization with an already strong presence on the island. The talks include Kula Hospital in Upcountry Maui.
The quasi-public hospital also is in similar discussions with Hawaii Pacific Health — operator of Kapiolani Medical Center for Women & Children, Pali Momi Medical Center, Straub Clinic & Hospital and Wilcox Memorial Hospital on Kauai.
Maui Memorial projects its deficit to be $40.1 million for 2016 and $46.5 million in 2017.
"It gets way worse in 2016 and 2017. All of a sudden as we look to 2016 and 2017, revenues aren’t projected to increase at all, then you have continued inflation and then also it appears there’s going to be additional raises (for workers)," said Maui Memorial CEO Wesley Lo, adding that the hospital recently was informed that its employee fringe benefit rates will increase significantly starting in 2016.
"The amount of losses over the next three to five years, I don’t even know what you would do to stem those losses," he added. "At (a certain) point in time, what do you cut? (If) you start cutting services, you start cutting revenue."
This is not the first time Maui Memorial has sought privatization. In 2012 the hospital began talks with Phoenix-based Banner Health on a public-private partnership. The talks ended when the participants failed to win approval for the move from the state Legislature.
Lawmakers shelved a separate measure earlier this year that would’ve allowed the Maui and Kula hospitals — part of the state Hawaii Health Systems Corp. — to partner with or be purchased by a private entity.
"Mainland companies that have been interested over the years basically are telling us they would be interested if there is legislation to allow it," Lo said.
If an agreement is reached and legislation is passed next year, Kaiser said it is committed to keeping the hospitals open for the entire Maui community, not just its members. Kaiser, both a health insurer and medical provider, typically cares for its own members at the facilities it operates.
The hospitals would continue to include private community physicians who would practice with Kaiser doctors, the HMO said in a press release.
"We would work with government leaders and union representatives to ensure the long-term sustainability of the hospitals, while continuing to provide community outreach and charitable care services," said Kaiser, which has more than 52,000 members on Maui. "And we would continue to accept a variety of health insurance plans at both hospitals."
The dire situation has already prompted the Maui hospital to begin cutting services and staff.
Maui Memorial recently closed its adolescent behavioral health unit to save more than $1 million annually.
Lo anticipates the hospital will start evaluating proposals by both Kaiser and Hawaii Pacific Health in the next six to eight weeks.
