SR112.DOC

WHEREAS, Wahiawa General Hospital (WGH), a 501(c)(3) non-profit community hospital incorporated in the State of Hawaii, is in serious and imminent danger of financial failure and the inevitable closure of its facilities unless immediate financial assistance from the State is provided; and

WHEREAS, having served the healthcare needs of residents in the Central Oahu and North Shore areas of Oahu since 1944, WGH has been and remains the only rural, independent, non-profit, general acute care hospital within the State; and

WHEREAS, beginning as a basic outpatient clinic for plantation workers, military personnel, and other Central Oahu residents, WGH has grown into a hospital providing complex emergency services, surgery, general acute care, senior behavioral health, outpatient clinics, and long-term care skilled nursing; and

WHEREAS, among other things, WGH:

(1) Is currently licensed for fifty-three inpatient acute care beds and one hundred seven skilled nursing beds;

(2) Provides emergency services, including radiology and diagnostic imaging studies, laboratory services, inpatient intensive care and telemetry services, as well as inpatient medical surgical services, senior behavioral health services, skilled nursing, and outpatient services;

(3) Is staffed by board-certified physicians, registered nursing staff, and emergency personnel that provide vital medical services for the community of Wahiawa and its surrounding areas;

(4) Remains a critical link in Oahu's integrated emergency services network, providing necessary emergency services to over an area populated by sixty thousand citizens;

(5) Houses a modernized and recently renovated emergency room, offering its patients innovative and medically advanced care and treatment; and

(6) Serves a thirty-mile contiguous area from Waialua to Kahuku on the North Shore through Wahiawa and Mililani, most of which is connected by a two-lane road; and

WHEREAS, WGH and its emergency services are critical to the community and area they serve; and

WHEREAS, the next closest hospital and emergency services facility is located at either Queen's Medical Center West located in Ewa Beach or Pali Momi Medical Center located in Aiea, which are approximately fourteen miles and thirteen miles away from WGH, respectively; and

WHEREAS, WGH is a major employer in the Central Oahu area, creating and maintaining a work force of approximately six hundred employees, including three hundred eighty full-time employees, with approximately ninety percent of its employees living within Wahiawa, or its surrounding areas of Kahuku, Haleiwa, Waialua, Wahiawa, Mililani, and West Oahu, eight percent being residents of Honolulu, and the remaining two percent from Kailua; and

WHEREAS, because WGH is the largest private employer in Wahiawa, its continuous presence, effective maintenance, and survival are vital not only to the town and its residents economically, but also necessary in terms of the health, safety, and welfare of residents of the State, visitors to the North Shore, and military families; and

WHEREAS, WGH's annual budget is comprised of payroll, physician and professional fees, supplies, and other annual expenditures, including but not limited to overhead and other operating expenses resulting in ongoing negative cash flows, as well as several extraneous factors, that have ultimately compromised the survival of the hospital; and

WHEREAS, with the reopening of Queen's Medical Center West in May 2014, WGH has suffered an approximately fourteen percent reduction in patient revenues resulting in a $7,500,000 revenue decline in the first twelve months after Queen's Medical Center West's opening, which would in most cases cause a small, private hospital to fail outright; and

WHEREAS, in response, WGH was required to reduce its staff by approximately seventy-five full-time equivalent employees and eliminate important programs in order to survive; and

WHEREAS, in addition, Wahiawa has experienced a major outflow of primary care physicians and specialist physicians to outlying medical centers throughout the State and mainland, and to retirement, resulting in a hospitalist-driven facility to treat patients admitted to inpatient services; and

WHEREAS, hospitalists are expensive, hospital-based physicians who cost the hospital $650,000 annually, without compensating insurance company reimbursement, to treat inpatients when the necessary community-based physician infrastructures are inadequate; and

WHEREAS, community physician shortages have created additional expenditures of over $1,700,000 to pay and support the hospitalists, on-call surgeons, and anesthesiologists; and

WHEREAS, for twenty-three years, WGH has supported the Family Medicine Residency Program of the John A. Burns School of Medicine at the University of Hawaii, which results in approximately $1,000,000 to $2,000,000 annually in unfunded costs; and

WHEREAS, WGH has been honored to help the State of Hawaii develop over one hundred family medicine physicians; and

WHEREAS, WGH has, over the years, spent over $24,000,000 in operating cash reserves on the Family Medicine Residency Program that were needed to fund other hospital programs and facility improvements; and

WHEREAS, in 2014, WGH was forced to discontinue the funding and initiate restructuring to the entire Family Medicine Residency Program; and

WHEREAS, despite the acknowledgment of the importance of the Family Medicine Residency Program, WGH no longer could reconcile seeking funds for the program when funds became necessary for the hospital's survival; and

WHEREAS, WGH serves a largely low-income and elderly population, with over eighty-five percent of WGH's patient revenues received from treating Medicare and Medicaid patients; and

WHEREAS, additionally, many of WGH's patients are from the Wahiawa Neighborhood Revitalization Strategy Area, a federally-designated distressed community; and

WHEREAS, distressed community government programs do not pay the true cost of treating program beneficiaries; and

WHEREAS, WGH cannot negotiate increased payments from the Medicare and Medicaid programs; and

WHEREAS, as a general rule all hospitals treating a large percentage of Medicare and Medicaid patients must have large endowments or receive state subsidies to survive; and

WHEREAS, billing and collection for Medicaid patients in Hawaii is extraordinarily difficult and costly due to the billing of up to five different QUEST insurance plans, all of which do not cover the cost of treating Medicaid patients; and

WHEREAS, when compared to other state-run rural hospitals under the Hawaii Health Systems Corporation, and even considering similar problems, WGH has traditionally been more efficient on an operating-margin basis; and

WHEREAS, in addition, the Wahiawa and surrounding areas, including the North Shore of Oahu, have and continue to see growth in the homeless population, a proportion of which has required immediate and in some instances repeated emergency medical attention from WGH and its emergency services; and

WHEREAS, services rendered to the homeless serve an important and necessary need; and

WHEREAS, however, WGH absorbs the costs associated with the uninsured treatments, further diminishing its very limited resources; and

WHEREAS, despite WGH's exclusion from participation as a member of a larger scale health system, differentiating it from other Hawaii-based and state-subsidized hospitals, it is still required to and did comply with the mandates of the Patient Protection and Affordable Care Act (Affordable Care Act) related to Meaningful Use and Quality Reporting; and

WHEREAS, compliance therewith increased WGH's costs for information systems, nursing, and quality functions by over $2,500,000 per year without offsetting any patient revenues; and

WHEREAS, employee health insurance costs under the Hawaii Medical Service Association and Affordable Care Act mandates on the Hawaii Medical Service Association have increased from $3,000,000 to $4,000,000 per year for a smaller employee base; and

WHEREAS, despite WGH's non-profit community hospital status and lack of similar financial assistance that had been provided to the Hawaii Health Systems Corporation's hospitals, WGH has remained dedicated to its patient care mission; and

WHEREAS, WGH had previously sought assistance from the State without success and is now forced to address its dire financial status due to national and local changes in healthcare; and

WHEREAS, on January 30, 2015, WGH submitted a grant-in-aid request in an amount of $2,500,000 for emergency support to this Legislature for fiscal year 2016, which funds would still be helpful to WGH; and

WHEREAS, to help mitigate serious cost deficiencies, WGH restructured the Family Medicine Residency Program, cancelled its home health and physical therapy outpatient programs, and reduced its staff; and

WHEREAS, WGH, now more than ever, is in desperate need of financial assistance from the State and without emergency financial aid will be required to close its doors; and

WHEREAS, the closure of WGH would have devastating effects upon the public health, safety, and welfare, not only on the residents of Wahiawa, but also on the surrounding areas, and the island as a whole; and

WHEREAS, the value of the emergency services at WGH, by servicing the surrounding rural areas from the North Shore to Mililani, are just as, if not more, important than the community health centers that have restricted hours and limited services; and

WHEREAS, in some medical emergency cases, the inability to access WGH and emergency services, requiring travel to the next closest hospital in Ewa or Aiea, could literally become an issue of life and death for patients; and

WHEREAS, it is imperative for the safety of the residents of the rural areas and potential patients of WGH, that WGH and its emergency services survive; and

WHEREAS, in addition to the overwhelming health and safety concerns, the closure of WGH would have a devastating economic impact, creating the loss of approximately six hundred jobs, as well as shift losses to be absorbed by the other Hawaii hospitals; and

WHEREAS, to allow the hospital to succumb to a financial death would be contrary to public policy and the Administration's inclusion and designation of Wahiawa as an area for economic growth through revitalization and development of agriculture in Hawaii; and

WHEREAS, the extreme dangers associated with the closure of WGH require the serious attention from the State; and

WHEREAS, emergent funds must be made available to continue WGH's operations for the benefit of the health, safety, and welfare of the residents of the thirty-mile contiguous area in which it has, and dutifully will continue to, protect and serve with the necessary assistance from the State; and

WHEREAS, this body declares that the medical facility and services provided by WGH are vital and necessary for the public health, safety, and general welfare to the public, and to further assist in the improvement of the health care system for residents of Wahiawa and the State; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-eighth Legislature of the State of Hawaii, Regular Session of 2016, that this body urges the Governor to provide financial assistance to Wahiawa General Hospital in a sufficient amount to enable it to operate while developing a new business model, including but not limited to potential partnerships with the private sector to enable it to continue its vital operations and discussion with potential partnerships with other hospitals and organizations, such as:

(1) The Queen's Medical Center;

(2) Hawaii Pacific Health;

(3) Shriners' Hospitals for Children;

(4) Kuakini Medical Center;

(5) Rehabilitation Hospital of the Pacific;

(6) Castle Medical Center;

(7) Kaiser Permanente;

(8) St. Francis Medical Healthcare;

(9) Hawaii Healthcare Systems Corporation;

(10) Hawaii State Hospital;

(11) Hawaii Nurses Association;

(12) Hawaii Emergency Physicians Associated;

(13) United Public Workers; and

(14) International Longshore and Warehouse Workers; and

BE IT FURTHER RESOLVED that this body take all steps necessary to provide sufficient funds to enable Wahiawa General Hospital to continue to provide uninterrupted medical services while the hospital, its Board, and interested parties seek potential affiliation with a larger business partner to more effectively integrate its clinical and non-clinical services and to create a more efficient business model, to support its already vulnerable business in light of expensive federal mandates related to compliance, physician shortages, and other issues that continue to push the hospital toward insolvency; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor; Speaker of the House of Representatives; President of the Senate; Director of Health; Director of Human Services; Director of Business, Economic Development, and Tourism; Director of Labor and Industrial Relations; Mayor of the City and County of Honolulu; Director of Emergency Services for the City and County of Honolulu; Chief Executive Officer of Wahiawa General Hospital; Chief Executive Officer of The Queen's Medical Center; Chief Executive Officer of Hawaii Pacific Health; Chief Executive Officer of Shriners' Hospital for Children; Chief Executive Officer of Kuakini Medical Center; Chief Executive Officer of Rehabilitation Hospital of the Pacific; Chief Executive Officer of Castle Medical Center; Chief Executive Officer of Kaiser Permanente; Chief Executive Officer of St. Francis Medical Healthcare; Chief Executive Officer of Hawaii Healthcare Systems Corporation; Chief Executive Officer of the Hawaii Primary Care Association; Chief Executive Officer of Hawaii State Hospital; President of Hawaii Emergency Physicians Associated; President of Hawaii Nurses Association; President of International Longshore and Warehouse Union Local 142; State Director of United Public Workers Local 646; Chairperson of Neighborhood Board No. 21 (Pearl City); Chairperson of Neighborhood Board No. 22 (Waipahu); Chairperson of Neighborhood Board No. 23 (Ewa); Chairperson of Neighborhood Board No. 25 (Mililani/Waipio/Melemanu); Chairperson of Neighborhood Board No. 26 (Wahiawa); Chairperson of Neighborhood Board No. 27 (North Shore); President of the Wahiawa Community and Business Association; and President of the Leilehua Alumni and Community Association.

	OFFERED BY:	_____________________________

Report Title:

Wahiawa General Hospital; Immediate Financial Assistance

THE SENATE	S.R. NO.	112
TWENTY-EIGHTH LEGISLATURE, 2016
STATE OF HAWAII