The dozen state hospitals that are the backbone of heath care on the Neighbor Islands had operating losses last year of about $9.6 million. That is the smallest loss since the Hawai‘i Health Systems Corp. was formed to run the system, hospital officials said recently.
However, that loss estimate doesn’t include $7 million in raises the hospitals must pay their state workers. When the raises are figured in, the system lost more than $16 million, according to testimony submitted this month to the Senate Ways and Means Committee.
The hospital system had total expenses of $257 million last year, including the cost of the employee raises.
Hawai‘i Health Systems Corp. President Thomas Driskill Jr. said the hospital corporation is in the best condition ever as he arrived at the Legislature to seek a new state subsidy to keep the system operating.
In general, the large state facilities in the network such as Hilo Medical Center and Maui Memorial Medical Center are profitable, but the state-run nursing homes and rural health care facilities lose money.
Gov. Ben Cayetano has proposed a state subsidy of $20 million over the next two years, although hospital officials had hoped for a state contribution of $28 million.
The quasi-public Hawai‘i Health Systems Corp. was formed in 1996 to reorganize the network of hospitals and try to curb their enormous financial losses.
Health Systems Chief Financial Officer Kelley Roberson estimated the hospital corporation has saved the state nearly $100 million in the past four fiscal years. That is money the state would have lost if the hospital continued down the path it was on in fiscal 1997, when the hospitals together lost $45.5 million.
In recent years some legislators have complained about the continuing need for subsidies for the hospital system.
However, Driskill said the state subsidy of the hospital system is about 5 percent of the cost of running the system. He said the national average for public hospitals is about 15 percent.
Corporation officials last year tried to convince the Legislature to give them more authority to reduce services in health care facilities that are losing money, but legislators so far have rejected that idea.
Some lawmakers worried that if the corporation closed rural health care facilities or scaled back on services, no one would be left to tend to the health care needs of the state’s rural communities.
Driskill said the corporation again will seek more autonomy this year. Specifically, he said the corporation wants to use community-based care programs to take the place of more than 300 nursing home beds at Lī‘ahi Hospital and Maluhia on O‘ahu. Those facilities together are losing about $5 million a year, he said.
