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Sunday, July 10, 2016
$42 Million Bid May Stall Hospital Transition and Jeopardize Union Jobs
By Keli'i Akina PhD @ 5:23 PM :: 3571 Views :: Maui County, Health Care, Labor

$42 Million Bid May Stall Hospital Transition and Jeopardize Union Jobs

by Keli’i Akina, Grassroot Institute

The State has recently made progress towards saving Maui’s public hospital system while at the same time saving the jobs of union workers. However, the battle over severance pay may add a price tag which could sink the project.

Union leaders are demanding a $42 million severance package through Bill 2077 which they claim is intended to cover job losses. The United Public Workers (UPW) claims that approximately 500 employees would transition from the public to private sector and be stripped of their benefits under Act 103, which authorizes the state to transfer Maui Regional System facilities to a new management entity. They also claim that many of their employees will be forced to move to the mainland to find jobs.

This would be a valid argument if the workers were indeed losing their jobs and benefits. But in fact, Act 103 states the new management shall offer all employees of the pre-transfer facility employment for a period of no less than six months after the transfer completion date.

Attorney General Doug Chin added, “The reality is Kaiser needs people to work in the hospitals and it’s exactly the people in that limited population [employees within current public system]”. In addition, Act 103 states healthcare workers will keep their accrued benefits on top of what the new health care provider might offer.

The new hospital public-private partnership is estimated to save the state $260 million in costs over the next decade, according to Governor David Ige. However, these savings could disappear if the costs for the transition is too great.

Such an expensive and unnecessary severance payout could set a dangerous precedent for the Big Island and Kauai as they also consider saving their healthcare systems through a public private partnership. The high price for partnership could scare away investors in future projects that would otherwise greatly benefit local residents.

The $42 million payout could also impact the Employee Retirement System with new spiked pensions. This could add more debt to the already $8.6 billion in unfunded liabilities, and taxpayers will ultimately have to pick up the extra tab.

Moreover, there is an enormous cost to the extra time needed to administer the transition, which has come at a snail’s pace due to opposition from union leaders at the Hawaii Government Employees Association (HGEA) and (UPW). The public private partnership was on track for completion by July 1, 2016 but now the completion date is unforeseen.
The longer the transition is held off the longer Maui citizens will need to put up with a hospital system in limbo. When Chin was asked whether the transition could wait until the contract was over he said, “No… As we’re speaking right now money is being lost and programs are being lost.”

In the long run, the public private partnership will do more than just save Maui’s hospital system - it will save the jobs of union workers, something union leaders are jeopardizing.  The partnership will also provide a wonderful model to help save hospitals on other islands where citizens struggle to find access to proper care.

However, if the state opts to pay the $42 million severance package, the result will be a misstep in the transition process which could set a counter-productive precedent for decades to come. Hawaii’s people need strong leadership to ensure that our hospitals stand on a strong financial foundation and our citizens have access to quality health care.


Keli’i Akina, Ph.D., is a recognized scholar, educator, public policy spokesperson, and community leader in Hawaii. Currently, he is President/CEO of Grassroot Institute of Hawaii, a public policy think tank dedicated to the principles of individual liberty, free markets and limited, accountable government.--


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