LIHUE — Tuesday was a day that Scott McFarland had hoped would never come.
“I have personally shed more tears today than I think I have in my entire professional career,” McFarland, the interim Kauai region chief executive officer for Hawaii Health Systems Corporation said by phone on Tuesday. “It’s definitely not an easy thing to do and to share this news with impacted employees.”
Throughout most of the day, McFarland said he and other Kauai officials from the state’s public health care system spoke with nearly two dozen employees who received layoff notices at the island’s two public hospitals.
A total of 20 HHSC employees — 12 at Kauai Veterans Memorial Hospital in Waimea and eight at Samuel Mahelona Memorial Hospital in Kapaa — received notices. Three other positions slated to be reduced were vacant when the layoffs were handed out on Tuesday and will be eliminated instead.
Unionized employees, according to HHSC officials, will be able to hold their jobs for the next 90 days and have the option of being placed in a budgeted vacant position.
If that option is no longer available, impacted workers may also take advantage of a bumping process, which allows senior employees to assume the job of a less senior employee within the same bargaining unit, who, in turn, would be laid off instead.
“We, as an employer, are certainly here for our employees,” McFarland said. “We are going to make sure that our impacted employees are connected with all of the federal, state and employment benefits that they’re entitled to for workforce development and unemployment benefits. We will make sure that we direct them to those community resources who are in the position to help.”
Jodi Endo Chai, senior advisor for the Hawaii Government Employees Association, which represents four of the laid off employees on Kauai, said she and other union officials are planning to meet with HHSC executives on Thursday to discuss concerns regarding the layoffs.
“We’re certainly concerned with the way the RIF (reduction in force) is being conducted,” Endo Chai said.
Two other employees facing lay offs — one at Kauai Veterans Memorial Hospital and one at Samuel Mahelona Memorial Hospital — are represented by the American Federation of State, County and Municipal Employees. The total number of employees represented by the United Public Workers was not immediately known Tuesday.
Rep. Daynette “Dee” Morikawa, D, Koloa-Niihau, who is up for re-election this year, said incumbent Democrats in the state House of Representatives will meet on Friday to discuss a wide range of topics facing the Legislature next year, including the issues facing Hawaii Health Systems Corporation.
“Until then, we really don’t know what we can do at the legislative side anyway right now, because, obviously, we can keep giving them money, but I would question why they’re doing this when they’re only two months into the budget year,” Morikawa said. “This (the reduction in force) is not going to save them substantial money — it’s not going to get them out of the $10 million hole that they’re in. Is it worth putting 20 families out on the street for unemployment? I don’t think so.”
Rep. Derek Kawakami, D, Wailua-Hanalei, who is also up for re-election this year, said he and other lawmakers “are seeking a holistic solution to the problems that have plagued HHSC for more than a decade.”
To do this, two major factors must be addressed: increasing revenue, which has shown signs of improvement over the last two fiscal years, and decreasing expenses, which have not.
“First and foremost, I want to express my heartfelt thoughts and prayers for the individuals and families that will be affected by these layoffs,” Kawakami wrote in an email. “Right now we do not know the details of how the cuts were made, but there is a union process that will be implemented and we should know better how we can minimize the impact.”
Affected employees, McFarland said, are not being offered severance packages as a part of the public health system’s reduction in force.
“What we’re doing is giving them enough notice so that they’re with us through Nov. 30, if they have collective bargaining benefits,” he said. “If they do not, they’re with us through Oct. 15.”
The round of layoffs, which were made public last week, is a part of the efforts adopted by the struggling, state-subsidized health provider to offset its projected $48 million budget shortfall this fiscal year.
In all, McFarland said the public health system received about $16.6 million in state subsidies during the last year alone for regional operations on Kauai, including about $9.7 million in emergency appropriations and about $6.9 million in additional money from the state’s general fund.
The statewide corporation, however, finished the 2013-2014 fiscal year with an operating loss of $123.3 million — about $33 million worse than the $90.3 operating loss reported for the 2012-2013 fiscal year.
The Kauai region alone reported an operating loss of $13.2 million during the 2013-2014 fiscal year, a slight jump from the $13 million operating loss reported the year before, according to unaudited financial reports.
As it stands now, the HHSC Kauai region is facing an $11 million shortfall for the upcoming 2014-2015 fiscal year, which began on July 1.
A total of 125 to 130 positions on Kauai are slated to be cut with in the next year to cut about half of that shortfall amount. This will be done, McFarland said, by not filling positions lost to attrition or retirement, not hiring people for funded positions and reducing the workforce through layoffs.
About 470 people are employed by HHSC on Kauai.
Officials from the public health care provider were previously considering plans to close Kalaheo Clinic, but current plans call for it to remain open until at least Feb. 1, 2015, McFarland said. Regional board members, meanwhile, will scrutinize the patient usage of the clinic and make further determinations later this year.
“The hospitals, certainly, are at no risk for closing,” McFarland said. “We encourage folks to continue to support Samuel Mahelona and KVMH as a place to get high-quality, compassionate care, and we look forward to coming through this in a more fiscally sustainable manner to continue to give great service to the community.”