Kaiser begins courting Maui hospitals

Kaiser Permanente Hawaii is throwing its hat into the ring as a potential suitor to purchase or partner with three Maui county hospitals.

In a letter to state Sen. Gil Keith-Agaran (D, Waihee-Wailuku-Kahului), Kaiser’s regional president, Mary Ann Barnes, said the state’s largest health maintenance organization is preparing to submit a letter of interest to partner with Maui Memorial Medical Center.

"We are taking this action because Kaiser Permanente Hawaii is committed to providing excellent care to the people of Maui and we believe that preserving a fiscally sound, high-quality community hospital network on the island is essential to the future of the Valley Isle," Barnes said in the letter. "We remain firmly anchored to our roots on Maui, with more than 40 percent of the island’s residents now entrusting us with their care."

Barnes went on to say the HMO is committed to keeping the hospital open to the entire Maui community, not just Kaiser members, and would accept a variety of health insurance plans. Kaiser, which has more than 52,000 members on Maui, is both a medical provider and health insurer in the islands.

Lawmakers last week sent a bill to Gov. David Ige clearing the way for the privatization of Maui Memorial and two other state-owned medical facilities. Ige has indicated he is will likely sign the bill.

Hawaii Pacific Health — which operates Kapiolani Medical Center for Women & Children, Pali Momi Medical Center, Straub Clinic & Hospital and Wilcox Memorial Hospital on Kauai — has been working toward taking over the Maui hospitals and pushed for passage of the bill.

However, the legislation requires that other hospital operators also be allowed to compete for the opportunity to operate the facilities, which include Kula Hospital & Clinic and Lanai Community Hospital.

The Maui hospitals — part of the financially ailing Hawaii Health Systems Corp. — have been engaged in a six-month due-diligence process with Hawaii Pacific to prepare for privatization.

"Hawaii Pacific Health has been committed to this public-private partnership effort from the beginning, and if selected, will continue to work with the governor and the Maui region to implement such a partnership," said HPH spokes­woman Kristen Bonilla in an email. "Our goal is, and always has been, to create a sustainable health care system for Maui and Lanai that will grow with the needs of the community and provide access to high quality health care close to home."

Kaiser had originally expressed interest in the Maui hospitals, but then decided not to pursue talks until the most recent privatization bill was approved. The latest version assigns Ige the task of leading negotiations for the transition to a public-private partnership with the assistance of Maui hospital officials.

Last month Ige intervened to delay a vote on the hospital privatization bill, which has been strongly opposed by the United Public Workers and the Hawaii Government Employees Association.

The state now pays about $100 million per year to support the HHSC hospital network, including the Maui facilities, and lawmakers want to reduce those costs.

"It’s a little premature to take a position one way or the other," said Wesley Lo, Maui Memorial’s chief executive officer, adding that the bill has yet to be signed by the governor. "We’re excited that there’s additional interest in the Maui region. It allows us to bring the best opportunity for the counties to the table. At the same time, we shouldn’t lose sight of the fact that Hawaii Pacific Health has expended a lot of resources and effort into this during the legislative proc­ess."

Hawaii Pacific invested in "a lot of man-hours" and hired advisers and consultants to complete due diligence and modeling, Lo said.

"At the end of the day, our priority is to make the selection that’s in the best interest of the residents of the County of Maui and the state," he said.

It is imperative that privatization be completed soon because "if this takes too long, there’s a potential for disruption of services," Lo warned.

In 2013 HHSC’s roughly dozen facilities on Maui, Lanai and Hawaii island were exploring a deal with Phoenix-based Banner Health to acquire some of the facilities. But the talks were scrapped when the Legislature couldn’t agree on the legislation.

The Maui County hospitals meanwhile are moving forward on a plan to cut $28 million from their budgets starting July 1.

Maui Memorial has already been forced to close services, including its youth behavioral health division.