HHSC needs lot more than Band-Aid

Elections always offer a chance to attend certain problems, and our public hospital system certainly needs attention. The 12 hospitals and outpatient clinics that compose Hawaii Health Systems Corp. (HHSC) provide most of the acute and long-term services on the neighbor islands. HHSC’s dedicated staff and healthcare providers — primarily civil service employees — deliver remarkable care, despite aging facilities. They are not the problem; the problem is HHSC’s dysfunctional governance structure.

Hawaii’s Legislature created HHSC in 1996, in an attempt to make our public hospital system operate more like a private hospital system. That was a good first step. While successful hospital systems across the country were consolidating operations, however, Hawaii derailed in the opposite direction: In 2007, Act 290 substantially changed HHSC, creating five regional health systems — Kauai, Oahu, East Hawaii, West Hawaii and Maui — each managing operations independently. Every region has a separate, independent board of directors, vested with equal authority as the corporate board. Act 290 essentially assured that Maui Region, with the largest budget, for example, could operate independently, unconcerned — and often uncommunicative — with the other island systems.

Led by Maui Region, HHSC’s latest solution to fiscal crisis was to lease or sell its hospitals to Banner Health, a huge private hospital system based in Phoenix, Ariz. Ironically, this would have resulted in a near-total loss of service control, but that did not deter Maui Region and its board affiliates. Banner executives made very clear that decisions would be made in Phoenix, not Hawaii, per established company procedure. Maui Region and others on the HHSC board largely pursued this takeover in secret, knowing that privatization would ultimately cost hundreds of jobs. Keep in mind that many Hawaii rural areas rely on HHSC as their largest employer.

One cannot blame Banner Health, who had nothing to lose. Little to no competition exists for hospital service on most neighbor lslands, and HHSC was advocating to pay Banner the same subsidies it was receiving. What a deal! If Banner downsized Hawaii’s hospital workforce, and avoided paying civil service benefits, it had everything to gain. Although both Queen’s and Hawaii Pacific Health had expressed interest in partnerships, the HHSC board essentially ignored their interests. Our local hospital systems were viewed as competitors, not partners. Fortunately, that has changed a little in recent months; at least discussions have started with local hospitals now.

Since 2007, only one small step has improved HHSC governance. In 2013, Act 278 was signed into law, after a threatened veto by Gov. Neil Abercrombie — changing the five regional CEOs on the corporate board into ex-officio nonvoting members, and calling on the governor to appoint five replacement board members. On any corporate board, management should never have a vote, given conflicts of interest.

Today, much more remains to be done.

First, extreme autonomy fragments HHSC’s system. One entity, a single corporate board, needs the authority to make policy decisions, and must stand accountable to the Legislature and all who provide "safety net" funding. Five regional boards and five independent CEOs (none accountable for the system as a whole) cannot manage in concert.

The nation’s fourth-largest public hospital system, HHSC operates as five separate systems. Duplicating efforts, HHSC fails to fully engage economies of scale, which could leverage resources with considerable bargaining power. Millions of dollars could be saved every year, by centralizing: billing, supply and equipment procurement, office administration, human resource management, and IT support. Such efficiency is vital for hospitals to remain solvent in today’s costly and changing health-care environs.

Regional input on service delivery is necessary. Neighbor island challenges vary and the needs of those communities differ. However, region-biased voices are best heard as regional advisory boards, composed of health-care experts, not as governing bodies.

Finally, we must aggressively pursue partnerships with local health-care systems, whom we know and trust to remain accountable. Queen’s and Hawaii Pacific Health rank among such potential partners. Their partnerships would not require the sale or leasing of our public hospitals, nor the termination of hundreds of health-care workers. By sharing knowledge, physicians, nurses, technical staff, even facilities with local partners, Hawaii can better leverage its precious health-care resources.

Obviously, these changes are easier discussed than executed, and political obstacles do exist. However, no time rivals the present, for candidates to begin discussing how to best accomplish the needed changes.

We need not sell out to a mainland chain, hoping it might do what we could not do ourselves. If HHSC begins to work together as a system, efficiencies will undoubtedly emerge, costs will fall, and our public hospitals can finally focus on providing quality health care, not just fighting for survival. We cannot afford the wait much longer.