Bill Text: HI SB1043 | 2017 | Regular Session | Introduced
Bill Title: Relating To Wahiawa General Hospital.
Spectrum: Partisan Bill (Democrat 5-0)
Status: (Introduced - Dead) 2017-01-25 - Referred to CPH, WAM. [SB1043 Detail]
Download: Hawaii-2017-SB1043-Introduced.html
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THE SENATE |
S.B. NO. |
1043 |
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TWENTY-NINTH LEGISLATURE, 2017 |
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STATE OF HAWAII |
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A BILL FOR AN ACT
relating to wahiawa general hospital.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The Wahiawa Hospital Association was founded in 1944 in response to the healthcare needs of the community following the attack on Pearl Harbor. Several years later, Wahiawa General Hospital, a nonprofit, community hospital was established to further meet the growing needs of central Oahu. Wahiawa General Hospital is centrally located on the island of Oahu, serving the surrounding communities of central Oahu and the north shore. Today, the hospital is a fifty-three bed acute facility and has one hundred seven beds in the long-term care facility that are equipped for all levels of patient care and accredited by The Joint Commission.
However, the hospital struggles to keep its doors open without financial assistance from the State. Since the regular session of 1983, the legislature has appropriated a total of:
(1) $7,200,000 as a grant or subsidy for operating costs;
(2) $3,750,000 in general obligation bond revenues for capital improvement projects; and
(3) $84,600,000 in special purpose revenue bonds for financing or refinancing construction projects.
Most notably during the regular session of 2016, the legislature appropriated $2,500,000 from the general fund as a subsidy for operating costs of the hospital.
The legislature notes that additional assistance has been provided to the hospital to enable it to continue to provide medical care and services. For over fifteen years, the hospital has attempted to merge or affiliate with a larger healthcare system and relocate its current acute care services to a larger service area, such as Koa Ridge, to create a sustainable business model. This has been the desire and goal of the past and present boards of directors of the hospital since the late 1990s. Recently, the hospital attempted to form an affiliation with The Queen's Health Systems, Hawaii Pacific Health, Castle Medical Center, and Sutter Health. However, after being unable to affiliate with these local providers, the hospital management and board of directors entered into a contract with Community Hospital Corporation from Plano, Texas.
The Community Hospital Corporation is a tax-exempt corporation dedicated to assisting rural hospitals in the United States. The corporation specializes in critical access hospitals and larger hospitals with up to one hundred fifty beds. The corporation owns four acute care hospitals and provides ownership and management services to ten long-term acute care providers. In addition, the corporation provides a wide range of consulting services to many hospitals on the mainland and has substantial experience in successfully operating and turning around troubled hospitals.
On October 21, 2016, the Wahiawa General Hospital board of directors entered into a three-year contract with Community Hospital Corporation to provide a benchmark based assessment of the hospital's current operations, develop a new operating plan or business plan, and provide a new chief executive officer and new chief financial officer. It is important to note that the corporation will be responsible for restructuring operations and management services within Wahiawa General Hospital, but that this contract does not establish an ownership agreement with the hospital. The corporation will have the authority and responsibility to recommend and implement changes to the daily operations of the hospital, and the assessment and operating plan will provide recommendations to enable the hospital to operate sustainably to decrease state funding support.
The legislature further finds that Wahiawa General Hospital has acquired debt over the years. For example, the debt owed to the Pension Benefit Guarantee Corporation, which is primarily a $6,000,000 payment-in-kind note, will most likely require restructuring at some point during the ten-year period of the debt. A major balloon payment is due in approximately 8.5 years. The hospital recognizes that this issue will not be resolved for a few years. It should be noted that the original note to the Pension Benefit Guarantee Corporation was negotiated down from approximately $22,000,000 to the $6,000,000 payment-in-kind note plus a smaller fixed payment per year over ten years.
Furthermore, debt owed to Central Pacific Bank was restructured in May 2015 to fully amortize the remaining balance in approximately five years. It should be noted that the principal owed a few years ago was over $6,000,000 and had been reduced to below $1,000,000 as of the end of October 2016. The re-amortization agreement entered into in 2015 reduced the debt service payments from approximately $75,000 per month to approximately $24,200 per month.
The legislature further notes that a business plan is necessary to facilitate a relocation of Wahiawa General Hospital's medical services. The Wahiawa General Hospital settlement agreement with Castle and Cooke, with respect to twenty-eight acres of Castle and Cooke owned land, does not permit banking of unused land for unspecified future use or sale by the hospital. The hospital needs to have a defined and approved business plan for certain medical services before Castle and Cooke will transfer the respective parcels of land. Also, the hospital will need to obtain certain permits for the development before Castle and Cooke will transfer the land to the hospital under the settlement agreement. The hospital has until April 2018 to develop a business plan for presentation to Castle and Cooke to transfer twenty-eight acres to the hospital to be used for medical services.
Accordingly, the legislature finds that it is in the public interest to keep Wahiawa General Hospital operating to serve the residents of central Oahu and allow the hospital to continue operations, preserve its hospital license, reorganize, relocate, and settle its debts.
The purpose of this Act is to authorize the Hawaii health systems corporation to bring Wahiawa General Hospital under its governance through formal affiliation with the corporation and to provide for transitional facilitation by the director of health.
SECTION 2. Chapter 323F, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:
"§323F- Acquisition of Wahiawa General Hospital. (a) Wahiawa General Hospital on Oahu may be assimilated into the corporation in a manner and to an extent that may be negotiated between the corporation and Wahiawa General Hospital. After assimilation, the physical assets and the ground lease of Wahiawa General Hospital shall become the property of the corporation, and Wahiawa General Hospital shall be operated by the corporation.
(b) None of the liabilities of Wahiawa General Hospital shall become liabilities of the corporation.
(c) The corporation, at its discretion, may retain any or all medical and nonmedical employees of Wahiawa General Hospital.
(d) The corporation, without regard to section 323F—31, may adjust the levels of services provided by Wahiawa General Hospital.
(e) Wahiawa General Hospital shall be exempt from chapter 102 and section 103—53, and its board of directors, if any, shall be exempt from part I of chapter 92.
(f) The purchase of goods and services by or on behalf of Wahiawa General Hospital shall be exempt from chapters 103D and 103F.
(g) Employees of Wahiawa General Hospital shall be exempt from chapters 76, 87A, 88, and 89, and shall not be considered as employees of the State."
SECTION 3. Wahiawa General Hospital; acquisition by Hawaii health systems corporation; transitional facilitation by the director of health. The director of health, as an interested third party, shall act in the role of honest broker to help facilitate the successful acquisition of Wahiawa General Hospital by the Hawaii health systems corporation during the transition period. To that end, the acquisition shall be exempt from part VII of chapter 323D, Hawaii Revised Statutes, relating to hospital acquisition.
SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ or so much thereof as may be necessary for fiscal year 2017-2018 to carry out the purposes of this Act, including the hiring of necessary staff.
The sum appropriated shall be expended by the department of health for the purposes of this Act.
SECTION 5. New statutory material is underscored.
SECTION 6. This Act shall take effect upon its approval; provided that section 4 shall take effect on July 1, 2017, and section 3 shall be repealed upon:
(1) The receipt of a letter by the director of health from the board of directors of the Hawaii health systems corporation officially notifying the director of health that the acquisition of Wahiawa General Hospital by the corporation has been successfully completed; and
(2) The issuance of a proclamation by the governor that the events in paragraph (1) have occurred.
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INTRODUCED BY: |
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Report Title:
Wahiawa General Hospital; Acquisition; Hawaii Health Systems Corporation; Appropriation
Description:
Authorizes the Hawaii health systems corporation to bring Wahiawa General Hospital under its governance through formal affiliation with the corporation and to provide for transitional facilitation by the director of health.
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
