HMC Hospitals in Hawaii to Close, Nearly 1,000 Jobs Lost

I've actually been surprised by the number of recent stories about layoffs in the medical profession. Here is one from Hawaii that appeared over the weekend:

The operators of bankrupt Hawaii Medical Center hospitals in Liliha and Ewa plan to close the facilities within three weeks, putting nearly 1,000 people out of work and eliminating more than 340 hospital beds.

The closures would affect the region's economy with the loss of 990 jobs, the Honolulu Star Advertiser reported Saturday ( ). Also, there would be a dramatic impact on health care.

HMC provides dialysis services and operates the only organ transplant center in the Pacific, while the Ewa facility is the only full-service emergency hospital in West Oahu, the newspaper said.

With the planned closure, the 150 patients in the two hospitals will have to be moved or discharged.

State officials are hoping a buyer or buyers can be found to keep the facilities running.

"Our understanding is there are still lingering interested parties," said Donalyn Dela Cruz, spokeswoman for Gov. Neil Abercrombie. "There are interested parties looking to reopen the facilities. If and when that occurs, the state will expedite that process."

Because so many health care workers will be losing their jobs, they'll likely have a difficult time finding new employment, according to health officials.

For a small state like Hawaii this has to be devastating. It's difficult to get a handle on exactly what is causing the financial troubles in the health care industry, but stories such as these put the lie to the notion asserted by clueless politicos that such jobs are the wave of the future as the economy "recovers."

Hawaii is Sinking Because of Retiree Health Care Costs

Here is a rather shocking story out of the State of Hawaii about financial problems related to health care costs for its own employees and retirees:

The Hawaii state legislative auditor has released the 2010 Comprehensive Annual Financial Report (CAFR), which is a series of audited government statements that detail the financial condition of the state government.

Sheila Weinberg, founder and CEO of the Institute for Truth in Accounting, called the state’s liability in the report “shocking", particularly when it comes to the increase in costs for medical services for state employees.

For example, the 2009 CAFR shows an unfunded liability for the Employees Union Trust Fund of $7.2 billion and for the Hawaii State Teachers Association's Voluntary Employees' Beneficiary Association (VEBA) of $1.6 billion for a total of $8.8 billion (for July 1, 2007, even though the CAFR is for June 30, 2009). Whereas the 2010 CAFR details unfunded liability for the EUTF of $11.5 billion and for the Hawaii State Teachers Association's VEBA of $2.5 billion for a total of $14.0 billion. (These numbers are for July 1, 2009.).

But wait, as bad as those numbers sound, it gets worse when you consider just how quickly the situation is deteriorating:

Weinberg points out that this is an increase of $5.2 billion in just two years - or almost 60 percent.

"Note that the EUTF liability per the 2009 CAFR was 4 times the amount of covered payroll. Per the 2010 CAFR the liability is now up to 8 times covered payroll. In other words, to have enough money to pay the EUTF benefits employees have already earned, the state would have to take all of the money they are using to pay employees for eight years and put it in the EUTF," Weinberg said.

Weinberg uses other comparative numbers to give the liabilities perspective.

"The state’s 2010 total revenue was reported to be $9.9 billion. Therefore it would take all of the state’s annual revenues plus $2 billion more to have enough money to pay these benefits. The state’s reported liabilities as of June 30, 2010 totaled $10.5 billion. Therefore the liabilities for retirees’ health care benefits that employees have already earned, but the state has not set aside money to pay, is more than all of the other liabilities the state has. And this does not include pension benefits," Weinberg said.

It is staggering tho think that this giant fiscal hole in Hawaii's finances are being caused merely by skyrocketing retiree health care costs. When you see figures like these, you realize just how broken and beyond repair the financial structure of our health care system really is.

The real wonder in all of this is not that things are unraveling, it's that they haven't actually collapsed already. I doubt even Steve McGarrett can save Hawaii this time.