Posted on: Saturday, October 30, 2004

Kaiser will continue service to Kaua'i

By Deborah Adamson
Advertiser Staff Writer

Kaiser Permanente will continue to serve Kaua'i next year, reversing an earlier decision to pull out of the island because of concerns over management of costs and quality of care.

"We are back in Kaua'i," said Chris Pablo, director of public, government and community affairs at Kaiser. "Customers asked us to return. They came back to us and said, please stay in this service area. They want choice."

Without Kaiser, Kaua'i would have been left without an HMO plan. A health maintenance organization can be less costly to users because it restricts use to its own list of healthcare providers and hospitals.

Unlike on O'ahu, Kaiser does not have its own clinics or doctors on Kaua'i. Instead, it contracts with Wilcox Hospital as well as the Kauai Medical Group for doctors' services. Such an arrangement makes it more difficult to manage costs and quality of care, Pablo said.

Kaiser serves about 4,700 people on Kaua'i, about 600 of whom are state and country employees and retirees covered under the Hawai'i Employer-Union Health Benefits Trust Fund. The trust fund, commonly known as EUTF, provides healthcare insurance for about 200,000 government workers and retirees in the state.

Statewide, one-fifth of all EUTF members use Kaiser. In the 12 months ended June 30, the EUTF paid Kaiser nearly $80 million in premiums.

Kaiser's two-year contract with the EUTF, which covers the entire state, ends on June 30, 2005. The EUTF has an option to renew the contract for another two years.

After Kaiser decided early this year to pull out of Kaua'i, the EUTF board considered taking bids to provide HMO or similar coverage for Kaua'i and other parts of Hawai'i that are underserved, said state Deputy Attorney General Brian Aburano, who is the legal adviser to the EUTF board.

"The trustees discussed the possibility of soliciting an HMO-like product which would have afforded us the opportunity to cover Kaua'i and some of the other remote areas in the state," said Katherine Thomason, chairwoman of the EUTF board.

Aburano said the board did "raise concerns about the loss of service in Kaua'i. ... After we talked to (Kaiser), they reconsidered their decision."

As a result, the board decided not to put the HMO contract out to bid and tentatively agreed to keep Kaiser for another two years, Aburano said. Kaiser still has to submit a healthcare contract for the board to review and approve.

According to the minutes of an Aug. 9 meeting of the EUTF board, a motion was made to exclude the HMO plan from a request for proposal and negotiate an extension of the Kaiser contract. The motion unanimously passed.

"They decided not to go forward with it," Aburano said.

The last time bidding opened for the HMO contract, the state didn't get other competing bids, he said.

Reach Deborah Adamson at dadamson@honoluluadvertiser.com or 525-8088.