State hospitals face a projected $62 million funding gap this fiscal year.The Lingle-Aiona Administration recognizes and appreciates the critical role our 13 Hawai‘i state hospitals play in ensuring access to healthcare for the residents of Hawai‘i. That is why the administration recently advanced $11.8 million in operating funds—the second quarter allotment for hospitals—to ensure that vendors can be paid on a timely basis and hospitals have the supplies they need. This allotment is part of the $53.6 million subsidy the hospitals will receive from the state this year.
Even after receiving this subsidy, the hospitals still face a projected $62 million funding gap this fiscal year. We appreciate the tough choices the hospital system’s regional boards have already made to realign staffing and services to reduce expenditures, without compromising quality or safety. We encourage the boards to continue to execute their plans, and hope that the State Legislature will allow them to exercise the autonomy they were given under Act 290 of 2007.
The current law limits the executive branch’s oversight of the health system’s budgets. However, Gov. Lingle recognizes that she cannot stand by and wait for the legislative branch to deliberate on possible actions while the hospitals’ fiscal difficulties continue. The legislature has been holding hearings since July on the hospitals’ fiscal predicament, and has not signaled what, if anything, it intends to do.
We urge the legislature to make fundamental reforms in the operating structure of the Hawai‘i Health Systems Corporation, including allowing it to operate like a privately managed corporation, independent of the state’s civil service system and procurement rules. These proposals have been discussed for several years. The legislature has the power to make these changes early in the 2009 legislative session.
Understanding the importance of timely action to avoid gaps in critical medical services, the administration has sought legal guidance on all options available. For example, the Department of Budget and Finance has legal authority to lend funds to the Hawai‘i Health Systems Corporation. However, a $14 million loan was made in 2002 and has never been repaid. Until hospitals regain a solid financial footing, it will be difficult to anticipate if additional loans could be paid back.
We commend the hospitals for averting the declaration of an emergency to address fiscal needs. While emergency declarations allow the governor to move general fund and special fund monies to other state accounts, doing so clearly impacts other programs.
The best option is for the legislature to act on the necessary and long-overdue reform to the system that has been bandied about for years.