State lawmakers have agreed to give public hospitals more money to help them climb out of a financial crisis and greater flexibility to meet community healthcare needs, but have weakened corporate control over the system in favor of more power for regional administrators.

The changes, now under consideration by Gov. Linda Lingle, have the broad support of lawmakers and public hospital administrators after a session of piercing debate about the future of the Hawai'i Health Systems Corp.

The network of 13 public hospitals was in danger of collapse before lawmakers and the Lingle administration agreed to take action:

• $39.5 million in additional state money in addition to the system's annual $82 million appropriation, including $14 million from the state's rainy day fund to get through the fiscal year that ends in June.

• $20.1 million in additional federal money, with the possibility of another $55 million in federal stimulus money to improve electronic health records.

• $10 million through a state loan to help Maui Memorial Medical Center pay bills that are past due.

• Allow public hospitals to partner with private interests or convert to private status to become more competitive.

• Let public hospitals reduce or eliminate services after community consultation, instead of first obtaining legislative approval.

• Give the corporation and regional boards the power to negotiate work rules with the Hawai'i Government Employees Association and the United Public Workers, the unions that represent hospital workers.

REORGANIZATION

While hospital administrators will have more flexibility, lawmakers also restricted corporate control and encouraged decision-making at the regional level.

Lawmakers eliminated the jobs of Thomas Driskill Jr., the system's chief executive officer, and his chief financial officer in fiscal year 2011 and ordered annual internal management and operations audits. Lawmakers also reorganized the corporate board, reducing it to 12 from 15 members, and included all of the regional chief executive officers as voting members.

"The notoriety is appreciated but this whole work that we do is so much bigger than one or two people," Driskill said of his job being cut. "It's all about the state, the communities, and the care that's provided. So we will transition through this process just like the rest of the system."

Maui Memorial had initially asked the state for $20 million as an operating subsidy and to pay down bills to vendors that it has been delinquent in for more than three months. The state agreed to a $10 million loan. The Wailuku hospital, which is developing an unusual cardiovascular program, has already attracted private investment interest.

"This helps us. We'll manage," Wesley Lo, the chief executive officer of the Maui region, said of the loan. "It is greatly appreciated."

Sen. David Ige, D-16th (Pearl City, 'Aiea), chairman of the state Senate's Health Committee, described it as a breakthrough session.

"Only time will tell, but I'm confident that there will be significant changes and, more importantly, significant improvement in access and quality of care, especially in rural communities," he said.

'THE NEXT STEP'

State House lawmakers had pushed for Driskill's removal and even suggested abolishing the system and folding public hospitals back into the state Department of Health.

The House, in conference committee negotiations with the Senate, also pressed to empower the regions.

"We felt the current management took it as far as it could with the current resources and current dynamics of how it was set up," said state Rep. Ryan Yamane, D-37th (Waipahu, Mililani), the chairman of the House Health Committee. "We felt the next step required that there be a change in paradigm.

"If we're going to invest in the hospitals, we need to give the control where the control can have the most immediate and quickest effect, which would be at the grassroots, in the community."

State Sen. Josh Green, D-3rd (Kohala, Kona, Ka'u), a Big Island doctor, said the goal is to have a system that does not suffer from financial shortfalls each year. He said the actions taken this session were the second phase of an effort started two years ago to encourage regional autonomy.

"I think the goal, all along, was to move us to a sustainable healthcare system," Green said.