Many revisions made to proposal

A state Senate bill that provides for the transfer of state public hospitals to a private nonprofit has undergone substantial revisions since it was introduced early this year by Senate Health Committee Chairman Josh Green and Sens. Suzanne Chun-Oakland and Maile Shimabukuro.

The original bill provided a broad method for a transition and allowed regional or individual Hawaii Health Systems Corp. facilities to be taken over by a new entity, such as a nonprofit corporation, a for-profit corporation, a municipal facility or a public-benefit corporation. The revised bill limits the new entity to a nonprofit hospital corporation incorporated in the state before Jan. 1, 2000, thereby limiting entities to those currently doing business in Hawaii.

Numerous testifiers called for removing that limitation.

“It may well be that in-state partners are the best and final choice, but the entire thrust of the legislation is to expand HHSC’s options,” said HHSC West Hawaii Regional Board Chairman Ali Bairos. “This provision limits options. I respectfully offer that it is strategically misguided to prematurely limit HHSC’s options at this early stage.”

Other revised provisions in the measure include:

* Allowing the transition of the existing facilities’ assets through sale, lease or transfer, but limiting real property to being transferred by lease only.

* Requiring the nonprofit hospital corporation to maintain equivalent hospital services for at least five years.

* Mandating that the hospital corporation receive general fund support from the state “sufficient to maintain equivalent hospital services” for at least five years.

* Mandating that the state take responsibility of the HHSC’s liabilities related to collective bargaining contracts, including all employee benefits, pensions and financial obligations.

In testimony submitted to the Ways and Means Committee, state Department of Budget and Finance Director Kalbert Young said his department supports the “general intent” of the bill, but he had “some areas of concern.”

For example, Young said the bill wasn’t clear about what was meant by “general fund support sufficient to maintain hospital services in the acquired areas.”

He asked: “Is the general fund support equal to what HHSC or a region is receiving currently? Does the level of support increase due to inflation or other cost increases? Does the support end at the end of the fifth year?”

And, Young told lawmakers he wasn’t clear about the state’s responsibility for HHSC’s public employee liabilities. “Is there a baseline of accounting of these liabilities so a determination can be made of what was transferred? Do the liabilities for collective bargaining contracts include all the salaries of HHSC employees or only the differential covered by general fund subsidies? What is envisioned – continued general fund payments to the nonprofit hospital corporation for these liabilities on an annual basis, a lump sum payment or something else?”

Young also asked whether the nonprofit hospital would assume responsibility for constructing, upgrading, maintaining and repairing facilities and equipment after it takes over.

“At a minimum, we believe that a complete and thorough analysis needs to be undertaken in the context of the state’s role in providing health care services and the extent to which the state can or should subsidize these operations,” Young said.

He added that an implementation plan addressing policies, resources and liabilities of the state should be reviewed and approved by the governor and the Legislature.

Last year, a bill to allow public-private partnership options for the state’s community hospitals failed to pass in the Legislature after it ran into stiff opposition from public employee unions.

* Brian Perry can be reached at