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Some say certificate of need stands in way of local hospitals

Law requires medical facilities to prove need before being built

The site of the proposed West Maui Hospital and Medical Center is shown in 2018. The project has long been delayed due to a lack of funding as well as certificate-of-need laws, which require health care investors to prove to the state that their proposed new medical facilities or services are needed before the state will let them be built or offered. Some experts say the regulation is preventing facilities from being built and contributing to Hawaii’s health care shortage. The Maui News / MATTHEW THAYER photo

For years, lack of funding has held back a hospital that would bring the West Maui community better access to health care and has been talked about and pursued for over two decades.

But there’s another barrier the project faced early on, and that other health care facilities have struggled to overcome — Hawaii’s “certificate-of-need” laws.

Certificate-of-need laws are like “permission slips” that require health care investors to prove to the state that their proposed new medical facilities or services are needed before the state will let them be built or offered, said Naomi Lopez-Bauman, health care policy director for the Arizona-based Goldwater Institute.

These laws are created to control capital gains between competing health care facilities, she said, but “it’s time to start putting the patients first.”

“It really is time for Hawaii lawmakers and policymakers to take a hard look at what they want for the state in terms of health care access and affordability,” Lopez-Bauman said. “If they want patients to have better services at a lower cost, and to be in more abundance, they really need to eliminate these laws.”

Lopez-Bauman spoke Monday at a Grassroot Institute of Hawaii webinar to discuss how Hawaii’s certificate-of-need laws are contributing to the state’s health care shortage, and barriers for the West Maui Hospital and Medical Center.

Certificate-of-need applications are reviewed according to the state health services and facilities plan, need and accessibility, quality, cost and finances, relation to the existing health care system and availability of resources.

While some states do not have certificate-of-need laws, Hawaii has the most in the U.S., covering 28 different medical services and leading to the fewest hospital beds per capita in the nation, according to the Grassroot Institute.

The payment model for health care has “completely changed” since certificate-of-need laws were established decades ago, Lopez-Bauman said.

“It’s absolutely absurd that the state of Hawaii is running their medical marketplace like they’re in the 1970s,” she added.

For West Maui — a community whose commute to Maui Memorial Medical Center in Wailuku is lengthy and often too far away in emergency situations, or who’s sometimes cut off from health care due to traffic crashes and fires on Honoapiilani Highway — this second hospital is crucial.

Joe Pluta, president of the West Maui Taxpayers Association, said during the Zoom meeting that the situation is a “life or death issue.” Pluta has been a longtime vocal supporter of a proposed second hospital on Maui.

However, obtaining a certificate of need has been “a tremendous challenge” and it will take “convincing the legislatures who have the power” to move the project forward, said Pluta, who led efforts that got the community the Napili Fire and Ambulance Station in 1992.

“This is my community and I am fighting for my community,” Pluta said. “I am very passionate about it.”

He explained how the state awarded the West Maui Hospital and Medical Center project a certificate of need in March 2009, and the developer, Newport Hospital Corp., purchased the 15-acre parcel on Kakaalaneo Road in September 2014. By November 2015, the project had received county and state approval to start development.

However, the project has run into a number of obstacles since breaking ground in August 2016, including loss of the project site after a Hawaii Supreme Court ruling deemed that the property had ceded land, financial issues while seeking a privately funded bond and certificate-of-need laws, Pluta said.

A new bond was discussed in the summer of 2018, but the attempt to secure financial support was unsuccessful and put the project on hold.

According to the West Maui Taxpayers Association, another parcel below the Kaanapali Coffee Farms became an option for the West Maui Hospital and Medical Center, but after developer Brian Hoyle and Newport Hospital Inc. approved building permits, it was unable to obtain the financing.

Still, the association has been analyzing a number of different scenarios while pursuing a certificate of need, Pluta said.

One scenario is purchasing an existing West Maui urgent care facility and remodeling it for emergency room operations as well as finding land for purchase for a brand-new developed facility with room for future expansion.

Pluta said it would include five critical-access beds and a 40-bed skilled nursing facility instead of the originally planned 25-bed, critical-access hospital with a 24-hour emergency room, a 40-bed skilled nursing facility, a 40-unit assisted-living facility, two medical office buildings and a future 40-bed drug and alcohol rehabilitation facility.

It would be the first new hospital on Maui since Maui Memorial Medical Center opened in Wailuku in 1952, according to the West Maui Hospital Foundation.

Moving forward, Sal Nuzzo, director of the Florida-based James Madison Institute’s Center for Economic Prosperity, suggested reaching out to organizations that do advocacy and grassroots work to help influence policymakers about changing certificate-of-need laws.

Nuzzo also advised meeting with stakeholders, key community members and the public to offer ideas, educational materials and strategies on how to pursue the agenda; or backing legislatures who could advocate the cause.

Eliminating certificate-of-need laws will not mean that health care services will “automatically be at your disposal,” but having them in place “certainly does create a huge obstacle to having those services in your community,” Lopez-Bauman said.

* Dakota Grossman can be reached at dgrossman@mauinews.com.

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