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Hospital privatization advances


Tribune-Herald staff writer

Bills supporting the privatization of Hawaii public hospitals on Hawaii Island and Maui continue to advance in the Legislature, making it through the halfway point in the session on Tuesday.

“We’re now heading into the second half of the football game,” said state Sen. Josh Green, D-Kona, Ka‘u, chairman of the Senate Committee on Health.

But, even as the measures progress, Green says he and other legislators intend to take as much time as they need to fully weigh the consequences of any decision that would affect Hawaii Health Systems Corp., the operator of the state’s “safety net” health care facilities, so-called because they are often the only option available to their communities, especially on the Neighbor Islands.

“Under any circumstances, we have to be careful to not go too quickly,” Green said Wednesday morning. “I have a lot of questions that need to be answered still. … If somebody was concerned about how slowly it’s going, I’d say they’re not fully committed to Hawaii.”

Among the biggest and most important questions that Green says remain to be answered to his satisfaction concerning the privatization of public facilities:

l How will the state’s health care workforce be handled and guaranteed employment?

l How will all patients on the Neighbor Islands be guaranteed to continue to receive service?

l What specific subsidy from the state would be necessary to keep the facilities operating?

“Those are the questions that I have to have answered before considering moving a bill out of the Legislature to the governor,” he said.

The legislation has taken center stage among a number of other important health care measures after it was learned in January that HHSC has been in talks with private nonprofit provider Banner Health, based in Phoenix, Ariz., to take over the state’s eastern region of facilities, including Hawaii Island and Maui.

HHSC says such a partnership is necessary to combat rising costs, dwindling state subsidies, and a drop in Medicare and Medicaid reimbursements.

Both HHSC and Banner representatives say they are far from arriving at a deal, but Legislative approval is an important step in that process.

“This legislation is not about Banner Health or the specifics of any transaction that may eventually be negotiated with Banner following passage of the bill. We cannot emphasize too strongly that this legislation would be needed for any privatization transaction to occur, whether with Banner Health or with another private health care organization,” said Banner Executive Vice President Ronald Bunnell in testimony presented to legislators.

The surviving measures consist of Senate Bill 1306 and its more conservative companion, House Bill 1483. Both succeeded in crossing over in the Legislature on Tuesday after passing their third readings.

HB 1483 takes a slower approach, calling for the establishment of a task force to study the feasibility of allowing the operations of HHSC regions and their facilities to transition to a “public-private partnership status.”

SB 1306 skips the task force step and goes straight to allowing the privatization of the state’s public hospitals. But as the bill worked its way through the Senate, Green says he helped to add more oversight by requiring that any future transition to non-public status require an affirmative vote by both houses of the Legislature.

“I’m going to be very cautious as we go forward, and make sure we have all the (health care) services available to isle residents,” he said. “It’s a gigantic decision for our health care system.”

Green added that he would be meeting with House Committee on Health Chairwoman Della Au Belatti in the next few days to discuss the progress of the legislation, and how to ensure that more community input is considered by legislators.

“In the next two weeks we’ll have the next round of bill hearings, and we’ll have a better idea of where we stand,” he said.

Testimony in support of privatization from HHSC and Banner representatives has centered on Banner’s larger size and its ability to better withstand the pressures that have negatively impacted operations at Hawaii facilities.

“Under current conditions, HHSC continues to face financial challenges including increasing operating and capital improvement costs, budget shortfalls, budgetary restrictions, declining government and third-party payer subsidies and lack of scale,” said Maui Memorial CEO Wesley Lo in Feb. 26 testimony provided to legislators. “These issues are related to declining reimbursements, medical inflation, the Affordable Care Act and the current ‘fiscal cliff’ and federal sequestration. These issues and many others are what bring us here today. We need to find a solution.”

But those in opposition to a public-private partnership say such a transition could be ruinous, both for employees and for Neighbor isle residents’ access to health care.

“… they don’t have a vested interest in the community and the families who live here,” said Hilo resident Adele Koyama in written testimony. “Banner’s bottom line is to make money, and vital services that are not profitable will be cut, leaving us with minimal services. … Lastly, Oahu has several hospitals residents can choose from. For Neighbor Islands, and I speak specifically to the Big Island, there is only Hilo Medical Center. They provide health care for all residents of the Big Island. Our families rely on it!”

Email Colin M. Stewart at


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