Two bills that would allow the transition of Hawaii’s public health facilities to private status — and open the door for a potential takeover of multiple facilities by mainland nonprofit Banner Health Systems Inc. — are working their way through the Legislature.
On Wednesday, House Bills 1483 and 1484 passed through hearings by the state House of Representatives committees on Health, and Labor and Public Employment.
Introduced by state Rep. Della Au Belatti, D-Makiki, Tantalus, Manoa, HB 1483 serves to permit Hawaii Health Systems Corp. and its facilities, including Hawaii Island’s Hilo Medical Center, Ka‘u Hospital, Kona Community Hospital, Kohala Hospital and Hale Hoola Hamakua, to make the transition to nonpublic status. Among those helping to co-sponsor the bill is state Rep. Faye Hanohano, D-Puna.
Meanwhile, HB 1484, also introduced by Belatti, would alter the governance structure of HHSC, making regional chief executive officers, including East Hawaii CEO Howard Ainsley, nonvoting members of regional boards. It would also establish a new personnel and retirement system, and create new employee collective bargaining units.
In the past month, HHSC executives have said that such changes would likely be necessary as they moved forward in talks with Phoenix-based Banner on the private, nonprofit organization’s bid to lease and operate eight HHSC facilities, including all the properties in the East Hawaii region.
The move to nonprofit status was recommended in an independent report prepared by Stroudwater Associates in 2009. In light of decreasing revenues from Medicare and Medicaid reimbursements, dwindling subsidies from the state, skyrocketing costs and pending reforms, the Stroudwater report highlighted as HHSC’s most effective option a move to privatize and partner with a larger entity like Banner Health.
“This option rests upon the conclusion that as a system HHSC by itself is insufficient in scale to move to the highest levels of performance, and that so many of its basic systems and infrastructure are in need of major updating that it will take the in-place resources of a more advanced system to help it catch up,” the report stated.
Supporters say that the house bills currently being discussed will help to set such a system in place.
“I believe HB 1483 lays the foundation for HHSC to carry out the recommendations of the Stroudwater Report,” said Patrick Saka, Chief Administrative Officer of HHSC’s Maui region, in testimony presented to legislators.
In his testimony, East Hawaii Regional CEO Howard Ainsley told legislators that he supports the bill because such a partnership can provide:
Access to private capital;
Higher compensation to retain top staffers;
Efficiencies of scale; and
A lower cost, higher quality way to provide health care.
Multiple HHSC representatives and other health care workers voiced their support via testimony for the bills.
But many more raised their voices in opposition.
Hawaii Government Employees Association Executive Director Randy Perreira said Wednesday the bills would serve to fragment Hawaii’s health care system “both financially and in the types of and mix of services available to local communities.”
Further, he said, “the effort to divest our state’s involvement in our health care, and put that responsibility on an Arizona-based provider is short-sighted and not in the best interest of our communities. It is unthinkable that our state will be better off with health care decisions for neighbor islanders being made out of state.”
Candace Tablit, an eight-year employee at Hilo Medical Center, said she opposes the two bills because she believes Banner Health would only be interested in hiring private employees.
“If they take over, they will most likely terminate all employees in Hilo Medical Center, and re-hire only those who pass pre-employment requirements,” her testimony reads. “Banner Health does not believe in unions, and my civil servant status and benefits will be lost as I will no longer be a state employee.”
Tablit also expressed concern that, should Banner Health deem a particular service unfeasible to maintain, “they will cut those vital services and possibly close facilities that our community depends on.”
Hilo Medical Center Registered Nurse Irene Iwata said, “With Banner Health, Hawaii taxpayers’ dollars will be supporting and funding a mainland company to provide Hawaii health services. It deeply troubles me that the Legislature is considering this partnership.”
Also speaking in opposition to the bill as presented were representatives of the United Public Workers union, and the state’s Department of Budget and Finance, and Employee Retirement System.
The bills are next set to go before the Consumer Protection and Commerce, and Finance committees, although it was not clear Thursday whether dates had yet been set for those hearings. Calls to Hanohano and Belatti seeking more information were not returned as of deadline.
A companion to the House bills, Senate Bill 1306, which also seeks to permit HHSC’s transition to nonpublic status, passed its first reading on Jan. 28, but did not appear to have any committee hearings scheduled as of Thursday afternoon, according to the state Legislature’s website.