State advances
millions to
health system

Hawaii Health System Corp.
needs to cover pay increases

By Helen Altonn
Star-Bulletin

The state has advanced the Hawaii Health System Corp. nearly $7 million to begin paying collective-bargaining increases for its 3,000 employees.

Further requests for advances will be considered as needed to meet the system's payroll in the next two months, Gov. Ben Cayetano said.

The health system was left without enough money to pay legally required retroactive and future pay increases when the funds were deleted from the collective-bargaining bill passed by the last Legislature.

Hawaii Health System Corp. had estimated it would need an extra $15.3 million to cover retroactive pay raises, plus $4.4 million for raises from July to January.

Corporate Controller Bob Hemker said the retroactive pay has been refigured to a total of between $11.8 million and $12 million, depending on the collecting-bargaining contracts.

Hemker said that pay increases in the next fiscal year are expected to total about $7.4 million.

In a letter Monday informing Thomas M. Driskill Jr., the health system's president and chief executive officer, of the cash advance, Cayetano said he recognizes that the system "will likely require cash advances through September 1999 to support all retroactive collective-bargaining costs."

He said additional cash advances will be reviewed and approved to coincide with the retroactive payment schedule.

Cayetano asked the corporation to work with the Department of Budget and Finance to repay the cash advances during the fiscal year.

Driskill said the governor "continues to be a strong supporter of our 3,000 diligent, hard-working employees and understands the critical role they play in providing quality acute, long-term and rural health care to the communities we serve."

The corporation was established by the Legislature in 1996 to operate the state's community hospitals. Driskill said the system's 12 facilities, most of them on the neighbor islands, affect the lives of hundreds of thousands of residents and visitors.

Health system spokesman Miles Takaaze said the first cash advance covers just a few UPW and HGEA bargaining units, depending how their contracts were set up. Other bargaining unit employees will receive their retroactive pay increases in August and September, he said.

Kelley Roberson, health system vice president and chief financial officer, said books for 1998-99 aren't closed yet but that more than $220 million in net revenues was recorded. As of May 31, however, the corporation still was owed $55 million for hospital services.

Roberson said the corporation is increasing its emphasis on cash collections. "We had an excellent June -- the highest cash collection month in the history of the corporation," he said, with a total of about $23.7 million.

But the corporation's normal annual operating expenses of $240 million will be going up a few million dollars in the next year because of increased wages and retroactive payments, he said.

"We're not complaining about those. We campaigned for those; they were long overdue. . . . But we're going to have to find a way to pay for them."

Roberson expects the corporation to return to the Legislature again in January for an emergency appropriation.

"Even the best projections indicate we don't have an opportunity to collect enough cash to cover all these costs," he said.

"It was what we told the Legislature this session, of course."