Senate committee
proposes breaking up
state hospital system

The move would cost $49 million
in the face of a state fund shortfall

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By Bruce Dunford
Associated Press

A Senate committee proposed yesterday that the state spend $49 million to split up the statewide community hospitals system into four separate county regions, despite a more than $300 million revenue shortfall forcing significant state spending cuts.

On top of that, the measure approved by the Health Committee would have the state borrow $38 million for expansions at Maui Medical Center and $20 million to expand Hilo Hospital.

The move being propelled by certain Maui interests and state Rep. Robert Nakasone (D, Waikapu-Wailuku-Kahului) has Senate President Robert Bunda scratching his head. "I have no idea of what's going on," Bunda said. "For us to split it up with a $50 million infusion, we're going backward. We're trying to get money, not lose money," he said.

The Senate Ways and Means Committee, where the bill would go if approved next week by the full Senate, needs to look at the proposal closely, said Bunda (D, Wahiawa-Haleiwa-North Shore).

The Senate proposal, inserted into an unrelated House bill, would break up the quasi-public Hawaii Health Systems Corp., which operates the 12 state-owned hospitals, and create four county regional systems in two years.

It gives the Hawaii Health Systems Corp. one year to come up with a plan and the costs to carry out the breakup.

The proposed breakup stems from concern on Maui that the statewide system's only moneymaking facility, Maui Medical Center, is used to subsidize the other 11 facilities instead of going for improvements at the Maui facility.

Senate Vice President Colleen Hanabusa (D, Nanakuli-Waianae-Makaha) suggested that the state take back administration of the hospitals. She is upset at the system's high administrative salaries and bonus pay, including the $255,000 annual pay and $50,000 "incentive pay" given to President Thomas Driskill.

Health Chairman David Matsuura (D, South Hilo-Puna) said the measure could set the stage for the state to either privatize the community hospitals or to take them all back under direct state administration.

"We don't know what the future's going to hold on this one. We're not quite sure what the next governor's going to do," he said. "If it's broken up, theoretically, they'll be easier to sell or parcel out."

Nakasone's proposal introduced last year to separate out only the Maui region bypassed the House Health Committee this year for some unexplained reason and went directly to the Finance Committee before being approved by the House.

Because Matsuura recommended a total breakup of the system, he inserted the Senate's proposal in the unrelated House bill.

Matsuura said the bond issues are intended to create more long-term care beds at Maui and Hilo hospitals, freeing up acute-care beds, which generate the most money.

Bunda said the statewide system under the corporation's operation over the past six years has reduced the state's subsidy of the hospitals.

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