Maui News

Maui Hospital Deal Pushed to 2017: Negotiations Hit Another Impasse

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Privatization timeline pushed to 2017. Maui Now graphic.

Privatization timeline pushed to 2017. Maui Now graphic.

Administrators with the Hawai‘i Health Systems – Maui Region say they are “left with many uncertainties” after the State and the Hawaiʻi Government Employees Association hit another impasse in negotiations.

After years of anticipating a transition to a private operation, and after months of closed discussions, administrators with the Hawai‘i Health Systems – Maui Region issued a statement today saying they learned that negotiations had failed over the weekend.

Kaiser Permanente has stated that it will not be able to transition to take over operations of the Maui Region until July 1, 2017.

Maui Region’s chief executive officer, Wes Lo, released the following statement:

“We are extremely disappointed with the continued delays of this transition. For years now we have known that the current business model could not sustain our hospitals while meeting the needs of our communities. We held so much hope that this transition would increase the quality of healthcare provided to our friends and family. Unfortunately, this impasse continues to chip away at our faith that this system is set up to ensure that we can provide high quality care for the long-term.

“Our Maui delegation and their colleagues worked diligently to provide our rural community with a solution to protect, preserve, and grow our care options. There cannot be enough gratitude for their leadership and understanding of Maui’s needs. Maui Region was proud to work alongside our legislators, in particular our Maui legislators to pass this legislation.

“However, once negotiations began, our Maui stakeholders were not part of the process. There has been little to no transparency. We are extremely frustrated to learn that negotiations have failed.

“Our patients, our staff, our community, and visitors have endured worry, threatened cuts and service closures for far too long, and even with the lack of urgency in settling this matter, they show up because at the end of the day, our services affect our families. They are the real heroes in this process, putting the needs of our patients above their own.

“I want to be expressly clear to our physicians, staff, patients and our families and friends that make up Maui County, our first priority is your care – we will do all we can to protect you throughout this drawn out process. We have to make some extremely tough decisions which may result in bed and specialty closures and an increased rate of transports to Honolulu facilities to deal with this shocking setback. As we continue to sort out this matter and balance the shortfalls against necessary services, we will continue to keep you informed.”

Maui Region Chair of the Board of Directors, Avery Chumbley remarked, “Maui Region’s staff and physicians have been forced to work and operate in an environment of uncertainty for far too long. Our community deserves better, and while we are disappointed the negotiation is enduring yet another setback, we remain committed to doing all we can to move this transition forward because it is in the best interest of our staff, family and friends to know that the foundation of their only acute-care option here in Maui County is stable and will be there for them for years to come.”

Hawai‘i Health Systems Corporation’s Chair of the Board of Directors, Carol Van Camp, said the following, “HHSC continues to be dedicated to improving healthcare delivery in all of Hawai‘i’s neighbor island communities. The HHSC Board of Directors is very disappointed that an agreement to move this important transition forward could not be reached at this time. While change of this magnitude is difficult, the HHSC Board has been and continues to be impressed with the dedication evidenced by all HHSC employees.”


The 9th Circuit Court of Appeals issued an order on Aug. 19, 2016, dissolving an injunction that had temporarily barred certain transition activities relating to Maui Memorial Medical Center, Kula Hospital and Lānʻai Communty Hospital.

Based upon a settlement agreement reached on Aug. 13, 2016 between Governor and the United Public Workers union and a joint request from both parties, the Court dismissed the underlying appeal brought by UPW as moot.

In 2015, the Hawaiʻi state legislature passed a law ending the Hawaiʻi Health System Corporation’s delivery of health care services at the three Maui region facilities and transferring service delivery to a private operator.

UPW had sued to stop the transition from taking place. The August 13th order meant that all transition activities between the State and a new Kaiser entity, Maui Health System, would be allowed to resume at the three Maui region facilities.


Under the settlement, the transfer was to occur no earlier than Nov. 6, 2016, but that date is now pushed to July of 2017.

Administrators with Kaiser issued a letter to Governor David Ige over the weekend, informing him of the outstanding issues involved in the transition agreement.  Since the HGEA and the state were unable to resolve their issues, Kaiser representatives said they could not set a start date.

Kaiser Permanente Hawaii’s Laura M. Lott said today, “We remain committed to a smooth transition of hospital operations that ensures patient safety and minimizes disruption. The delays in finalizing the transfer, while unintentional, have been disruptive and caused confusion and anxiety among the hospital staff and physicians, patients, and the community.”

She continued saying, “Given the continuing uncertainty, and in order to ensure a safe and smooth transition of operations, we have notified the state that the transfer date will be July 1, 2017. We appreciate the support and patience of the staff and leadership of MRHS and the Maui and Lānaʻi communities. We’d also like to thank and recognize the tremendous amount of hard work that has been accomplished thus far by staff, physicians and the transition team, creating a solid foundation for the work that still needs to be completed,” said Lott.


Ray Hahn, SVP & Hospital Administrator of the Maui Health System, (a Kaiser Foundation Hospitals LLC) wrote a letter addressed to Governor David Ige, expressing concern over the State’s collective bargaining agreements with the unions and the need for supplemental agreements.

The letter, dated Sunday, Aug. 28, 2016, states the following:

Dear Governor lge:  

In follow-up to the August 11, 2016 letter to you from Mary Ann Barnes and Dr. Geoffrey Sewell, we reaffirm the strong commitment of Kaiser Permanente to the State of Hawaii and the communities of Maui and Lanai to provide high quality and financially sustainable health and hospital care to those communities when Maui Health System, a Kaiser Foundation Hospitals LLC (MHS) commences management and operation of Maui Memorial Medical Center, Kula Hospital, and Lanai Community Hospital (the Hospitals).

In the August 11th letter, and in our numerous conversations with you, we have all been clear that the last viable date that we could effectuate a transfer of operations in 2016 was November 6, 2016, but only if the State resolved all outstanding issues with the United Public Workers (UPW) and the Hawaii Government Employees Association (HGEA) unions by Friday, August 26, 2016. We, like you, were hopeful that this date could be achieved. As the August 26 deadline approached, and our concern about success accelerated, we reiterated the need for signed supplemental agreements modifying the State’s collective bargaining agreements (CBAs) with the unions to enable and facilitate the civil service hospital employees working at the Hospitals to work under MHS policies, procedures, and work rules. As we arrived at the deadline on Friday, Mary Ann Barnes communicated that she could extend the deadline to 8 a.m. on Saturday morning, August 27, 2016, but no later. As of 8 a.m. yesterday morning, August 27, 2016, James Nishimoto from your team communicated to Jean Melnikoff, our Vice President of Human Resources, that agreements with the unions had still not been reached or signed. Accordingly, we are formally notifying you that a transfer date of November 6, 2016 is no longer possible.

As noted in the August 11th letter, the next clearly identifiable transfer date is July 1, 2017, the day after the current hospital contracts with UPW and HGEA expire. Due to the practical and logistical difficulties of mobilizing necessary trainers, vendors, and other resources during the winter holiday season, as well as the length of time and complexity involved in restarting and completing all necessary transition readiness work and fulfilling all closing conditions in order to achieve a smooth transfer, and the ongoing uncertainty associated with the State’s inabil ity to resolve its issues with the unions, we are confirming the transfer date for closing and transfer of operations is July 1, 2017.

We believe that the ongoing uncertainty associated with repeatedly setting and cancelling potential closing dates, while not intended, is a disservice to the people of Maui and Lanai, as well as to all the clinical and administrative staff who have dedicated so much time and effort to this project on behalf of the State, MHS, the Hospitals, and the communities of Maui and Lanai. With a new date of July 1, 2017, we will all avoid the perpetual raising and dashing of expectations as interim closing dates are repeatedly set and cancelled. Providing certainty in an achievable transfer date of July 1, 2017 will enable everyone involved in this project to pla n and strive together to reach a common goal on a firmly defined timelilne.

Thank you again for your leadership and the opportunity to participate in this historic project. Our commitment to the people of Maui, Lanai, and the State of Hawaii remains unwavering.

With aloha,

Ray Hahn, SVP & Hospital Administrator Maui Health System, a Kaiser Foundation Hospitals LLC



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