WAILUKU - Maui Memorial Medical Center executives joined the Hawaii Health Systems Corp. on Monday in calling for a $62 million legislative bailout and a new law giving the public acute-care hospitals new options for governance and planning for the future, The Maui News reported today.

"There is no silver bullet left anymore," explained Maui Memorial Chief Executive Officer Wesley Lo as he outlined options Maui Memorial has taken to address anticipated operating deficits and generate revenue for the islands' community hospitals.

In sharp contrast to previous legislative meetings, HHSC Chief Executive Officer Tom Driskill agreed in concept on the suggested solutions and the time frame it would take to resolve the hospitals' money woes.

"We need the unity. We have to study all the factors and look for creative solutions," Driskill said.

Driskill has overall management authority over the state's medical facilities, including Maui Memorial Medical Center. During the 2008 legislative session, Lo and Driskill took bitterly opposing positions on proposals to create regional boards that reduced the role of the HHSC central board and Driskill's authority.

The Legislature approved Act 290, providing for five regional boards that includes a Maui board with responsibility for Maui Memorial, Kula Hospital and Lanai Community Hospital.

At the informational session Monday for the Senate Ways and Means and House Finance committees, both executives agreed on the factors that have led to layoffs at HHSC's Honolulu offices and at Kona Hospital on the Big Island. The joint committee hearing was held in a Maui Economic Opportunity Inc. conference room, with additional hearings being held in all regions.

HHSC in late June advised legislators of an anticipated $62 million shortfall involving 12 of the community hospitals and medical centers that it oversees. At the time, Lo said Maui Memorial had anticipated its shortfall in operating revenues and planned to cover the costs without resorting to layoffs or any reduction in services.

In his presentation Monday, Driskill reported the $62 million deficit includes $21.8 million for the Maui Region, $26.9 million for East Hawaii, $7.6 million for West Hawaii, $4.2 million for Kauai and $1.5 million for Oahu.

The Oahu deficit is for the Leahi and Maluhia hospitals, both long-term care facilities.

Three state acute-care hospitals - Maui Memorial, Hilo and Kona - account for 83 percent of the anticipated deficit, Driskill said, offering five primary factors:

* Mandated care for underinsured patients; public hospitals must accept patients in need of medical care regardless of their ability to pay.

* Inadequate reimbursements for hospital services from government programs such as Medicaid and Medicare, and from private insurers who base their reimbursement levels on Medicare/Medicaid.

* Beds taken by long-term care patients waiting to transfer out of the acute-care hospitals to lower level facilities or nursing homes. Long-term care patients typically are covered by Medicaid, which does not cover the costs of the acute-care bed that must be fully staffed even if the patient does not require the highest level of care.

* Costs for physicians taking calls for emergencies as well as recruitment costs for medical professionals.

* Salaries and fringe benefits for unionized workers employed at the state hospitals.

In referring to costs of contracts for workers represented by the Hawaii Government Employees Association and the United Public Workers, Driskill said he has no intention of breaking up the unions or their collective bargaining agreements.

"We're going to always be union. We just need to relook our assets, the structure and the overall posture of employees," he said.

But Driskill and Lo both discussed difficulties in developing new partnerships because of restrictions imposed on the centralized state health care system, even if it's been turned over to a semiautonomous board.

Lo said connections with HHSC and the state system make it difficult for the Maui Region to negotiate possible revenue-generating alternatives such as public-private partnerships, joint operating agreements and leases with private entities for use of what are considered public facilities.

Driskill testified that he has been in direct contact with representatives at the Cleveland Clinic and the Mayo Clinic, with officials at both facilities saying the present state system and statutes prevent them from working collaboratively with the public health care system.

South Maui Rep. Joe Bertram III questioned Lo about the effects of keeping the public hospitals tied to the state system.

"I think it's good to be a part of the state for a variety of reasons," Lo said.

He said services such as behavioral health would not be provided at the hospitals without the state's financial support.

"It's a little bit more complicated than just being a part of the state," Lo said.

Still, he suggested that the state lawmakers consider changes to the law that would give Maui Memorial and the other acute-care hospitals in the state more authority for their own finances.

Under provisions of Act 290 establishing the regional boards, Maui Memorial was able to arrange for loans that are part of an overall program to handle its costs, Lo said. He said Maui Memorial was able to negotiate an $11 million loan from J.P. Morgan Chase Bank and avoid asking for an emergency appropriation from the state for fiscal year 2008.

Lo said that he and his staff are working on an additional $19 million loan that would cover budgeted cash-flow deficits for fiscal year 2009.

In response to a question at the briefing, Lo said he estimates Maui Memorial to generate $5 million to $7 million in profits from an expansion of its Heart, Brain and Vascular Center to provide for angioplasty and open-heart procedures within the next three to five years.

After the meeting, Lo said Maui Memorial had anticipated the deficits that Driskill listed two years ago and began planning for ways to handle the operating losses without having to resort to layoffs as has occurred at Kona.

"Our thought is we need to be sure that the really crucial rural health care centers, like Kula and Lanai, need to be fully funded and the best way to do that is for the acute-care hospitals to look at different financial models," he said.

Having flexibility in arranging for financial support through Act 290 means that the Maui Region does not need to seek an emergency state bailout, he said. But there needs to be additional steps to allow the Maui Region to make structural changes in the operations while maintaining and expanding services the community expects, he said.

The concept includes a proposal to the legislators to allow the acute-care hospitals in the HHSC system to form a separate corporation while maintaining the new regional boards that allow each region to deal with the community "in their own way," he said.

After the meeting, Maui Sen. Roz Baker, chairwoman of the Ways and Means Committee, said it's clear to her that the state will have to provide additional allocations to keep the community hospitals from having to cut services and staffing. She said it's also clear from testimony submitted that the islands' community hospitals have systematic challenges that prevent them from being efficient.

"We need to come up with a framework that everybody can buy into," she said.

She added that she believes part of the solution will require financing from the federal government.

* Claudine San Nicolas can be reached at claudine@mauinews.com.