H.R. NO.

















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 of Hawaii is provided; and


WHEREAS, having served the healthcare needs of residents in the Central Oahu and North Shore areas of the State since 1944, WGH has 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 53 inpatient acute care beds and 107 skilled nursing beds;


(2) Provides emergency services, including radiology and diagnostic imaging studies, laboratory, inpatient intensive care and telemetry services, as well as inpatient medical surgical services, senior behavioral health, 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 Oahus integrated emergency services network, providing necessary emergency services to over an area populated by 60,000 citizens;


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


(6) Serves a 30-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;




WHEREAS, WGH and its emergency services are critical to the community and area in which it serves; 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 both approximately 14 miles and 13 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 600 employees (380 FTE's), with approximately 90% of its employees living within Wahiawa, or its surrounding areas of Kahuku, Haleiwa, Waialua, Wahiawa, Mililani, and West Oahu, 8% being residents of Honolulu, and the remaining 2% from Kailua; and


WHEREAS, because WGH is the largest private employer in Wahiawa, its continuous presence, effective maintenance, and survival is vital not only to the town itself and its residents economically, but absolutely necessary in terms of the public health, safety and welfare to the 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 approximately a 14% reduction in patient revenues resulting in a $7.5 million revenue decline in the first twelve months after Queen's West 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 has been forced to 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, the 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 $1.7 million dollars to pay and support the hospitalists, on-call surgeons, and anesthesiologists; and


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


WHEREAS, in effect, WGH has helped (and has been honored to do so) the State of Hawaii develop over one hundred family medicine physicians; and


WHEREAS, WGH has, over the years, spent over $24 million in operating cash reserves on the FMRP that were needed to fund other hospital programs and facility improvements; and


WHEREAS, however, in 2014, WGH was forced to discontinue the funding and initiate restructuring to the entire FMRP; and


WHEREAS, despite the acknowledgement of the importance of the FMRP, WGH no longer could reconcile seeking funds for the program when funds are now necessary for the hospital's survival; and


WHEREAS, WGH serves a largely low-income and elderly population with over 85% of WGHs patient revenues received from treating Medicare and Medicaid Patients; and


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


WHEREAS, these government programs do not pay the true cost of treating their 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 (HHSC), 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 North Shore) 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 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 WGHs 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 Affordable Care Act (ACA) related to Meaningful Use and Quality Reporting; and


WHEREAS, compliance therewith increased WGH's cost for information systems, nursing, and quality functions by over $2.5 million per year without offsetting any patient revenues; and


WHEREAS, employee health insurance costs -- under the Hawaii Medical Service Association (HMSA) and ACA mandates on HMSA -- have increased from $3 to $4 million 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 HHSC'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 $2.5 million for emergency support to this Legislature for fiscal year 2016, which would still render WGH eligible to receive funds associated with said grant-in-aid request; and


WHEREAS, to help mitigate serious cost deficiencies, WGH restructured the FMRP, cancelled 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, on not only on the residents of Wahiawa, but also on the surrounding areas, and the Island as 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 the Wahiawa General Hospital and emergency services, requiring further 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 patients that it serves, that WGH and its emergency services survive; and


WHEREAS, in addition to the overwhelming health and safety concerns, the closure of WGH would have devastating economic impact, create 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 WGHs operations for the benefit of the health, safety, and welfare of the residents of the 30-mile contiguous area in which it has, and dutifully will continue to, protect and serve with the necessary assistance from the State; and


WHEREAS, the Legislature declares that the medical facility and services provided by WGH are vital and necessary to the public interest and 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 House of Representatives of the Twenty-eighth Legislature of the State of Hawaii, Regular Session 2016, that this body urges the Governor to provide financial assistance to WGH in a sufficient amount to enable it to operate while developing a new business model, including but not limited to potential ways to create partnerships with the private sector so as to enable it to continue its vital operations while establishing a new business model that provides self-sufficiency, including but not limited to potential discussion 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




BE IT FURTHER RESOLVED that the Legislature take all steps necessary to provide sufficient funds to enable WGH to continue to provide uninterrupted medical services while the hospital, it's Board, and interested parties seek potential affiliation with a larger business partner to create a more effective integration of 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 as described that continue to push the hospital toward insolvency; and


BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor; the Speaker of the House of Representatives; the President of the Senate; the Directors of Health, Human Services, Business, Economic Development and Tourism, and Labor and Industrial Relations; the Mayor of the City and County of Honolulu; the Director of Emergency Services of the City and County of Honolulu; the Chief Executive Officers of The Queen's Medical Center, Hawaii Pacific Health, Shriners' Hospital for Children, Kuakini Medical Center, Rehabilitation Hospital of the Pacific, Castle Medical Center, Kaiser Permanente, St. Francis Medical Healthcare, Hawaii Healthcare Systems Corporation, Hawaii Primary Care Association, and Hawaii State Hospital; Hawaii Emergency Physicians Associated; the Hawaii Nurses Association; the Directors of the International Longshore and Warehouse Workers and United Public Workers; the Chairs of Neighborhood Boards Nos. 21 (Pearl City), 22 (Waipahu), 32 (Ewa); 25 (Mililani/Waipio/Melemanu), 26 (Wahiawa), 27 (North Shore); and the Chief Executive Officers of the Wahiawa Community and Business Association, the Whitmore Community Association, the Wahiawa Community and Development Organization, the Leilehua Alumni and Community Association, and WGH.


































Report Title:

Governor; Wahiawa General Hospital; Solvency