Hospitals face more pain

“Catastrophic cuts to services” are on the horizon if legislators don’t provide more funding this year, says the head of East Hawaii’s public health care system.

Hawaii Health Systems Corp.’s East Hawaii operations are expected to see a revenue shortfall of $29 million in the coming year out of a total operations budget of $160 million, said East Hawaii Interim CEO Dan Brinkman. The following year, the shortfall is predicted to balloon to $35 million.

“We’re worried,” he said in an interview last week. “We have a lot of reason to be concerned for next year.”

This summer, East Hawaii facilities like Hilo Medical Center made cuts in various areas to help make up a $9 million shortfall for the year, including cutting some nursing positions held by temporary traveling nurses. Those cuts, administrators said, would have little or no impact on quality of services, but the days of “squeezing blood from a stone,” are now over, according to the interim CEO.

“Right now, we have a plan to get through this year without cuts in services; We’ve figured out how to scrape enough together to keep going,” he said. “But, we have wrung all the possible efficiencies out of our system. There’s not another thing left to drop.”

The system continues to wrestle with declining revenues due to increasing costs and lower reimbursement rates, he explained. Those are perennial issues, however. The big hit next year will come as a result of HHSC instituting a series of pay raises negotiated through the collective bargaining process.

“The previous administration, which has now been voted out, negotiated for all our work force a series of raises over consecutive years that, to be honest, we’re not able to pay out of operations,” he said. “They’ve always done that, but this is different in that, in the past, those pay raises were funded by the legislature and the executive branch. That didn’t happen last year.”

Brinkman said that leaves the East Hawaii region of HHSC with $18 or $19 million in new labor expenses for next year, as well as $10 million in fringe rate increases, which may or may not be covered by the state.

“We’ve been told by the outgoing administration that we’d need to come up with that. You put the two together and that’s $29 million in increases, which is about 20 percent of our operating budget. … That’s a big deficit, and minor cuts aren’t going to cover it,” he said.

State Sen. Josh Green, D-Kona, Ka‘u, who serves as chairman of the Senate Health Committee, said Monday that bolstering the state’s public health system is at the top of his to-do list this Legislative Session.

“Without reform and support, we would see a serious loss of services, which I’m totally opposed to,” he said. “I expect there will be an emergency appropriation request in February or early March, and I will support that as health chair.”

Green said that HHSC’s regions across the state are faced with similar shortfalls, and emergency infusions of cash from the state will be necessary to keep them going until a long-term fix can be set in place.

“Without it, my prediction is we’ll see 10 percent of services cut each year for the next three years,” he said.

That long-term fix, he added, will likely come in the form of local public-private partnerships. For instance, private organizations like Kaiser Permanente and Hawaii Pacific Health have shown interest in partnering with Maui, which faces a $6.4 million shortfall this year.

But, Brinkman said, such a partnership with East Hawaii may not be as attractive to potential partners, when one takes into account the fact that about 75 percent of the region’s reimbursements come from Medicare and Medicaid.

“We’re a very poor region,” he said. “Maui’s a much more affluent area. The businesses are different.”

Ultimately, he said, community partnerships “with a little ‘P,’ rather than a big ‘P,’” will help HHSC serve the public on Hawaii Island, including programs like the recently launched Community First. The nonprofit effort, headed by KTA Super Stores CEO Barry Taniguchi, takes a hyperlocal approach to forming partnerships between health care providers, as well as helping area residents take more of an active role in monitoring their health.

“Health care is changing and we’re looking at forming clinical integration groups and forming networks to help manage patient health and wellbeing. We’re exploring those types of partnerships,” he said.

“But this all takes time. We don’t have a solution for tomorrow, and we need stable funding for the next few years so we can transition to a viable, sustainable solution. … We need it, and our community needs it.”

Email Colin M. Stewart at cstewart@hawaiitribune-herald.com.