No one ever said it was going to be easy converting the Maui region’s failing hospitals from public to private stewardship — but it’s been an agonizing one step forward, two steps back, due to labor issues. A major step forward was taken a week ago today, when the state and the United Public Workers struck a deal for the union’s 530 hospital employees that basically settles a delaying lawsuit —
and now, the Hawaii Government Employees Association must similarly do right by the communities the hospitals serve.
It’s grown increasingly difficult to sustain quality of care and continuity at Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital, the longer managerial limbo remains. The UPW pact, at least, should enable the lifting this week of a court injunction, so transition work can resume in the privatization deal between the state and Kaiser Permanente, delayed from July 1 and now slated for November at the earliest.
But obstacles remain over HGEA’s insistence of added benefits for its 900 members at the three hospitals, a dubious position since Kaiser was set to retain virtually all employees.
A figurative step back must be taken at this point, to recall why privatization was necessary to begin with. The publicly run Hawaii Health Systems Corp. (HHSC) is financially unsustainable, and private-public partnership looks to be the best way for these community hospitals to survive and modernize in a fast-changing health care industry. Maui’s system is the first attempting this path — estimated to save the state $260 million in hospital subsidies over the next decade — but it has been stymied by UPW’s lawsuit and by HGEA’s legislative maneuvers.
Under the settlement with UPW, the Maui region hospitals will be transferred from HHSC management to Kaiser not earlier than Nov. 6. The UPW employees will remain state employees but work under Kaiser’s supervision until their union contract expires on June 30; for six months after that, Kaiser will offer to hire these workers.
How much the UPW settlement will cost the state is still unknown, and that bears watching. The Legislature had appropriated $33.4 million for HHSC employees in 2016-2017, as a contingency. Kaiser and the state now will be negotiating a lump sum to pay to HHSC under an employment lease agreement regarding the UPW employees, starting from when the Kaiser transfer occurs until June 30.
Like the UPW, HGEA’s Maui hospital contract with the state expires June 30, 2017. But where UPW sued to retain public-workers rights for its members, HGEA convinced state lawmakers to pass Senate Bill 2077, a bad move that gave special severance or retirement benefits to the Maui employees — even though most of them were keeping their jobs under Kaiser.
Gov. David Ige vetoed the bill based on valid concerns that it jeopardized the state Employees’ Retirement System (ERS) tax-exempt status. If Ige’s more-palatable compromise had been accepted, the Maui hospitals’ transition could now be moving forward unencumbered. Instead, legislators unwisely overrode the veto and SB 2077 became law (Act 1).
Not only is there no funding for Act 1’s special-interest payout — estimated at $60 million — but the ERS is now suing the state to stop implementation of the law.
Discussions between HGEA and the governor are ongoing, so there’s cause for some optimism. The Maui communities and ERS members should be pressing HGEA to negotiate a pact with the state that allows the Maui hospitals’ transition to occur in November.
“I pledged to work out an agreement with UPW because we need to honor our commitments to the Maui Region hospital employees,” Ige said. “I am hopeful that we can reach a similar agreement for employees in those facilities who are represented by HGEA.”
Make a deal. Resolve the risk to the ERS’s tax-exempt status. Moot the need to evoke SB 2077 (Act 1). Public-union membership might have its privileges — but it should not be paid unreasonably on the backs of all ERS retirees, let alone state taxypayers who must fund those benefits.
