How to create a more robust healthcare system on Maui

Healthcare in Hawaii is beset with problems, and the situation is especially acute on Maui. But there are reforms that could improve the situation, according to Keli‘i Akina, president and CEO of the Grassroot Institute of Hawaii

In a Jan. 12, 2022, presentation to the West Maui Taxpayers Association, Akina said that even before the COVID-19 pandemic, Hawaii had the fewest hospital beds per capita in the nation and the longest emergency room wait times. It also had a longstanding shortage of doctors, nurses and other medical personnel, and a shortage of medical facilities, as on Maui, which has only one acute-care hospital.

He said government reforms that could make for a more robust healthcare system for Maui residents, as well as for the state in general, include:

>> Greater reliance on public-private partnerships to run Hawaii’s state-run hospitals, such as occurred with the Maui Memorial Medical Center.

>> Reform of the state’s certificate-of-need laws, which have blocked a significant amount of private investment into Hawaii healthcare facilities.

>> Tax cuts for doctors, particularly regarding the state general excise tax.

>> Licensing reciprocity, to allow medical professionals from the mainland to operate in Hawaii without having to obtain a Hawaii license.

>> Permanent legalization of telehealth.

To see Akina’s entire presentation, click on the video below. A complete transcript is provided.

1-12-22 Keli’i Akina at the West Maui Taxpayers Association annual meeting

Joe Pluta: Now, we’ll go to Dr. Keli’i Akina, president of Grassroot Institute of Hawaii. Dr. Akina.

Keli’I Akina: Good evening Joe. Can you hear me well enough?

Pluta: Perfect.

Akina: Fantastic. I want to say aloha to all of the members of the West Maui Taxpayers Association and the guests who are here tonight as well as my esteemed fellow panelists. You’ve had some important subject matter and I’m going to continue sharing a bit about the healthcare situation in Hawaii. First, Joe, would you help me out here? Do I have permission to share my screen?

Pluta: Yes.

Akina: Good. Everyone, rather than looking at my face, can you see my PowerPoint slide in front of you?

Pluta: Got it.

Akina: Let’s see. Very good. Well, thank you for letting me be here. 

Let me just mention a little bit about the Grassroot Institute of Hawaii. Joe said that I’m the president and CEO. I have been since 2013. We’re a nonprofit and independent research agency. What we do is stand for the principles of individual liberty, free economics or economic freedom and accountable government. 

We publish accurate and timely research and commentaries. Many of you receive our newsletters. We often organize events on the island of Maui and we work hard to inform our public policymakers on how to do a better job of keeping government open and making sure that the market is not interfered with.

What we like to do is follow the principle of “E hana kākou.” You’ve all heard “E pule kākou” — Let’s pray together. We believe at Grassroot Institute, we should also “E hana kākou.” We should all work together to find common ground in order to solve our problems as a society. 

What I’d like to talk with you a bit about today is something that you all know all too well on the island of Maui. First of all, Maui nō ka ʻoi, absolutely and in terms of the beauty, the people, the culture. Hawaii’s healthcare system however means that Maui is not nō ka ʻoi. We were not prepared for the coronavirus pandemic, and we are now in the midst of an emergency of a large magnitude that we’re still not prepared for, if it gets worse.

When COVID hit, Hawaii had the fewest hospital beds per capita in the nation and we had the longest emergency room wait times. This was our standing even before the pandemic. As a result, we experienced a severe shortage of doctors and nurses and healthcare in general. As many of you know, Maui has only one acute care hospital on the island, and it was struggling even before the pandemic. You see, the perilous condition required the bailing out of the Maui hospital to the tune of $40 million every year.

A study in 2014 showed that the hospital was paying salaries and benefits to the tune of 63% of their total operating expenses. Now, that figure actually needs to be 50% in order for a hospital to be viable. So it simply wasn’t viable. Taxpayers were bailing out the hospital at the end of every year. 

The Grassroot Institute of Hawaii educated lawmakers about that, and the public-private partnership went through. We praise our lawmakers for that. Now the hospital is less reliant on taxpayer bailouts, and as you see from this chart, it’s on its way to becoming sustainable. Now that’s wonderful news, but it’s not perfect in terms of the situation that the lawmakers gave us.

When they transferred the Maui hospital to a private company, they stipulated that only a local company could be used. That cut out any mainland company from bidding on the project. For example, if we wanted to go to a world-class mainland organization like the Mayo Clinic to run our hospitals, they would not have been able to bid on this. Lawmakers also neglected to put any satisfaction requirement in the law or include any mechanism by which citizens could find a different private partner.

For example, if I don’t like my plumber, I can hire another plumber, but if citizens are not satisfied with the private partner running a hospital, we have no mechanism by which to switch to a different company that might serve its residents better. 

Now, let me make this clear. That’s not at all to say that Kaiser is doing a bad job. Quite the opposite. Kaiser is doing a very good job and saving lives. But I’m talking about whether citizens have recourse to hold any organization running their hospital accountable. While the private partnership of the Maui hospital was an overall good thing, the structuring of the arrangement could have been better.

That kind of an analysis is an example of what we do at the Grassroot Institute. We look for policy reforms that ultimately will improve life in the islands. There are other reforms which could improve the Maui healthcare system. For example, Maui County is currently, as of 2021, short 158 doctors, which is among the worst doctor shortages per capita in the nation. Many physicians throughout the pandemic have opted to retire or decrease their hours, which has made matters even worse, and many of you know, far better than I, how difficult it was even before the pandemic to get to a specialist, often requiring visits to Honolulu or even the mainland.

One of the problems with this has to do with Hawaii’s tax regime, which has put extra financial pressures on physicians. One doctor – Kyle Varner – told us he saved over $100,000 every year after leaving the state because of the reduced taxation and the lower cost of living. Hospitals and nonprofits are exempt from paying the general excise tax, but private practice doctors like Kyle Varner have to pay it if their practice is in Hawaii. That puts private practice doctors at a huge disadvantage, especially in rural areas such as much of Maui.

In addition to that, Hawaii has some of the highest taxes in the nation, and that adds up for doctors, yet lawmakers always try to increase taxes on the rich, which often affects doctors.

Here’s our report which you can get free online, “How Hawaii’s GET adds to island healthcare costs.” We should actually be doing the opposite of taxing doctors. We should be cutting taxes on them. One way to do that would be to cut the general excise tax out of what they have to pay.

Our study shows that exempting the GET for private practices could save them over $200 million every year. That could result in an increase of thousands of healthcare positions, and $1.4 billion in additional economic activity, but that’s not the only reform that could help.

There’s another issue that needs to be looked at, and that’s the issue of licensing reciprocity, or whether we will acknowledge the licenses of medical professionals from the mainland. 

Hawaii also has a severe shortage of nurses, physicians assistants and other medical staff. To ease this shortage, Gov. Ige temporarily allowed occupational licensing reciprocity for healthcare workers via his COVID-19 emergency proclamation. That allowed healthcare workers to come to our state and help throughout the pandemic. That’s a very good move.

This is a reform that should be made permanent, even after the governor’s emergency proclamation expires, so that Hawaii can encourage more healthcare workers to help our state. Many states already allow some degree of healthcare licensing reciprocity, and Hawaii should do the same. 

In a sense, one positive thing that the pandemic brought us was the experience of being able to practice licensing reciprocity. But we suggest, don’t do that just for the emergency. Make that a permanent feature here that will help us to increase our healthcare capacity.

Another issue to look at is telehealth, a booming practice today. Telehealth is another area that could provide more healthcare access to Hawaii residents that would allow people to visit a doctor over the phone or over Zoom, even if the doctor is on the mainland. 

Unfortunately, Hawaii has a law that prohibits telehealth services and limits them significantly. The governor, fortunately, lifted that law with his emergency proclamation in June of 2021. But now the waiver has expired, so telehealth is once again restricted. 

Lawmakers can simply change the law to allow telehealth in Hawaii. That would be a good thing to talk to them about during this upcoming legislative session.

That could especially help with mental health services for island residents, as well as access to specialists, when rural areas just don’t have them. Another issue which my fellow speakers today have alluded to, and you all know is very important, is the issue of Certificate of Need, which I wrote about in a recent Wall Street Journal article, “Hawaii Is No Paradise If You Need Medical Care.” Hawaii also has the most burdensome certificate-of-need laws in the nation, which have prevented hospitals from opening.

A certificate of need can be likened to Burger King having to go before a committee in order to get permission to open a store, but the committee consists of its competitors – McDonald’s, Jack in the Box, Denny’s, and other restaurants that are already in business. There’s a natural conflict of interest that is built into this. 

Now, there are some benefits to certificate-of-need laws. I don’t challenge that, and they can help bring us much-needed medical facilities. Unfortunately, there are ways in which certificate-of-need laws need to be updated in order to make it easier for vital services to be provided, everything from the opening of facilities to the addition of wings and addition of medical services.

Case in point: On Maui, the government denied the building of the Malulani Hospital, which could have provided 150 acute care beds and $119 million of private healthcare investment at that time. 

Fifteen other states have no certificate-of-need laws at all. Even if Hawaii didn’t want to go down that route, it could at the very least loosen some of the regulations and make the whole process easier. For example, do we really need to ask permission to move hospital beds from one hospital to another, or to start a dialysis center or a rehab center? Simple things like this should be easier to reform and it could help provide more services for our residents.

In conclusion, there’s one thing we should bear in mind. We can improve our healthcare system with the right ideas. That’s what the Grassroot Institute is committed to providing, along with your ideas as we vet them, and we try to communicate them to the public and to our elected officials. 

Healthcare on Maui shouldn’t be as difficult to find as it is. There are many governmental reforms that could make for a more robust healthcare system for Maui residents, such as reforms for taxation, certificate-of-need licensing and telehealth. These reforms could literally save the lives of local residents and make Maui even more nō ka ʻoi.

If you have any questions, please give me a call or email me at the address, info@grassrootinstitute.org, or give us a call. You can find all the information I’ve presented here and much more at our website grassrootinstitute.org. I’ve enjoyed sharing this with you, and if anyone has any questions, I’ll be glad to take them at this time.

Pluta: I’m going to do the same thing, Dr. Akina, with the chat function to move things along. People can submit it by the chat function and get you that way and are directed to us and we’ll see that it gets redirected to you to respond.

Akina: Very good. Well, thank you very much, Joe.

Pluta: Thank you so much

Akina: Thank you to the West Maui Taxpayers Association and everyone here tonight.

Pluta: We appreciate you very much and the work you’re doing for us. Keep up the good work. 


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