The Beginning, Expanding, and Evolving

The Hawaii Health Systems Corporation (HHSC) is a unique organization. In very few other locales is the State the principal provider of primary medical care to its citizens.

The evolution of this corporation began pre-statehood when the major activities of the Neighbor Islands centered around the sugar and pineapple plantations, which in each county was responsible for providing medical care to its residents. The counties did this with a wide variety of facilities. Many were built by the counties themselves as tuberculosis “sanitariums”. Other facilities were turned over to the counties as the plantations closed or reduced production. During the years 1950 to 1965, the cost of this care grew to the point where the individual counties could no longer afford it. It was at this point that the State began to give small subsidies and grants to the different counties.

A series of legislative actions began which expanded the role of the State to where it stands today. In 1965, the county public hospitals officially became a state responsibility. However, the counties still ran the facilities with very limited state leadership or control. Then in 1967, the State, through the Department of Health (DOH), began the transition from county management to full state control. The County-State Hospital division was managed and, thus, it became a growing burden on the general revenue taxes.

Many governmental and private studies were conducted over the years after the state assumed responsibility for this system. Virtually all of the studies undertaken concluded that significant organizational and structural reform was necessary if the system was to ever operate efficiently and effectively. All of these studies concluded that major change was necessary if the system was ever going to be able to both respond to the rapidly changing national and state health marketplace while, at the same time, ensure that the system would be able to continue to carry out its important patient care and community services mission.

In 1994, Governor Benjamin Cayetano initiated a “Blue Ribbon” Task Force to create a new and more autonomous “agency”, a public benefit corporation, as the prescription for needed reform. The task force was led by Larry Gage, esq., president, National Association of Public Hospitals, and it included many representatives from the Hawaii health care, labor, and business communities.

Based upon the recommendations of this “Blue Ribbon” Task Force and with the support of the governor, the Legislature passed the landmark Act 262 in the 1996 legislative session, formally creating the Hawaii Health Systems Corporation with an effective date of July 1, 1996. In November of 1996, the DOH transferred the liabilities and assets to the new Corporation Board of Directors who were appointed by the governor. The 13-member board of directors was responsible for developing policies, procedures, and rules necessary to plan, operate, and manage the hospitals. The joint conference, quality improvement, personnel and compensation, and finance and information systems committees were formed during November 1996.

It was understood at the time Act 262 was signed into law that operation of the HHSC facilities would continue to require state funding support. A number of the 12 facilities are located in remote, rural, and low-populated areas with insufficient business to support their high costs of operation. These facilities were referred to as “safety-net” facilities because they are often the only alternative for the delivery of medical care in their respective geographic area and they served everyone in need of medical attention regardless of the patient’s ability to pay.

Initial corporate management was provided by select individuals serving in “acting” positions. In August 1997, Thomas M. Driskill, Jr., was named President and Chief Executive Officer (CEO). Subsequently, the CEO hired and organized the primary corporate staff, established the Corporate Office at Leahi Hospital on Oahu, and filled key vacancies in hospital leadership positions.

During the summer of 1998, the hospital system was reorganized, based on the regionalization concept. The basic, underlying premise for regionalization was to provide each of the five regions with shared-services support for its respective facilities, yet encourage hospitals within a region to work closer together in a collaborative fashion to provide integrated community care. During the summer of 1998, through the generosity of the Harry and Jeannette Weinberg Foundation, HHSC developed a full-motion video teleconferencing system that linked up all 12 HHSC facilities with the University of Hawaii, all other hospital systems in Hawaii, and other national and international organizations.

On October 21, 1999, the Hawaii Health Systems Foundation (HHSF) was established. HHSF, a wholly-owned subsidiary of HHSC, was organized to raise funds and obtain gifts and grants for the entire HHSC system, in addition to assisting HHSC facilities interested in developing their own foundations. On June 21, 2000, Ali’i Community Care, Inc., a wholly-owned subsidiary of HHSC, was incorporated to build and operate a series of state-of-the-art assisted living facilities throughout the state of Hawaii. Groundbreaking for Roselani Place took place on October 26, 2000, on the island of Maui. In response to the unique health care challenges being faced by the regions, the Legislature, in 2007, passed Act 290 (Session Laws of Hawaii), which enabled the five HHSC regions to establish their own governance, thereby creating five regional health systems and boards of directors, including a corporate board

In 2009, the Legislature passed Act 182 (Session Laws of Hawaii), in an effort to strengthen the viability of the public hospital system through organizational and operational changes, in addition to providing the regions with authority to transition into various legal entities. Thanks to the tremendous support from our Boards of Directors (Regional and Corporate levels), Medical Staffs, employees, labor partners, the Legislature, governor, and communities, HHSC has been able to move forward as a health care leader in the state of Hawaii. At the same time, in light of the significant economic challenges and ever-changing health care environment that hospital systems are facing today, HHSC needs to aggressively develop effective future and collaborative planning that will enable its facilities to continue providing quality, accessible health care to our island communities.

State Funding

HHSC continues to depend on appropriations for the provision of mandated services and some capital improvement projects from the state general fund through the Legislature. Most recent general fund support amounted to approximately 20 percent of the $538M HHSC FY10 operating budget.

Board of Directors

As prescribed by Act 182 (2009) and Act 126 (2011), governance of the HHSC Corporate Board of Directors consists of 13 members, including the state Director of Health (ex-official status), the at-large member, the five regional chief executive officers, and two members who reside in the county of Maui appointed by the Maui regional system board, one member each who resides in the East Hawaii region, West Hawaii region, Kauai region, and Oahu region. The regional board members (non-regional CEO members) are appointed by their respective regional system boards while the at-large member is appointed by the Governor.

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