H.R. NO.



H.D. 1














WHEREAS, Wahiawa General Hospital (WGH), a section 501(c)(3) nonprofit 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 the State since 1944, WGH has and remains the only rural independent nonprofit, 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 that provides 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 who 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 covering 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; and


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


WHEREAS, the next closest hospital and emergency services facility is located at either The 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 full-time equivalent), with approximately 90 percent of its employees living within Wahiawa, or its surrounding areas of Kahuku, Haleiwa, Waialua, Wahiawa, Mililani, and West Oahu; 8 percent being residents of Honolulu; and the remaining 2 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 absolutely necessary to the public health, safety, and welfare of the residents of the State, visitors to the North Shore, and military families; and

WHEREAS, WGH's annual budget comprises payroll, physician and professional fees, supplies, and other annual expenditures, including overhead and other operating expenses resulting in ongoing negative cash flow, as well as several extraneous factors, that have ultimately compromised the survival of the hospital; and


WHEREAS, with the reopening of The Queen's Medical Center West in May 2014, WGH has suffered approximately a 14 percent reduction in patient revenues resulting in a $7.5 million revenue decline in the first twelve months after the Queen's West opening, which would in most cases cause a small, private hospital to fail outright; and


WHEREAS, in response to revenue decline, WGH was required to reduce its staff by approximately 75 full-time equivalent employees and has been forced to eliminate important programs 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 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 23 years, WGH has supported the Family Medicine Residency Program (FMRP) of the John A. Burns School of Medicine at the University of Hawaii at Manoa, which costs approximately $1 million to $2 million dollars annually in unfunded costs; and

WHEREAS, in effect, WGH has helped (and has been honored to do so) the State develop over 100 family medicine physicians; and


WHEREAS, over the years, WGH has 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 funding and initiate restructuring to the entire FMRP; and


WHEREAS, despite acknowledgement of the importance of the FMRP, WGH could no longer 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 percent of WGHs patient revenues received from treating Medicare and Medicaid patients; and


WHEREAS, additionally, many WGH 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 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 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 the homeless serve an important and necessary need; and


WHEREAS, however, WGH absorbs the costs associated with uninsured treatments, thus further diminishing WGH's 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 federal Patient Protection and Affordable Care Act (ACA) related to Meaningful Use and Quality Reporting; and


WHEREAS, compliance 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 million to $4 million per year for a smaller employee base; and


WHEREAS, despite WGH's nonprofit community hospital status and lack of similar financial assistance that had been provided to Hawaii Health Systems Corporation 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 the 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 will have devastating effects on public health, safety, and welfare, not only on the residents of Wahiawa, but also on the surrounding areas and the island of Oahu as whole; and


WHEREAS, the value of WGH's emergency services, by servicing the surrounding rural areas from 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 its emergency services requires further travel to the next closest hospital in Ewa or Aiea, which could be an issue of life and death for patients; and


WHEREAS, it is imperative that WGH's emergency services continue for the safety of rural area residents and patients that WGH serves; and


WHEREAS, in addition to the overwhelming health and safety concerns, the closure of WGH would have devastating economic impact and result in the loss of approximately 600 jobs, as well as requiring other hospitals in the State to absorb these losses; and


WHEREAS, to allow WGH to succumb to a financial death is 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 serious attention from the State; and


WHEREAS, emergency funds must be made available to continue WGHs operations for the benefit of the health, safety, and welfare of residents of the 30-mile contiguous area in which it has, and dutifully will continue to, protect and serve with 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 welfare, 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 of 2016, that this body urges the Governor to provide financial assistance to WGH in a sufficient amount to enable WGH to operate while developing a new business model, including potential ways to create partnerships with the private sector to enable WGH to continue its vital operations, while establishing a new business model that provides self-sufficiency, including potential discussions 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) Tripler Army Medical Center;

(8) United States Army;


(9) HMSA;


(10) Kaiser Permanente;


(11) St. Francis Medical Healthcare;


(12) Hawaii Health Systems Corporation;


(13) Hawaii State Hospital;


(14) Hawaii Nurses Association;


(15) Hawaii Emergency Physicians Associated;


(16) United Public Workers; and


(17) International Longshore and Warehouse Workers; and


BE IT FURTHER RESOLVED that the Governor convene meeting with the Director of Health, Director of Human Services, Chief Executive Officer of the Hawaii Health Systems Corporation, and the Administrator of the State Health Planning and Development Agency, or their respective designees, to identify opportunities to assist WGH in continuing its operations; and


BE IT FURTHER RESOLVED that Hawaii's Congressional Delegation support WGH in providing a continuum of care in the State by seeking resources to support WGH, including resources for rural healthcare facilities and distressed communities; and


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 WGH, its 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; 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 of the City and County of Honolulu; members of Hawaiis Congressional Delegation; 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, HMSA, St. Francis Medical Healthcare, Hawaii Health Systems Corporation, Hawaii Primary Care Association, Hawaii State Hospital; Hawaii Emergency Physicians Associated; and Hawaii Nurses Association; Commanding General of the United States Army Pacific; Commander of Tripler Army Medical Center; Directors of the International Longshore and Warehouse Workers and United Public Workers; Chairs of Neighborhood Boards Nos. 21 (Pearl City), 22 (Waipahu), 25 (Mililani/Waipio/Melemanu), 26 (Wahiawa), 27 (North Shore), and 32 (Ewa); and Chief Executive Officers of Wahiawa Community and Business Association, Whitmore Community Association, Wahiawa Community and Development Organization, Leilehua Alumni and Community Association, and WGH.




Report Title:

Governor; Legislature; Congressional Delegation; Wahiawa General Hospital; Solvency