KCH Budget Defict to Cause Service Closure, Force Staff Reductions

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Thirty-four positions at Kona Community Hospital will be reduced, according to KCH leadership, who announced Monday that the reduction in force will begin no later than August 1.

The reduction in staff will occur throughout the facility. In addition, KCH’s skilled nursing unit, which holds 18 beds, will close.

“It is with deep regret that we must make these decisions,” said Jay Kreuzer, West Hawai’i Regional CEO of Hawai’i Health Systems Corportation. “Over the past several years, the entire hospital staff has pulled together to help address our financial challenges. Our hospital departments are running efficiently, and there is no excess or waste to be trimmed. Sadly, these efforts do not offset our FY 2016 deficit due to lack of state funding.”

The hospital is faced with a $6 million budget shortfall that is being met with the planned RIF and service closure as part of its contigency plan. According to KCH, the shortfall has come from increased costs of collective bargaining and retiree health benefits, which in the past were paid for by the State. This year, the State has decided to not fund those expenses.


“We are grateful for state support,” said Kreuzer. “Although the state budget is also tight, with these new expenses, the general fund assistnce we receive is not enough to continue our current level of operations.”

KCH’s reductions are part of the HHSC’s corportate-wide RIF and service reduction, which aims to address a $50 million deficit that is projected for the entire HHSC system for the 2016 FY.

“Many factors have contributed to this very difficult decision,” said Kreuzer.


Prior to the announced plans to reduce its staff and programs, KCH reduced staff through retirement and resignation. The hospital also completed a year-long project that implemented $9 million in cost savings initiatives.

Aside from reducing staff, KCH has reduced expenses through the devleopment of a financial contingency plan that includes the closure of its skilled nurses unit, which will not be de-licensed, and will remain able to be reopened in the future. On average, the until fills about 6 of the 18-beds in the unit. According to KCH, the skilled nursing services are able to be provided elsewhere in the region.

“We are profoundly aware that the lives of these employees are being impacted,” said Kreuzer. “They have been valued members of our work family. These are very difficult times for our hospital.


Kreuzer continued, “At Kona Community Hospital, we have learned to adapt when change happens. Our mission has always been to provide accessible, comprehensive healthcare to our community. We will continue to do that during this tough transition.”

Both HHSC Corportate and KCH Human Resrouces personnel will assist employees affected by the RIF through a 90-day process. According to KCH, the employees affected by the eliminations can be placed in a budgered vacant position within their bargaining units.

In May, HHSC announced that East Hawai’i health care facilities would be faced with a reduction in force that would include 87 employees being laid off and a reduction in services.

Planned closures included Home Care Services, which provides chronic and transitional nursing care to homebound individuals, and one wing of adult inpatient psychiatric care at Hilo Medical Center. Ka’u Hospital, Ho’ola Hamakua, and HMC were announced to also see a reduction in the amount of long term care beds available.

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