Thursday, June 17, 1999

Public hospitals unsure
how to fund raises

By Helen Altonn


Hawaii Health Systems Corp. officials still are hunting for $19.5 million to cover pay increases for the system's 3,000 employees.

"We had a very positive meeting with the governor and are in the process of providing additional information to (the Department of) Budget and Finance," said Thomas M. Driskill Jr., president and chief executive officer of HHSC, which runs the state's community hospitals.

The corporation is exploring several ways of acquiring the money, including a state loan or reduction of its contributions to the public employees retirement fund.

It is legally required to pay $15.3 million in retroactive collective bargaining pay increases and increased wages totaling $4.4 million from July 1 to Jan. 1.

But funds for the system's pay raises were deleted at the last minute from the Legislature's collective bargaining bill.

Senate leaders said they didn't know the money was missing from the House-drafted conference bill.

House Speaker Calvin Say said the corporation could use its special fund to pay the salary increases. But HHSC officials said there was barely enough in the special fund to cover their $5.5 million payroll last month.

"It's kind of like one step, two step," Driskill said. "One step is real simple. The total focus is on retroactive pay for our employees. We're doing whatever is required to make that happen.

"The second step will be to really take a deep breath and look at where we've been and where we need to go as we go into the next legislative session."

He said HHSC has made great strides in cutting the hospital system's losses from $46 million to under $18 million in less than 11 months. The system continues to cut operating costs, he said.

However, he said, "To continue to operate the organization in status quo form is going to cost more and more money, and it's money we don't have in the state."

Here, as across the country, health care costs are going up and Medicare and Medicaid reimbursements are going down, Driskill pointed out.

"We need to look at our position. ... We must develop a legislative platform. We're talking to the community, our labor partners and medical staff: How can we evolve as a public benefit corporation to meet needs of our communities in the future?"

Driskill said HHSC's next legislative package will include measures allowing the corporation to have more autonomy and function more like a corporation.

"We don't even have a seat at the table for collective-bargaining increases, then we are faced with funding them with our special fund," he said.

The corporation inherited a deficit financial operation when the Legislature established it in 1996 to operate the community hospitals. They had been under state control.

"We are the safety net for the neighbor islands and people recognize that," Driskill said. "I think everybody appreciates how difficult the situation is for us."

The corporation has a $38 million bond issue pending to implement a master plan to upgrade Maui Memorial Hospital, he said.

"We've got to get it through and now it's more difficult for us because of the monetary concern we're facing. We're meeting with Budget and Finance on that. All these pieces come together.

"The toughest part of it all -- I've been out and talked to employees. It's unnerving, upsetting, to be in this posture. They see others getting pay raises and collective bargaining increases.

"It's terribly important ... that they feel good about themselves and not worried about families and pay," Driskill said. "We are trying to focus on running the health system and providing quality care."

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