Hawaii-2010-SR43-Introduced

WHEREAS, the Hawaii Health Systems Corporation, a network of five regions and thirteen facilities spanning five islands across the State, is one of the largest public hospital systems in the nation and is an important safety valve during this economic downturn; and

WHEREAS, the Hawaii Health Systems Corporation has experienced unprecedented fiscal challenges that have led to an unsustainable reliance on government subsidies, totaling $649,200,000 since it was established fourteen years ago; and

WHEREAS, the State does not have the fiscal capacity to continue funding the Hawaii Health Systems Corporation at its current level; and

WHEREAS, Section 31 of the General Appropriations Act of 2009 mandated an eight-prong comprehensive, independent review and evaluation of the management and operations of the Hawaii Health Systems Corporation, its regional systems boards, and its facilities, including the effectiveness of its current organizational structure; and

WHEREAS, Stroudwater Associates was retained to conduct the study, which was released December 28, 2009. The study concludes that the Hawaii Health Systems Corporation is in a financially perilous condition and that the age and condition of its facilities and other physical assets are well beyond national averages, prompting serious concerns as to the levels of quality of care and safety available at Hawaii's public hospital network; and

WHEREAS, the Stroudwater Associates' Study (Study) finds that a new sustainability plan for restructuring is needed to diminish the burden of general fund subsidies for the vital health care services provided by Hawaii Health Systems Corporation; and

WHEREAS, the Study specifically concludes that the conversion of the Hawaii Health Systems Corporation from a public benefit corporation to a private nonprofit corporation is essential, that the Hawaii Health Systems Corporation requires recapitalization, and that increased applications of efficiencies of scale and expertise inherent in the system model of governance are needed to increase effectiveness; and

WHEREAS, given that the Hawaii Health Systems Corporation's ability to implement a successful transition to a private nonprofit entity is dependent on further extensive analysis, planning, funding, and collaboration, the drafting of legislation based on the Study's recommendations for the 2010 Regular Session is premature; and

WHEREAS, given the on-going and grave economic challenges that both the State and the market are facing, the current fiscal situation presents the Hawaii Health Systems Corporation with an opportunity to reevaluate and restructure operationally and organizationally; and

WHEREAS, the Hawaii Health Systems Corporation can take advantage of this opportunity to increase its efficiency not only for the short-term, but also to increase its resiliency and prepare for future economic challenges; and

WHEREAS, the Hawaii Health Systems Corporation must also aggressively pursue cost-reduction initiatives, including but not limited to those outlined in the Study, while further improving its marketability and public-private partnership potential; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fifth Legislature of the State of Hawaii, Regular Session of 2010, that the Senate President and Speaker of the House of Representatives establish a committee to study and plan the transformation of the Hawaii Health Systems Corporation to an organizational structure that responds more effectively to the health care needs of the island communities it serves; and

BE IT FURTHER RESOLVED that the committee shall be named the Committee on Transitioning the Hawaii Health Systems Corporation (Committee); and

BE IT FURTHER RESOLVED that the planning include, as appropriate, collaboration among the various stakeholders and potential partners, examination of potential sources of funding of the capitalization and transition costs, examination of the Hawaii Health Systems Corporation's marketability and potential partnerships, and review of implementation of operational and organizational efficiencies identified in the Study as currently available to Hawaii Health Systems Corporation; and

BE IT FURTHER RESOLVED that the Committee shall consist of the following members:

(1) One member from each Regional System Board of Directors and the Hawaii Health Systems Corporation Board of Directors;

(2) The Regional Chief Executive Officers and the President or Chief Executive Officer of the Hawaii Health Systems Corporation;

(3) An appointee of the President of the Senate from the Senate and an appointee of the Speaker of the House from the House of Representatives;

(4) A representative of the State Administration appointed by the Governor; and

(5) The President and Chief Executive Officer of the Healthcare Association of Hawaii; and

BE IT FURTHER RESOLVED that the members of the Committee shall select a chairperson from among themselves, and the chairperson is requested to convene meetings; and

BE IT FURTHER RESOLVED that the Hawaii Health Systems Corporation administration shall staff the Committee for administrative purposes, and the Committee shall begin its work no later than thirty days after the adoption of this measure; and

BE IT FURTHER RESOLVED that the Committee is requested to submit a report of its recommendations, including any proposed legislation, to the Legislature no later than twenty days prior to the convening of the Regular Session of 2011; and

BE IT FURTHER RESOLVED that the Legislative Reference Bureau is requested to assist the Committee in drafting its recommendations and proposed legislation; and

BE IT FURTHER RESOLVED that certified copies of this Resolution be transmitted to the Governor, Director of Health, President and Chief Executive Officer of the Hawaii Health Systems Corporation, Chairperson of the Hawaii Health Systems Corporation Board of Directors, the Chairperson of each Regional System Board of Directors, the President of the Healthcare Association of Hawaii, and the Director of the Legislative Reference Bureau.

	OFFERED BY:	_____________________________

Report Title:

Establishment of the Committee on Transitioning the Hawaii Health Systems Corporation

THE SENATE	S.R. NO.	43
TWENTY-FIFTH LEGISLATURE, 2010
STATE OF HAWAII