Legislators Pave Way for Maui Hospital to Pursue Public-Private Partnership

House and Senate conferees today agreed to authorize the Maui Regional System (MRS) of the Hawaii Health Systems Corporation (HHSC) to enter into an agreement with a private entity to transition one or more of its facilities into a new private, nonprofit corporation.

Lawmakers amended HB1075, CD1, requiring MRS to re-solicit proposals from any party locally and nationally interested in partnering with it to operate its hospitals. It will also allow the Governor to direct negotiations for the transfer of MRS facilities to protect and further the state’s interest in controlling the levels of financial support for HHSC operations and maintaining current levels of access to healthcare services on Maui.

The measure will also preserve all rights, benefits and privileges earned by HHSC employees and requires the new nonprofit management to offer employment to all employees of facilities transferred for at least six months.

In addition, the measure would cap the state’s financial support to the transitioned facilities at the amounts provided in fiscal year 2014. Transitioned facilities will also be eligible to apply for Capital Improvement Project (CIP) funds for up to the first 10 years.

Recent projections provided to the Legislature forecasted a deficit of about $800 million over the next 10 years for the Maui hospitals and, in March, the Maui Regional board announced plans to cut $28 million in services and positions at Maui Memorial Medical Center for the upcoming fiscal year.

“This action was absolutely essential for the people of Maui,” said the bill’s introducer, Speaker Joseph M. Souki (Kahakuloa, Waihee, Waiehu, Puuohala, Wailuku, Waikapu). “The financial situation for Maui Memorial was not sustainable for the short or long run, and a private-public partnership is the best solution for Maui and the state of Hawaii.

“What we did today will open the doors for a vital public-private partnership to keep Maui’s hospitals open and to most importantly provide the appropriate and quality care for the people of Maui County. I thank Governor Ige for his leadership in bringing everyone to the table to work together on a bill that will have a significant impact on the lives of Maui County residents.”

Health Committee Chair, Rep. Della Au Belatti (Makiki, Tantalus, Papakolea, McCully, Pawaa, Manoa) who led discussions for the House said, “Our collective goal was to come up with a bill that addresses concerns that include fairness, employment, expenses, efficiency, quality and accessible health care to the residents of Maui County.”

House Majority Leader, Rep. Scott K. Saiki (Kaheka, Kakaako, Downtown said, “This bill allows for all interested parties, locally and nationally, to come to the table with proposals. It re-enforces the vetting process and enables us to find the best fit for Maui Hospital and the health care needs of Maui County residents.”

“It was important to all of us, particularly the Senate, that any transition did not disrupt any services, for the people of Maui and hopefully grow health services there quite quickly,” said Health Committee Chair, Sen. Josh Green (Kailua-Kona, Honokohau, Honaunau, Captain Cook, Kealakekua). “We expect Maui Memorial will find a strong partner for the Maui health care system quickly so that everyone can move forward. We also didn’t want people to lose benefits or jobs and there are provisions in the bill to make sure we do everything we can to continue a strong employment environment on Maui.”

This past November, the House Committee on Health held an informational briefing at Maui Waena Intermediate School on Maui to hear from MRS officials and the community. The meeting was part of a series of community-based public hearings related to the Hawaii Health Systems Corporation, its Regional Boards, and their plans to streamline operations and address anticipated budget shortfalls. Informational briefings were also held on Oahu, Kauai, and the Big Island in Kona and Hilo.

The Hawaii Health Systems Corporation is a statewide public health system and is the only acute care provider on the islands of Maui and Lanai. HHSC is the “safety net” for neighbor island acute care and for long-term care throughout the state.

The system operates over 1,300 licensed beds in facilities located on five different islands and relies on state appropriations to provide services and capital improvements and maintenance of its health facilities. However, the HHSC has continued to operate at a deficit and requires significant public funding and emergency appropriations to remain operational.

House conferees are Representatives Sylvia Luke, Mark Nakashima and Della Au Belatti, co-chairs; Kyle Yamashita and Cynthia Thielen, managers. Luke, Nakashima and Belatti also serve respectively as the chairs of the House Committees on Finance, Labor and Health.

Senate conferees are senators John Green, chair; Roz Baker, Gilbert Keith-Agaran, Jill Tokuda, co-chairs; and Sam Slom, manager.

The bill now goes to a vote before the full House and Senate. If passed by both chambers, the measure will go to the Governor, who has the option of signing the bill into law, vetoing the measure, or allowing it to become law without his signature.