THE SENATE

S.B. NO.

795

TWENTY-EIGHTH LEGISLATURE, 2015

 

STATE OF HAWAII

 

 

 

 

 

 

A BILL FOR AN ACT

 

 

relating to the Hawaii Health Systems Corporation.

 

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 


SECTION 1. The purpose of this Act is to ensure that all people of the State, especially those residing in the county of Maui, have continued access to health care services in the county of Maui and ensure those health care services are delivered more cost-effectively by enabling the Maui regional health care system of the Hawaii health systems corporation to collaborate with a private entity to transition one or more of its facilities, including Maui memorial medical center, Kula hospital, and Lanai community hospital, into operation as a new private nonprofit corporation.

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

"Part    . public-private transition for the operation of maui regional health care system facilities

323F-A Definitions. As used in this part:

"Pre-transition facility" means the facility or facilities of the Maui regional health care system, prior to the transition into the transitioned hospital.

"Private entity" means the private party authorized under this part to enter into an agreement with the Maui regional health care system to transition a facility or facilities into the transitioned hospital.

"Transitioned hospital" means the new private nonprofit corporation established under this part.

323F-B Maui regional health care system; transition authority. Notwithstanding any other law to the contrary, including but not limited to section 27-1 and chapters 76, 78, 89, and 171, the Maui regional health care system is hereby authorized to enter into an agreement with a private entity to transition one or more of its facilities, including Maui memorial medical center, Kula hospital, and Lanai community hospital, into a new private Hawaii nonprofit corporation, to be operated and managed by the private entity as the facility's or facilities' sole member and operator.

323F-C Attorney general, director of finance, governor; approval. The agreement and transition authorized under this part shall occur only upon approval of the Maui regional system board. Any agreement and transition shall be subject to legal review by the attorney general, who shall approve the transition if satisfied that the transition conforms to all applicable laws; subject to the review of the director of finance, who shall approve the transition if it conforms to all applicable financing procedures; and subject to the governor's approval.

323F-D Nonprofit corporation; established; lease agreement. (a) The private entity shall establish a nonprofit corporation organized pursuant to chapter 414D. The purpose of the nonprofit corporation established under this section shall be consistent with the language in the incorporation documents for the nonprofit corporation.

(b) The Maui regional system board, as lessor, is hereby authorized to enter into a fixed long-term lease operator agreement, or lease, of not less than twenty-five years with the transitioned hospital, wherein the transitioned hospital, as lessee, leases the facilities under the custodial control of the Maui regional system board and operates and manages the leased facilities.

(c) The provisions of the lease authorized under this section shall specify that:

(1) The annual rent shall be $1 a year, payable in advance and in full for the term of the lease;

(2) The lease shall not be terminated other than for good cause; provided that the lease may be terminated only with a minimum of three hundred sixty-five days' notice, to ensure that the delivery of health care to the community will not be disrupted;

(3) The transitioned hospital shall be allowed exclusive control of all matters related to the management and operation of the leased facilities, except as otherwise provided in the lease; and

(4) The Maui regional system board, as lessor, shall have the responsibility to oversee the performance of the terms of the lease by the transitioned hospital.

323F-E Assets. (a) The corporation shall retain ownership of all real property associated with the lease entered into pursuant to section 323F-D.

(b) The Maui regional system board shall be authorized to:

(1) Lease real assets under its custodial control, including all lands and facilities in the Maui regional health care system under its custodial control, to the transitioned hospital at nominal rent; and

(2) Transfer to the transitioned hospital all other assets, other than real assets, and all equipment relating to the operation of the transitioned hospital.

(c) The transitioned hospital shall assume the medicare provider agreement or agreements of the leased facilities.

323F-F Liabilities. (a) The State, the corporation, the Maui regional health care system, or any combination thereof, shall assume current liabilities associated with accounts payable, accrued time off, debt, capital leases, malpractice liabilities, and other liabilities as specifically set forth in the lease entered into pursuant to section 323F-D.

(b) Any and all liabilities of the Maui memorial medical center that were transferred to the Hawaii health systems corporation upon its creation by Act 262, Session Laws of Hawaii 1996, all liabilities of the Maui memorial medical center related to collective bargaining contracts negotiated by the State, and the liability for current outstanding post-employment benefits, shall become the responsibility of the State.

(c) All future liabilities arising out of the transitioned hospital's operation of the leased facilities shall be the responsibility of the transitioned hospital.

323F-G Employment, wages, and benefits. (a) A personnel system shall be established for employees working at the transitioned hospital that is exempt from title 7, including but not limited to chapters 76, 89, and 89A.

(b) Employees of the pre-transition facility shall be transitioned to the private entity's standard wage and benefit structure.

(c) The transitioned hospital shall offer all medical and nonmedical employees of the pre-transition facility, who satisfy the job qualifications for comparable positions and the employment requirements of the private entity, continued employment for not less than six months after the commencement of the lease; provided that at that time the transitioned hospital may, at its discretion, continue to employ any or all medical and nonmedical employees at the transitioned hospital.

(d) No employee of the corporation who is separated from service as a result of the agreement and transition under this part shall suffer any loss of retirement allowance earned as provided in section 88-74, or of vacation leave accumulated and earned while working as a state employee.

(e) The transitioned hospital shall provide a plan for a smooth transition of the employees of the pre-transition facility from state employment to private employment by the transitioned hospital.

323F-H Operating subsidy; capital subsidy. (a) The State shall subsidize the operation of the transitioned hospital. There shall be a subsidy schedule where the guaranteed maximum annual subsidy shall not exceed the 2014 fiscal year subsidy; provided that there shall be an opportunity for the subsidy to be lowered based on operating performance.

(b) The capital subsidy shall be as follows:

(1) For the first ten years of the lease, the State shall jointly fund capital expenditures with the private entity on terms to be agreed upon as part the lease entered into under section 323F-D; provided that capital planning and expenditures shall be completed in accordance with the private entity's current capital planning procedures; provided further that capital funding shall be consistent with current funding levels and previously approved capital improvement plan requests for the pre-transition facility and the current capital improvement plan request list for the pre-transition facility; and

(2) After the first ten years of the lease, the transitioned hospital and the private entity shall fund all capital expenditures of the transitioned hospital.

323F-I Lease; strategic commitment. (a) The private entity shall be committed to supporting the transitioned hospital to achieve excellence and improve access to services for community members in the county of Maui. The private entity shall establish a governance and management structure to improve the performance of the transitioned hospital. The private entity shall apply efficiencies of scale, consolidation of shared services, and administrative and technological expertise to improve the health care performance of the transitioned hospital.

(b) The private entity shall support the transitioned hospital in the following areas:

(1) Expansion of primary care access throughout the county of Maui;

(2) Recruitment and rotation of specialists to fill existing service gaps;

(3) Extension of the private entity service line coordination to the county of Maui, including cancer, cardiology, orthopedics, pediatrics, and women's services;

(4) Coordination of long-term care patients and reduction of the wait list;

(5) Upgrading of facilities and equipment as needed to provide high quality care and enhance patient experience; and

(6) Incorporating the Maui regional health care system into the private entity's value-based contracting initiatives to better align quality and cost initiatives."

SECTION 3. 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 4. This Act shall take effect upon its approval.

 

INTRODUCED BY:

_____________________________

 

 


 


 

Report Title:

Hawaii Health Systems Corporation; Maui Regional Health Care System; Nonprofit Corporation; Transition; Agreement

 

Description:

Authorizes the Maui regional health care system to enter into an agreement with a private entity to transition one or more of its facilities, including Maui memorial medical center, Kula hospital, and Lanai community hospital, into a new private Hawaii nonprofit corporation.

 

 

 

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.