The State Health Planning and Development Agency has approved the merger of Wilcox Health System (Wilcox Hospital and Kaua’i Medical Clinic) with Kapi’olani Health and Straub Clinic & Hospital Inc. A ceremonial signing of merger documents creating Hawai’i Pacific Health
The State Health Planning and Development Agency has approved the merger of Wilcox Health System (Wilcox Hospital and Kaua’i Medical Clinic) with Kapi’olani Health and Straub Clinic & Hospital Inc.
A ceremonial signing of merger documents creating Hawai’i Pacific Health is planned for Dec. 18 in Honolulu, said Lani Yukimura, Wilcox spokeswoman.
“Our current planning is to launch the new corporation on Dec. 23,” Yukimura said. “There remains much to be accomplished, including the transition to a new (board of directors) structure, and we are working hard to stay on schedule.”
According to Yukimura, Wilcox Health System got added good news this year that higher revenues have “significantly improved” dismal financial projections stated earlier.
Still, the bottom line is that Wilcox needed this merger more than the other two entities, according to Dave Heywood, vice president of corporate development of Kapi’olani Health.
“Wilcox does need to do something” to remain financially viable, Heywood said during the merger’s state approval process.
In the merger application process required by the state, Wilcox projected it would lose $29.2 million over the next five years without the merger and lose $16.3 million over the same period with the merger.
Yukimura said earlier this month that the current year’s financial results “were significantly improved” over earlier projections, “due to higher revenues.” She did not elaborate.
Earlier, Heywood said Straub, which needs the merger to provide capital to buy new equipment and make other physical improvements, would break even without the merger but make money if merged.
Kapi’olani, which stood to lose money without the merger, will also make money as a result of the merger and its projected savings achieved through combined purchasing power and consolidating some systems currently triplicated, including personnel, billing and other departments, Heywood explained.
Hawai’i Pacific Health before the end of this year will become by far the largest healthcare provider in the state, the largest private-sector employer in the state, and among the top 10 largest companies in Hawai’i in combined sales.
It is that size, centralization of common services (probably to O’ahu) and what all of that will mean to levels of care and current employees that were raised as potential problems by those concerned about the merger. But it’s also what proponents of the deal say will keep all three organizations viable.
Based on last year’s sales of $374 million, Kapi’olani was the third-largest healthcare provider in the state. Straub was fourth ($358.7 million) and Wilcox ranked ninth ($79 million), according to information compiled by Hawai’i Business magazine.
Combined, the 5,039 full-time employees (Kapi’olani’s 2,250, Straub’s 1,800 and Wilcox with 989) will make the merged organization the largest non-government employer in the state.
Had it existed as a single company last year, the total combined sales of $811.7 million would have placed Hawai’i Pacific Health between seventh-place Kamehameha Schools ($839 million) and eighth-place Verizon Hawai’i (formerly GTE Hawaiian Telephone, $679.1 million), based on those two entities’ 1999 sales, according to figures from Pacific Business News.
Where healthcare providers are concerned, Kaiser Permanente Medical Care Program is tops in the state, with $520.5 million in 2000 sales, and 3,150 full-time employees.
Heywood said he likes the new health mega-corporation’s combined lobbying clout and wider base of donors of money and equipment.
“We’re going to continue to lobby to improve the agenda of Medicare and Medicaid payments,” he said.
A change in government policy, reversing rules which have seen lower Medicare and Medicaid payments to hospitals and clinics for services rendered, would mean a “dramatically” altered financial picture for the new entity, Heywood said.
Hawai’i Pacific Health also wants to improve the frequency and amount of gifts and donations, either to the various individual entities or the combined company, he added.
The Kapi’olani and Wilcox fund-raising foundations remain in the organizational chart for Hawai’i Pacific Health. So does Hawai’i Pacific Health’s 20 percent ownership in United Laundry Services Inc., the company whose president and chief executive officer is Vicky Cayetano, wife of Governor Ben Cayetano.
Straub, which operated as a for-profit entity, did not have a foundation.
As far as how the various hospital and clinic employees of Wilcox feel about the merger, particularly the nurses, Yukimura explained that system continues to offer forums to answer employees’ questions and present the latest information.
Earlier in the merger process, the Hawai’i Nurses Association, which represents most of the nurses at the hospital and clinics, voiced concerns about the merger. The association, through representatives, said at a public hearing that it wanted the merger process delayed while it got answers to its questions.
Staff Writer Paul C. Curtis can be reached at mailto:pcurtis@pulitzer.net or 245-3681 (ext. 224).
