Disappearing medical clinics highlight need to implement policy fixes now

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By Keli‘i Akina

State lawmakers recently made some inroads into addressing Hawaii’s doctor shortage, but the state’s healthcare crisis, especially in our most rural communities, is far from over.


In fact, among the heartbreaking losses earlier this month in fire-ravaged Lahaina were three healthcare clinics that served approximately 30,000 patients.

That leaves few healthcare options for the residents on West Maui, where the drive to the Maui Memorial Medical Center in Kahului can take one to two hours.

Keli’i Akina

In addition, it was announced this week that the Kauai Community Health Alliance, which operates the North Shore Wellness Center and Hale Lea Medicine and Urgent Care, will be ceasing operations over the next few weeks.

The nonprofit medical provider’s president and CEO, Jim Winkler, told The Garden Island: “Even with extremely generous charitable organizations from our community, KCHA is simply unable to generate enough revenue to meet its payroll demands and keep its doors open.”

Winkler said reasons the clinics can no longer afford to operate include low Medicare, Medicaid and HMSA reimbursement rates, as well as changes brought on by the COVID-19 crisis.

It’s a story that has become all too familiar to those who are keeping an eye on Hawaii’s healthcare situation.

Statewide, Hawaii is short almost 800 full-time equivalent physicians. Bed shortages are also a problem, with one in 10 hospital beds occupied by patients who are on waitlists for beds in nursing homes or assisted living facilities. Meanwhile, there aren’t enough medical professionals to care for patients who need long-term care.

Emergencies highlight such shortages, but our lack of adequate healthcare services existed well before COVID-19 and the Maui wildfires came along. These shortages are the result of policies that go back decades and have left our state ill-equipped to handle day-to-day operations.

For example, the state general excise tax on medical services has made it near-impossible for private practices to flourish. Hawaii is one of only two states that charges a tax on your doctor visit or medical procedure — and the only one that taxes Medicare and Medicaid patients.

Hawaii also has overly restrictive medical certificate-of-need laws, which require government permission to provide new services or build new medical facilities. Such laws are being rolled back elsewhere in the nation because they have been linked to higher costs and fewer healthcare facilities.

Thankfully, state lawmakers passed legislation this year to raise Medicaid reimbursement rates to match Medicare rates.

The Legislature and governor also allowed Hawaii to join the Interstate Medical Licensure Compact, which will make it easier for doctors from participating states to practice in Hawaii.

These are good moves, but we need stronger action to significantly improve healthcare access in the state.

Looking forward, state lawmakers should enter Hawaii into more interstate medical compacts, covering everything from nurses to psychologists.

They also should exempt medical services from the GET to make it easier for private medical practices to stay in business.

Finally, lawmakers should remove the state’s CON requirements that inhibit the growth of much-needed medical facilities, such as dialysis centers, substance abuse facilities, hospice centers, psychiatric facilities and ambulatory surgical centers.

Hawaii’s healthcare crisis is not a problem that can be solved overnight. Even if the Legislature were to jump into action and pass broad reforms, it would still take many years for us to see the effects of those changes.

That’s all the more reason we shouldn’t wait. Hawaii’s healthcare crisis is only going to get worse until we work together to change the policies that created it in the first place.

Keli‘i Akina is president and CEO of the Grassroot Institute of Hawaii.



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Grassroot Institute of Hawaii is a nonprofit, nonpartisan research institute dedicated to the principles of individual liberty, the free market and accountable government. Through research papers, policy briefings, commentaries and conferences, the Institute seeks to educate and inform Hawaii's policy makers, news media and general public. Committed to its independence, the Grassroot Institute of Hawaii neither seeks nor accepts government funding. The institute is a 501(c)(3) organization supported by all those who share a concern for Hawaii's future and an appreciation of the role of sound ideas and more informed choices.

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