History of HHSC

The Hawaii Health Systems Corporation (HHSC) is a unique organization. In very few other locales is the state the principal provider of institutional 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 were responsible for providing medical care to their employees.  Many were built by the counties 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 care grew to the point where the individual counties could no longer afford it.  At this point the state began to give small grants to the counties to subsidize care.

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.  At the same time, it became apparent that the cost was becoming a growing burden on the state’s general fund.

Many governmental and private studies were conducted over the years after the state assumed responsibility for the 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 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 continue to carry out its important patient care and community service 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, Esquire, President, National Association of Public Hospitals, and included many representatives from the Hawaii health care industry, labor, and business communities.

Based upon the recommendations of the 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. The primary purpose of the new law was to free the community hospital system from bureaucratic oversight and red tape. Consequently, the system was exempted from many laws pertinent to other government agencies. In November of 1996, the DOH transferred liabilities and assets to the new corporation board of directors whose members were appointed by the governor. The 13-member board was responsible for the development of 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 essential medical care in their respective geographic area and they serve 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. A year later, Thomas M. Driskill, Jr., was named President and Chief Executive Officer (PCEO). Subsequently, the PCEO hired and organized the primary corporate staff, established the corporate office at Leahi Hospital on Oahu, and filled key vacancies in hospital leadership positions.

Consistent with Act 262, the hospital system was internally reorganized into regions in 1998. The basic, underlying premise for regionalization was to provide each of the five regions with shared-services support for its respective facilities, which encouraged hospitals within a region to work closer together in a collaborative fashion to provide integrated community health care. During the summer of 1998, through the generosity of the Harry and Jeanette Weinberg Foundation, HHSC developed a full-motion video teleconferencing system that connected 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 501C(3) nonprofit affiliate of HHSC, was organized to raise funds and obtain gifts and grants for the entire system, in addition to assisting HHSC facilities interested in developing their own foundations.

On June 21, 2000, Ali’i Community Care, Inc. (ACC), a 501C(3) nonprofit affiliate 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. Later, ACC expanded its mission by establishing Ali’i Health Center, a physician’s clinic in Kona.

There were various amendments to HRS Chapter 323F, HHSC’s enabling statute over the years, in order to continue to improve the system’s ability to operate more like a business than a state agency.

In response to the unique healthcare challenges being faced by each of the regions, the legislature in 2007 passed Act 290 (Session Laws of Hawaii), which enabled the five HHSC regions to establish five regional health systems with boards of directors, while still maintaining the system and 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.

In 2011, the legislature passed Act 126 (Session Laws of Hawaii), introduced through the Abercrombie administration, which was focused on the corporate board of directors: 1) restored the voting rights to the director of health and; 2) added an at-large member appointed by the governor.

Subsequently, in 2013, Governor Neil Abercrombie signed into law Act 278 (Session Laws of Hawaii), which again was focused on the corporate board of directors. The Act changed the five regional chief executive officers status to nonvoting and added five regional system board members appointed by the governor to serve as voting members.

Thanks to the tremendous support from our boards of directors (regional and corporate), medical staffs, employees, labor partners, the legislature, governor and communities, HHSC has been able to move forward as a healthcare leader in the state of Hawaii. In light of the federal healthcare reform, significant economic challenges, and a dynamic healthcare environment, HHSC will continue collaborative planning to further enable its facilities to provide quality, accessible health care to our island communities.