Nearly $100 million in federal stimulus money has flowed to Hawaii health care providers during the COVID-19 epidemic, with about half of it going to the two largest hospital systems, according to federal records.

Hawaii Pacific Health, which includes Straub, Pali Momi, Kapiolani hospitals on Oahu and Wilcox hospital on Kauai, received a total of $26 million.

The Queen’s Medical Center — which includes the Punchbowl and West Oahu campuses — received nearly $22 million, the largest payment registered to a Hawaii health care agency according to federal records. Another $1.6 million went to Queen’s Health Systems’ neighbor island hospitals, North Hawaii Community Hospital and Molokai General Hospital.

Hawaii Pacific Health Straub Medical Center sign.
Straub Medical Center, part of the Hawaii Pacific Health system, received nearly $9 million in provider relief funds from the federal government to cover revenue losses associated with COVID-19. Cory Lum/Civil Beat/2020

The funds are part of billions of dollars in federal grants from the federal Department of Health and Human Services.

The money is slated to help hospitals and other health care providers survive financial blows delivered by the COVID-19 pandemic — and comes in the form of direct reimbursement. Funds may cover delayed or canceled non-emergency services or procedures, and other coronavirus related expenses such as testing, treatment and prevention.

Small Clinics Still On The Brink

The federal funds have been a lifeline, but some health care executives fear it won’t be enough to survive the pandemic for the long haul.

Smaller, more rural operations that serve a higher proportion of Medicaid patients are facing much more dire prospects than larger hospitals, which can tap into existing funding streams and assets.

The Bay Clinic, a federally qualified health center that operates seven clinics in Hilo, had to furlough 23 dental department staff and lay off another 20 employees at other departments.

Earlier this month, Bay Clinic received $418,489 of the $3.8 million distributed to 14 community health centers across the islands specifically to expand COVID-19 testing and contact tracing. Another $230,000 was offered in general provider relief funds, which allowed the clinic to bring back some positions and funded some salaries and wages.

But the health center only has enough cash to operate until the end of June until it goes into the negative, CEO Kimo Alameda calculates. Patient visits during the next month will be pivotal to the clinic’s future, Alameda said.

“If patients continue to forgo their medical and dental appointments we may face the tough decision of layoffs and furloughs once again,” he said.

Even the big health care players in Hawaii say the federal funds won’t make up for their losses.

Queen’s, which received about one quarter of funds distributed to date, says it’s still dealing with financial losses caused by canceled non-emergency and outpatient surgeries as well as higher expenditures on equipment and protective gear.

While appreciative of the federal support, “the monies we have received do not cover the financial shortfall we are experiencing along with other hospitals across the state and around the country,” said Mich Riccioni, The Queen’s Health Systems executive vice president and chief financial officer, in an emailed statement to Civil Beat.

The Ripple COVID-19 Effect

For the most part, Hawaii has avoided a costly surge in COVID-19 patients and the number of new cases confirmed each day has dwindled significantly.

But precautions to prevent the spread of the disease have taken a hit on the operations of many clinics that serve vulnerable populations.

Initially, when certain services had to be cut entirely and people were asked to stay home, health center revenues dropped dramatically.

Some clinics and care homes needed funds to cover the cost of personal protective equipment and training. Others, like dental clinics, needed funding because they were advised to close operations except for emergency procedures.

Federal grants have come in different batches. Some of the funds have been designated specifically for COVID-19 diagnostic testing capacity. Other funds have been targeted specifically to rural providers.

The bulk of funds have been allocated through the Coronavirus Aid, Relief and Economic Security (CARES) Act and the Paycheck Protection Program and the Health Care Enhancement Act.

Small private clinics and independent Hawaii physicians got grants ranging from fewer than a thousand dollars to hundreds of thousands of dollars. Their specialties vary. Surgeons, oncologists, physical therapists, eye and ear doctors are among those listed. Retina Consultants of Hawaii, for example, received about $400,000.

Maui Memorial Medical Center. 3 aug 2016
Maui Memorial Medical Center dealt with a COVID-19 outbreak that affected staff and patients. Along with its two sister hospitals, it received $5.5 million in federal COVID-19 relief funds. Cory Lum/Civil Beat/2016

Other hospitals, like Adventist Health Castle and Kuakini Medical Center, received about $3 million each.

Maui Health Systems, which includes Maui Memorial Medical Center, Kula Hospital and Lanai Community Hospital, received $5.5 million. The hospitals are an affiliate of Kaiser Permanente. Maui Memorial Medical Center dealt with one of Hawaii’s largest COVID-19 outbreaks.

Tracy Dallarda, spokeswoman for Maui Health Systems, said the Maui Memorial Medical Center postponed a lot of outpatient imaging such as MRIs and ultrasounds, as well as elective surgeries and procedures.

“It is difficult to quantify monetarily how much has been lost, but we can look at volumes in general; there’s been a significant reduction in ER visits, upwards of 50-60% of typical volume,” she said. “When we look at stroke patients, that’s down about 30% and cardiac patients are down as well, by close to 30-40%.”

Things could turn around soon, though. This week, the hospital was scheduled to start a “gradual increase” in elective surgeries and procedures, since the outbreak had resolved.

Medicare Providers Received More Funds

Recent national studies found most of the initial relief funding has gone to hospitals and facilities that serve Medicare patients — those over 65 years old — not Medicaid providers, who serve people with low incomes and their children.

Some nursing care homes in Hawaii received significant support. Hale Makua Health Services on Maui received $1.5 million, Bristol Hospice another $1.4 million, and Avalon Care Center – Hale Nani about $800,000.

Hale Makua cared for the first and only COVID-19 patient confirmed to be in a nursing home in Hawaii — the patient had transferred from Maui Memorial Medical Center — and once they were diagnosed, more than 100 staff and residents were tested.

The tests returned negative, but administrators are still on alert and are taking infection control precautions, according to Hale Makua’s director Wesley Lo.

Wahiawa General Hospital hallway.
Wahiawa General Hospital received about as much federal COVID-19 relief funding as some local radiology companies. Cory Lum/Civil Beat/2019

Hale Makua had already spent more money on staffing and equipment in recent months. More staff were needed to conduct temperature checks for all entrants.

Caring for the COVID-19 positive patient meant more labor, policies and procedures, said Lo. Most of the nursing home’s residents come directly from Maui Memorial Medical Center.

“We were forced to stop new admissions from the hospital for a period of time,” Lo said. He added that the hospital had “additional staffing costs and care for patients who were forced into quarantine upon admission to Hale Makua.”

The agency’s annual fundraising events and campaigns were postponed or canceled, and revenue is no longer flowing from the temporarily suspended Adult Day Health Program and limited home health visits.

Rural Hospitals

Rural hospitals have also received funds, such as Wahiawa General Hospital on Oahu, which received $725,000.

Many were in rough shape before the pandemic. According to the National Rural Hospital Association, an average rural hospital in America only has enough reserves to stay open for a month. 

The nine hospitals in the quasi-public Hawaii Health Systems Corporation network received grants that totaled $8 million.

Kohala Hospital was among the rural hospitals that received federal support. Flickr: Matt McGee

The chief financial officer of two of those hospitals says federal grants have kept them afloat, but fewer ER visits, in-patient days and out-patient services led to severe loss of revenue.

According to the CFO Dean Herzog, Kona Community Hospital received $6.8 million and Kohala Hospital received $3.5 million in CARES Act funding, which helped administrators avoid cuts.

Neither facility had to furlough or lay off staff, but Herzog said it’s too early to tell how much revenue has been lost or will be lost.

“Kohala did not have any COVID patients and Kona only had one positive patient, so the costs were minimal – about $500,000 in PPE and staff time spent on preparing and being ready for a surge,” he said. “The remainder covers all our lost revenue projected through June.”

An Uneven Toll

Smaller community health centers, which primarily care for low-income Medicaid patients, say the federal grants they have received may not be enough to keep them operating throughout the ongoing crisis.

They rely heavily on federal funding to cover the costs of caring for people, and the majority of their revenue comes from patient visits. The patients they care for are also largely the ones who have been shown to be most affected by COVID-19 

For health centers like Hana Health on Maui it’s more of a life-and-death scenario, says Executive Director Cheryl Vasconcellos.

Patient appointments at the clinic were chopped in half, and revenue generated by those visits is down by about 60% along with it.

Hana Health received $542,000 in CARES funding and about $125,000 from the federal Provider Relief Fund. That covers the health center’s revenue shortfall for about six months, she said. But at the current rate, Hana Health loses about $125,000 a month in both Medicaid and private insurance revenue.

“We are the only health care provider in Hana, and it would be devastating to the community if we had to curtail services, or close down altogether,” she said.

“If the expected surge in COVID-19 occurs this fall or winter as expected, we could see the backbone of Hawaii’s primary health care system — community health centers — crushed by the end of the year.”

Bev Harbin, who leads Wahiawa Health, says the financial future of the community health center will be rocky. Courtesy: Bev Harbin

On Oahu, Wahiawa Health hasn’t received any federal funding at all, despite the fact that it cares for patients regardless of ability to pay.

Half of Wahiawa Health’s patients use Medicaid insurance, and another fifth are on Medicare, but the health center has not yet been able to secure a special designation that would allow it to receive federal reimbursement for serving vulnerable populations.

As a result, it hasn’t received a single federal “penny,” said Wahiawa Health CEO Bev Harbin.

“It’s been a financial battle for us since day one,” she said.

Before COVID-19, Wahiawa Health welcomed as many as 100 patients a day. That dropped to about 20 patients daily, and then in late March, when two staff members were confirmed to have COVID-19, the clinic had to temporarily shut down entirely for a deep cleaning.

Within 24 hours, about 80% of the clinic’s business was lost, and within a span of a week some employees had to be laid off — those who worked at hourly rates, helped schedule appointments or assisted with physical rehab.

The clinic’s 38 employees shrank to 22 full time equivalent positions. With most staff asked to work remotely, Wahiawa Health began the difficult transition to shift in-person appointments to virtual ones as quickly as possible.

The center still limits the kinds of in-person visits allowed, and Harbin says PPE supply is minimal and medical workers are preserving it.

This month, the center received some funding from the City of Honolulu to ramp up its testing capacity 

Support Civil Beat during the season of giving.

As a small nonprofit newsroom, our mission is powered by readers like you. But did you know that less than 1% of readers donate to Civil Beat?

Give today and support local journalism that helps to inform, empower and connect.

About the Author