It was nearly two hours into the hearing on the future of Maui’s largest and most important hospital before Dr. Peter Galpin was able to roll his wheelchair up to the lectern. Galpin spoke for a couple minutes–one of dozens who’d packed themselves into the Maui Waena Intermediate School cafeteria to testify–but I only wrote five of his words in my notebook: “Trade us or play us.”*
That was the big takeaway from the Nov. 10 state House of Representatives Health Committee hearing–one of eight being held on how to deal with the tens of millions of dollars that bleed out every year from Maui Memorial Medical Center (MMMC) and its parent “company” Hawaii Health System Corporation (HHSC), a unique quasi-corporate entity that runs our state’s major hospitals.
The stakes are incredibly high. Maui Memorial is Maui County’s largest hospital and only acute care facility. In written testimony before the state Legislature back in February, HHSC’s Maui Region CEO Wesley Lo said the hospital handled one-fifth of the state’s total inpatient volume.
“It is also the only hospital in the state with a 24/7 stroke prevention program and only neighbor island hospital that provides comprehensive cardiovascular services,” Lo testified. “With more than 1,400 employees, including 200 attending physicians, MMMC is one of the largest employers on Maui.”
And yeah, there’s been plenty of doomsday talk of cutting services and sacking personnel at the hospital.
“The current structure of HHSC is not sustainable for the long-term delivery of quality health care services for residents, especially those on the neighbor islands,” Governor Neil Abercrombie said in Feb. 10, 2014 written testimony before the state Legislature.
At the Nov. 10 hearing, Lo painted a future in stark colors–the Maui region expects to end fiscal year 2015 with a $46.3 million deficit. HHSC’s Last year, the Maui region showed a $38.2 million loss, and the projected losses–according to a Nov. 5 press release from Maui Memorial–will just keep coming with $39.6 million in projected losses in 2016 and another $46.4 million in 2017.
“Current budget estimates anticipate that the deficits will continue to grow exponentially year after year,” the Nov. 5 Maui Memorial press release stated. “This may leave [the] Maui County population vulnerable to drastic cuts in available services and jobs, and families with little other option than to fly to Oahu for care.”
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The reason for such losses is simple: the state isn’t giving HHSC the kinds of subsidies it used to. Health care costs are, as usual, rising, and government itself at all levels is looking for ways to save money.
“All of its [HHSC’s] state-run facilities face decreased state subsidies and health insurance reimbursements, while operating costs continue to rise and the need for healthcare in a growing population increases,” stated the Maui Memorial press release. It’s a “trend whose negative impact has devastated many other facilities across the nation.”
According to state Senate testimony in February from Alice M. Hall, HHSC’s acting President and CEO, there are just two ways to deal with these losses. The first, which we’ll call the “doomsday scenario,” involved “possible facility closures and loss of jobs, which will negatively impact communities that HHSC facilities serve, especially low income and low income elderly.”
It’s a frightening possibility. But Hall was similarly dramatic about what she termed “the only other viable alternative”–a public-private partnership. “A public-private partnership will reduce dependence on government subsidies and provide access to private capital,” Hall testified.
Consider the Nov. 10 Kahului hearing to have been a giant love letter to the notion of setting up a public-private partnership involving MMMC. Hospital officials made sure the hearing was packed with supporters (one official even stood at the front door handing out green “Patients Are Priority” stickers to everyone filing in). Hospital officials also handed out statements printed on HHSC Maui Region stationery that called for a “Total Healthcare Matrix” for Maui County, but thankfully, no one actually used such scary-clunky language in their testimony.
The first to speak in favor of such a deal was Maui County Mayor Alan Arakawa, who peppered his remarks with words like “alarming” and “struggling” to describe Maui Memorial. “I fully support a partnership,” Arakawa told the assembled legislators.
A long list of MMMC doctors, board members and community leaders also testified, all in favor of allowing MMMC to partner up with a private hospital provider. Maui County Councilmember Gladys Baisa (fresh from apparently losing her council chair title to Mike White in what she described in the Nov. 11 Maui News as a “coup”) testified that she was in “full support” of what Arakawa said and that a partnership “may be what’s needed.”
Dave DeLeon, the Realtors Association of Maui executive director, testified that his organization’s 1,400 members support a partnership. Sharon Suzuki, president of Maui Electric Co., said she “strongly supports” the hospital’s proposed “long-term solution.” Lisa Paulson of the Maui Hotel & Lodging Association urged the legislators “to pass legislation allowing public-private partnerships.”
Even Chuck Bergson and Joe Bradley, who run Pacific Media Group (PMG) and The Maui News, respectively, testified that a public-private partnership was the way to go (Bergson is also a member of HHSC’s Maui Region Board). Though PMG’s Maui Now and The Maui News ran stories on the Nov. 10 hearing, neither disclosed that their corporate bosses had testified on behalf of the hospital’s proposal.
What’s more, neither story quoted anyone at the hearing who testified against a possible parternship. At roughly 7:15pm (the hearing began at 5:30pm), Stephen Castro, ILWU Local 142’s Maui Division Director went to the lectern. Unions typically look at public-private partnerships with more than a skeptical eye (MMMC employs a great deal of unionized labor) and that’s what Castro proceeded to do.
“The challenges are nothing new,” Castro said of the hospital deficit figures. “Due diligence is in order. The healthcare safety net must be preserved and protected… All residents must have access… Employees are unionized and must remain unionized.”
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Castro also noted that the state created HHSC itself in 1996 (through Act 262) to deal with financial distress at state hospitals.
“It was understood at the time Act 262 was signed into law that operation of the HHSC facilities would continue to require state funding support,” states the official HHSC history. “A number of the 12 facilities are located in remote, rural and low-populated areas with insufficient business to support their high costs of operation. These facilities were referred to as ‘safety-net’ facilities because they are often the only alternative for the delivery of essential medical care in their respective geographic area and they serve everyone in need of medical attention regardless of the patient’s ability to pay.”
As things stand now, it’s not legal for HHSC to enter into any sort of partnership with a private hospital provider–even though the state isn’t sending the hospitals adequate “funding support.” But periodically, bills pop up in the state Legislature that would legalize them. Earlier this year, the state Legislature debated SB 3064, which was supposed to make public-private partnerships with HHSC hospitals possible.
Like the Nov. 10 hearing, numerous hospital officials, doctors and community leaders supported it–though many had a few reservations.
“As Mayor of Maui County, I can support this message but share many of the concerns being voiced by the members of our health care community in Maui County,” Alan Arakawa said in written testimony presented before the House Finance Committee on April 1. “As this measure would significantly impact everyone in Maui County, we feel strongly that the partner selection not have any restrictions, and that any partnership be made by, or in large part by, the communities affected–all of us in Maui County.”
Still, the big unions wouldn’t budge. In fact, officials with the Hawaii Government Employees Association (HGEA)–the state’s largest union with 43,000 members–testified against it at nearly every legislative committee hearing.
“[W]e oppose as drafted S.B. 3064 as the language does not provide for the bargaining process to protect the rights and benefits of the affected employees,” Randy Perreira, HGEA’s executive director, testified before the Senate Health Committee on Feb. 10, 2014. Fifteen days later, HGEA Deputy Executive Director Wilbert Holck, Jr. said much the same thing to the Senate Ways and Means Committee.
“[T]he language does not provide for the bargaining process nor legislation to ensure protection of the rights and benefits of the affected employees,” Holck said. “As written, the proposed legislation does not provide for any long-term assurances that communities will continue to receive needed health care services.”
The union opposition was simple: once the state divests itself of the hospital, it’s not coming back. Union contracts and employment figures are manageable now, but once a private provider steps in, the door’s open to wage tightening or even future cutbacks.
Later, on April 1, Perreira was back at the Capitol, this time testifying before the House of Representatives Finance Committee–but this time with a new, even more defiant message. “The language does not sufficiently identify the long-term liabilities the State would face through provider subsidies,” Perreira said. “Furthermore, we believe the legislature should address concerns with the current governance of the Hawaii Health Systems Corporation as opposed to having new providers come in and manage the system.”
Of course, there was no talk of scrutinizing HHSC’s “current governance” at the Nov. 10 hearing.
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In the end, SB 3064 died in committee, but where this much money and power are concerned, nothing stays in the morgue forever.
“What we’re looking for is someone who’s going to come in on some kind of lease or some other kind of joint venture,” state Senator Gil Keith-Agaran, a Kahului Democrat who attended the Nov. 10 hearing and is slated to chair the Senate Judiciary and Labor Committee, said in the Oct. 27 Maui News. “Everybody realizes we want to have a hospital that meets the needs of our residents without requiring them to travel to Oahu or the Mainland for treatment, and we could do that. But we need to have the additional resources both financially and administratively, and the medical expertise that an outside partner can bring us.”
Indeed, Maui Memorial officials recently announced they were talking with a few private providers, including Kaiser Permanente–about a new public-private partnership. Phyllis Dendle, Kaiser Permanente Hawaii’s Director of Governmental Relations, testified at the Nov. 10 hearing that Kaiser was “in discussions” with MMMC on “ways we can work together.” Dendle also said her company was “committed” to keeping the hospital open “to all community members.”
News of the Kaiser-MMMC talks broke in The Maui News a few weeks ago (HHSC is also talking with Hawaii Pacific Health). But what isn’t well known is that earlier this year, Dendle testified against SB 3064.
“[T]his bill is too vague on the specifics of how such a transition and partnership might work in the best interest of the public’s health and safety particular for the most vulnerable in our community,” Dendle said in written testimony provided to the House Health Committee. “We request that the legislature continue to work on the details and difficulties of this idea with the HHSC and the communities they serve in the interim rather than passing this bill in its current form.”
Then again, Kaiser wasn’t in talks with MMMC back then.
In the end, Maui residents are in a bind. Keith-Agaran is right–the state isn’t sending HHSC the kinds of subsidies it did in the past, and the state hospitals are suffering for it. But the Legislature also can’t bring itself to defy the unions and let the hospitals team up with providers like Kaiser. So nothing changes, beyond the amount of red ink that pours from HHSC balance sheets. It’s a frustrating, scary situation summed up beautifully by Galpin’s playful phrase quoted at the beginning of this story.
The Nov. 10 hearing in Kahului was just one in a series of eight committee hearings. More will happen before the Legislature reconvenes early next year. And given the rousing love-fest for MMMC that convened Monday night, it’s pretty clear a new bill legalizing public-private hospital partnerships will again move through the House and Senate committees.
Of course, the HGEA doesn’t seem to be going away either.
“The HGEA has been and continues to be part of discussions regarding the future plans of Hawaii Health System Corporation,” said Perreira in a statement his office emailed me shortly before the Nov. 10 hearing. “We represent more than 2,390 members throughout the HHSC and are concerned about their positions, working conditions and vested benefits if a public/private partnership is formed moving forward. We are also concerned about the community and any impact that changes will have on the health care provided to all of these rural communities. However, at this time, proponents of such an arrangement have not outlined the scope of their intent. We will continue to be part of the discussions. The HHSC provides important hospital and acute care facilities throughout the state to residents and visitors without regard to their ability to pay. The HGEA believes in the HHSC mission and our members make sure patients receive excellent care at these facilities everyday.”
* State Senator Gil Keith-Agaran, who was also at the hearing, subsequently tweeted Galpin’s quote as “Play us or trade us,” but regardless, the sentiment is the same.