HILO, HAWAII – 87 people will be laid off at three East Hawaii hospitals – Hilo Medical Center, Ka‘u Hospital and Hale Ho‘ola Hamakua – due to a projected $7 million deficit in the fiscal year starting July 1. In addition, the Hawaii Health Systems Corporation announced on Wednesday that some services will have to be cut.

The hospitals comprise the state funded East Hawaii Region of Hawaii Health Systems Corporation. Statewide, HHSC is facing a $50 million shortfall overall for fiscal 2016. (Corrected, earlier version reported East Hawaii Region faced $50 million shortfall.)

The East Hawaii Region operates on a budget of $160 million and, with a current payroll of over $100 million; it is Hawaii Island’s second largest employer, according to HHSC.

Higher costs and lower reimbursement rates are driving HHSC’s budget shortfall. HHSC says 75% of the East Hawaii Region’s reimbursements come from Medicare and Medicaid/Quest and they do not cover the cost of care.

According to HHSC:

Planned closures include Home Care Services, which provides homebound individuals both chronic and transitional nursing care, and one wing of adult inpatient psychiatric care at Hilo Medical Center. Service cutbacks will reduce the number of long term care beds available at Hilo Medical Center, Ka‘u Hospital and Hale Ho‘ola Hamakua. Additional cuts will be necessary in many departments and in total 87 people, or approximately 7% of the total workforce, will lose their jobs as a result of these planned closures and cutbacks.HHSC media release

Gary Yoshiyama, East Hawaii Regional Board Chair, said many scenarios were carefully weighed, including “preparations to maintain essential healthcare services and minimize any potential harm to patients.” Interim CEO Dan Brinkman was also quoted in the media release.

Some healthcare services for our communities will be reduced and disrupted as a result of the planned closures, cutbacks and staff layoffs. As a result of operational efficiencies and cost reductions we’ve already instituted, we are able to complete our current fiscal year intact, but those actions are not enough to make up for the coming year’s shortfall. While the vast majority of our workers will keep their jobs, it saddens us that very capable people who help care for our community will lose their jobs. We know our employees and physicians will continue to deliver the high quality patient centered care our community has come to expect.”Dan Brinkman, Interim East Hawaii Regional CEO