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Friday, July 11, 2003



Attorney general
probing Kuakini

Staff dissatisfaction and two
suits prompt the investigation


Dissatisfaction among some physicians and nurses at Kuakini Medical Center, along with two recent lawsuits, has prompted the state attorney general's office to investigate the organization's business practices.

A letter sent Wednesday from Deputy Attorney General Hugh Jones to Kuakini officers and board members asks for information relating to allegations that include a lack of oversight by the board of directors, costly spending blunders and a management style that harms patient care. It also requests documents such as recent tax filings and asks the hospital to respond by July 30.

Jones, supervisor of the attorney general's office's tax division, said he could not comment on the letter, but noted that the matter is not a criminal investigation and that it is common for his department to examine nonprofit charitable institutions such as Kuakini.

"At any one time, we have a number of charitable matters open and pending," he said.

Kuakini officials said they will respond to the letter, although they dispute the allegations.

"We are going to comply and provide information that will help set the record straight," said hospital spokeswoman Donda Spiker.

Spiker said the hospital believes it is doing a good job.

"It's our business to be a responsible organization to the patients, residents and the communities we serve," she said. "We are very serious about providing quality patient care and patient safety."

Some of the allegations detailed in the letter first surfaced in two lawsuits filed in May by a Kuakini physician, Dr. Robert Oishi. Others were in a recent survey of a group of Kuakini physicians. The Hawaii Nurses Association also wrote to the attorney general's office voicing concerns about the facility and its management.

Oishi is a former board member of Kuakini Medical Center and its parent, Kuakini Health System, and says he was improperly removed from the two boards after criticizing management practices.

He was appointed to Kuakini's governing health system board in 1995 and its medical center board in 1996. He was removed from both boards in 2001.

According to the lawsuit, Oishi repeatedly spoke out about the management style of Kuakini President and Chief Executive Gary Kajiwara and alleged Kajiwara failed to keep the boards informed of significant financial activities. The suit alleges Kajiwara failed to obtain board approval prior to pursuing new business ventures and failed to report to the board on the progress of large projects Kuakini was undertaking, such as the construction of a physicians office tower.

The lawsuit says that as a result of his questions, Oishi was removed from the board without the number of votes required in Kuakini's bylaws.

Another lawsuit, against a Kuakini subsidiary headed by Kajiwara, was filed by a group of physicians, including Oishi. The suit alleges construction defects and misrepresentation related to the sale of four office condominium units at the Kuakini Physicians Office Tower.

The doctors survey, conducted by SMS Research, was released this week by a group of Kuakini physicians. The results show doctors are critical of the hospital's administration and management and called for major changes at the facility.

For example, when asked whether the president of Kuakini understands the needs of physicians, 79 percent disagreed or strongly disagreed. Doctors also complained that the administration does not clearly communicate with staff and does not follow through on decisions.

A similar survey taken in 1994 showed doctors had many of the same concerns.

Some of the criticisms were also raised by the hospital's former president Masaichi Tasaka, who sent a letter to the organization's boards of directors detailing his concerns. The letter was sent Monday to members of the boards of the medical center and the health system. Tasaka retired as president of Kuakini in 1990 and was replaced by Kajiwara.

Tasaka said he was concerned both about the results of the physicians survey and the lawsuits, noting he had been hearing reports about problems for some time.

"These reports, particularly the physicians survey, have indicated that the health system is in serious condition where the future of the institution is in serious jeopardy," he said.

In his letter, Tasaka urged the organization's boards to take action.

"The SMS Research Survey is a serious document for the board of directors to study and take corrective action in fulfilling your fiduciary responsibilities to the hospital, its patients and to the community supporters," he said.

The hospital's boards are scheduled to meet today.

Kuakini spokeswoman Spiker said numerous programs and organizations routinely assess and measure the hospital's performance.

"We are accredited by numerous national health care organizations, such as the Joint Commission on Accreditation of Health Care Organizations," she said. "We are certified for the Medicare and Medicaid programs, and we are monitored by the federal government's contracted quality improvement organization. HMSA also monitors us for quality of care. There have been no serious or significant findings of poor quality of care. We've also received numerous commendations about the care we provide."

The hospital believes the survey and the lawsuits are related.

"Based on the timing of the survey and the involvement of some of the principals of the survey in two current lawsuits filed against Kuakini, Kuakini considers the survey to be connected to the lawsuits," a statement said. "Neither of the lawsuits is related to patient-safety and quality-of-care issues."

Kajiwara said he could not comment on the specifics of either lawsuit or the criticisms raised in the survey. He did note that all hospitals, including Kuakini, have been dealing with a tough financial environment and making difficult decisions for some years.

Kajiwara said that the hospital's finances have remained in the black for six of the past seven years, with the remaining year break-even. Even so, Kuakini continues to re-evaluate all its programs and services and is looking for ways to keep costs under control, he said.

Keeping up with new technology while handling declining revenues and an aging population are some of the challenges faced by all hospitals, Kajiwara said.

"Everyone is going through the same stress and strain," he said.

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Letter details management, budget troubles

Among the allegations detailed in Wednesday's letter from the state attorney general's office to the officers and board members of Kuakini Medical Center:

>> Managers were told of a $3 million shortfall, while the staff was told there is no operational deficit.

>> Millions of dollars were spent to develop a family practice residency program. The cost to build a clinic on Maui was never reported, and the board was never informed when the clinic opened and was later closed.

>> Kuakini invested in a telemedicine system that has not been used. The hospital spent $1.5 million to install a telecommunications line with the Maui High Performance Computing Center which was subsequently disconnected.

>> The hospital is experiencing a rise in medication errors, increased incidences of patient falls and a higher rate of infections due to inadequate staffing.

>> Large numbers of executives and staff have been fired because of heavy-handed and retaliatory management practices.

>> Staff morale is low, and the hospital has a high rate of employee turnover and burnout.

>> The hospital's board has not adequately overseen President and CEO Gary Kajiwara and has allowed him to effectively govern the institution.

>> Kajiwara may be overcompensated.

>> The board of directors violated its bylaws by removing a director without the required votes.


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