HB1484 HD1.DOC

SECTION 1. The Hawaii health systems corporation operates public health care facilities that provide essential safety net hospital and long-term care services throughout the State. Due to rapid changes taking place in the health care industry and implementation of national health care reform, the legislature finds that the governance structure of the Hawaii health systems corporation must be provided with the appropriate flexibility and autonomy needed for community hospitals to compete and remain viable.

The current Hawaii health systems corporation governance structure includes regional chief executive officers serving as ex-officio, voting members, who have been instrumental in bringing additional expertise to the board during the time of transition to a multi-level board system. However, the legislature finds that the roles, powers, and responsibilities of the corporate board and regional boards have been the subject of extensive debate since the establishment of regional boards in 2007. In light of the successful establishment of the regional boards, significant challenges imposed by an ever-changing and complex health environment, the time commitment required of individuals who serve on the corporate board, and the desire for additional community participation, the time has come to change the composition of the Hawaii health systems corporation board by changing the role of the regional chief executive officers to nonvoting status. A new board structure will support clear and consistent roles for all regions and reduce the conflicts of interest of regional chief executive officers who not only sit as voting members on the Hawaii health systems corporation board but also must look out for the best interests of their respective regions. A new board structure will create a more balanced multi-board tiered system.

Furthermore, revamping the Hawaii health systems corporation employee structure is necessary for the corporation to improve efficiencies, operate more like private hospitals, and compete for qualified health care workers. This Act will:

(1) Clarify and separate the powers of the Hawaii health systems corporation to provide a clear line of authority and accountability;

(2) Allow the Hawaii health systems corporation to leverage one of its major assets--property owned in fee simple--by mortgaging it to secure loans and expanding the ability to enter into financing leases. These changes will provide the corporation with the flexibility intended by the legislature in 1996 when the corporation was first created to run the state hospitals;

(3) Establish a separate benefits structure for new employees to allow the corporation to negotiate contracts for its health care employees; and

(4) Build on the progress made by the regions to coordinate service delivery and improve health care.

The purpose of this Act is to affirm the State's commitment to provide high-quality health care for the people of the State by amending the structure and composition of the Hawaii health systems corporation to increase flexibility for the corporation and improve accountability and sustainability within the system.

SECTION 2. Chapter 323F, Hawaii Revised Statutes, is amended by adding three new sections to be appropriately designated and to read as follows:

"§323F-A Hawaii hea1th systems corporation personnel system. (a) Notwithstanding any other law to the contrary, the corporation board may establish without regard to the public notice or public hearing requirements of chapter 91, a personnel system separate from the existing system, to be known as the Hawaii health systems corporation personnel system, for employees commencing employment on or after July 1, 2014.

(b) General administration and responsibility for the proper operation of the personnel system of the corporation shall be vested in the corporation board and may be delegated to the regional system boards for their respective employees.

(c) Any person hired after the establishment of the Hawaii health systems corporation personnel system shall become an employee of the Hawaii health systems corporation personnel system.

(d) Any person who commenced employment with the corporation or any of the regional systems prior to the establishment of the Hawaii health systems corporation personnel system and continues uninterrupted to be employed by the same shall remain an employee of the personnel system in existence prior to the establishment of the Hawaii health systems corporation personnel system.

(e) No rights are created under this section for employees without tenure.

(f) For purposes of this chapter, "employees without tenure" means employees who are not members of the civil service system entitled to hold the member's position for the duration of the member's appointment, as provided in section 76-27.

§323F-B Co11ective bargaining agreements. Collective bargaining agreements in effect on July 1, 2014, covering employees of the Hawaii health systems corporation personnel system, shall continue in full force and effect and shall be recognized by the corporation until the termination date of the agreements or until mutually modified by the parties. Upon expiration of those agreements, the corporation may negotiate collective bargaining agreements or sub-agreements under chapter 89 to address its needs for efficiency and effectiveness.

§323F-C Hawaii health systems corporation personnel system; riqhts. (a) All employees of the corporation shall have full rights under all applicable laws to self-organize; to form, join, or assist labor organizations; to bargain collectively through representatives of their own choosing, and to undertake other concerted activities for the purpose of collective bargaining or other mutual aid or protection and shall have the right to refrain from any or all such activities, except to the extent that such right may be affected by an agreement requiring membership in a labor organization as a condition of employment, as may be permitted under all applicable laws; provided that the corporation shall recognize the continuing effect of collective bargaining agreements in effect on July 1, 2014, covering employees of the corporation, until such agreements are altered or amended by the parties in conformance with all applicable laws and as otherwise provided."

SECTION 3. Section 89-6, Hawaii Revised Statutes, is amended as follows:

1. By amending subsections (a) and (b) to read:

"(a) All employees throughout the State within any of the following categories shall constitute an appropriate bargaining unit:

(1) Nonsupervisory employees in blue collar positions;

(2) Supervisory employees in blue collar positions;

(3) Nonsupervisory employees in white collar positions;

(4) Supervisory employees in white collar positions;

(5) Teachers and other personnel of the department of education under the same pay schedule, including part-time employees working less than twenty hours a week who are equal to one-half of a full-time equivalent;

(6) Educational officers and other personnel of the department of education under the same pay schedule;

(7) Faculty of the University of Hawaii and the community college system;

(8) Personnel of the University of Hawaii and the community college system, other than faculty;

(9) Registered professional nurses;

(10) Institutional, health, and correctional workers;

(11) Firefighters;

(12) Police officers;[~~and~~]

(13) Professional and scientific employees, who cannot be included in [~~any of the other~~] bargaining units[.] (1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), and (12);

(14) Nonsupervisory employees in blue collar positions with the Hawaii health systems corporation;

(15) Supervisory employees in blue collar positions with the Hawaii health systems corporation;

(16) Nonsupervisory employees in white collar positions with the Hawaii health systems corporation;

(17) Supervisory employees in white collar positions with the Hawaii health systems corporation;

(18) Registered professional nurses with the Hawaii health systems corporation;

(19) Institutional and health workers with the Hawaii health systems corporation; and

(20) Professional and scientific employees with the Hawaii health systems corporation, who cannot be included in bargaining units (14), (15), (16), (17), (18), and (19).

(b) Because of the nature of the work involved and the essentiality of certain occupations that require specialized training, supervisory employees who are eligible for inclusion in bargaining units (9) through (13) shall be included in bargaining units (9) through (13), respectively, instead of bargaining unit (2) or (4)."

2. By amending subsection (d) to read:

"(d) For the purpose of negotiating a collective bargaining agreement, the public employer of an appropriate bargaining unit shall mean the governor together with the following employers:

(1) For bargaining units (1), (2), (3), (4), (9), (10), and (13), the governor shall have [~~six~~] five votes and the mayors[,] and the chief justice[~~, and the Hawaii health systems corporation board~~] shall each have one vote if they have employees in the particular bargaining unit;

(2) For bargaining units (11) and (12), the governor shall have four votes and the mayors shall each have one vote;

(3) For bargaining units (5) and (6), the governor shall have three votes, the board of education shall have two votes, and the superintendent of education shall have one vote;

(4) For bargaining units (7) and (8), the governor shall have three votes, the board of regents of the University of Hawaii shall have two votes, and the president of the University of Hawaii shall have one vote[.]; and

(5) For bargaining units (14), (15), (16), (17), (18), (19), and (20), the governor shall have one vote and the Hawaii health systems corporation board shall have one vote.

Any decision to be reached by the applicable employer group shall be on the basis of simple majority, except when a bargaining unit includes county employees from more than one county. In [~~such~~] that case, the simple majority shall include at least one county."

SECTION 4. Section 89-8.5, Hawaii Revised Statutes, is amended to read as follows:

"§89-8.5 Negotiating authority; Hawaii health systems corporation. Notwithstanding any law to the contrary, including section 89-6(d), the Hawaii health systems corporation [~~or any of the regional boards~~], as a sole employer negotiator, may negotiate with the exclusive representative of any appropriate bargaining unit and execute memorandums of understanding for employees under its control to alter any existing or new collective bargaining agreement on any item or items subject to section 89-9."

SECTION 5. Section 89-11, Hawaii Revised Statutes, is amended by amending subsection (e) to read as follows:

"(e) If an impasse exists between a public employer and the exclusive representative of bargaining unit (2), supervisory employees in blue collar positions; bargaining unit (3), nonsupervisory employees in white collar positions; bargaining unit (4), supervisory employees in white collar positions; bargaining unit (6), educational officers and other personnel of the department of education under the same salary schedule; bargaining unit (8), personnel of the University of Hawaii and the community college system, other than faculty; bargaining unit (9), registered professional nurses; bargaining unit (10), institutional, health, and correctional workers; bargaining unit (11), firefighters; bargaining unit (12), police officers; [or] bargaining unit (13), professional and scientific employees[,]; bargaining unit (14), nonsupervisory employees in blue collar positions with the Hawaii health systems corporation; bargaining unit (15), supervisory employees in blue collar positions with the Hawaii health systems corporation; bargaining unit (16), nonsupervisory employees in white collar positions with the Hawaii health systems corporation; bargaining unit (17), supervisory employees in white collar positions with the Hawaii health systems corporation; bargaining unit (18), registered professional nurses with the Hawaii health systems corporation; bargaining unit (19), institutional and health workers with the Hawaii health systems corporation; or bargaining unit (20), professional and scientific employees with the Hawaii health systems corporation, the board shall assist in the resolution of the impasse as follows:

(1) Mediation. During the first twenty days after the date of impasse, the board shall immediately appoint a mediator, representative of the public from a list of qualified persons maintained by the board, to assist the parties in a voluntary resolution of the impasse.

(2) Arbitration. If the impasse continues twenty days after the date of impasse, the board shall immediately notify the employer and the exclusive representative that the impasse shall be submitted to a three-member arbitration panel who shall follow the arbitration procedure provided herein.

(A) Arbitration panel. Two members of the arbitration panel shall be selected by the parties; one shall be selected by the employer and one shall be selected by the exclusive representative. The neutral third member of the arbitration panel, who shall chair the arbitration panel, shall be selected by mutual agreement of the parties. In the event that the parties fail to select the neutral third member of the arbitration panel within thirty days from the date of impasse, the board shall request the American Arbitration Association, or its successor in function, to furnish a list of five qualified arbitrators from which the neutral arbitrator shall be selected. Within five days after receipt of such list, the parties shall alternately strike names from the list until a single name is left, who shall be immediately appointed by the board as the neutral arbitrator and chairperson of the arbitration panel.

(B) Final positions. Upon the selection and appointment of the arbitration panel, each party shall submit to the panel, in writing, with copy to the other party, a final position which shall include all provisions in any existing collective bargaining agreement not being modified, all provisions already agreed to in negotiations, and all further provisions which each party is proposing for inclusion in the final agreement.

(C) Arbitration hearing. Within one hundred twenty days of its appointment, the arbitration panel shall commence a hearing at which time the parties may submit either in writing or through oral testimony, all information or data supporting their respective final positions. The arbitrator, or the chairperson of the arbitration panel together with the other two members, are encouraged to assist the parties in a voluntary resolution of the impasse through mediation, to the extent practicable throughout the entire arbitration period until the date the panel is required to issue its arbitration decision.

(D) Arbitration decision. Within thirty days after the conclusion of the hearing, a majority of the arbitration panel shall reach a decision pursuant to subsection (f) on all provisions that each party proposed in its respective final position for inclusion in the final agreement and transmit a preliminary draft of its decision to the parties. The parties shall review the preliminary draft for completeness, technical correctness, and clarity and may mutually submit to the panel any desired changes or adjustments that shall be incorporated in the final draft of its decision. Within fifteen days after the transmittal of the preliminary draft, a majority of the arbitration panel shall issue the arbitration decision."

SECTION 6. Section 323F-3, Hawaii Revised Statutes,

is amended by amending subsections (a) and (b) to read as follows:

"(a) The corporation shall be governed by a thirteen-member board of directors that shall carry out the duties and responsibilities of the corporation other than those duties and responsibilities relating to the establishment of any captive insurance company pursuant to section [~~323F-7(c)(20)~~] 323F-7(c)(19) and the operation thereof.

(b) The members of the corporation board shall be appointed as follows:

(1) The director of health as an ex-officio, voting member;

(2) The five regional chief executive officers as ex-officio,[~~voting~~] nonvoting members;

(3) Two members who reside in the county of Maui shall be appointed by the Maui regional system board;

(4) One member who resides in the eastern section of the county of Hawaii who shall be appointed by the East Hawaii regional system board;

(5) One member who resides in the western section of the county of Hawaii who shall be appointed by the West Hawaii regional system board;

(6) One member who resides on the island of Kauai who shall be appointed by the Kauai regional system board;

(7) One member who resides on the island of Oahu who shall be appointed by the Oahu regional system board; and

(8) One member who shall be appointed by the governor and serve as an at-large voting member.

The [~~appointed~~] board members appointed by the regional system boards who reside in the county of Maui, eastern section of the county of Hawaii, western section of the county of Hawaii, on the island of Kauai, and on the island of Oahu shall each serve for a term of four years; provided that the terms of the initial appointments shall be as follows: one of the initial members from the county of Maui shall be appointed to serve a term of two years and the other member shall be appointed to serve a term of four years; the initial member from East Hawaii shall be appointed to serve a term of two years; the initial member from West Hawaii shall be appointed to serve a term of four years; the initial member from the island of Kauai shall be appointed to serve a term of two years; and the initial member from the island of Oahu shall be appointed to serve a term of four years. The at-large member appointed by the governor shall serve a term of two years. Appointments by the governor shall be made with the advice and consent of the senate pursuant to section 26-34.

Any vacancy shall be filled in the same manner provided for the original appointments. The corporation board shall elect its own chair from among its members. Appointments to the corporation board shall be as representative as possible of the system’s stakeholders as outlined in this subsection[.] and shall include at least one physician."

SECTION 7. Section 323F-7, Hawaii Revised Statutes,

is amended as follows:

1. By amending its title and subsection (a) to read:

"§323F-7 Duties and powers of the corporation [~~and regional system boards~~]. (a) Notwithstanding any other law to the contrary and unless otherwise specified, only those duties and powers related to corporation-wide matters, including but not limited to [~~corporationwide budgeting,~~] approval of the system-wide, regional, and facility budgets; personnel policies[,]; procurement policies[,]; fiscal policies[,]; accounting policies[,]; policies and decisions related to affiliations[,]; and joint ventures [~~and contracts,~~]; legal affairs; legislative affairs; regulatory compliance[,]; risk management[,]; continuing medical education programs[,]; strategic planning[,]; [~~and~~] capital planning[~~, including~~]; the issuance of revenue bonds in any amount[,]; and collective bargaining negotiations, shall be carried out by the corporation board in collaboration with the regional system boards. [Duties and powers related to the operation of facilities within each regional system, including but not limited to regional system and facility budgeting, employment and removal of regional system and facility personnel, purchasing, regional system strategic and capital planning, organization, quality assurance, improvement and reporting, credentialing of medical staff, and the issuance of revenue bonds in any amount with corporation board approval, shall be carried out by the regional system boards, either directly or by delegation to regional and facility administration.] Unless otherwise prohibited, the duties and powers granted to the corporation board may be delegated to the regional system boards."

2. By amending subsections (c) and (d) to read:

"(c) Notwithstanding any other law to the contrary, the corporation [~~and any of the regional system boards~~] shall exercise the following duties and powers:

(1) Developing corporation-wide policies, procedures, and rules necessary or appropriate to plan, operate, manage, and control the system of public health facilities and services without regard to chapter 91; [provided that each regional system board shall be responsible for its own policies, procedures, and rules necessary or appropriate to plan, operate, manage, and control the public health facilities within its own regional system consistent with corporation policies;

~~(2)~~ ~~Evaluating the need for additional health facilities and services; provided that each regional system board shall be responsible for the evaluation within its own regional system;~~

~~(3)~~] (2) Entering into and performing any contracts, leases, cooperative agreements, partnerships, or other transactions whatsoever that may be necessary or appropriate in the performance of its purposes and responsibilities, and on terms the corporation, [~~or regional system boards,~~] may deem appropriate, with either:

(A) Any agency or instrumentality of the United States, or with any state, territory, or possession, or with any subdivision thereof; or

(B) Any person, firm, association, partnership, or corporation, whether operated on a for-profit or notfor-profit basis;

provided that the transaction furthers the public interest; [and provided further that if any dispute arises between any contract, lease, cooperative agreement, partnership, or other transaction entered into by the corporation and a regional system board with regard to matters solely within that regional system, after July 1, 2007, the contract, lease, cooperative agreement, partnership, or other transaction entered into by the regional system board shall prevail;] and provided further that such agreements are consistent with corporation policies; or

[~~(4)~~] (3) Conducting activities and entering into business relationships as the corporation board[~~, or any regional system board,~~] deems necessary or appropriate, including but not limited to:

(A) Creating nonprofit corporations, including but not limited to charitable fund-raising foundations, to be controlled wholly by the corporation[~~, any regional system board,~~] or jointly with others;

(B) Establishing, subscribing to, and owning stock in business corporations individually or jointly with others; and

(C) Entering into partnerships and other joint venture arrangements, or participating in alliances, purchasing consortia, health insurance pools, or other cooperative arrangements, with any public or private entity; provided that any corporation, venture, or relationship entered into under this section furthers the public interest; provided further that this paragraph shall not be construed to authorize the corporation [~~or a regional system~~] board to abrogate any responsibility or obligation under paragraph (15);[provided that each regional system board shall be responsible for conducting the activities under this paragraph in its own regional system consistent with policies established by the corporation board;

~~(5)~~] (4) Participating in and developing prepaid health care service and insurance programs and other alternative health care delivery programs, including programs involving the acceptance of capitated payments or premiums that include the assumption of financial and actuarial risk; [provided that each regional system board shall be responsible for conducting the activities under this paragraph in its own regional system consistent with policies established by the corporation board;

~~(6)~~] (5) Executing, in accordance with all applicable bylaws, rules, and laws, all instruments necessary or appropriate in the exercise of any powers of the corporation [~~or regional system boards~~];

[~~(7)~~] (6) Preparing and executing all corporation-wide budgets, policies, and procedures or approving, rejecting, or amending any regional system budgets, policies, and procedures; provided that the regional system boards shall submit their regional and facility budgets to the corporation to be reviewed, approved, or rejected and consolidated into a corporation-wide budget for purposes of corporation-wide planning and appropriation requests. Regional system and facility budgets shall be received by the corporation and shall be reviewed, approved, or rejected and included in the corporation-wide budget upon submittal to the corporation;

[~~(8)~~] (7) Setting rates and charges for all services provided by the corporation without regard to chapter 91[; provided that the duty and power of the corporation board shall be limited to approving the rates and charges developed by the regional system boards for the regional system's facilities and services. Rates and charges may vary among regional systems and facilities and may be consolidated with the rates of other regional systems into one charge master]. Third-party payer contracts [~~may~~] shall be negotiated at the corporation-wide level with input from the regional systems[, taking into consideration the rates set by the regional system boards. For purposes of securing revenue bonds, the corporation or regional system board may covenant to set, and if necessary increase, rates and charges as needed to pay debt service and related obligations plus a coverage factor

~~(9)~~ Developing a corporation-wide hospital system that is subject to chapters 76 and 89; provided that employment of regional system and facility personnel shall be the responsibility of the regional system boards pursuant to corporation-wide policies and procedures, applicable laws, rules, regulations, and collective bargaining agreements];

(8) Employing personnel as needed to conduct the business of the corporation and its facilities and programs, and to classify, prescribe the duties and qualifications, and fix the compensation and benefits of all officers, employees, and agents of the corporation as needed in accordance with chapters 76 and 89;

[~~(10)~~] (9) Developing the [~~corporation's corporation-wide~~] capital and strategic plans [or any regional system board's capital and strategic plans; provided that each regional system board shall be responsible for development of capital and strategic plans in its own regional system that shall be consistent with, and incorporated into, the overall corporation-wide plans; ~~and~~]; provided [~~further~~] that the corporation [~~and each regional system~~] board shall be entitled to undertake the acquisition, construction, and improvement of property, facilities, and equipment to carry out these capital and strategic plans;

[~~(11)~~] (10) Suing and being sued; provided that only the corporation may sue or be sued; and provided further that the corporation [~~and regional system boards~~] shall enjoy the same sovereign immunity available to the State;

[~~(12)~~] (11) Making and altering corporation board [~~and regional system board~~] bylaws for its organization and management without regard to chapter 91 and consistent with this chapter; provided that each regional system board shall be responsible for the final approval of its regional system board bylaws;

[~~(13)~~] (12) Adopting rules without regard to chapter 91 governing the exercise or the corporation's [~~or regional system boards'~~] powers and the fulfillment of its purpose under this chapter;

[~~(14)~~] (13) Entering into any contract or agreement whatsoever, not inconsistent with this chapter or the laws of this State, and authorizing the corporation, [~~regional system boards,~~] and chief executive [~~officers~~] officer to enter into all contracts, execute all instruments, and do all things necessary or appropriate in the exercise of the powers granted in this chapter, including securing the payment of bonds; [provided that the corporation board shall delegate to a regional system board its authority to enter into and execute contracts or agreements relating to matters exclusively affecting that regional system; provided further that a regional system board shall exercise this power consistent with corporation-wide policies; and provided further that contracts or agreements executed by a regional system board shall encumber only the regional subaccounts of that regional system board;

~~(15)~~] (14) Issuing revenue bonds up to $100,000,000 subject to the approval of the governor or the director of finance; provided that:

(A) All revenue bonds shall be issued pursuant to part III, chapter 39;

(B) The corporation [~~and any regional system~~] board shall have the power to issue revenue bonds in any amount without regard to any limitation in chapter 39; and

(C) The corporation shall have the power to incur debt, including the issuance of revenue bonds in any amount[~~, and the regional system boards shall have the power to issue revenue bonds in any amount upon approval by the corporation board~~];

[~~(16)~~] (15) Reimbursing the state general fund for debt service on general obligation bonds or reimbursable general obligation bonds issued by the State for the purposes of the corporation [~~or any regional system board~~];

[~~(17)~~] (16) Pledging or assigning all or any part of the receipts, revenues, and other financial assets of the corporation [~~or the regional system boards~~] for purposes of meeting or securing bond or health systems liabilities [~~; provided that each regional system board shall be responsible for conducting the activities under this paragraph in its own regional system~~]. Any pledge or assignment by the corporation [~~or any regional system board~~] to secure revenue bonds or health system liabilities shall be valid and binding in accordance with its terms against the pledgor, creditors, and all others asserting rights thereto from the time the pledge or assignment is made, without the need of physical delivery, recordation, filing, or further act[. The corporation shall not take or omit to take any act that would interfere with, impair, or adversely affect any pledge or assignment by a regional system board pursuant to this chapter. In connection with issuing revenue bonds or related obligations, consistent with corporation policies and procedures, any regional system board may make such other covenants, binding on the regional system board and the corporation, that the regional system board determines to be necessary or appropriate to establish and maintain security for the revenue bonds or related obligations];

[~~(18)~~] (17) Owning, purchasing, leasing, exchanging, or otherwise acquiring property, whether real, personal, or mixed, tangible or intangible, and of any interest therein, in the name of the corporation, which property is not owned or controlled by the State but is owned or controlled by the corporation; provided that:

(A) Regional system boards shall have custodial control over facilities and physical assets in their respective regional systems[. A regional system board may own, purchase, lease, exchange, or otherwise acquire property, whether real, personal, or mixed, tangible or intangible, and of any interest therein, other than property owned or controlled by the corporation, in the name of the regional system board]; provided further that a regional system board shall be subject to section 323F-3.5; and

(B) Each regional system board shall be responsible for conducting the activities under [~~this paragraph~~] subparagraph (A) in its own regional system;

[~~(19)~~] (18) Maintaining, improving, pledging, mortgaging, selling, or otherwise holding or disposing of property, whether real, personal, or mixed, tangible or intangible, and of any interest therein, at any time and manner, in furtherance of the purposes and mission of the corporation or any regional system board; provided that the corporation or any regional system board legally holds or controls the property in its own name; provided further that other than to secure revenue bonds and related obligations and agents, and to transition into a new entity, the corporation or any regional system board shall not sell, assign, lease, hypothecate, mortgage, pledge, give, or dispose of all or substantially all of its property; and provided further that each regional system board shall be responsible for conducting the activities under this paragraph in its own regional system, and control over such property shall be delegated to each regional system board; provided further that this paragraph shall not be construed to authorize the sale, pledge, or mortgage of real property under the control of the corporation or a regional system board;

[~~(20)~~] (19) Purchasing insurance and creating captive insurers in any arrangement deemed in the best interest of the corporation, including but not limited to funding and payment of deductibles and purchase of reinsurance; provided that only the corporation shall have the power to create captive insurers to benefit public health facilities and operations in all regional systems; [and provided further that a regional system board may purchase insurance for its regional system in collaboration with the other regional systems and the corporation until captive coverage is provided by the corporation;

~~(21)~~] (20) Acquiring by condemnation, pursuant to chapter 101, any real property required by the corporation to carry out the powers granted by this chapter;

[~~(22)~~] (21) Depositing any moneys of the corporation or any regional system board in any banking institution within or without the State, and appointing, for the purpose of making deposits, one or more persons to act as custodians of the moneys of the corporation or any regional system board; [~~provided that regional system boards may deposit moneys in banking institutions pursuant to corporation-wide guidelines established by the corporation board;~~

~~(23)~~] (22) Contracting for and accepting any gifts, grants, and loans of funds, property, or any other aid in any form from the federal government, the State, any state agency, or any other source, or any combination thereof, and complying, subject to this chapter, with the terms and conditions thereof; [provided that the regional system boards shall be responsible for contracting for and accepting any gifts, grants, loans, property, or other aid if intended to benefit the public health facilities and operations exclusively in their respective regional systems; and provided further that all contracting for or acceptance of gifts, grants, loans, property, or other aid shall be consistent with corporation wide policies established by the corporation board;

~~(24)~~] (23) Providing health and medical services for the public directly or by agreement or lease with any person, firm, or private or public corporation, partnership, or association through or in the health facilities of the corporation or regional system boards or otherwise; [~~provided that the regional system boards shall be responsible for conducting the activities under this paragraph in their respective regional systems;~~

~~(25)~~] (24) Approving medical staff bylaws, rules, and medical staff appointments and reappointments for all public health facilities of the corporation or any regional system board, including but not limited to determining the conditions under which a health professional may be extended the privilege of practicing within a health facility, as determined by the respective regional system board and consistent with corporation-wide policies, and adopting and implementing reasonable rules, without regard to chapter 91, for the credentialing and peer review of all persons and health professionals within the facility; [~~provided that regional system boards shall be the governing body responsible for all medical staff organization, peer review, and credentialing activities to the extent allowed by law;~~

~~(26)~~] (25) (A) Investing any funds not required for immediate disbursement in property or in securities that meet the standard for investments established in chapter 88 as provided by the corporation board [~~or any regional system board~~]; provided that proceeds of bonds and moneys pledged to secure bonds may be invested in obligations permitted by any document that authorizes the issuance or securing of bonds; and provided further that the investment assists the corporation or any regional system board in carrying out its public purposes; selling from time to time securities thus purchased and held, and depositing any securities in any bank or financial institution within or without the State. Any funds deposited in a banking institution or in any depository authorized in this section shall be secured in a manner and subject to terms and conditions as the corporation board [~~or a regional system board~~] may determine, with or without payment of any interest on the deposit, including without limitation time deposits evidenced by certificates of deposit. Any bank or financial institution incorporated under the laws of this State may act as depository of any funds of the corporation or a regional system board and may issue indemnity bonds or may pledge securities as may be required by the corporation [or regional system board; provided that regional system boards may exercise the powers under this subsection with respect to financial assets of the regional system consistent with corporation-wide policies]; and

(B) Notwithstanding subparagraph (A), contracting with the holders of any of its notes or bonds as to the custody, collection, securing, investment, and payment of any moneys of the corporation or regional system board and of any moneys held in trust or otherwise for the payment of notes or bonds and carrying out the contract. Moneys held in trust or otherwise for the payment of notes or bonds or in any way to secure notes or bonds, and deposits of such moneys, may be secured in the same manner as moneys of the corporation or regional system board, and all banks and trust companies are authorized to give security for the deposits;

[~~(27)~~] (26) Entering into any agreement with the State, including but not limited to contracts for the provision of goods, services, and facilities in support of the corporation's programs or the regional system boards' programs, and contracting for the provision of services to or on behalf of the State; [provided that the regional system boards shall be responsible for entering into agreements to provide goods, services, and facilities in support of programs in their respective regional systems consistent with corporation-wide policies;

~~(28)~~] (27) Having a seal and altering the same at pleasure;

[~~(29)~~] (28) Waiving, by means that the corporation [~~or regional system board~~] deems appropriate, the exemption from federal income taxation of interest on the corporation's or regional system boards' bonds, notes, or other obligations provided by the Internal Revenue Code of 1986, as amended, or any other federal statute providing a similar exemption;

[~~(30)~~] (29) Developing internal policies and procedures for the procurement of goods and services, consistent with the goals of public accountability and public procurement practices, and subject to management and financial legislative audits; provided that [the regional system boards shall be responsible for developing internal policies and procedures for each of their regional systems consistent with the corporation's policies and procedures; and further provided that]:

[~~(A)~~ ~~The regional system boards and~~] the corporation board shall enjoy the exemption under section 103-53(e);

[~~(B)~~ ~~The regional system boards shall enjoy the exemption under chapter 103D; and~~

~~(C)~~ ~~The corporation shall be subject to chapter 103D;~~

~~(31)~~] (30) Authorizing and establishing positions[; provided that regional system boards shall be responsible for hiring and firing regional and facility personnel consistent with corporation policies, except a regional chief executive officer shall only be hired or dismissed upon the approval of the regional system board as further set forth in section 323F-8.5]; and

~~(32)~~] (31) Having and exercising all rights and powers necessary or incidental to or implied from the specific powers granted in this chapter, which specific powers shall not be considered as a limitation upon any power necessary or appropriate to carry out the purposes and intent of this chapter[; ~~provided that the regional system boards shall be responsible for having and exercising all powers and rights with respect to matters in their regional systems consistent with the law; and~~

~~(33)~~ ~~Each regional system, through its regional system board, shall:~~

~~(A)~~ Develop policies and procedures necessary or appropriate to plan, operate, manage, and control the day-to-day operations of facilities within the regional system that are consistent with corporation-wide policies;

~~(B)~~ ~~Exercise custodial control over and use of all assets of the corporation that are located in the regional system pursuant to this chapter; and~~

~~(C)~~ ~~Expend funds within its approved regional system budget and expend additional funds in excess of its approved regional system budget upon approval of the corporation board~~].

(d) [Each regional system board shall not be subject to chapters 36 to 38, 40, 41D, and 103D as well as part I of chapter 92 and shall enjoy the exemptions contained in sections 102-2 and 103-53(e), except as otherwise provided in this chapter.] The corporation shall not be subject to chapters 36 to 38, 40, and 41D, as well as part I of chapter 92, and shall enjoy the exemptions contained in sections 102-2 and 103-53(e)[; provided that the exemption provided under this subsection to chapter 37D shall only apply to financing agreements of $5,000,000 or less; provided further that the aggregate value of financing agreements per fiscal year shall not exceed $25,000,000]."

SECTION 8. Section 323F-7.5, Hawaii Revised Statutes, is amended to read as follows:

"[[]§323F-7.5[]] Regional system boards; delegated authority. [If the Hawaii health systems corporation board is unable to act on important transactions in as timely a manner as the chairperson of the corporation board deems reasonable, the chairperson of the corporation board may further delegate authority to the regional system boards to take action on specific matters.] (a) Duties and powers related to the day-to-day operation of facilities within each regional system, including but not limited to development of regional system and facility budgets, employment and removal of regional system and facility personnel, purchasing, regional system strategic and capital planning consistent with the system-wide strategic and capital plan, quality assurance, improvement and reporting, and governance and credentialing of medical staff, shall be carried out by the regional system boards, either directly or by delegation to regional and facility administration. Notwithstanding any other law to the contrary, the regional system boards shall exercise the following duties and powers consistent with corporation policies and procedures:

(1) Developing policies, procedures, and rules necessary or appropriate to plan, operate, and manage, the regional system of public health facilities and services without regard to chapter 91;

(2) Evaluating the need for additional health facilities and services; provided that each regional system board shall be responsible for the evaluation within its own regional system;

(3) Entering into and performing any contracts, leases, or other transactions whatsoever that may be necessary or appropriate in the performance of its purposes and responsibilities, and on terms the regional system boards may deem appropriate, with either:

(A) Any agency or instrumentality of the United States, or with any state, territory, or possession, or with any subdivision thereof; or

(B) Any person, firm, association, partnership, or corporation, whether operated on a for-profit or notfor-profit basis; provided that the transaction furthers the public interest;

(4) Participating in and developing prepaid health care service and insurance programs and other alternative health care delivery programs, including programs involving the acceptance of capitated payments or premiums that include the assumption of financial and actuarial risk;

(5) Executing, in accordance with all applicable bylaws, rules, and laws, all instruments necessary or appropriate in the exercise of any powers of the regional system boards;

(6) Preparing and executing facility and regional budgets, policies, and procedures; provided that the regional system boards shall submit their regional and facility budgets to the corporation to be reviewed, rejected, or approved and consolidated into a corporation-wide budget for purposes of corporation-wide planning and appropriation requests;

(7) Hiring, firing, and management of regional system and facility personnel pursuant to applicable laws, rules, regulations, and collective bargaining agreements; provided that the regional chief executive officer shall be hired and fired upon approval of the corporation and the regional system board;

(8) Developing of capital and strategic plans in its own regional system that shall be consistent with, and incorporated into, the overall corporation-wide plans; provided that each regional system board shall be entitled to undertake the construction and improvement of property, facilities, and equipment to carry out these capital and strategic plans;

(9) Enjoying full immunity from suit; provided that regional system boards shall enjoy the same sovereign immunity available to the State;

(10) Making and altering regional system board bylaws for its organization and management without regard to chapter 91 and consistent with this chapter;

(11) Adopting rules without regard to chapter 91 governing the exercise of the regional system board's powers and the fulfillment of its purpose under this chapter;

(12) Authorizing regional system boards to enter into all contracts, execute all instruments, and do all things necessary or appropriate in the exercise of the powers granted in this chapter with respect to matters exclusively affecting that regional system and within their approved budgets and appropriations, including securing the payment of bonds; provided that contracts or agreements executed by a regional system board shall encumber only the regional subaccounts of that regional system board;

(13) Reimbursing the state general fund for debt service on general obligation bonds or reimbursable general obligation bonds issued by the State for the purposes of the corporation or any regional system board;

(14) Controlling the day-to-day decisions relating to the facilities and physical assets in their respective regional systems; provided that all leases and mortgages of corporation real property to third parties shall require corporation approval;

(15) Maintaining, improving, or otherwise holding or disposing of property, whether real, personal, or mixed, tangible or intangible, and of any interest therein, at any time and manner, in furtherance of the purposes and mission of the corporation or any regional system board;

(16) Depositing any moneys of the corporation or any regional system board in any banking institution within or without the State, and appointing, for the purpose of making deposits, one or more persons to act as custodians of the moneys of the corporation or any regional system board;

(17) Contracting for and accepting any gifts, grants, property, or any other aid from the federal government, the State, any state agency, or any other source, or any combination thereof, and complying, subject to this chapter, with the terms and conditions thereof;

(18) Providing health and medical services for the public directly or by agreement or lease with any person, firm, or private or public corporation, partnership, or association through or in the regional system's health facilities;

(19) Approving medical staff bylaws with the concurrence of the corporation board and approving rules, medical staff appointments and reappointments, as governing body, for all public health facilities of the regional system board, including but not limited to determining the conditions under which a health professional may be extended the privilege of practicing within a health facility, and adopting and implementing reasonable rules, without regard to chapter 91, for the credentialing and peer review of all persons and health professionals within the facility;

(20) (A) Investing any funds not required for immediate disbursement in property or in securities that meet the standard for investments established in chapter 88 as provided by the corporation board or any regional system board; provided that proceeds of bonds and moneys pledged to secure bonds may be invested in obligations permitted by any document that authorizes the issuance or securing of bonds; and provided further that the investment assists the corporation or any regional system board in carrying out its public purposes; selling from time to time securities thus purchased and held; and depositing any securities in any bank or financial institution within or without the State. Any funds deposited in a banking institution or in any depository authorized in this section shall be secured in a manner and subject to terms and conditions as the corporation board or a regional system board may determine, with or without payment of any interest on the deposit, including without limitation, time deposits evidenced by certificates of deposit. Any bank or financial institution incorporated under the laws of this State may act as depository of any funds of a regional system board and may issue indemnity bonds or may pledge securities as may be required by the corporation or regional system board; and

(B) Notwithstanding subparagraph (A), contracting with the holders of any of its notes or bonds as to the custody, collection, securing, investment, and payment of any moneys of the regional system board and of any moneys held in trust or otherwise for the payment of notes or bonds and carrying out the contract. Moneys held in trust or otherwise for the payment of notes or bonds or in any way to secure notes or bonds, and deposits of such moneys, may be secured in the same manner as moneys of the corporation or regional system board, and all banks and trust companies are authorized to give security for the deposits;

(21) Entering into any agreement with the State, including but not limited to contracts for the provision of goods, services, and facilities in support of the corporation's programs or the regional system boards' programs, and contracting for the provision of services to or on behalf of the State; and

(22) Developing internal policies and procedures for the procurement of goods and services, consistent with the goals of public accountability and public procurement practices, and subject to management and financial legislative audits; provided that the regional system boards shall be exempt from chapter 103D;

(b) Each regional system, through its regional system board, shall:

(1) Develop policies and procedures necessary or appropriate to plan, operate, and manage the day-to-day operations of facilities within the regional system that are consistent with corporation-wide policies;

(2) Exercise custodial control over and use of all assets of the corporation that are located in the regional system pursuant to this chapter; and

(3) Expend operating and capital funds within its approved regional system budget and expend additional funds in excess of its approved regional system budget upon approval of the corporation board.

(c) Each regional system board shall not be subject to chapters 36 to 38, 40, 41D, and 103D as well as part I of chapter 92 and shall be exempt from sections 102-2 and 103-53(e), except as otherwise provided in this chapter."

SECTION 9. Section 323F-8.5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

"(a) Upon establishment, a regional system board may appoint a regional chief executive officer, whose salary shall be set by the corresponding regional system board, and may discharge a regional chief executive officer; provided that the position shall be exempt from chapter 76 and section 26-35(a)(4)[.]; and provided further that the corporation concurs with the hiring, firing, and compensation package. Each regional chief executive officer may also appoint, as necessary, other personnel, exempt from chapters 76 and 89, to work directly for the regional chief executive officer for the regional system and for the corresponding regional system board."

SECTION 10. Section 323F-21, Hawaii Revised Statutes, is amended by amending subsections (b), (c), and (d) to read as follows:

"(b) The corporation board [~~and regional system boards~~] shall [~~collaboratively~~] develop and adopt, upon consultation with the regional system boards via the system policy committee established in section 323- , budgetary guidelines and annual operating and capital budgets for each facility[,] and the corporate office, taking into account anticipated surpluses from or subsidies to the facilities pursuant to the annual guidelines described in this section, accumulated corporation and regional reserves and accounts, subsidies, if any, that are determined to be needed from the general fund, and other sources of corporation-wide and regional income as may be identified. Two-year budgets will be approved for regional system boards, in alignment with State of Hawaii biennium budgeting. The corporate board shall [~~not alter the two-year budget of a regional system except:~~

~~(1)~~ ~~Where state general funding is reduced;~~

~~(2)~~ ~~An emergency exists; or~~

~~(3)~~ ~~There is a renegotiated budget approved by a regional system board.~~]

approve, modify, or reject the facility and regional budgets submitted by the regional system boards. The corporation [~~and regional system boards~~] shall [~~collaboratively develop budgetary guidelines and negotiate with each facility~~] determine reasonable corporation administrative costs, including funds determined by the corporation or any regional system board to be needed from or provided to each facility to:

(1) Repay corporation or regional system board debts;

(2) Provide subsidies to any facility determined to be unable to fund from within that facility's programs and services deemed essential to community needs; and

(3) Maintain appropriate reserves.

(c) The corporation [~~and regional system boards~~] shall [~~collaboratively~~] develop annual corporation operating and capital budgets, taking into account anticipated surpluses from or subsidies to the facilities pursuant to the annual guidelines described in this section, accumulated corporation and regional system board reserves and accounts, subsidies, if any, that are determined to be needed from the general fund, and other sources of corporation-wide and regional system board income as may be identified.
(d) Beginning with the first of the legislative biennium budget years following the establishment of a regional system board, and for each biennium period thereafter, the corporation shall call together all the regional systems through representatives selected by each regional system board[~~,and the chairs of the facility management advisory committees, if any,~~] to determine which additional services the regions require from the corporation in addition to the corporate functions needed in order to implement this chapter [~~and functions should be provided by the corporation for the next biennium budget period, consistent with this chapter~~]. As part of the biennium budgeting process, the corporation board and the representatives of each regional system, working through the corporation board regional representatives, shall agree upon an allocation methodology for funding the agreed upon and statutorily created corporate services and functions. When allocation decisions cannot be reached by majority agreement, with each region receiving one vote, the corporate board shall decide the allocation for that service or function."

SECTION 11. Section 323F-22, Hawaii Revised Statutes, is amended by amending subsections (a) and (b) to read as follows:

"(a) The corporation shall engage a certified public accountant to conduct an annual audit of its financial affairs, books, and records in accordance with generally accepted accounting principles. [The corporation, in consultation with a regional system board, may permit or require a regional system board to retain an audit firm to conduct an independent audit of the regional system. Each regional system board shall submit the results of the annual audit to the corporation board within one hundred twenty days after the close of the regional system board's fiscal year.] The corporation shall submit to the governor and the legislature, within one hundred [~~fifty~~] eighty days after the close of the corporation's fiscal year, a report that shall include the audited financial report for that fiscal year for the corporation and each regional system board.

(b) In addition to the submittal of the audit required under subsection (a), the corporation, in cooperation with the regional system boards, shall submit a report to the legislature at least twenty days prior to the convening of each regular session that shall include but not be limited to:

(1) The projected revenues for each health care facility; and

(2) A list of all proposed capital improvement projects planned for implementation during the following fiscal year[~~; and~~

~~(3)~~ ~~All reports submitted by regional public health facility management advisory committees pursuant to section 323F-10(c)~~]."

SECTION 12. Section 323F-24, Hawaii Revised Statutes, is amended to read as follows:

"§323F-24 Budget oversight. The corporation's [~~and each regional system board's operating and capital improvement~~] combined corporation and regional operational and capital budgets shall not be subject to review or approval by the governor or any state agency, except where state general funds or capital improvement moneys are requested. If general funds or capital improvement moneys are requested, then the corporation or any regional system board shall include, with its request, the proposed budget for which the funds or moneys are to be included. The corporation [~~and regional system boards, once operational,~~] shall [~~collaboratively~~] submit [~~their budget~~] the combined budgets annually to the legislature for review and approval at least twenty days prior to the convening of [~~the~~] each regular [~~legislative~~] session, beginning with the budgets for the [~~2010-2011~~] 2016-2017 biennium fiscal years."

SECTION 13. Section 323F-10, Hawaii Revised Statutes, is repealed.

["~~§323F-10 Regional public health facility management advisory committees.~~ (a) On the transfer date, there shall be established within the corporation for each region, a public health facility management advisory committee to consist of nine members initially to be appointed by the chief executive officer of the corporation with the advice of the hospital administrators of the facilities in the affected regions. The members shall serve for a term of four years; provided that upon the initial appointment of the members, two shall be appointed for a term of one year, two for a term of two years, two for a term of three years, and three for a term of four years.

Following the initial appointments by the chief executive officer of the corporation board, any vacancies on a regional committee shall be filled by a simple majority vote of the members of the executive committee from a list of qualified nominees submitted by the regional committee in which the vacancy occurred. If a regional committee vacancy remains unfilled for more than thirty days, that vacancy may

~~be filled by the chief executive officer of the corporation.~~

Each regional management advisory committee shall include medical and health care providers, consumers, and knowledgeable individuals in other appropriate areas such as business and law; provided that at least one member shall be a physician with active medical staff privileges at one of the region's public health facilities. At least three members of the committee shall be consumers.

The management advisory committee for the East Hawaii region shall have three members who reside in the Ka'u district, three members who reside in the Hamakua/North Hilo districts, and three members who reside in the South Hilo/Puna districts. The management advisory committee for the West Hawaii region shall have not less than three members who reside in the North Kohala/South Kohala districts.

Each regional committee shall select its own chairperson and vice chairperson and shall adopt rules governing the terms for removal of its chairperson from the executive management advisory committee. In the event of a regional committee voting to remove its chairperson who concurrently sits on the corporation board, that vote shall be unanimous. In the event of a regional committee voting to remove its physician member from the corporation board, that vote shall also be unanimous. Each regional committee may also adopt other rules as it may consider necessary for the conduct of its business.

The members of the regional committees shall serve without compensation, but shall be reimbursed for traveling expenses incurred in the performance of their duties. The corporation shall provide for the necessary expenses of the committees; provided that no expenses may be incurred without prior authorization by the chief executive officer.

(b) Each regional committee shall sit in an advisory capacity to the chief executive officer on matters concerning the formulation of regional operational and capital improvement budgets, and the planning, construction, improvement, maintenance, and operation of public health facilities within its respective jurisdiction and shall sit in an advisory capacity to the governor on matters concerning the nominees for positions on the corporation board. Nothing in this section shall be construed as precluding or preventing the committees from coordinating their efforts and activities with the facility administrators within their counties.

(c) Each regional committee may prepare a report for inclusion with the corporation's annual report and audit, which shall include but not be limited to comments and analyses on the corporation's regional operational and capital improvement budgets for its respective region.

~~(d) Upon the establishment of a regional system board for a regional system pursuant to section 323F-3.5, this section shall no longer apply to that regional system.~~"]

SECTION 14. Section 323F-10.5, Hawaii Revised Statutes, is repealed.

["~~§323F-10.5 Executive public health facility management advisory committee; establishment.~~ (a) There is established within the corporation an executive public health facility management advisory committee to consist of the chairpersons of each of the five regional public health facility management advisory committees. The executive committee shall, through its chairperson, represent the interests of all regional committees on the corporation board.

(b) The executive committee shall select its own chairperson to serve on the corporation board and shall adopt rules governing the terms of office and removal from the corporation board. The executive committee shall also adopt rules governing the terms of office for each of the five regional committee chairpersons. The executive committee may also adopt other rules as it may consider necessary for the conduct of its business.

~~(c) The members of the executive committee shall serve without compensation, but shall be reimbursed for reasonable expenses incurred in the performance of their duties.~~

~~(d) Upon the establishment of a regional system board for a regional system pursuant to section 323F-3.5, this section shall no longer apply to that regional system.~~"]

SECTION 15. In codifying the new sections added by section 2 of this Act, the revisor of statutes shall substitute appropriate section numbers for the letters used in designating the new sections in this Act.

SECTION 16. All acts passed prior to or during the regular session of 2013, whether enacted before or after passage of this Act shall be interpreted to conform to this Act, unless the acts specifically provide that this Act is being amended. Insofar as this Act is inconsistent with any other law, this Act shall control.

SECTION 17. If any provision of this Act, or the application thereof to any person or circumstance is held invalid, the invalidity does not affect other provisions or applications of the Act, which can be given effect without the invalid provision or application, and to this end the provisions of this Act are severable.

SECTION 18. This Act does not affect rights and duties that matured, penalties that were incurred, and proceedings that were begun before its effective date.

SECTION 19. Statutory material to be repealed is bracketed and stricken. New statutory material is underscored.

SECTION 20. This Act shall take effect on July 1, 2050.

HOUSE OF REPRESENTATIVES	H.B. NO.	1484
TWENTY-SEVENTH LEGISLATURE, 2013		H.D. 1
STATE OF HAWAII