Nearly 90 Hawaii island workers will lose their jobs as a result of planned closures and cutbacks at Hilo Medical Center, Ka‘u Hospital and Hale Ho‘ola Hamakua.

The reductions are meant to offset a projected $7 million deficit in the fiscal year starting July 1.

The East Hawaii region of the Hawaii Health Systems Corp., the troubled public hospital system that is facing a $50 million shortfall for fiscal 2016, announced the cuts late Tuesday night.

Planned closures include one wing of adult inpatient psychiatric care at Hilo Medical Center, and home care services, which provides homebound individuals chronic and transitional nursing care, the HHSC said. The cutbacks also will eliminate 35 long-term care beds at Hilo Medical Center, Ka‘u Hospital and Hale Ho‘ola Hamakua. The reductions do not affect the Yukio Okutsu State Veterans Home.

Additional cuts will be necessary in many departments and a total of 87 people — or approximately 7 percent of the workforce — will lose their jobs, the company said.

"Some health care services for our communities will be reduced and disrupted as a result of the planned closures, cutbacks and staff layoffs," said Dan Brinkman, interim East Hawaii regional chief executive officer, in a news release. "While the vast majority of our workers will keep their jobs, it saddens us that very capable people who help care for our community will lose their jobs."

The region’s estimated shortfall is a result of higher costs and lower reimbursement rates for the "safety net" facilities that serve a rapidly growing population of more than 100,000 people, many of whom are uninsured, in the rural community, the HHSC said.

Approximately 75 percent of the region’s reimbursements, which do not cover the cost of care, come from the government-funded Medicare and Medicaid programs for seniors and low-income residents.

"Our budget shortfall will have considerable impact on health care facilities in East Hawaii. Regionwide cost-cutting measures have already been implemented and service cutbacks and layoffs are the only remaining option for our financial viability," said Gary Yoshiyama, the HHSC’s East Hawaii regional board chairman, in the release. "Many scenarios were carefully weighed in our preparations to maintain essential health care services and minimize any potential harm to patients." 

The HHSC announced plans last month to cut 300 workers at its 12 public hospitals statewide to offset an estimated $50 million deficit in fiscal 2016.

Lawmakers appropriated about $106 million in general funds for the fiscal year beginning July 1. The HHSC said it needed $156 million to cover costs. The Legislature also granted it $85 million for fiscal 2017, but the hospital group projects it will still be short $90 million that year.

HHSC CEO Linda Rosen said all of the regions, including Maui, Kauai, West Hawaii and Oahu, are developing cost-cutting plans, which will be discussed at HHSC’s board meeting on May 28.

"Each region is going to work as hard as possible to minimize the effect on their employees," she said. "Unfortunately we can’t close the budget gap without affecting employees. There’s just simply not another category of costs besides labor that is big enough to find that savings."

Rosen said the HHSC has "tightened the belt" over the last several years because it has been underfunded, despite increases in collective bargaining and retiree health costs that are negotiated by the state.

"We spend 80 percent of revenue for labor. If you only have 20 percent of revenue available to spend on other things, it’s pretty hard to cut into that," Rosen said. "(Lawmakers are) not convinced at this point that the funds are needed to the degree we asked for them. Now this is the time we’ll see how far the limited funds can go."

Meanwhile, lawmakers approved the privatization of Maui Memorial Medical Center and two other state-owned medical facilities — Kula Hospital and Clinic and Lanai Community Hospital — clearing the way for a possible takeover by the nonprofit Hawaii Pacific Health or Kaiser Permanente Hawaii.

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

The East Hawaii Region operates on a budget of $160 million and has a current payroll of more than $100 million and is Hawaii island’s second-largest employer.