Not long ago Maui’s only acute care hospital was bleeding red ink.

Maui County locator mapIn 2014, Maui Memorial Medical Center in Wailuku, along with its affiliate community hospitals in Kula and on Lanai, were operating at an annual loss of $43 million.

For years the state-run hospital group had budget shortfalls. At the same time, the hospitals faced worrisome staffing shortages and public concern over the prevalence of trauma patients being airlifted to Honolulu.

The combination of struggles could have been the death knell for Maui’s hospital system. Instead, the crisis shocked the state into a sharp change in direction.

State lawmakers passed legislation in 2016 that paved the way for Kaiser Permanente to take control of operations at Maui County’s three financially troubled government-owned hospitals — the largest privatization of public facilities in state history.

“I’m convinced if Kaiser hadn’t come in we probably wouldn’t have a hospital on Maui anymore,” said Maui Sen. Rosalyn Baker, who advocated for the transition.

The deal required the hospitals to become financially self-sustaining by 2025, but now, only three years away from that deadline, the health system is likely going to ask for even more money from the state to maintain operations.

Maui Memorial Medical Center hospital. 3 aug 2016
At a time when Maui County’s government-run hospitals faced an acute financial crisis, state officials handed over operations at Maui Memorial Medical Center, along with Kula Hospital and Lanai Community Hospital, to Kaiser Permanente. Part of the deal calls for the hospitals to become financially self-sustaining by 2025. Cory Lum/Civil Beat/2016

Completed in July 2017, the public-private partnership was viewed by government leaders as an opportunity to bolster the quality of hospital care on Maui while saving $260 million in taxpayer money over the course of a decade.

Nearly five years later, the Kaiser-affiliated hospital group known as Maui Health System has increased revenue, reduced expenses and implemented measurable improvements to patient care.

But staff recruitment and retention difficulties continue to hamper hospital performance. And a series of pandemic-related budget busters — staffing shortages, supply chain issues and record-high inflation — now threaten to roll back progress made toward reducing the hospitals’ reliance on taxpayer money, according to Maui Health CEO Michael Rembis.

The impact of the last two years has put the health system in a position to likely need an increased state subsidy for fiscal year 2024, Rembis said. It would be the first time the hospital system needs more money since the public-private partnership was established in 2017.

State Rep. Sylvia Luke, chairwoman of the House Finance Committee, described it as “shocking news” that the hospital system could be poised to ask for more state funds when it’s supposed to be on track to require less.

“When the state first got into this agreement with Maui Health, there were a lot of skeptics on whether this new entity would make a go at it,” Luke said. “They, along with the Maui delegation, worked really hard to convince the Legislature. So I think they would be putting the state in a tough position.”

While many of the problems it faces are common to hospitals in Hawaii and across the U.S., Maui Memorial is different because it’s the only acute hospital for Maui’s 165,000 residents, plus roughly 57,000 daily visitors, that doesn’t require an airlift.

“I want this to work so badly and I’m optimistic about it,” said longtime hospital board member Anthony Takitani. “I think we’ve made improvements but we’re not where I wanted to be.”

Searching For Staff

The last state subsidy provided to the Maui hospitals when they were still a state agency was $36.8 million.

Under Kaiser, that number has decreased every year, culminating in an $11 million subsidy request to cover hospital operations for fiscal year 2023, which starts July 1.

Rembis said it’s important that the hospitals get to a place where they can forgo public money and it’s his commitment to get them there quickly. But he said Maui Health will likely need to ask the Legislature for a first-ever subsidy increase next fiscal year, and possibly the year after that, even as the clock is ticking on the hospital group’s commitment to become financially self-sustaining by 2025.

Maui Memorial Medical Center . Emergency room area. 3 aug 2016.
With the recent addition of 24/7 dedicated trauma surgeon coverage in the emergency department, Maui Memorial Medical Center is working toward becoming a Level II trauma center. Cory Lum/Civil Beat/2016

“We were on a projection to probably get off of the reliance on the state subsidy before the 10 years,” Rembis said. “But I do think the pandemic has kicked us all back a little bit.”

Maui Health is still chasing the 2025 goal, Rembis said. But as the pandemic continues to spike costs and worsen the hospital group’s labor shortage, he said he’s predicting a couple of financially difficult years between now and then.

The hospital group’s financial position is intrinsically linked to what Rembis acknowledges as its two biggest problems: staff retention and recruitment.

A persistent shortage of medical workers has historically forced Maui Health to look far and wide for staffing help. At the time of the 2017 transition, Maui Health was leaning on more than 200 clinical workers flown in from the mainland to keep its hospitals running, according to Rembis.

Travel nurses who work on short-term contracts earn more pay than their full-time counterparts, so reducing Maui Health’s dependence on them is one of the keys to a healthy hospital budget.

“I want people on Maui taking care of people on Maui,” Rembis said. “My goal is to not rely on the mainland at all.”

Before the coronavirus pandemic, the hospital had reduced its cohort of travel clinical workers to about 50, Rembis said. But burnout and other pandemic-related factors have since caused many physicians and nurses to retire early. This has spiked the hospital’s reliance on travel staff, undoing hard-earned progress.

“We’re very worried about retention,” Rembis said. “We are working constantly with our staff, with the unions. How do we help our staff? Can we help them take some time off if they need to? Can we do flexible shifts? We need to do things we’ve never done before. We can’t afford to lose anybody.”

Under Kaiser, Maui Memorial has recruited more than a dozen new physicians, vascular surgeons, general surgeons and cardiologists. Before the Kaiser takeover, the hospital didn’t have any neurosurgeons. Now it has two. 

The hospital still doesn’t have enough urologists or primary care physicians, according to Rembis. But he credits new recruitments with helping the hospital reduce the number of trauma patients that have to leave Maui for medical care. 

From 2018 to 2021, the percentage of trauma patients who were transferred from Maui Memorial to an off-island medical facility dropped from 19% to 3%, according to hospital spokeswoman Tracy Dallarda.

But Takitani, the hospital board member, said the hospital is still sending too many patients to Oahu.

Maui Memorial’s staffing problems are a symptom of a statewide doctor shortage, a consequence of Hawaii’s high cost of living and limited medical training opportunities in the islands that has plagued medical facilities across the islands since long before the pandemic.

At last count, Hawaii has the equivalent of about 2,800 full-time doctors. But the state estimates it needs an additional 1,000 physicians to meet patient demand, up from about 800 in 2019.

To begin filling the gap, the University of Hawaii John A. Burns School of Medicine, the state’s only medical school, would need to triple in size, according to a report by Hawaii/Pacific Basin Area Health Education Center Director Kelley Withy, who tracks Hawaii’s medical professional needs.

The coronavirus pandemic has exacerbated the physician shortage, with many physicians choosing to retire or reduce their hours due to exhaustion or burnout.

“It’s a huge problem,” Rembis said. “If we don’t have enough staff, that means our staff has to work overtime and you pay significantly more for that. It means our staff gets burnout and they’re tired, which means we’re going to have to try to recruit people from the mainland.”

That means finding housing for temporary mainland workers at a time when the median home price on Maui hovers around $1 million and then paying those workers at a higher rate than full-time hospital staff.

“We would prefer to give that money to our own people on Maui,” Rembis said. “But if we can’t find anyone, we still need to provide care.”

Since the Kaiser takeover, Kula Hospital, a 99-bed long-term care facility, improved from a two-star to a five-star rating from the Centers for Medicare and Medicaid Services. Lanai Community Hospital, a 10-bed facility pictured above, rose from a one-star to a five-star facility. Brittany Lyte/Civil Beat/2020

During the omicron surge last year, Lydia Brandes, 65, decided to retire early from her job as a nurse in Maui Memorial’s intensive care unit after a 20-year career. She attributes her decision to a problem she said predates the pandemic: harsh working conditions.

Brandes said she could rarely take the two 15-minute breaks she was allotted per shift because it would require her to find another nurse to agree to cover her two patients in addition to their own. And since she said it’s difficult for a nurse to double up on patients, Brandes skipped her breaks. In a typical 12-hour shift, Brandes said she used to pause only once for a 30-minute lunch break.

“I think a lot of patients do get good care but I think the staff gets squeezed,” she said. “It’s not a disaster but it could be so much better.”

Brandes, who still works at Maui Memorial on a per diem basis, said she had initially hoped the hospital privatization would bring some relief. But she said the demanding working conditions haven’t eased.

“One day I went to pick up a patient in the ER and the nurse had eight patients that day and (she) hadn’t had a break,” she said. “I just feel like the administration didn’t care before the pandemic and now that we’re in a pandemic they say, ‘Oh, well, it’s because of the pandemic.’”

Brandes acknowledges how difficult recruitment can be. But she said she’s puzzled that the hospital administration hasn’t invested more resources toward improving working conditions, something that could reduce employee turnover. For example, Brandes said she used to advocate for the hospital to hire a resource nurse to cover for nurses during their 15-minute breaks and to help nurses when they need assistance with something like bathing a patient.

“It’s a real loss when you have a trained member of the ICU who wants to leave because they’re being squeezed,” she said. “We should be making this a place that people really want to work at and stay. Every time you lose a worker who lives here and has family here on the island, it’s a huge loss.”

‘As Good Of Care As We Could Get Anywhere’

Bob and Kay Lloyd, both 76, said the importance of having a quality hospital nearby has grown as they’ve aged. And for years the part-time Maui residents said they didn’t have much confidence in Maui Memorial.

“We had a lot of friends who just said, ‘Oh … disaster,’” said Bob Lloyd, who splits his time between Wailea and the San Francisco Bay Area.

So the Lloyds became hospital donors. They increased their financial support of Maui Memorial when its management transitioned to a private partner.

Maui Memorial Medical Center. 3 aug 2016
Through a new partnership with the University of Hawaii’s Maui campus nursing program, Maui Health has hired every nursing graduate, totaling more than 100 nurses, according to Maui Health spokeswoman Tracy Dallarda. Cory Lum/Civil Beat/2016

Since Kaiser took over hospital operations, Bob Lloyd said his confidence in Maui Memorial has grown. When his wife was recently hospitalized after having what he called a heart scare, he said she received “as good of care as we could get anywhere.”

“When I talk to people here about supporting the hospital, they say, ‘Well, if I have a problem, I’ll go off-island,’” Bob Lloyd said. “Well, what if you have a heart issue? A stroke? Kidney stones? For probably 90-something percent of the things that happen, you’re not going off-island. You’re going to get treated right here. And so everything we can do to make this hospital the best it can be, that’s the most important thing.” 

Since the privatization, there have been measurable improvements at Maui Health — and donors like the Lloyds have played a significant part in achieving them.

Nearly 20 new physicians have been recruited since 2017, reducing the need for residents to travel off-island for care.

At Maui Memorial, the trauma team slashed its maximum response time in half to 15 minutes last year, a step toward its goal to become the second Level II Trauma Center in the state. The hospital has received numerous awards since 2017 for heart, stroke and diabetes care from the American Heart Association. Construction is underway to build a wound care and hyperbaric oxygen therapy center.

Both Lanai and Kula Hospital improved their quality metrics and are now rated five-star by the Centers for Medicare and Medicaid. Before the privatization, Kula was rated two stars and Lanai was rated one star.

In 2021, the Maui Health Foundation raised a record $4.7 million for Maui Health, a contribution Rembis described as critical to the hospital group’s budgetary success.

Money raised by the foundation in recent years has led to the purchase of $1 million in neurosurgery equipment, a half-million dollars in ventilators and personal protective equipment during the coronavirus pandemic and 3D mammography equipment.

“Let’s be honest,” Rembis said. “The state doesn’t have all the money we need and we can’t generate all the money we need. So if the community can come and help us and assist us, it just helps us do more for the community, expand services and improve health care.”

Civil Beat’s coverage of Maui County is supported in part by a grant from the Nuestro Futuro Foundation.

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