Hawaii’s Public Hospitals Eye Cuts Amid Shortfall

Lawmakers have decided not to privatize Hawaii Health Systems Corp. Instead, members of the Hawaii House and Senate on Friday granted the 12-member public hospital system $102 million for 2015, $48 million less than the system had requested.

Alice Hall, the hospital system’s acting president and CEO, told the Honolulu Star-Advertiser that the shortfall compels the hospitals to consider cutting services or staff.

“We believe all our services are essential. But we must examine all options in order to make up for the huge deficit that we’re anticipating for next year,” she said.

The hospital system had hoped for legislation that would have allowed a partnership with or purchase by a local nonprofit provider such as Hawaii Pacific Health, the Queen’s Health Systems or Kaiser Permanente Hawaii.

The public hospitals are under increasing strain. The Affordable Care Act is expected to bring in more patients as more people get health insurance. Reimbursements from government programs such as Medicare and Medicaid have shrunk. Aging hospital facilities, some of which are a century old, need an estimated $1 billion in capital improvements.

The shortfall for next year is caused mostly by unfunded wage increases negotiated through collective bargaining, Hall said.

“The way our system is set up right now is unsustainable,” she said. “We did come up with what we think is the best solution, but then it died at the last minute. These are major changes, and it takes a long time for people to be comfortable with major changes.”

The hospital system will ask for an emergency appropriation for next year, Hall said.