>> Daryl: BIG CHANGES COULD BE COMING TO HEALTHCARE IN HAWAI'I.

HMSA, THE STATE'S LARGEST INSURER, AND HAWAII PACIFIC HEALTH, WHICH OWNS FOUR MAJOR HOSPITALS, ARE LOOKING TO JOIN FORCES.

THE COMPANIES SAY THIS PARTNERSHIP AIMS TO STREAMLINE SERVICES, IMPROVE PATIENT OUTCOMES AND EXPAND ACCESS STATEWIDE.

BUT OPPONENTS CITE A NUMBER OF CONCERNS INCLUDING HIGHER PRICES AND REDUCED CHOICES.

TONIGHT'S LIVE BROADCAST AND LIVESTREAM OF "INSIGHTS" ON PBS HAWAI'I START NOW.

♪ ♪ >> Daryl: ALOHA AND WELCOME TO "INSIGHTS" ON PBS HAWAI'I, I'M DARYL HUFF.

IN AN HISTORIC MOVE, HAWAII MEDICAL SERVICE ASSOCIATION AND HAWAII PACIFIC HEALTH ARE FORGING AHEAD WITH PLANS TO PARTNER UP AND CREATE A NEW NONPROFIT PARENT ORGANIZATION CALLED ONE HEALTH HAWAII.

HMSA AND HPH SAY THE TWO COMPANIES WILL REMAIN INDEPENDENT OF EACH OTHER, BUT THE COLLABORATION WILL OFFER A SOLUTION TO AFFORDABILITY AND ACCESS ISSUES BY STREAMLINING CARE AND REDUCING ADMINISTRATIVE COSTS.

HOWEVER, SOME HEALTHCARE PROVIDERS, INCLUDING THE QUEEN'S HEALTH SYSTEMS, OPPOSE THE PLAN, ARGUING IT COULD REDUCE COMPETITION, STEER PATIENTS TOWARD HPH FACILITIES, AND HARM SAFETY NET PROVIDERS LIKE QUEENS AND INDEPENDENT DOCTORS.

THE PARTNERSHIP STILL NEEDS GOVERNMENT APPROVAL, BUT WITH HMSA INSURING MORE THAN HALF OF HAWAII'S POPULATION, WE WANT TO KNOW HOW THIS COULD AFFECT PATIENTS.

WE LOOK FORWARD TO YOUR PARTICIPATION IN TONIGHT'S SHOW.

YOU CAN EMAIL OR CALL IN YOUR QUESTIONS.

AND YOU'LL FIND A LIVE STREAM OF THIS PROGRAM AT PBSHawaii.org AND THE PBS HAWAI'I YOUTUBE PAGE.

NOW, TO OUR GUESTS.

DR.

KENRIC MURAYAMA IS AN EXECUTIVE VICE PRESIDENT AND CHIEF HEALTH OFFICER AT HMSA, THE STATE'S LARGEST HEALTH INSURER.

DR.

MURAYAMA IS A SURGEON AND THE RETIRED CHAIR OF THE DEPARTMENT OF SURGERY AT THE UNIVERSITY OF HAWAII JOHN A. BURNS SCHOOL OF MEDICINE.

JASON CHANG IS THE PRESIDENT AND CEO OF THE QUEEN'S HEALTH SYSTEMS, HAWAII'S LARGEST PRIVATE, NON-PROFIT HEALTHCARE ORGANIZATION THAT OPERATES SIX HOSPITALS ACROSS THE STATE.

HE HAS MORE THAN 15-YEARS OF EXECUTIVE LEADERSHIP EXPERIENCE IN BOTH FOR-PROFIT AND NON-PROFIT HEALTHCARE SYSTEMS.

RAY VARA SERVES AS PRESIDENT AND CEO OF HAWAII PACIFIC HEALTH, AN INTEGRATED HEALTHCARE SYSTEM CONSISTING OF FOUR HOSPITALS ON OAHU AND KAUAI.

HE JOINED HPH IN 2002 AS EXECUTIVE VICE PRESIDENT AND CEO OF OPERATIONS AND ASSUMED HIS CURRENT ROLE IN 2013.

AND ED CHAN IS THE PRESIDENT OF KAISER FOUNDATION HEALTH PLAN AND HOSPITALS IN HAWAII, DIRECTING ALL HEALTH PLAN AND HOSPITAL OPERATIONS.

KAISER PERMANENTE IS THE STATE'S SECOND LARGEST HEALTH INSURER, WITH 275,000, ONE HOSPITAL AND NUMEROUS FACILITIES STATEWIDE.

THANK YOU, ALL, GENTLEMEN, FOR BEING HERE.

THIS IS AN ESTEEMED PANEL.

THANK YOU VERY MUCH FOR BEING HERE.

LET ME START OFF BY ASKING WHAT PROBLEMS ARE WE TRYING TO FIX?

LET ME OPEN UP WITH THAT BECAUSE YOU FOLKS ARE PROPOSING YOUR PARTNERSHIP.

WHAT PROBLEMS NEED TO BE FIXED MOST URGENTLY IN THE HEALTHCARE SYSTEM?

>> YEAH, THANK YOU, DARYL, I APPRECIATE THAT QUESTION.

I THINK THAT PROVIDES A GOOD CONTEXT FOR TONIGHT'S DISCUSSION.

I'VE BEEN DOING THIS FOR A LONG TIME.

I'VE BEEN SERVING AT THE CEO LEVEL FOR THE LAST 24 YEARS OF HEALTH CARE, HOSPITAL SYSTEMS IN THE STATE OF HAWAII.

I'VE NEVER SEEN THIS STATE OF THE INDUSTRY IN SUCH A VULNERABLE POSITION.

WE SEE ACCESS BEING CURTAILED.

WE SEE COSTS RISING WITHIN THE HEALTHCARE INDUSTRY, BUT ON TOP OF CERTAINLY THE AFFORDABILITY AND LIVABILITY BROADLY IN THE STATE OF HAWAII, WE SEE THE SYSTEM BEING OVERWHELMED WITH ADMINISTRATIVE BURDEN.

AND FRANKLY, WE THINK THAT'S PART OF THE ROOT CAUSE FOR MUCH OF THE MIGRATION WE SEE FROM THE STATE OF HAWAII.

I THINK WE'RE AT A TIPPING POINT AND AN APPROPRIATE TIME FOR SOME REAL STRUCTURAL CHANGE TO CHANGE THE TRAJECTORY OF HEALTH CARE IN HAWAII.

>> JASON CHANG, SAME QUESTION TO YOU.

WHAT DO WE NEED TO FIX MOST URGENTLY IN THE HEALTHCARE SYSTEM?

>> I DON'T DISAGREE WITH WHAT RAY IS FUNDAMENTALLY SAYING IS THAT THE HEALTHCARE COSTS ARE GOING UP.

THERE'S A GREATER NEED FOR HEALTHCARE ESPECIALLY FOR VULNERABLE POPULATIONS IN HAWAII.

POPULATION IS NOT GROWING BUT THE NUMBER OF SENIORS IS ACTUALLY GROWING FASTER THAN THE NUMBER OF, YOU KNOW, NONSENIORS.

AND THE MIGRATION, OUR WORKFORCE, WORRIES US.

SOMETHING NEEDS TO HAPPEN.

IF FOCUSES ON THE CARE OUR MOST VULNERABLE AND MOST SENIOR POPULATIONS REALLY NEED.

>> Daryl: LET ME TALK TO DR.

MUIRYAMA FROM HMSA.

WHERE'S HMSA FIT IN THIS PROBLEM?

SOME PEOPLE MAY SAY, WELL, HMSA IS PART OF THE PROBLEM BECAUSE OF THE WAY THE HEALTHCARE SYSTEM IS STRUCTURED.

THERE'S A LOT OUT THERE ABOUT HMSA.

TALK ABOUT THAT FOR US A LITTLE BIT?

>> FOR HMSA, IF YOU LOOK AT GOVERNMENT LINES OF BUSINESS, MEDICARE AND MEDICAID, THE COST TO DELIVER CARE TO THOSE POPULATIONS CONTINUES TO RISE.

THE AMOUNT THAT THE GOVERNMENT PAYS US TO PROVIDE THAT CARE IS GOING DOWN OR AT LEAST IS FLAT AND LIKELY GOING TO GO DOWN.

BECAUSE OF THAT, IT'S UNSUSTAINABLE FOR US TO CONTINUE TO PAY FOR THE KIND OF CARE THAT PEOPLE NEED AND DESERVE.

AND SO THAT'S PART OF THE REASON TO LOOK AT A STRUCTURAL CHANGE LIKE THIS TO SEE CAN WE CREATE A MODEL WHERE WE CAN ACTUALLY HAVE THE RESOURCES TO REINVEST IN THE HEALTHCARE ECOSYSTEM?

>> Daryl: THE OTHER QUESTION I WOULD HAVE FOR YOU FOLKS -- BECAUSE WE'VE HAD SEVERAL VERY DISRUPTIVE STRIKES IN THE MEDICAL CARE SYSTEM IN THE LAST YEAR, YEAR AND A HALF, AND IN EVERY ONE OF THOSE THINGS, THE COSTS FOR THE PERSONNEL HAVE GONE UP.

IS THAT PUTTING A LOT OF PRESSURE ON HMSA AS WELL?

>> IT DOES, AND REALISTICALLY IN ANY MODEL LIKE THIS, THE COSTS GET SPREAD ACROSS THE WHOLE HEALTHCARE ECOSYSTEM.

SO HIGH-DOLLAR CLAIMS, HIGHER SALARIES AND WAGES, EVERYONE'S PREMIUMS ARE IMPACTED BY THOSE THINGS.

WE DO HAVE TO KEEP A CLOSE EYE ON THAT AND I THINK THAT'S WHY WE NEED TO FIGURE OUT, AGAIN, A WAY TO BETTER MANAGE THE HEALTHCARE DOLLAR.

>> Daryl: SOME PEOPLE HAVE SAY THAT KAISER ALREADY FIGURED THAT OUT.

WE HEAR KAISER IS -- YOU GUYS HAVE GOT THIS SYSTEM THAT'S ALL INTEGRATED, BUT I'LL PUT THE SAME QUESTION BACK TO YOU: WHERE DO YOU GUYS SEE THE WEAKNESSES IN THE SYSTEM NOW AT KAISER?

>> YEAH, I AGREE WITH EVERYTHING THAT EVERYONE HAS SAID HERE.

SOMETHING FUNDAMENTALLY HAS TO CHANGE AND WHEN YOU TALK TO ALL OF OUR RESIDENTS ACROSS THE STATE OF HAWAII, AFFORDABILITY COMES UP.

RIGHT?

WE ALL KNOW HEALTH CARE HAS GOT TO BE A PART OF THE SOLUTION TO HAVE A THRIVING COMMUNITY.

KAISER PERMANENTE, SOME SAY WE'RE A TRULY INTEGRATED MODEL WHERE OUR PHYSICIANS AND THE INSURANCE COMPANY AND THE CARE DELIVERY SYSTEM ARE ALL WORKING TOGETHER IN THE BEST INTEREST OF THE PATIENT, TRYING TO REDUCE ALL OF THAT UNNECESSARY BURDEN AND TRYING TO COORDINATE ALL OF THE CARE.

I THINK REALLY AT THE ROOT OF IT IS HOW DO YOU DO THAT IN A PLACE LIKE HAWAII WHERE THE HEALTHCARE ECOSYSTEM IS SO FRAGILE IN A SMALL COMMUNITY AND DO IT IN A WAY THAT'S SUSTAINABLE AND COLLABORATIVE AND LIFTS UP ALL THE PARTS OF OUR COMMUNITY?

NO ONE SYSTEM COULD DO IT ALONE.

>> Daryl: LET ME ASK RAY VARA, YOU FOLKS CAME UP WITH THIS PLAN.

CAN YOU DESCRIBE WHAT YOU AND HMSA ARE PLANNING TO DO?

HOPING TO DO?

>> THANKS, DARYL.

YOU KNOW, FIRST OF ALL IF I COULD, UM, THE FACT WE'RE HAVING THIS CONVERSATION AND WE ALL AGREE THAT THE CURRENT SYSTEM IS UNSUSTAINABLE, UM, CERTAINLY TO ME, IT SHINES A BRIGHT LIGHT ON THE FACT THAT AT LEAST WE'RE HAVING THESE DISCUSSIONS AND WE'RE HAVING CONVERSATIONS AROUND OUR COMMUNITY ABOUT HOW TO ADDRESS AN ISSUE THAT FRANKLY HAS EXISTED IN OUR COMMUNITY FOR A LONG TIME.

AND SO, UM, JUST AS THE CONVERSATIONS WITH HMSA AND HAWAII PACIFIC HEALTH HAVE BEEN GOING ON FOR A LONG TIME, HAWAII PACIFIC HEALTH MADE A COMMITMENT TO SHIFTING TO A HEALTHIER COMMUNITY STRATEGY WHICH IS SORT OF OUR LANGUAGE FOR VALUE-BASED CARE, IF YOU WILL.

AS MUCH AS A DECADE AND A HALF AGO, IT CAME FROM THE FACT THAT WE SAW THE WAY THE SYSTEM WAS BEING IMPACTED BY THE NEED FOR VOLUMES OF ACTIVITY IN ORDER TO BE FINANCIALLY SUSTAINABLE.

TO ME, THAT'S JUST AN INDICATION OF A BROKEN SYSTEM.

>> Daryl: LET ME STOP YOU FOR A SECOND BECAUSE THIS TERM -- AND I WROTE IT DOWN -- VALUE-BASED CARE, IT'S A TERM THAT GETS THROWN AROUND IN THESE CONVERSATIONS.

I DON'T KNOW THE AVERAGE PERSON HAS ANY IDEA WHAT THAT MEANS.

FOR YOU FOLKS AT QUEENS, HOW WOULD YOU DEFINE VALUE-BASED CARE?

WHAT DOES THAT MEAN TO A PATIENT?

>> I THINK TO THEM.

>> Daryl: YOU GUYS, TOO, THE SAME THING?

>> WHEN YOU THINK ABOUT VALUE, YOU THINK ABOUT WALMART VERSUS GOING TO A HIGH-END DEPARTMENT STORE.

I PERSONALLY DON'T LIKE THE TERM VALUE-BASED.

I THINK PERFORMANCE-BASED CARE IS REALLY MORE APPROPRIATE, BECAUSE THERE'S WASTE IN HEALTHCARE.

SO IF A PATIENT IS GETTING, YOU KNOW, UNNECESSARY EMERGENCY DEPARTMENT UTILIZATION BECAUSE THEY DON'T HAVE A PRIMARY CARE OR THEY HAVE MISMANAGED CHRONIC CONDITIONS SO THEY'RE NOT TAKING THEIR MEDICINES AND NOT SEEING THEIR DOCTOR, AND SO THE COST FOR THAT INDIVIDUAL IS GOING UP, THOSE ARE PLACES WHERE WE HAVE OPPORTUNITIES AND THAT'S THE VALUE.

WHEN WE SAY IT'S VALUE, IT'S PUTTING RISK -- TAKING THE RISK FROM THE INSURANCE COMPANY, SHARING THAT RISK WITH THE PROVIDER AND THEN THERE'S OPPORTUNITIES TO EITHER HAVE SHARED UPSIDE OR SHARED DOW DOWNSIDE.

>> CAN I JUMP IN FOR A SECOND HERE, DARYL?

>> Daryl: PLEASE.

>> I AGREE WITH WHAT JASON SAID AND I SAW ED SHAKING HIS HEAD.

NO ONE LIKES THE WORD -- WHEN YOU THINK OF HEALTHIER COMMUNITIES AS A STRATEGY, WHAT I WOULD WANT THE COMMUNITY TO ENVISION IS AN ENVIRONMENT WHERE YOU'VE GOT THE PATIENT'S BEST INTERESTS BEING SERVED IN A WAY THAT CREATES AN EASE OF PRACTICE FOR OUR PROVIDERS AND THE FLOW OF FUNDS SUPPORTS THAT EFFORT.

AND SO YOU'RE TAKING ALL OF THE -- AS MANY OF THE BURDENS ACROSS THAT CONTINUUM OF CARE FOR THE BENEFIT OF THE PATIENT OUT OF THE EQUATION.

TODAY'S SYSTEM IS EXACTLY THE OPPOSITE.

DARYL, YOU'VE HEARD ME SHARE THIS STORY BEFORE.

WHEN IT HIT ME ON THE HEAD WAS BACK AROUND 2006 WHEN I WAS THE CEO OF A CENTER FOR WOMEN AND CHILDREN.

WE HAD LESS REALLY SICK KIDS IN THE HOSPITAL AT THAT POINT IN TIME, AND IT WAS HAVING FINANCIAL IMPLICATIONS ON OUR ORGANIZATION.

I REFUSED TO BE IN A PLACE WHERE I HAD TO HOPE FOR MORE REALLY SICK KIDS IN ORDER FOR OUR ORGANIZATION TO BE FINANCIALLY SUSTAINABLE.

THAT'S WHEN WE KNEW WE HAD TO CHANGE THE TRAJECTORY AND START WORKING WITH OUR PAYER PARTNERS LIKE HMSA AND OTHER PAYERS IN THE COMMUNITY TO REALLY BEGIN TO CHANGE THAT REALITY FOR THE PEOPLE OF HAWAII.

>> YEAH.

I WANT TO JUST CHIME IN.

THE TERM VALUE-BASED CARE, YEAH, IT'S CONFUSING.

WHERE DOES THE "VALUE" COME FROM, RIGHT?

I PREFER TO USE THE TERM "IT'S PREVENTIVE CARE."

IT'S "UPSTREAM CARE."

WHY'S THAT SO IMPORTANT?

SO MANY OF OUR PATIENTS IN THE COMMUNITY FACE -- THEMSELVES AND FAMILY MEMBERS -- HAVE CHRONIC CONDITIONS OR HAVE CONDITIONS BASED ON THEIR FAMILY HISTORY THAT COULD COME UP LATER ON IN LIFE, AND IF YOU MOVE AND FIND THOSE THINGS, DETECT ALL OF THOSE TYPES OF THINGS EARLY ON, YOU'RE ABLE TO TREAT THEM IN A MORE PREVENTIVE WAY BEFORE THEY GET SO SERIOUS THAT THE ONLY POSSIBLE WAY YOU CAN DO THAT IS WITH HIGH COST OF CARE, SPECIALTY AND PROBABLY THE MOST EXPENSIVE SETTING USUALLY AS A TERTIARY MEDICAL CENTER.

IT'S PREVENTIVE CARE.

>> WHAT ARE WE TRYING TO DO HERE?

IT'S TRYING TO PUT THE PATIENT AT THE CENTER OF THE EQUATION AND PUT AS MUCH OF THE DOLLARS, THE PREMIUM DOLLARS AS CLOSE TO THE PROVISION OF CARE AND SERVICE TO THAT PATIENT AS POSSIBLE.

THAT'S WHAT WE'RE TRYING TO DO.

>> Daryl: I'M GOING TO GIVE DR.

MURAYAMA A CHANCE TO RESPOND TO THAT QUESTION.

DOES HMSA'S SYSTEM AS A PAYER WORK TOWARDS THESE IDEALS THAT THEY'RE EXPRESSING?

>> SO I THINK THE SYSTEM THAT WE'RE IN NOW HAS MADE IT CHALLENGING TO DO THAT.

AND YOUR QUESTION SAID THE PUBLIC GENERALLY DOESN'T UNDERSTAND WHAT THAT MEANS, AND I WOULD TELL YOU EVEN PEOPLE IN HEALTHCARE DON'T FULLY APPRECIATE WHAT VALUE-BASED CARE REALLY MEANS.

TO ED'S POINT, I THINK IT'S ABOUT WELLCARE.

IF YOU LOOK AT WHAT VALUE MEANS, IT'S ACCESS, QUALITY AND OUTCOMES OVER COST.

SO IF COST GOES UP, THE VALUE GOES DOWN IF NOTHING ELSE GETS BETTER.

IF EVERYTHING ELSE GETS BETTER AND WE CAN MANAGE COSTS, THAT BRINGS VALUE TO THE SYSTEM.

SO I BELIEVE FOR PEOPLE, THEY WANT QUALITY, GOOD OUTCOMES, ACCESS TO CARE AND A MANAGED -- AND THE COST NEEDS TO BE MANAGEABLE.

THAT'S REALLY WHAT VALUE IS IN HEALTHCARE.

>> Daryl: JASON CHANG, UM, WHEN YOU FOLKS LOOK AT A PAT PATIENT, CAN YOU TELL ME HOW DOES THIS CONVERSATION AFFECT PATIENTS?

HOW MUCH IS OUR UNSUSTAINABLE ISSUE -- I DON'T KNOW IF YOU WOULD AGREE IT'S COMPLETELY UNSUSTAINABLE.

WE'RE MANAGING SOMEHOW TO SUSTAIN RIGHT NOW, BUT HOW MUCH OF THIS IS THE SAFETY NET THAT THE ELDERLY, THE POOR, THE CHRONIC CONDITIONS THAT AREN'T GETTING GOOD CARE, HOW MUCH IS THAT A PROBLEM HERE?

WE HAVE AN 80/20 THING WHERE 20% OF THE PEOPLE ARE USING UP 80% OF THE HEALTHCARE DOLLAR?

>> IT'S PRETTY CLOSE.

SO I WOULD SAY THAT WE REALLY SERVE AS THE SAFETY NET, HOSPITAL HEALTHCARE SYSTEM FOR THE STATE.

WE'RE THE HIGH-LEVEL -- THE SICKEST PATIENTS, WHEN YOU GET INTO A CAR ACCIDENT AND PART OF THE TRAUMA SYSTEM, YOU COME TO QUEENS.

IF YOU HAVE A MAJOR STROKE, YOU'RE COMING TO QUEENS.

IF ANY OF THAT HAPPENS ANYWHERE IN THE STATE, THERE'S A GOOD CHANCE YOU'RE GOING TO GET TRANSFERRED THIS WAY TO O'AHU.

I THINK THE CHALLENGE WE HAVE TODAY IS THAT WE DON'T HAVE THE INFRASTRUCTURE AS A STATE WITH THE RESOURCES OUT IN OUR RURAL COMMUNITIES TO CARE FOR ALL OF THOSE CHRONIC DISEASES.

SO WHAT HAPPENS IS YOU END UP WITH BOTH OF THE HIGH-ACUITY PATIENTS THAT NEED CARE, CATASTROPHIC CARE AND IT'S IMPORTANT TO HAVE HIGH-LEVEL CARE FOR PEOPLE IDEALLY CLOSER TO WHERE THEY LIVE SO THEY DON'T HAVE TO GET ON AN AIRPLANE BUT AT THE SAME TIME WE COLLECTIVELY HAVEN'T MADE THE RIGHT INVESTMENTS AND RESOURCES TO GET THE CARE OUT TO THESE COMMUNITIES.

AND SO THERE'S BEEN EXPERIMENTS WITH MEDICAL HOMES, THERE'S BEEN EXPERIMENTS WITH HOW WE PAY OUR DOCTORS.

BOTH OF THOSE I THINK HAVE NOT BEEN SUCCESSFUL.

SO WE'RE LOOKING AT A NEW MODEL TO TRY TO ADDRESS HOW DO WE TAKE CARE OF THE POPULATION IN A SUSTAINABLE WAY?

IT'S -- THERE ISN'T THAT MAGIC BULLET.

THERE'S NO RIGHT WAY TO DO IT.

I THINK RIGHT NOW, IT TAKES MORE COLLABORATION TO FIGURE THIS OUT OPPOSED TO VERTICAL INTEGRATION.

>> Daryl: LET ME GET BACK TO YOU, HMSA AND HPH.

SO DESCRIBE AS BEST YOU CAN FROM A LAYMAN'S POINT OF VIEW HOW WHAT YOU'RE PROPOSING WILL ADDRESS THESE ISSUES?

>> SO -- THANKS A LOT.

SO, FIRST OF ALL, BOTH -- WE'RE GOING TO DO IT THROUGH AN OPEN SYSTEM WHICH MEANS THAT IF YOU HAVE HMSA AS YOUR INSURANCE TODAY, YOU'RE GOING TO BE ABLE TO CONTINUE TO SEE YOUR DOCTOR, REGARDLESS OF WHETHER THAT DOCTOR IS AT HAWAII PACIFIC HEALTH, AT QUEENS, AT CASTLE OR A NEIGHBOR ISLAND FACILITY, WHEREVER THEY'RE AT.

THAT'S WHAT WE'RE TALKING ABOUT IF WE'RE TALKING ABOUT AN OPEN SYSTEM.

FURTHER, IF YOU HAVE AN HMS PATIENT AND HAVE USA, YOU'LL BE ABLE TO CONTINUE TO HAVE YOUR CARE THERE WITH THOSE INSURERS.

HAWAII PACIFIC HEALTH AND HMSA WILL CONTINUE TO OPERATE AS INDEPENDENT ORGANIZATIONS UNDER A NEW NOT-FOR-PROFIT PARENT COMPANY CALLED ONE HEALTH HAWAII.

WE'LL BE ABLE TO CREATE SAVINGS OR VALUE FOR THE COMMUNITY THROUGH THAT CONSOLIDATION A IN FOUR KEY AREAS.

ONE COLLAPSING CORPORATE ADMINISTRATIVE COSTS OVER THE COURSE OF THE NEXT DECADE THAT WILL BRING LITERALLY HUNDREDS OF MILLIONS OF DOLLARS WORTH OF SAVINGS TO OUR COMMUNITY WHICH LATER COULD BE REINVESTED IN SOME AREAS I'LL DISCUSS LATER ON.

SECOND, THROUGH REDUCING ADMINISTRATIVE BURDEN.

THINGS WE KNOW CREATE DUPLICATION RIGHT NOW.

DUEL-CASE MANAGEMENT FOR PATIENTS.

IN OTHER WORDS, GETTING APPROVALS FOR CARE THAT IS NEEDED AFTER SEEING YOUR DOCTOR OR AFTER A HOSPITAL ADMISSION, AFTER A SURGERY AND THINGS OF THE LIKE.

UM, ELIMINATING OR DECREASING SIGNIFICANTLY PRIOR AUTHORIZATIONS FOR CERTAIN TYPES OF PROCEDURES.

AND THEN ALSO HELPING TO MAKE SURE THAT THE SYSTEM, THE FUNDS FLOW SUPPORTS GETTING THE RIGHT CARE AT THE RIGHT PLACE AT THE RIGHT TIME.

AS AN EXAMPLE, UM, IF YOU HAVE A COUGH OR A COLD AND YOU GET SENT TO THE EMERGENCY ROOM, THAT COULD COST YOU IN EXCESS OR COST THE SYSTEM IN EXCESS OF $1,000.

IF YOU GO FOR THAT SAME TREATMENT TO AN URGENT CARE FACILITY, IT'LL COST YOU A COUPLE HUNDRED DOLLARS.

IF YOU GO TO YOUR PRIMARY CARE PHYSICIAN, IT'LL COST YOU LESS THAN $100.

RIGHT NOW WHEN IT'S ON VOLUMES OF ACTIVITY, FRANKLY, THE BEST SCENARIO FROM A REVENUE STANDPOINT IS THAT PATIENT ENDS UP IN THE EMERGENCY ROOM.

THEY ARE NOT NECESSARILY GOING TO GET BETTER CARE, THEY'RE NOT GOING TO GET MORE ACCESSIBLE CARE, IT'S JUST MORE COSTLY CARE.

>> Daryl: I GUESS WHERE I GET CONFUSED IS -- AGAIN, THE PATIENT SHOWS UP AT HPH -- AN HMSA PATIENT SHOWS UP AT HPH -- MAYBE YOU COULD HELP ME OUT WITH THIS, HOW WOULD THAT PATIENT'S EXPERIENCE BEING DIFFERENT FROM SHOWING UP FROM BEING A PATIENT FROM QUEENS OR KAISER?

>> SHOULDN'T BE DIFFERENT.

PATIENTS SHOULD STILL BE ABLE TO GET THE CARE THEY NEED WHEREVER THEY GO OR BY WHOMEVER THEY CHOSE.

THE ONE IMPORTANT THING IS ONE HEALTH WAY IS NOT ABOUT DIRECTING WHERE PHYSICIANS COULD REFER THEIR PATIENTS -- AS A PROVIDER I TELL PEOPLE THIS ALL THE TIME, YOU SEND YOUR PATIENT TO WHERE YOU THINK THEY'RE GOING TO GET THE BEST CARE.

IT MAY BE IF I'M AN HPH DOCTOR, IT MAY BE AT A QUEENS DOCTOR.

YOU WANT YOUR PATIENTS TO GET THE BEST CARE THEY COULD GET.

I THINK THAT HAPPENS TODAY AND THAT SHOULDN'T CHANGE MOVING FORWARD IN HOW PEOPLE GET THEIR CARE.

>> SO I DON'T THINK IT'S AN ARGUMENT OR DISCUSSION ABOUT WHERE YOU NEED TO GO IF YOU HAVE AN EMERGENCY.

SO WE HAVE -- PATIENTS COULD GO TO ANY EMERGENCY DEPARTMENT OR ANY URGENT CARE.

WE DON'T ASK WHAT INSURANCE THEY HAVE.

YOU GET THE CARE THEY NEED.

THAT'S ABSOLUTELY, YOU KNOW, IMPERATIVE.

I THINK THE QUESTION AT STAKE IS WHAT HAPPENS TO THE ELECTIVE CARE?

WHEN YOU HAVE YOUR PRIMARY CARE DOCTOR -- PART OF THIS IS A HIGH-PERFORMANCE NETWORK.

WE'VE HAD THE CONVERSATION ABOUT A PREFERRED NETWORK.

OUR QUESTION IS, SO WHAT DOES IT TAKE TO BE PART OF THIS NETWORK?

IN OUR MEETINGS WITH HMSA, THEY DON'T KNOW WHAT IT IS.

SO WE DON'T KNOW HOW OR WHAT -- WHAT YOU'RE SIGNING UP TO BE PART OF.

AND SO I GUESS AS WE THINK ABOUT THE VERTICAL INTEGRATION, WE KNOW THAT IF YOU'RE INSIDE THE VERTICAL INTEGRATION, YOU'RE PART OF THE PREFERRED NETWORK.

AND THEN FOR EVERYBODY ELSE, WHAT ARE THE -- WHAT ARE THE CONDITIONS THAT WE HAVE TO PARTICIPATE BY IN ORDER TO BE PART?

>> Daryl: GO AHEAD.

ANSWER THE QUESTION.

>> SO WE'RE IN THE PROCESS OF DEVELOPING THE HIGH-PERFORMING NETWORK NOW.

IT HAS TO DO WITH THE FACT THAT WE HAVE NOT BEEN ABLE TO MANAGE THE HEALTHCARE SPEND AS WELL AS WE SHOULD.

AND PART OF THAT IS PEOPLE GET CARE -- AS WE SAID, IN AN OPEN SYSTEM, YOU GET CARE WHERE YOU WANT, BUT IT'S REALLY IMPORTANT TO MAKE SURE THEY'RE GETTING THE QUALITY CARE AND THAT IT'S AFFORDABLE.

SO AS WE DEVELOP THIS NETWORK -- AND TO JASON'S POINT, AND I AGREE -- IT'S STILL IN DEVELOPMENT.

HAVING SAID THAT, WHEN IT'S DONE, IT SHOULD BE ABOUT FINDING HIGH-QUALITY CARE THAT'S AFFORDABLE FOR OUR MEMBERS.

>> SO THERE'S -- THERE'S -- WE'RE MISSING A BIG POINT HERE.

THIS -- AND THIS IS EVEN BEYOND, UM, ONE HEALTH HAWAII.

THIS IS ABOUT CHANGING THE WAY HEALTHCARE IS DELIVERED AND FUNDED ON A COMMUNITY-WIDE BASIS.

ONE OF THE THINGS THAT HAWAII PACIFIC HEALTH HAS DONE IN PARTNERSHIP WITH HMSA OVER THE LAST FEW YEARS, OVER THE LAST FOUR YEARS, TO BE EXACT, IS TO MOVE AWAY FOR A PAY FOR VOLUMES OF ACTIVITY BASIS TO PAYING FOR BEING STEWARDED OVER THE HEALTH OF THE POPULATION THAT WE SERVE.

NOT SO DIFFERENT THAN WHAT KAISER DOES FOR THEIR MEMBERS, EXCEPT WHAT WE'RE TALKING ABOUT DOING IS ON A COMMUNITY-WIDE BASIS AND AN OPEN SYSTEM MODEL.

AND SO WE'RE GOING TO ASK THE OTHER PROVIDERS, QUEENS, CASTLE, THE OTHER INDEPENDENT PHYSICIANS, PROVIDER ORGANIZATIONS TO DO IS MAKE A COMMITMENT TO OVER TIME TRANSITIONING FROM THAT FEE-FOR-SERVICE, PAY FOR VOLUMES OF ACTIVITY-TYPE REIMBURSEMENT TO PAY FOR KEEPING OUR COMMUNITY HEALTHY STANDPOINT.

NOW, WE RECOGNIZE NOT EVERYBODY IS IN A POSITION TO DO THAT TODAY, AND SO THE EXISTING CONTRACTS WITH HMSA WILL REMAIN INTACT OR WE'LL MEET THEM WHERE WE'RE AT WHILE WE MAKE -- PUT TOGETHER A PROCESS TO HELP EVERYONE TRANSITION TO THAT HEALTHIER COMMUNITY STRATEGY.

>> YEAH, AND I JUST DON'T WANT -- I WANT TO COMMENT ON SOMETHING THAT RAY SAID.

YOU KNOW, KAISER PERMANENTE, LET'S LOOK UNDER THE HOOD OF WHAT KAISER PERMANENTE ACTUALLY IS.

WE ARE THREE SEPARATE ORGANIZATIONS NOT MERGED TOGETHER OR UNDER A PARENT COMPANY BUT THROUGH PARTNERSHIP AND STRONG TRUST.

WE'RE ABLE TO HAVE THAT CARE COORDINATION, PROVIDE THE RESOURCES.

OUR INDEPENDENT PHYSICIAN MEDICAL GROUPS ARE ABLE TO MAKE THOSE CLINICAL JUDGMENTS IN WHAT IS THE BEST INTEREST OF THE PATIENT, NOT WILL THIS GIVE ME THE VOLUMES OF CARE SO I CAN GET THE RESOURCES THAT I NEED.

SO I THINK SOME OF THE QUESTIONS THAT HAVE BEEN OUT THERE ARE, UM, YOU KNOW, WE HAVE BEEN ABLE TO DO THIS RIGHT NOW WITHOUT HAVING A MERGER OF, YOU KNOW, AND STILL HAVE THE INTEGRATED MODEL THAT A LOT OF PEOPLE REFER TO AS KAISER PERMANENTE.

>> Daryl: LET ME JUST ASK JUST TO CLARIFY, KAISER IS A CLOSED SYSTEM.

YOU HAVE TO BE A MEMBER -- EXCEPT IN MAUI WHICH GETS KIND OF COMPLICATED AND I KNOW YOU DO REFER OUTSIDE OF KAISER FOR CERTAIN SERVICES BUT YOU GUYS ARE BASICALLY A CLOSED SYSTEM SO YOU HAVE THE PATIENTS UNDER YOUR CONTROL MORE THAN WHAT THESE FOLKS ARE DEALING WITH.

>> I'M GLAD YOU BROUGHT THAT UP.

LET'S ALSO UNPACK THAT A LITTLE BIT, TOO.

KAISER PERMANENTE, YES, WE HAVE A HEALTH PLAN AND HEALTH PLAN MEMBERS RECEIVE THEIR CARE THROUGH DOCTORS AND OTHER PROVIDERS THAT ARE PART OF THE NETWORK.

IT'S VERY SIMILAR TO HMSA.

HMSA HAS A NETWORK OF PROVIDERS AND IF YOU HAVE HMSA INSURANCE, YOU ARE TO GO INTO THAT NETWORK TO RECEIVE YOUR CARE.

AND AS PART OF THAT, I MENTIONED EARLIER, OUR INDEPENDENT MEDICAL GROUP, THE HAWAII PERMANENTE MEDICAL GROUP, THEY HAVE COLLABORATION AND PART OF THAT KAISER PERMANENTE CARE AS A MEMBER, YOU ARE RECEIVING CARE THROUGH HAWAII PACIFIC HEALTH.

YOU ARE RECEIVING SPECIALTY CARE AT QUEENS HEALTH SYSTEM.

WHY IS THAT?

BECAUSE THAT IS REALLY THAT COLLABORATIVE EFFORT THAT STRENGTHENS ACCESS TO CARE IN THE COMMUNITY THAT I WAS TALKING ABOUT EARLIER.

>> I THINK TO BE FAIR, ED, WHILE THAT MAY BE STRUCTURALLY OR LEGALLY TRUE, UM, THE ENTITIES WITHIN THE KAISER PERMANENTE GROUP OR KAISER HOSPITALS AND HEALTH PLANS, YOU'RE LARGELY EACH OTHER'S ONLY CUSTOMERS CREATING THAT MORE CLOSED ENVIRONMENT.

AND THE CARE THAT'S RECEIVED OUTSIDE OF THE KAISER ENVIRONMENT IS A VERY SMALL FRACTION OF THE TOTAL CARE, CORRECT?

>> IT'S MANAGED CENTRALLY, UM, BUT MY POINT IS WE ALSO COLLABORATE THROUGHOUT THE COMMUNITY.

>> YEAH, OK -- >> I THINK THAT IS THE CONCERN IS THAT SO IF YOU'RE REALLY JUST THE ONLY CUSTOMERS WITHIN THAT ENTITY, IS THAT IS WHAT IS BEING CREATED?

SO GOING BACK TO WHAT RAY MENTIONED, YOU KNOW, WE WANT TO CHANGE THE MODEL SO THAT YOU'RE CARING FOR A POPULATION OF PATIENTS -- SO IF I'M AN INSTANT PHYSICIAN -- AN INDEPENDENT PHYSICIAN, I'M GETTING PAID TO CREATE VALUE AS OPPOSED FOR FEE FOR SERVICE SO THE BEST WAY TO DO THAT IS TO TAKE CARE OF HEALTHIER PATIENTS.

LOWER COST AND LOWER UTILIZATION PATIENTS AND THEN I'LL BENEFIT.

WE'RE AFRAID THE DISTRIBUTION OF PATIENTS WILL BE NOT EQUITABLE.

>> Daryl: I HAVE TO COME TO SOME OF OUR QUESTIONS FROM VIEWERS BECAUSE THEY'RE STARTING TO PILE UP HERE.

AND THIS IS -- I'M USING THE QUESTION THAT CAME THE MOST OFTEN.

I'VE GOT FOUR SEPARATE QUESTIONS.

I'M NOT GOING TO READ THEM ALL BUT THE SIMPLEST ONE WAS, UM, YOU KNOW, WILL DOCTOR -- SORRY, HOW WILL THIS PARTNERSHIP ADDRESS OUR DOCTOR SHORTAGE OR WILL IT?

WILL DOCTOR COMPENSATION INCREASE BECAUSE OF THIS PARTNERSHIP?

MANY DOCTORS LEAVE BECAUSE COMPENSATION IS SO LOW.

WILL IT ATTRACT OR SCARE AWAY CURRENT OR PERSPECTIVE PHYSICIANS.

WE ALREADY HAVE A SHORTAGE.

WHO WILL BE CARING FOR US?

OR WILL MORE PHYSICIANS BE LEAVING?

HOW WILL THIS WORK WHEN IT'S ALREADY DIFFICULT TO FIND A PRIMARY CARE PROVIDER ACROSS THE STATE?

IF YOU DO NOT HAVE ENOUGH PROVIDERS, HOW WILL WHAT YOU SAY HAVE A PLAN ACTUALLY TAKE SHAPE?

LET ME START, THOUGH, WITH DR.

MURAYAMA.

AS A DOCTOR YOURSELF, HOW WILL THIS INCREASE OR HELP THE PHYSICIAN SHORTAGE IN THIS STATE?

>> PHYSICIAN SHORTAGE IS A COMPLICATED PROBLEM AS YOU KNOW.

IT'S MULTI-FACTORIAL.

>> Daryl: THEY'RE ALL COMPLICATED.

>> I BELIEVE ONE OF THE ISSUES IS TO REINVEST INTO THE PROVIDER COMMUNITY.

WE NEED TO INVEST IN PRIMARY CARE AND PEDIATRIC CARE SO THAT THOSE DOCTORS FEEL LIKE THEY HAVE A REWARDING PROFESSIONAL EXPERIENCE AND LIVELIHOOD.

RIGHT NOW WITH THE LOSSES THAT HMSA INCURRED BECAUSE OF MEDICARE AND MEDICAID, THERE ARE NO DOLLARS TO REINVEST.

PART OF ONE HEALTH HAWAII, THE GOAL IS TO CREATE THE MODEL THAT WILL RESULT IN SIGNIFICANT SAVINGS OVER TIME AND THEN THOSE DOLLARS THEN COULD BE REINVESTED INTO PRIMARY CARE, INTO UPSTREAM CARE FOR FOOD INSECURITY OR HOUSING INSECURITY MAKING SURE WE CAN KEEP PEOPLE HEALTHY.

THERE IT'S NO BETTER WAY TO KEEP PEOPLE HEALTHY THAN HAVE THEM BE ABLE TO SEE A PRIMARY CARE PHYSICIAN.

RIGHT NOW, PRIMARY CARE PHYSICIANS ARE STRUGGLING BECAUSE IT'S HARD TO KEEP THEIR OFFICES STAFFED SO THEY CAN STAY OPENED LONGER.

IT'S HARD FOR THEM TO WORK LONGER BECAUSE OF THE ADMINISTRATIVE BURDEN THEY HAVE TO DO AT THE END OF THE DAY.

A LOT OF THIS IS MAKING SURE WE CAN CREATE A MODEL OR MODIFY THE MODEL OR IMPROVE THE MODEL SO PRIMARY CARE OFFICES COULD SEE PEOPLE.

MY FATHER-IN-LAW HAD AN INFECTION ON HIS LEG.

HIS DOCTOR COULDN'T SEE HIM AT 3:45 IN THE AFTERNOON ALREADY.

THE RESPONSE?

SORRY, YOU HAVE TO GO TO THE EMERGENCY ROOM!

THAT DRIVES UP THE COST OF CARE.

WHAT WE WOULD HOPE TO DO IS IN THE FUTURE, HAVE PEOPLE BE ABLE TO KEEP THEIR OFFICES OPEN LATER SO THEY CAN SEE PATIENTS AND NOT HAVE THEM GO TO THE ER OR EVEN URGENT CARES.

I'M A PHYSICIAN SO MY WIFE SENDS ME THE PICTURE AND I MAKE A CLINICAL DECISION FOR MY FATHER-IN-LAW.

NOT A GOOD IDEA GENERALLY.

WE KEPT HIM OUT OF THE ER BUT REALLY WHAT WE NEED IN THE FUTURE IS FOR PEOPLE TO BE ABLE TO HAVE STAFFING AND OFFICE HOURS SO WE CAN KEEP PEOPLE OUT OF THE EMERGENCY ROOM.

IT'S ABOUT WELL CARE.

>> Daryl: LET ME JUST ASK, THOUGH, THE TWO OF YOU, SO -- IN RESPONSE TO THE VIEWERS' QUESTIONS -- ARE YOU SAYING YOU'RE PLANNING TO PAY PRIMARY CARE PHYSICIANS MORE IN ORDER TO KEEP THEM?

WOULD THAT ONLY BE THE PRIMARY CARE PHYSICIANS IN YOUR SYSTEM OR WOULD IT BE THE ONES OUTSIDE YOUR SYSTEM?

>> I'LL ANSWER THAT.

THE -- UM, FIRST OF ALL, I DON'T THINK ANY OF US WILL COMMIT TO PAY ANYBODY ANY MORE OR LESS TODAY, BUT WHAT WE WILL SAY IS THAT WE INTEND TO CREATE -- WE'VE BEEN VERY VOCAL, AT LEAST A COUPLE BILLION DOLLARS WORTH OF VALUE OVER THE COURSE OF THE NEXT DECADE THAT WILL GO INTO THREE BUCKETS: CHANGING THE RATE OF INCREASE FOR THE COST OF INSURANCE, REINVESTING INTO THE ECOSYSTEM OF HEALTHCARE WHICH MEANS MAKING HOUGH IS WE HAVE THE RIGHT PHYSICIANS AT THE RIGHT PLACE TO PROVIDE THE RIGHT CARE AT THE RIGHT TIME AND THAT MEANS YOU HAVE TO BE ABLE TO IMPROVE RECRUITMENT AND RETENTION FOR THE PHYSICIANS HERE IN HAWAII.

THAT'LL BE DONE THROUGH RECRUITING MORE AND PAYING THEM A FAIR MARKET-BASED WAGE, MAKING SURE WE RETAIN FOLKS BY PAYING THEM A FAIR MARKET-BASED WAGE.

IT MAY BE THROUGH INCREASING THE NUMBER OF SCHOLARSHIPS WE PROVIDE TO THE JOHN A. BURNS SCHOOL OF MEDICINE.

RIGHT NOW, HAWAII PACIFIC HEALTH BY ITSELF HAS 20 STUDENTS TODAY ON FULL FOUR-YEAR FULL-RIDE SCHOLARSHIPS.

WE'RE INCREASING THE NUMBER OF SCHOLARSHIPS.

AND AS WE TALKED ABOUT, EASING THE ADMINISTRATIVE BURDEN.

IF WE DO THOSE THINGS, WE BEGIN TO MAKE A DENT IN THE FUTURE HEALTHCARE WORKFORCE FOR HAWAII.

>> Daryl: WHAT IMPACT DO YOU THINK IT WILL HAVE?

>> I THINK IF YOU CAN CONNECT THOSE DOTS, IT IS YOU HAVE TO BE PART OF THIS PREFERRED NETWORK, YOU HAVE TO CHANGE THE WAY YOU PRACTICE BECAUSE YOU'RE GOING TO GET PAID DIFFERENT AND YOU'RE NOT GOING TO GET PAID ANY MORE.

THE RESULT IS GOING TO BE BILLIONS OF DOLLARS TO THIS NEW VERTICALLY-INTEGRATED ENTITY.

THAT'S OUR CONCERN.

>> JASON, YOU KNOW, LOOK, I KNOW WE SEE THAT IN A LOT OF THINGS BUT THIS ISN'T ONE OF THEM.

THE TRUTH IS, YOU DON'T HAVE TO BE PART OF THE PREFERRED NETWORK OR PART OF HAWAII PACIFIC.

YOU HAVE TO COMMIT TO MAKING A TRANSITION TO CHANGE THE SYSTEM THAT ISN'T WORKING FOR THE PEOPLE OF HAWAII AND THAT WILL BE A NEGOTIATED ARRANGEMENT BETWEEN THE HEALTH PLAN AND EACH INDIVIDUAL PROVIDER.

WE ALSO KNOW THAT THE SYSTEM IS UNSUSTAINABLE.

TO SUGGEST WE DON'T HAVE TO MAKE SYSTEMIC CHANGES IS JUST NOT SERVING IN THE BEST INTEREST OF OUR COMMUNITY AND SO WE HAVE TO COMMIT TO CHANGE.

>> TOTALLY AGREE!

I THINK THAT'S WHY OUR ALTERNATIVE PLAN IS THAT IT'S HORIZONTAL INTEGRATION, NOT THE VERTICAL INTEGRATION.

SO THE BILLIONS OF DOLLARS THAT GET SAVED DON'T GO TO THE VERTICALLY-INTEGRATED ENTITY THAT DECIDES WHERE THOSE DOLLARS GET SPENT AND HOW THOSE DOLLARS GET SPENT.

EVERYBODY IS AN EQUAL PARTNER AT THE TABLE CREATING THE SAVINGS AND CREATING THE NEW MODEL AND THEN IT'S EQUITABLE.

>> JASON F YOU -- IF YOU WILL, TO HORIZONTALLY INTEGRATE WOULD BE A TRUST ISSUE.

IF WE TRY TO DO IT THROUGH SOME FORM OF A RISK-BEARING ENTITY OUTSIDE OF ONE HEALTH HAWAII -- WHICH IS LIKELY THE CASE -- THEN WE WOULD HAVE THAT SHARED INTEREST AND SHARED GIVENNANCE AND TAKE THE SHARED RISK AND TAKE THE OPPORTUNITY TO DO IT BUT IN ORDER FOR THAT TO HAPPEN, IT'S GOT TO BE FUELED BY THE VALUE CREATION THROUGH THE SAVINGS THAT ARE CREATED THROUGH THE VERTICALLY-INTEGRATED ORGANIZATION, OTHERWISE WE'RE JUST DOING WHAT WE'RE DOING NOW.

>> YEAH, I THINK THAT'S WHERE WE DISAGREE, BECAUSE YEARS AGO -- AND IT WAS BEFORE ME -- THERE WAS CONVERSATIONS ABOUT A THREE-PARTY RISK-BEARING ENTITY.

>> Daryl: NOW WE'RE GETTING A LITTLE BIT HIGHER IN THE STRATOSPHERE OF HEALTHCARE FINANCE RIGHT NOW.

I NEED TO BRING IT BACK.

IS IT -- I THINK THAT -- I THINK THE FEAR -- WHAT PEOPLE DON'T UNDERSTAND OR SHOULD UNDERSTAND IS THAT THERE IS COMPETITION IN THE MARKETPLACE RIGHT NOW.

AND THE COMPETITION IS OFTEN FOR A PARTICULAR KIND OF PATIENT, THE WELL-PAYING PATIENT, THE ONE THAT HAS A JOB, HAS PRE-PAID HEALTHCARE AND LIVES NEAR A FACILITY OR NEARBY.

>> THAT'S A VERY SMALL FRAGMENT OF THE POPULATION.

THE TRUTH IS, WE ALL SERVE AS SAFETY NETS.

OUR NEIGHBOR ISLAND HOSPITALS, PART OF HHSC AND QUEENS AND HAWAII PACIFIC HEALTH ARE ALL SAFETY NET HOSPITALS.

IT TAKES A VILLAGE, IF YOU WILL.

RIGHT NOW, IT TAKES ALL OF US TO SERVE OUR POPULATION AND WE STILL HAVE ACCESS ISSUES.

>> Daryl: I WANT YOU TO GET IN.

>> I WANT TO COMMENT ON A COUPLE OF THINGS IN THIS CONVERSATION.

AS PART AN INTEGRATED SYSTEM THAT'S BEEN DOING THIS FOR A LONG TIME I CAN TELL YOU THAT OUR VAST PRIMARY CARE SYSTEM ACROSS THE STATE, WE KNOW THE RESOURCES IT TAKES TO TAKE CARE OF A HEALTHY PATIENT VERSUS SOMEONE WHO MAY HAVE A LOT OF CHRONIC DISEASES AND ILLNESSESES WHERE YOU NEED TO TAKE MORE TIME, YOU NEED TO HAVE MORE PEOPLE ON YOUR TEAM TO BE ABLE TO WRAP THAT PATIENT WITH CARE SO THAT YOU'RE TRULY PREVENTING THEM FROM GETTING SO SICK THAT THEY HAVE TO GO INTO THE HOSPITAL.

I THINK SOME OF THE QUESTIONS THAT HAVE COME UP ARE IN THIS HIGH-PERFORMING NETWORK, WILL THE PEOPLE THAT RAISE THEIR HAND AND SAY, YES, I WANT TO PRACTICE THAT KIND OF MEDICINE, BUT WILL YOU BE PROVIDING THOSE RESOURCES FOR ME SO THAT I CAN PROVIDE THAT KIND OF CARE THAT WILL TAKE MORE TIME AND WILL REQUIRE MORE RESOURCES.

>> I'LL SAY ON THE RECORD YES.

>> Daryl: I WANT TO JUST BREAK THAT APART A LITTLE BIT.

SO WHAT I'M GETTING HERE IS IT'S GOING TO COST A LOT OF MONEY TO CHANGE THIS SYSTEM.

YOU'RE TALKING ABOUT SAVING MONEY THROUGH ADMINISTRATIVE CHANGES, PREAUTHORIZATION, OTHE- >> CARE COORDINATION.

>> Daryl: CARE COORDINATION.

>> FEDERAL FUNDS.

>> Daryl: DOES IT GENERATE -- THAT'S ONE OF THE QUESTIONS.

HOW WILL THE PROPOSED -- THEY SAID MERGER -- I'M GOING TO SCRATCH THAT, PARTNERSHIP, AFFORDABILITY AND SUSTAINABILITY TO SUSTAIN INVESTMENTS IN THE LONG-TERM?

I HAVE ANOTHER COUPLE QUESTIONS ABOUT, UM, YOU KNOW, PEOPLE DON'T UNDERSTAND THE FINANCE ASPECT OF THIS.

I DON'T FULLY UNDERSTAND THE FINANCE ASPECT OF THIS, BECAUSE HMSA IS STRUGGLING RIGHT NOW, RIGHT?

AND SO HOW MUCH OF THIS IS TO MAKE SURE HMSA SURVIVES?

>> SO I DON'T THINK IT'S TO MAKE SURE HMSA SURVIVES, BUT WE DO KNOW THAT WITHOUT SOME STRUCTURAL CHANGE IN HOW WE SET UP THE HEALTHCARE ECOSYSTEM, WE'RE GOING TO CONTINUE TO STRUGGLE BECAUSE OF THOSE GOVERNMENT LINES OF BUSINESS AND THOSE PEOPLE, MEDICARE AND MEDICAID, THEY HAVE TO BE ABLE TO GET CARE.

WE HAVE TO BE ABLE TO AFFORD TO PROVIDE THAT CARE TO THEM.

AND SO THE IMPORTANT THING THIS IS WITHOUT ONE HEALTH HAWAII, WE CAN'T REINVEST IN THE HEALTHCARE SYSTEM, RIGHT?

IF YOU LOOK AT THE MODEL THAT'S IN PLACE RIGHT NOW, HMSA HAS TO BE GOOD STEWARDS OF THE PREMIUM DOLLARS THAT EVERYONE PAYS.

THAT'S TRYING TO MANAGE THAT COST OF CARE, STILL BE ABLE TO HAVE THE PEOPLE GET THE CARE THEY NEED.

ON THE PROVIDER SIDE, EVERY HEALTH SYSTEM IS TRYING TO HAVE A REVENUE MARGIN.

THAT'S TRUE, OTHERWISE THEY WOULDN'T SURVIVE, RIGHT?

SO THERE'S THIS MISALIGNMENT OF INCENTIVES ABOUT WHAT WE'RE TRYING TO PAY AND WHAT THEY'RE TRYING TO GET.

IN AN INTEGRATED SYSTEM, THE HOSPITAL BECAUSE A COST CENTER OVER TIME.

WHAT THAT MEANS IS THE DOLLARS THAT WE DON'T HAVE TO PAY FOR THAT CARE IN THE INTEGRATIVE MODEL COULD BE REINVESTED AND NOT JUST IN HPH OR HMSA BUT ACROSS THE WHOLE ECOSYSTEM.

>> Daryl: JASON, DO YOU WANT TO RESPOND TO THAT?

>> YEAH, YOU KNOW, I THINK THAT -- I HEAR, YOU KNOW, THAT -- I KEEP RECURRENTLY HEARING THAT THE BENEFIT HAPPENS WITHIN THE INTEGRATED MODEL.

SO, AGAIN, IT GOES BACK TO THE WHOLE FACT THAT THE INTEGRATED MODEL HAS THOSE THAT ARE WITHIN THE WALLS AND EVERYBODY ELSE BEING OUTSIDE THE WALLS.

AND SO HOW DO WE CREATE A SYSTEM THAT ALLOWS EQUITY?

BECAUSE IF WE'RE ALL -- TAKES A VILLAGE -- ALL HAVE TO PULL TOGETHER TO MAKE SURE WE'RE CARING FOR THE MOST VULNERABLE PATIENTS IN HAWAII, IT'S, AGAIN, GOING TO TAKE EVERYONE LEANING IN OPPOSED TO EVERYBODY TRYING TO FIGURE OUT LIKE IS THIS GOOD?

IS THIS BAD?

ARE WE NOT GOING TO BE ABLE TO -- >> I GUESS WHAT I WOULD ASK, JASON, THIS ISN'T A NEW PROBLEM AND ISN'T THAT -- I ASSUME SINCE THAT'S WHAT WE'VE ALL BEEN DOING FOR YEARS, IF NOT DECADES, AND IT HASN'T PRODUCED THE RIGHT OUTCOME, ISN'T IT TIME FOR A DIFFERENT LENS AND VIEW IN TERMS OF HOW TO DO THINGS DIFFERENTLY?

WHERE WERE THESE IDEAS AND DISCUSSIONS PRIOR TO US BRINGING UP THE IDEA OF A VERTICALLY-INTEGRATED SYSTEM?

LET ME REMIND YOU, THE VERTICALLY-INTEGRATED SYSTEM, ALL THREE ENTITIES WILL BE NOT FOR PROFIT ORGANIZATIONS WITH GOVERNED BY COMMUNITY BOARDS THAT ARE REGULATORY REQUIRED TO SERVE IN THE BEST INTEREST OF THE BROADER COMMUNITY, NOT JUST OUR INDIVIDUAL ENTITIES.

>> Daryl: OK, I WANT TO MAKE SURE WE HEAR THAT THE VIEWERS ARE ALSO CONCERNED ABOUT THIS, UM, THIS COMPETITIVE MONOPOLY IS THE WAY SOME PEOPLE PUT IT.

DAVE FROM THE BIG ISLAND, IF THE STATE OF HAWAII ALLOWS THIS MERGER TO HAPPEN, EVEN IF IT'S NOT A FULL MONOPOLY, IT'LL BE A NEAR MONOPOLY VERTICALLY AND HORIZONTAL T COULD BE DISASTROUS FOR HAWAII DEATHIR.

THIS PARTNERSHIP WOULD BE HIGHLY REGULATED WHICH WOULD BE VERY DIFFICULT TO DO.

WITH THIS PROPOSAL, HMSA PAY A SMALLER CO-PAY AT QUEENS OR HPH HOSPITAL WHICH IS A BIGGER ISSUE.

ARE YOU GOING TO ATTRACT PAYING PATIENTS AWAY?

WHY IS THIS ONLY HPH AND HMSA.

IF THIS IS FOR EVERYBODY?

YOU TALK ABOUT OTHER ORGANIZATIONS COMING ON BOARD.

HOW DO YOU ENSURE THIS HAPPENS?

>> CLEARLY WE BELIEVE THIS WON'T BE A MONOPOLY.

IT'S A VERTICAL INTEGRATION.

IT'LL BE -- WE'RE DOING IT THROUGH VERTICAL INTEGRATION CREATING VALUE CREATION THAT WILL SERVE ALL PARTIES ACROSS THE HEALTHCARE INDUSTRY.

THERE'S NO PLAN RIGHT NOW TO DIFFERENTIATE THE VERTICALLY INTEGRATED PROVIDER AND THE RELATIONSHIP WITH HMSA AND ANY OTHER PROVIDER THAT MAKES A COMMITMENT TO MOVE TO ANY OTHER COMMUNITY'S STRATEGY.

IN A PROVIDER CHOOSES NOT TO BE PART OF CHANGING, THEY IN FACT MAY FIND THEMSELVES WITH DIFFERENT TERMS.

THAT'S GOING TO BE THROUGH A CHOICE THEY MAKE, NOT ONE THAT THE VERTICALLY-INTEGRATED SYSTEM MAKES.

AND SO THIS IS, AGAIN, I GO BACK TO THE FACT THAT RIGHT NOW IN ORDER TO CARE FOR ALL 760,000 LIVES OF HMSA MEMBERS AS WELL AS THE MEMBERS OF OUR GOVERNMENT PAYERS, IT TAKES THE ENTIRE ECOSYSTEM.

IT SERVES NOBODY IF ONE PROVIDER OF ONE OF THE OTHER HEALTH PLANS FINDS THEMSELVES IN HARM'S WAY.

>> Daryl: JASON, GO AHEAD QUICKLY.

I WANT TO ASK ONE OF THE OTHER QUESTIONS.

>> WHAT I HEARD IS YOU HAVE TO -- IF YOU ADOPT THE PHILOSOPHY AND DECIDE YOU'RE GOING TO, YOU KNOW, PRACTICE THIS WAY, BUT THIS WAY IS STILL REALLY VAGUE.

IT HASN'T BEEN DESCRIBED AS HOW THIS IS GOING TO WORK.

AND SO IT'S A MODEL.

IT'S AN EXPERIMENT.

AND SO IT'S OTHERS THAT HAVE A DIFFERENT OPPORTUNITY, A DIFFERENT IDEA THAT DIFFERS FROM THAT MODEL, ARE YOU STILL OUT?

>> WELL, LET'S TALK ABOUT THAT JUST FOR A SECOND -- >> Daryl: WAIT, WAIT, WAIT, LET ME GIVE ED A CHANCE TO TALK.

>> I WANT TO COMMENT ON THE PART THAT NO ONE IS SAYING HERE THAT FUNDAMENTAL CHANGE OR WE HAVE TO LOOK AT THE WAY CARE IS DELIVERED AND COLLABORATE ACROSS THE STATE, RIGHT?

I THINK WE ALL AGREE ON THAT, BUT WHEN WE TALK ABOUT NOT A MONOPOLY OR NOT GOING TO BE FUNDAMENTALLY CHANGING THE HEALTHCARE SYSTEMS IN THE STATE, WHEN YOU CONTROL OVER HALF OF THE INSURED POPULATION AND YOU'RE ONE OF THE LARGEST CARE DELIVERY SYSTEMS IN THE STATE AND THEN WALL THAT OFF AND SAY TO THE REST OF THE COMMUNITY, UM, WE'RE GOING TO DO OUR THING OVER HERE, IT DOES HAVE UNINTENDED CONSEQUENCES ON -- YOU KNOW, WE SAID EARLIER, EVERY PART AND PIECE OF THE STATE'S HEALTHCARE SYSTEM HAS TO WORK COLLABORATIVELY WITH THE OTHER PIECES.

IT HAS -- IT ALMOST CERTAINLY HAS UNINTENDED CONSEQUENCES.

>> WOULDN'T WALLING OFF A CERTAIN PART OF THE POPULATION BE MORE KAISER-LIKE THAN AN OPEN SYSTEM?

>> NO.

NO.

I THINK THAT'S ONE OF THE MISSED STEREOTYPES OF KAISER PERMANENTE.

OUR PERMANENTE PHYSICIAN GROUP HAS BROAD RELATIONSHIPS WITH MANY OF THE CLINICIANS AT KAP.

WE HAVE PHYSICIANS THAT SEE PATIENTS AT BOTH KAISER PERMANENTE AND HAWAII PACIFIC HEALTH.

WHY DO THEY DO THAT?

IN A STATE THAT'S ONLY GOT 1.4 MILLION RESIDENTS, WE HAVE A VERY CAPTIVE AUDIENCE.

WE'RE IN A VERY ISOLATED PLACE.

WE'RE NOT IN AN URBAN CENTER WHERE YOU CAN CREATE THE ECONOMIES OF SCALE AND GET THE EFFICIENCIES BECAUSE WE HAVE A LARGE POPULATION.

OUR CLINICIANS FIGURED THIS OUT.

THEY WORK COLLABORATIVELY WITH ONE ANOTHER.

WHAT THIS DOES WITH THE PHYSICIAN SHORTAGE FOR THE VIEWER THAT BROUGHT THAT UP IS THAT ACTUALLY ATTRACTS MORE PHYSICIANS IN, BECAUSE THEY CAN THEN SEE A PATH FORWARD THAT I CAN HAVE A THRIVING PRACTICE WHERE WHEN I LOOK AT THE NUMBERS ON THE SURFACE, JEEZ, THAT'S REALLY NOT A LARGE ENOUGH POPULATION FOR ME TO HAVE A THRIVING PRACTICE AND HAVE ENOUGH BUSINESS, BUT WHEN I'M COLLABORATIVE NOW, THAT'S A VERY DIFFERENT VALUE PROPOSITION FOR ME.

>> ED, HASN'T KAISER OVER THE LAST COUPLE OF YEARS BEEN SPENDING TIME SPECIFICALLY ACQUIRING SYSTEMS AROUND THE COUNTRY JUST LIKE WE'RE TALKING ABOUT CREATING?

>> Daryl: RAY, I'M GOING TO STOP YOU.

I THINK THAT -- NO.

I THINK -- YOU GUYS ARE GETTING INTO SOMETHING -- NO OFFENSE TO ANYBODY HERE BUT I THINK GETTING INTO THE -- I KNOW THERE'S A FEAR THAT THERE WOULD BE -- IF THE SYSTEM REALLY GOT DESTABILIZED, BEING ONE OF THE ENTITIES COMING IN AND TAKING OVER SECTIONS.

LET'S SAY THAT THAT'S A FEAR THAT EVERYBODY SHARES A LITTLE BIT.

>> THAT'S NOT WHERE I WAS GOING.

>> Daryl: OK, BUT I WANT TO GET TO -- THIS IS A REALLY DECENT QUESTION FROM A PATIENT POINT OF VIEW.

SEEMS LIKE THE SYSTEM WOULD BE MORE BACK TO QUALITY-BASED CARE WHICH MAY HAVE BEEN A FAILING SYSTEM INSTEAD OF FEE FOR SERVICE.

WHY DO THEY THINK IT'LL WORK?

FOR DOCTORS PART OF THE SYSTEM, WILL THEY BE LESS MOTIVATED TO FIGHT MORE ME, THE PATIENT, BY NOT ORDERING TESTS THEY DEEM TOO EXPENSIVE?

THIS IS A THING.

HOW MUCH IS A PREAUTHORIZATION SYSTEM COSTING AND AFFECTING PATIENTS?

IS THAT GOING TO GO AWAY UNDER THIS ARRANGEMENT?

>> PRIOR AUTHORIZATION ISSUE IS BEING ADDRESSED BY CMS AND INSURANCE COMPANIES, RIGHT?

WE KNOW WE HAVE TO GET OUR PRIOR AUTHORIZATION NUMBERS DAYS DOWN BELOW SEVEN BUT THE OTHER THING ABOUT THAT IS WE'VE ALSO -- WE'RE ALSO EXAMINING, REMOVING PREAUTHORIZATION FOR A LOT OF DIFFERENT CODES WHICH IS GOING ON NATIONALLY BECAUSE WE KNOW THAT'S AN UNNECESSARY ADMINISTRATIVE BURDEN FOR THINGS THAT DON'T GET DENIED VERY OFTEN SO THAT'S BEING ADDRESSED.

THAT IS A BIG BURDEN ON PHYSICIAN OFFICES.

WE KNOW THAT.

IT TAKES A STAFF PERSON ALMOST THE WHOLE TIME DURING A WORK DAY TO DO PRIOR AUTHORIZATIONS.

THAT NEEDS TO CHANGE.

>> Daryl: I KNOW JASON HAS BROUGHT THIS UP BEFORE, THIS ISSUE OF PREAUTHORIZATIONS.

THAT AFFECTS PATIENTS.

PEOPLE ARE VERY AWARE OF THAT ISSUE.

>> IF I COULD SAY, ANY SYSTEM WE CREATE TO IMPROVE THE PRIOR AUTHORIZATION BURDEN IS NOT GOING TO BE LIMITED TO JUST ONE HEALTH AWAY PHYSICIANS.

BECAUSE IT'S ON THE PAYER SIDE, WE HAVE TO DO IT ACROSS ALL OF OUR MEMBERS.

>> YEAH, I THINK IF YOU ASK ANY DOCTOR, ANY STAFF INSIDE OF AN OFFICE, ANY PATIENT, THEY DON'T LIKE THE AUTHORIZATION PROCESS.

SO WE APPRECIATE IT.

>> WE ALL AGREE WITH THAT.

>> WE APPRECIATE THE WORK THAT HMSA IS DOING TO ELIMINATE THAT.

DOESN'T REQUIRE VERTICAL INTEGRATION THAT COULD DO THAT.

SOUNDS LIKE THAT'S SOMETHING THAT COULD HAPPEN RIGHT AWAY.

WE BELIEVE THAT'S THE RIGHT THING TO DO BECAUSE OUR PHYSICIANS FOR THE MOST PART ARE ORDERING TESTS AND PRESCRIBING TREATMENTS THAT ARE MEDICALLY APPROPRIATE.

>> WE'RE NOT LOOKING TO CONTROL HOW PHYSICIANS PRACTICE.

THAT'S STILL THE RELATIONSHIP BUILT ON TRUST BETWEEN A DOCTOR AND A PATIENT.

THAT SHOULD NOT CHANGE.

>> BUT I THINK A LOT OF PEOPLE -- I MEAN, JUST SPEAKING -- I THINK A LOT OF PEOPLE FEEL LIKE THAT IS THE SYSTEM.

>> AND THAT'S WHAT WE'RE TRYING TO CHANGE.

>> Daryl: EVERYBODY AGREES ABOUT THAT?

>> YES.

>> YEAH.

>> Daryl: LINDA IN PEARL CITY IN HER 80'S SAYS, HOW IS THIS GOING TO AFFECT ME?

CAN SOMEONE EXPLAIN THAT?

>> I THINK RIGHT NOW IT'S DIFFICULT TO GET ACCESS TO THE HEALTHCARE SYSTEM.

>> Daryl: YOU DON'T HAVE A PCP.

>> YOU DON'T HAVE A PCP.

EVEN IF YOU GET TO SEE A PCP, NAVIGATING TO A SPECIALIST IF YOU NEED ONE, FILLING OUT THE PAPERWORK THE SECOND TIME IN A DAY BECAUSE THE DEMOGRAPHICS INFORMATION DOESN'T GET TRANSFERRED OVER, ALL OF THAT NEEDS TO BE ADDRESSED.

RIGHT NOW, WE HAVE A VERY FRAGMENTED SYSTEM IN THE STANDPOINT OF ELECTRONIC HEALTH RECORD.

EACH SYSTEM HAS THE SAME PROBLEM BUT THEIR OWN VERSION OF IT.

THEY DON'T TALK TO EACH OTHER THE WAY THAT WE NEED THEM TO.

PART OF THIS IS -- IT'S IMPORTANT TO UNDERSTAND THAT PART OF THE MONOPOLY IS A BARRIER OF ENTRY INTO THE MARKET.

WHAT WE'RE TALKING ABOUT HERE IS WE NEED EVERYONE TO COME ALONG FOR THE RIDE ON THIS JOURNEY SO THAT EVERYONE, THE PATIENTS WILL BENEFIT IF EVERYONE IS A PART OF THIS JOURNEY.

THAT'S NOT A MONOPOLY IF YOU WANT EVERYBODY TO BE PLAYING IN THE SAME FIELD.

>> Daryl: GO AHEAD, YEAH.

>> I THINK LINDA IS ASKING THE PERFECT QUESTION.

SO TO HER, 80 YEARS OLD, PROBABLY A MEDICARE BENEFICIARY, WHAT CHANGES FOR HER?

AND I THINK THOSE ARE PART OF THE QUESTIONS BECAUSE THERE'S THREE SEGMENTS OF BUSINESS IN HEALTHCARE.

THERE'S THE MEDICARE, THERE'S THE MEDICAID AND THEN THERE'S THE COMMERCIAL POPULATION.

EACH ONE OF THEM IS GOING TO BE TREATED DIFFERENTLY BECAUSE THERE'S DIFFERENT NEEDS FOR EACH ONE.

>> WELL, WHAT I WOULD HOPE WOULD HAPPEN IS IF SHE -- AND WHAT I BELIEVE WOULD HAPPEN IS IF SHE HAS AN EXISTING PHYSICIAN RELATIONSHIP, THAT WILL GO UNCHANGED.

IF SHE DOESN'T, WE BELIEVE THAT THROUGH THE CREATION OF ONE HEALTH HAWAII, WE CREATE A GREATER CAPACITY FOR HER TO HAVE ACCESS TO A PRIMARY CARE PHYSICIAN AND A NETWORK OF PROVIDERS NOT JUST WITHIN HAWAII PACIFIC HEALTH, WHEREVER THAT SERVICE IS BEST PLACED.

IT MAY BE THROUGH WORK WITH QUEENS WEST OR ONE OF THEIR PROVIDER ORGANIZATIONS OUT TH THERE.

THIS IS NOT INTENDED TO BE EXCLUSIVE.

IT IS WHOLLY INTENDED TO BE INCLUSIVE.

>> Daryl: THE QUESTION BECOMES HOW -- I'VE HEARD YOU GUYS DO THESE FORUMS BEFORE.

THIS IS NOT NEW GROUND.

WHEN YOU CREATE THIS SYSTEM AND IT BECOMES VERY ATTRACTIVE TO PEOPLE WHO HAVE INSURANCE, PEOPLE WHO, YOU KNOW, THEY MAY BE EVEN HAVING MEDICARE OR MEDICAID AND YOU'RE ATTRACTING DOCTORS, DO YOU THEN TAKE THOSE AWAY FROM THE OTHER PROVIDERS?

AND FROM THE INDEPENDENT PHYSICIANS?

YOU KNOW, IT DOESN'T -- DOESN'T BY ITS NATURE UNDERMINE THEIR ABILITY TO ATTRACT -- >> WHAT I WOULD TELL YOU IS IN NO PART OF OUR PLANNING HAVE WE INCLUDED ANY INCREASE IN ORGANICALLY WITHIN THE PROVIDER ORGANIZATION INCREASE OF PROVIDERS OR INCREASE OF THE NUMBER OF MEMBERS AFFILIATED WITH HAWAII PACIFIC HEALTH PROVIDERS.

IT'S BASED ON THE CURRENT BASE OF ACTIVITY.

NOW, WHAT WE DO KNOW IS THAT THE CURRENT BASE OF ACTIVITY THAT INCLUDES ALL OF US IS NOT ENOUGH TODAY TO SERVE THE COMMUNITY WITH THE LEVEL OF ACCESS WE BELIEVE THE COMMUNITY DESERVES.

AND SO THE INTENT IS TO GROW THE PROVIDER BASE.

AGAIN, IF THAT'S ON MAUI, THAT MAY BE IN PARTNERSHIP WITH MAUI HEALTH WHICH IS A SUBSIDIARY OF KAISER.

IF IT'S ON THE BIG ISLAND, THAT MAY BE APPROPRIATE TO DO IT WITH NORTH HAWAII COMMUNITY HOSPITAL AND THEIR PHYSICIAN BASE.

THERE ARE PLENTY OF POPULATIONS THAT AREN'T SERVED BY HAWAII PACIFIC HEALTH PROVIDERS THAT THAT SERVICE IS BETTER PROVIDED BY OTHER PROVIDER GROUPS.

>> Daryl: THIS IS A POINT WE NEED TO GET TO.

WE'VE ONLY GOT ABOUT SIX OR SEVEN MINUTES LEFT.

UM, QUESTION FROM YOUTUBE.

THERE'S A LOT OF -- I DIDN'T KNOW WE GET QUESTIONS ON YOUTUBE.

I DON'T KNOW HOW THEY DO THAT.

THERE'S A LOT OF OPEN SPACE BETWEEN SOME TOWNS OVERALL IN THE STATE.

HOW CAN WE MAKE SURE WE'RE EXTENDING INFRASTRUCTURE FOR OFFICES AVAILABLE TO ALL CITIZENS FOR HEALTHCARE?

THAT'S A GOOD QUESTION.

HOW DOES THIS HELP THAT?

I KNOW YOU WANT TO REINVEST.

IS IT A GUARANTEE?

>> IS IT A GUARANTEE?

I BELIEVE THERE'LL LIKELY BE CONDITIONS THAT REQUIRES US TO DO THAT AND CERTAINLY AS A NOT FOR PROFIT ORGANIZATION, ANY EARNED INCOME HAS TO BE REINVESTED BACK INTO THE WELL-BEING OF THE COMMUNITY.

THAT'S A GUARANTEE.

BUT AN EXAMPLE OF HOW IT MAY WORK IS WE HAVE VULNERABLE COMMUNITIES ON THE BIG ISLAND.

WE KNOW THAT RIGHT NOW IN THE KONA MARKET, THERE'S A NEED FOR A NEW KONA COMMUNITY HOSPITAL, OUR NEW HOSPITAL IN KONA.

JASON AND QUEENS ARE HOPING TO BUILD ONE THERE IN PARTNERSHIP WITH HHSC.

WE SUPPORT THAT 100%.

QUITE FRANKLY, WE MAY BE ABLE TO HELP THEM WITH THAT IN ANY WAY THEY ENGAGE IN DISCUSSIONS TO DO THAT BECAUSE RIGHT NOW AS ONE HEALTH HAWAII -- IF YOU THINK ABOUT IT WITH THAT LENS -- HMSA HAS A LOT OF MEMBERS ON THE BIG ISLAND.

RIGHT NOW, OFTENTIMES THOSE MEMBERS ARE GETTING ON AIRPLANES EVERY SINGLE DAY TO COME OVER FOR CARE.

THAT'S LESSER QUALITY OF CARE BY MAKING THEM GET ON A PLANE TO COME TO O'AHU FOR THEIR CARE.

IT'S CERTAINLY MORE COSTLY.

SO IT MAKES ALL THE SENSE IN THE WORLD FOR THE FUTURE ONE HEALTH HAWAII TO INVEST AND PARTNER WITH QUEENS OR HHSC OR WHOEVER THE PROVIDER IS IN THAT MARKET TO HELP PROVIDE THOSE SERVICES FOR THAT COMMUNITY.

>> Daryl: YOU KNOW, I DID GET A QUESTION -- YEAH, GO AHEAD.

>> I WOULD JUST SAY THAT WHAT RAY JUST SAID IS ABSOLUTELY RIGHT.

WE MADE A COMMITMENT.

OVER HALF A BILLION DOLLARS OF INVESTMENT BACK INTO THAT COMMUNITY AND QUEENS IS COMMITTED TO DOING IT.

IT.I'LL SHARE WE DON'T HAVE -- QUEENS DOESN'T REALLY HAVE A PRESENCE ON MAUI.

WE DON'T HAVE DOCTORS OR FACILITIES BUT HMSA REACHED OUT TO US A COUPLE OF YEARS AGO BECAUSE THE OB'S IN THE COMMUNITY, THE PRIVATE INDEPENDENT OB'S LEFT AND ASKED FOR US TO PUT SOME OB'S ON THE ISLAND SO WOMEN DIDN'T HAVE TO FLY OVER.

WE HAD A RELATIONSHIP.

WE HAVE TWO OB'S THAT ARE THERE TODAY THAT ARE PROVIDING CARE TO THE COMMUNITY.

IT'S NOT PART OF A PRIMARY MARKET FOR US BUT WE FEEL IT'S THE RIGHT INVESTMENT TO MAKE.

>> I CAN JUST ADD ONTO THAT, TOO, IS THAT KAISER PERMANENTE HAS A PRESENCE ON MAUI.

EARLIER WE ASKED HOW DO WE CONTRIBUTE TOWARDS THE ACCESS OF CARE IN THE COMMUNITY?

OUR OB'S -- WHILE THEY DO SEE KAISER PERMANENTE MEMBERS -- THEY ALSO DELIVER THE BABIES AT MAUI THE HEALTH SYSTEM.

IF AN HMSA MEMBER HAPPENS TO BE GIVING BIRTH AT THAT HOSPITAL AND OUR KAISER PERMANENTE PHYSICIANS ARE ON CALL, THEY'RE DELIVERING THOSE BABIES.

THAT'S ONE EXAMPLE OF HOW YOU COULD BE ONE ORGANIZATION BUT COLLABORATE TO INCREASE THE ACCESS TO CARE IN THE COMMUNITY.

>> WHICH IS EXACTLY WHAT WE INTEND TO DO AS ONE HEALTH HAWAII.

>> Daryl: YOU KNOW, THIS IS SORT OF A FUNDAMENTAL QUESTION.

I CAN UNDERSTAND -- YOU MAY HAVE ANSWERED THIS BUT I WANT TO MAKE SURE THAT THIS QUESTION IS ADDRESSED BEFORE WE FINISH, I CAN UNDERSTAND WHY HPH WOULD WANT TO PARTNER WITH HMSA BUT HMSA IS THE ENTIRE INSURANCE FOR THE WHOLE STATE.

WHY PARTNERSHIP WITH ONE MEDICAL SYSTEM?

WHY JUST ONE ENTITY?

DR.

MURAYAMA, WHAT WAS THE STRATEGY HERE?

>> THIS DISCUSSION REALLY STARTED -- I THINK JASON BROUGHT IT UP -- SIX OR SEVEN OR EIGHT YEARS AGO.

AT THAT TIME, I DON'T THINK QUEENS OR HMSA MAY HAVE BEEN READY AT THAT TIME.

THE DISCUSSIONS WENT ON AND IT TURNED OUT THAT AT THIS POINT IN TIME IN THE LAST COUPLE OF YEARS, HPH AND HMSA HAVE REALIZED THE PATH THAT HEALTHCARE IS ON IN THE STATE IS NOT SUSTAINABLE.

VERTICAL INTEGRATION WE BELIEVE IS GOING TO ADDRESS SOME OF THE UNSUSTAINABILITY FOR HEALTHCARE IN THE STATE OF HAWAII.

THAT'S WHERE IT IS TODAY.

IT DOESN'T MEAN WE HAVEN'T HAD DISCUSSIONS WITH OTHER HEALTH SYSTEMS LIKE QUEENS, IT JUST MEANS THAT TODAY THIS IS WHERE WE ARE.

REALLY, IT'S ABOUT TRANSFORMING HOW WE LOOK AT HEALTHCARE IN THIS STATE.

>> WE, IN FACT, DID HAVE THESE CONVERSATIONS JUST A FEW YEARS AGO BEFORE JASON WAS IN HIS SEAT AND QUEENS SAID THEY DID NOT WANT TO BE PART OF SUCH A COLLABORATION AT THAT POINT, CORRECT?

>> THAT'S ABSOLUTELY RIGHT, AND I WILL SAY IT'S STILL THE WRONG THING.

LOOKING BACK IN HINDSIGHT, YOU KNOW, THINGS ARE CLEARER.

IT WAS ONLY THREE ENTITIES THAT WERE GOING TO BE PART OF THIS -- LEGAL ENTITIES THAT ALLOWED FOR US TO PROVIDE CARE.

I BELIEVE WE NEED TO HAVE HHSC, WE NEED CASTLE, WITH HE NEED KAISER, WE ALL THE ALL THE OTHER PROVIDERS, INDEPENDENT PROVIDERS AT THE TABLE IN THIS MODEL THAT WE'RE PROPOSING AS THE ALTERNATIVE.

>> THAT WAS ALWAYS THE INTENT BUT THE INITIAL CONVERSATIONS -- YOU'RE CORRECT -- WERE WITH HAWAII PACIFIC HEALTH AND QUEENS WITH HMSA AND WHEN QUEENS SAID THEY DIDN'T WANT TO BE A PART OF IT, IT CHANGED THE WHOLE TRAJECTORY OF THE CONVERSATION.

>> Daryl: REAL QUICK, WE ONLY HAVE A COUPLE MINUTES.

BASICALLY, EACH OF YOU GUYS GIVE ME ONE MINUTE.

WHAT'S GOING ON NEXT?

WHAT'S GOING TO HAPPEN NEXT?

>> WELL, I CAN TELL YOU WE'RE IN REGULATORY REVIEW.

WE'VE DONE OUR REGULATORY FILINGS WITH THE DEPARTMENT OF JUSTICE AND WITH THE STATE REGULATED AGENCIES, THE STATE HEALTH PLANNING DEPARTMENT AGENCIES AND WE ARE IN THE INQUIRY ANSWERING -- YOU KNOW, THEY'RE SENDING US QUESTIONS AND WE'RE ANSWERING QUESTIONS AND WE'LL CONTINUE THAT PROCESS FOR THE NEXT SEVERAL MONTHS AT A MINIMUM AS WE SEEK REGULATORY APPROVALS.

>> Daryl: WE'VE HAD ABOUT SEVERAL MONTHS NOW WE'VE BEEN TALKING ABOUT THIS, JASON CHANG, AND YOU'VE BEEN CONSISTENT.

WHAT DOES QUEENS DO IF THIS GETS CLOSER TO APPROVAL?

>> YEAH, SO WE WILL CONTINUE TO OPPOSE, BECAUSE WE STILL DON'T UNDERSTAND WHAT ONE HEALTH HAWAII ULTIMATELY IS AND HOW EVERYONE GETS TO PARTICIPATE.

I THINK WE'LL STILL ADVOCATE FOR THE COMMUNITY.

WE REALLY BELIEVE OURSELVES AT THIS POINT TO BE PROTECTORS OF OUR COMMUNITY AND MAKING SURE THAT HEALTHCARE, WHICH IS SO IMPORTANT, IS NOT DISMANTLED FOR THE COMMUNITY.

>> Daryl: DOES THAT MEAN GOING TO COURT OR SOMETHING LIKE THAT?

>> WE DON'T KNOW.

>> Daryl: OK, WELL, FOLKS, I THINK WE'VE EXHAUSTED -- I'M EXHAUSTED, BUT I RAELLIE WANT TO THANK ALL OF YOU GENTLEMEN FOR JOINING US TONIGHT.

IT'S BEEN A VERY ENLIGHTENING AND CHALLENGING CONVERSATION.

LOTS OF VIEWERS INTERESTED.

I APPRECIATE THAT.

MAHALO TO YOU FOR JOINING US TONIGHT!

AND WE THANK OUR GUESTS... HMSA EXECUTIVE VP AND CHIEF HEALTH OFFICER DR.

KENRIC MURAYAMA AND HAWAII PACIFIC HEALTH PRESIDENT AND CEO RAY VARA.

PRESIDENT AND CEO OF THE QUEEN'S HEALTH SYSTEMS, JASON CHANG, AND PRESIDENT OF KAISER FOUNDATION HEALTH PLAN AND HOSPITALS IN HAWAII, ED CHAN.

NO "INSIGHTS" NEXT WEEK.

INSTEAD, WE'LL BE HAVING A 90-MINUTE CONVERSATION ABOUT CREATING A HAWAII WE CAN AFFORD.

RESIDENTS CONTINUE TO ENDURE ONE OF THE HIGHEST COSTS OF LIVING IN THE COUNTRY, COUPLED WITH A LOW-WAGE, SERVICE-DRIVEN ECONOMY.

WE'LL ASK OUR PANEL IF THERE ARE TANGIBLE, EVEN OUT OF THE BOX SOLUTIONS TO TACKLE THIS ISSUE, NEXT WEEK ON "KAKOU: HAWAI'I'S TOWN HALL."

PLEASE JOIN US THEN.

I'M DARYL HUFF FOR "INSIGHTS" ON PBS HAWAI'I.

ALOHA!

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