HONOLULU (HawaiiNewsNow) - A proposal to allow the privatization of the financially hemorrhaging Maui Medical Center gained preliminary approval this week by a key state House committee, but it's coming under attack by the head of the state's largest union for being a "sweetheart deal."
Maui Memorial Medical Center lost $43 million in the red last year and it's expected to need another $46 million from taxpayers to cover its losses this year.
A proposal before state lawmakers would allow a private operator such as Hawaii Pacific Health, the parent company of Straub and three other Hawaii hospitals, to take over Maui Memorial as well as community hospitals on Lanai and in Kula, Maui.
Under the deal, taxpayers would pay HPH $32 million a year for ten years and share in new construction costs.
"We wanted to be proactive and come forward to the state with option as opposed to saying 'Give us more money' over and over again. I just don't think that's a sustainable model," said Wes Lo, regional chief operating officer of Maui Memorial Medical Center and the Kula and Lanai hospitals.
Dr. Linda Rosen, who runs the state's public hospital system, said it's a good deal.
"Because it will save the state money eventually, and it will also bring improved, I think, health care services to Maui County," said Rosen, who oversees 14 hospitals statewide.
But the proposal is opposed by Randy Perreira, the executive director of the Hawaii Government Employees Association, the union that represents 800 employees at Maui Memorial such as nurses, clerks and medical technicians.
"We have absolutely nothing against Hawaii Pacific Health, they're a great provider of care. The bill as drafted really gives them a sweetheart deal," Perreira said.
Under the proposal, current hospital employees would be guaranteed employment for just six months but would have to re-apply for their jobs.
The former state workers would probably see their private sector salaries increase -- but their vacation, sick day and retirement benefits would decrease. Private health care workers generally lack pensions and lifetime medical benefits that state workers receive. Private health care employees also have significantly less vacation and sick time, since state workers receive 21 days a year in each category.
State officials estimate Maui Memorial would save $26 million a year in fringe benefits under the deal.
"And under those circumstances, they can operate on a less costly model," Rosen said.
Perreira, the HGEA leader in charge of the state's largest union, said, "Even if you effect changes with government employees that would provide some savings in that employment area, you're not going to make up the $40 million."
The state spends about 52 percent of each employee's pay on fringe benefits, roughly double the fringe benefit rate of health care employees, which is about 25 percent, Rosen said.
Lo said public union work rules make it difficult if not impossible to open and close units depending on patient census or move employees around to meet patient demand.
Reached for comment, Hawaii Pacific Health released a statement that said: Hawaii Pacific Health was approached by the Maui Region to assist in addressing the operational and financial challenges currently facing the Maui and Lanai communities. Under the proposed public private partnership, Hawaii Pacific Health will be leasing the hospital facilities on Maui while taking on the financial risk of turning around the Maui Region, which experienced an operating loss of $43.4 million in fiscal 2014"
"HPH is committed to working with the Maui Region under a not-for-profit private sector model to create a sustainable health care system for Maui and Lanai that provides high quality, locally accessible health care," the HPH statement said.
HPH owns Straub Clinic and Hospital, Kapiolani Medical Center for Women and Children and Pali Momi Medical Center on Oahu as well as Wilcox Memorial Hospital on Kauai.
Lo, the head of Maui Memorial, said without change in operations, "Frankly, it potentially could lead to cutting services and staff to reduce the size and magnitude of our deficit."
Last year, the hospital closed its adolescent mental health unit, known as Molokini II, in a cost cutting move.
About 1,030 employees at the three Maui County hospitals are HGEA union members, while 564 are members of the United Public Workers union, including janitorial and food service workers, according to a spokesman for Maui Memorial. Another 34 employees at the three hospitals are non-union employees.
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