Maui hospitals look to privatization as potential solution for budget woes
HHSC Maui region wants to enter into partnership discussions with Hawaii Pacific Health corporation.
The State of Hawaiʻi’s Health Systems Corporation (HHSC) Maui facilities—which include Maui Memorial Medical Center (MMMC), Kula Hospital and Lāna‘i Community Hospital—have struggled to stay solvent in recent years. The HHSC Maui Region ended fiscal year (FY) 2014 with an operating loss of approximately $43.4 million, and is projected to lose an addition $46.3 million in FY2015.
The fiscal difficulties of the HHSC Maui Region have been a topic of discussion among legislators for several years. With the financial losses for the next FY estimated to be just shy of $50 million, state officials are seeking public opinion through town hall meetings and testimony to determine the impact budget shortfalls will have on their constituents.
The region’s largest hospital has already felt the effect of current fiscal shortfalls. In October, 2014, MMMC was forced to close its adolescent behavioral health unit, creating increased demand on local island partners, and challenging the ability of Oʻahu facilities to accept increased patient demand.
In the past, MMMC has proposed alternative solutions to eliminate its dependence on state funds in an effort , including partnering with a private healthcare provider to maintain and possibly expand services to the islands’ residents. This past summer, HHSC Maui Region leadership began exploratory (informal) discussions with Hawaii Pacific Health corporation to enter into such a partnership agreement for the entire region.
In a press release, HHSC Maui Region CEO Wesley Lo said that without a partnership agreement the Maui Region will be obligated to further re-evaluate staffing levels and the range of health services it provides.
“We have a responsibility to meet the healthcare needs of our community, but do not possess the necessary resources or freedom to grow with their needs,” said Lo. “A partnership with Hawaii Pacific Health provides a mutually beneficial solution to help reduce the financial burden to the state while addressing the long-term needs of our community.”
Legislative approval is needed for HHSC Maui Region to enter into formal partnership discussions with Hawaii Pacific Health.
In the same press release, Hawaii Pacific Health CEO Ray Vara said the continued discussions between the two organizations represent a unified commitment towards a next phase of due diligence.
“We believe a partnership will benefit the community as well as both organizations and stakeholders,” said Vara. “It is vital that we work together so we can create a more stable operating environment for Maui. Most importantly our intent is to grow health services and deliver enhanced care for the people of Maui County.”
Since 1971, the state has commissioned a number of studies and task forces to evaluate the solvency of the public healthcare system. The 2009 Stroudwater Report made several proposals to address the growing financial demands of maintaining HHSC on the state, including bringing in an external, private partner to assist HHSC in achieving “efficiencies of scale” and an “integrated clinical service delivery system.”
The joint press release states that:
Without the ability to partner with another organization, MMMC alone will require between $573 million and $843 million in state subsidies over the next decade just to operate at current levels. Not factored into these figures are critical issues like physician shortages and a maturing Maui community. The extrapolated numbers also do not include costs for the upkeep of an aging infrastructure and necessary technologies to improve efficiencies in operations.
“We are looking for ways to do more than survive,” Lo said. “We are looking for ways to grow with the needs of our community. This community deserves access to comprehensive, quality healthcare that evolves with their needs, close to home.”
Critics of privatization point to valid concerns about profit motive, hidden costs, unrealistic projections, loss of transparency and accountability, inadequate monitoring and oversight, corruption and fraud risks, and the increased influence of corporations over the public. “‘Best’ cannot mean only the cheapest or most efficient, for a reasonable appraisal of alternatives needs to weigh concerns of justice, security, and citizenship,” writes Paul Starr in his book, “The Limits of Privatization.”
Starr argues that privatization introduces a downward spiral on democracy in which influence on government now comes from an “enlarged class of private contractors and other providers dependent on public money.” The end results is a further stratification between rich and poor and the services (and quality of services) available to each group.
