SCR170 SD1 PROPOSED

WHEREAS, in 2001, Wilcox Memorial Hospital (Wilcox) and Kauai Medical Clinic (KMC) merged with Kapi‘olani Health and Straub Hospital and Clinics to create Hawaii Pacific Health (HPH); and

WHEREAS, after six years of operation, there appear to be real problems with Wilcox Memorial Hospital and Kauai Medical Clinic; and

WHEREAS, a group pf physicians, county leaders, former hospital administrators, and members of the public have reviewed the Certificate of Need (CON) operating agreement, analyzed the issues and concerns, and determined that the present situation is not working; and

WHEREAS, although physicians are contractually bound to not speak against Hawaii Pacific Health, the parent corporation of Wilcox and KMC, it has been anecdotally reported that the HPH management style has made KMC an undesirable place to work; and

WHEREAS, for instance, in February 2007 alone, six physicians announced their intention to leave KMC; and

WHEREAS, KMC is reducing its commitment to primary care; and

WHEREAS, for example, since the merger, the offices of nine general internists have closed in the Kauai Medical Clinic; and

WHEREAS, four family practitioners have left the medical group and two pediatricians’ practices have closed; and

WHEREAS, this is a result of an intentional HPH policy to alter the ratio of specialty care to primary care physicians on Kauai, reducing the number of primary care providers who traditionally provide the majority of care to the disadvantaged, uninsured, and underinsured and who are necessary for health maintenance; and

WHEREAS, structural changes have increased the expense of operating Wilcox; and

WHEREAS, for example, the outsourcing of long-term care services and resulting loss of management control of long-term care has resulted in Wilcox patients not being accepted into long-term care and increasing unrecoverable costs for Wilcox; and

WHEREAS, HPH has annually charged Wilcox/KMC significant unallocated expenses in contradiction to the financial model HPH presented in exhibit D-2 of the 2001 CON application; and

WHEREAS, each year these charges, which HPH failed to disclose prior to the merger, have exceeded the savings projected in the 2001 CON application; and

WHEREAS, under HPH ownership, Wilcox’s commitment to care for the disadvantaged, uninsured, and underinsured has wavered; and

WHEREAS, for example, in 2003 HPH hired ECG Management Consultants and instructed them to find ways to change the payer mix of Wilcox Hospital and reduce free care and patients covered by low paying insurance; and

WHEREAS, in addition, a KMC primary care physician divulged that he has been directed by his supervisor to limit his appointments of Medicaid and Medicare patients because of the low reimbursement rates that these insurance plans provide; and

WHEREAS, HPH dissolved the KMC Physicians’ Advisory Group, a group of physicians elected at-large from the physician ranks to liaison with management, because it voted ninety-five per cent no-confidence in the KMC Medical Director chosen by HPH; and

WHEREAS, as KMC dwindles, the loss in physician and hospital synergy is hurting Wilcox and as a result, in February 2007, Kauai Veterans Memorial Hospital (KVMH), a forty-five bed hospital located in an isolated, low population area of Kauai, had more deliveries than Wilcox; and

WHEREAS, as a result of these problems, Wilcox and KMC seem to be doing worse under HPH than it was before the merger; and

WHEREAS, Wilcox and KMC had positive cash flow margins nine of ten years immediately preceding the consolidation; and

WHEREAS, only a few years before the change, in 2000, Wilcox was selected as one of the one hundred best hospitals in the nation; and

WHEREAS, during the post merger era, Wilcox and KMC have seemingly checkered financial histories, significant physician turnover, and reportedly poor staff morale; and

WHEREAS, the State Health Planning and Development Agency (SHPDA) stated in the 2001 CON: "Non-implementation of a project as described in your application may result in a fine and/or withdrawal of the Certificate of Need."; now, therefore,

BE IT RESOLVED by the Senate of the Twenty-fourth Legislature of the State of Hawaii, Regular Session of 2007, the House of Representatives concurring, that the State Health Planning and Development Agency (SHPDA) should open a formal case on HPH, Wilcox, and KMC to determine their compliance with its 2001 Certificate of Need operating agreement and recommend remedies; and

BE IT FURTHER RESOLVED that the investigation is requested to include, but not be limited to, the following areas:

(1) Public hearings to solicit input from the physicians and staff of Wilcox and KMC and the community;

(2) Independent SHPDA due diligence; and

(3) A report to look at the effect of revoking the 2001 CON and ways to mitigate the impact; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to the Governor, the Director of Health, the SHPDA Administrator, the Kauai County Mayor and County Council, Wilcox and KMC Physicians, Hawaii Medical Association, and the Hawaii Nurses Association.

Report Title:

Certificate of Need; Hawaii Pacific Health; Wilcox

THE SENATE	S.C.R. NO.	170
TWENTY-FOURTH LEGISLATURE, 2007		S.D. 1
STATE OF HAWAII