 Aloha and welcome to Ehana Kako. We're here every week on the Think Tech Hawai'i Broadcast Network. I'm Kili Iakena, president of the Grassroot Institute. One of the things that is the most fun in my day is getting to talk with really smart people who researched the facts behind almost everything in Hawai'i and come up with great solutions. Leading the team at the Grassroot Institute is Joe Kent, the vice president of research whose job it is to see that the best available research from across the country and the world is used to apply to the problems that we face in Hawai'i and the economy and government and society and used to come up with great solutions. And I have to tell you that's a lot of fun and brings us in contact with some very creative people. Today we're going to talk with Joe, who is a former resident and former employee on the island of Maui. He learned in that county, Maui County, which consists of three islands. What it's like to live in an island environment that is somewhat small, but somewhat big in terms of its potential impact upon the entire state and perhaps even the world. And today's episode is called Here Today Gone to Maui. We're going to take a look at how public policy can learn quite a bit by looking at what's going on on the island of Maui. So I welcome to the program today Joe. Joe Kent? Aloha. Welcome to the program. Thank you for having me. Well, you know, this seems so in-house because you actually helped me put together our guests, our programs and get the research that's behind them. And I appreciate that greatly. But as you and I have talked, Maui is a very special place not only because of the beauty, the people, the wonderful culture that is over there. Maui's special because those of us in the policy world who come up with good policies can learn quite a bit from Maui. Right. At least I've lived on Maui for many years and when I was there, my friends would say, oh, why get involved with all the stuff, economics, society and government? Why should you care? Maui can't make a difference. But the reality is Maui is big when it comes to making a difference in the state. All the biggest issues across the state are happening on Maui right now. And it serves as kind of a tipping point for so much of the rest of the state. Maui is a microcosm of the rest of the state when it comes to what's going on in issues relating to the economy or to society at large or to the government. Right. In some ways it's small enough so that we can do things and actually change policy and change society for the better. But it's big enough that it can have an impact and be somewhat of an incubator for policy solutions. Yeah. I mean, it's kind of like a cross between, you know, it's rural like the Big Island, but it's also a little bit of a big city as well. And so you've just got this perfect mix that serves as the perfect catalyst for a lot of issues. Absolutely. Well, one of those issues that we have been tracking and getting involved in and have become very much committed to bringing it out about a good solution has been the public-private partnership of Maui's public hospital system. And you've been there from the very beginning with us. In many ways, this issue is really bigger than just three little hospitals on the island of Maui or their employees. This issue could become a pattern for how on island after island we handle not only the labor at hospitals, but perhaps in other sectors of government and so forth. And tell us a little bit about what actually generated our interest in the Maui hospital situation. Right. Well, I mean, I remember being sick one time on Maui, and I had to go all the way to the other side of the island just to get to the hospital. And I was thinking, why is it so hard to find a doctor on Maui? And a lot of people on all the other islands say the same thing. Why is it so hard to find a doctor? Well, the reason is because of government management of a lot of the hospital sector. And that has created less supply for a big demand. And when we saw at the legislature that there was this move to create a partnership between a private entity that would help to run and manage the hospital, we jumped on board and we did some research. And we found that this could really save a lot of money. In fact, looking at some of the causes of the problem, you helped do some of the research that showed that ultimately the state hospital system was really functionally bankrupt. Right. Right. In a normal business, if you bring in less money than you spend, you end up with a situation that puts you ultimately into going out of business. But this was actually masked by the fact that year after year, the hospital system would come to the state legislature and our state legislators would pour money into it, up to a hundred million dollars a year, which hid that fact. Now, what were some of the reasons or perhaps one of the main causes that this hospital system run by the state was going bankrupt functionally? Well, one of the big reasons is overhead for bureaucracy. And you'll find a lot of times in government systems, bureaucracy costs more. Because if there is someone who's going to bail them out, as long as there's some free money, then the cost goes up to take advantage of that free money. And the more money they were pouring in, the higher costs would rise every time. And this created a system where it was functionally bankrupt. Sure. A lot of systems don't realize that institutions, you see the building, you see the ambulance, you see the doctors. But what you don't see is the debt that's behind it, that every year they have to limp to the legislature to say, could we have a hundred million dollars? Now, a huge part of that cost, as you pointed out in your report, had to do with the cost of labor. That the unions, which have organized labor and operate that under a union contract, were taking up, what, 70% of the cost of the budget there in the Mali hospitals? That's incredible. And what they were able to charge under recent insurance revisions was actually shrinking. So you had costs going up, income coming down, and they just couldn't survive. And in a normal, healthy hospital, you want those worker costs to be about 50% or lower. But if you've got a hospital system where it costs 70% to just for the workers, then you have a system that's going to fail, and that's exactly what we're seeing. And then people began to see the effects of this. Union workers were being laid off, because clinics were being shut down. Services were being stopped to the most needy in society who require these public hospitals. And it was so bad that you had some friends, Joe, who actually were contributing financially out of their own pocket charity to keep a state hospital open. They were contributing hundreds of thousands of dollars just to try to keep the hospital afloat of their own personal private money to a public system. In addition to paying the taxes that were supposed to be going to the hospital anyway. And then, of course, there's always this human side. Right. Well, with the human side too, I've talked to a hospital official who said that if the hospital, let's say a lot of people weren't sick that day, so you had a lot of empty beds, well, they still had to employ, because of the union rules, they had to employ at 100%. So you have a system that's being, I guess, wastefully employed, and where a private system could ramp up and down depending on whether or not people are sick, a public system has to employ the hospitals at 100% capacity at all times, and that's a huge cost too. So the principle here is that our government is doing something that the government is not competent to do. The government is doing something that private industry, when it competes between players, actually does much better at a lower cost and serving a greater number of people, but just because of the way we are structured here in the state of Hawaii, we tend to think government should be doing things that it's not good at and that it's failing at. Well, and across the nation, if you look, a lot of private hospitals are pretty typical, and privately run hospitals or public-private partnership, they're very typical. That's right. Even in one county, Orange County. Orange County, California. They actually went and did a transfer of all their hospitals to a public-private partnership. And that was quite interesting because Orange County, as a county, went bankrupt. And part of the fix was for them to recognize that there was a better thing than having government run businesses that it wasn't good at. And so as you mentioned, all of its hospitals in that very ritzy district in California are now private hospitals run by competing businesses that are doing it far more efficiently and at less cost to the people. Now, let's kind of zoom ahead a little bit over here in the story. You got involved. You were involved with people who actually saw the homelessness problem increase, the poor in society, unable to have their needs met, and a failing hospital system. You got involved when there were a lot of union employees who were very disgruntled by the fact that their jobs were no longer secure. And many people on the island of Maui became activists. They flew and went with us before the legislature in the state. And our legislature passed a law. Our governor signed it. It went through some court battles. But basically the fact is we are now in the midst of transition. Right. We went through this big fight. And we won. And the governor signed the document. We could finally transition to this new model that would save the hospital system except for one thing. We didn't make the agreements with the unions yet. OK. And that has been the big snag in this whole process. And it's been this delay and delay to finally make an agreement with the unions for this to happen. That hasn't happened yet. And because of that, it's going to delay even further. As I understand it from some of the research that is public as well as some of the private interviews that we've had with key players, we've pretty much passed the point of no return. The handoff has been made to Kaiser Hospital. And now Kaiser Hospital is stuck because they had a deadline of July 2017 by which the state needed to have its act together. That deadline has failed. It's been reset to July of 2017. I'm sorry. It was originally 2016. 16. And now it's a year later. A year later, 2017. And it looks like that might even be in question, because what's going on? How much is this costing Kaiser Hospital? Well, it's costing Kaiser about $500,000 a week. And that's a low estimate. $500,000 a week to try to maintain this sort of hobbling along. That's incredible. They can't run like that for long. And what about the hospital staff now that they've shut down beds, now that they're closing down services. And now I hear that they're functioning pretty much as a clearinghouse, like an emergency room and passing people on to Oahu. What's happening with some of the skilled labor that are not employed now? Well, imagine if you were a nurse at a hospital that was going through this big process of, it looks like they're shutting down almost. Imagine if you were a nurse in that system. What would you do? And a lot of the nurses are flying away or they're just getting jobs elsewhere. And they're saying, we can't wait for this system to fall apart or what? They want to get on with their lives. As you and your team have done their research, what do you think about the prospects of even being able to make the 2017 July deadline with everything together if the state gets the entire act together? Well, it all depends on what happens at the legislature this year. So you see the union has delayed and delayed and now it's going to go and delay into the legislative season. So we would predict that this is going to come up during the legislative session. And obviously it might delay and make the whole thing vanish in a puff of smoke. That's something. I do want to make a note to our viewers that at the Grassroots Institute, we are not opposed to the unions. We believe that there is a noble heritage of rights for workers and the defensive workers that have been fought for by Hawaii's unions. And they have been a very important part of coming into the modern age. But like all institutions, they need to evolve. And we care greatly about union workers. And if union negotiations for salaries and work conditions, collective bargaining and so forth don't change, we're gonna be in a situation where our hospitals are gonna be losing, I mean, are going to actually lose the jobs of union workers that union workers will be out of jobs. And for the sake of their workers, there needs to be some adjustment. This is a time of transition, wouldn't you say? Yeah, well, yeah, to say the least. Before we go to a break, Joe, what's the implication? Let's say we see a successful transition of labor from a purely state-run union sector to a public-private partnership with a competitive entity like Kaiser or Hawaii Pacific Health or Adventist or Queens or someone with great skill operating that. Other islands are watching. What's the implication if this is successful? The implication is it could save a lot of lives. I mean, there are a lot of people on Maui who have to fly now over to Oahu for life-saving procedures. And that time could be a life and death scenario. So we could actually save people's lives if this transition goes successfully. Well, and that's the bottom line, saving lives of people, touching real human needs, along with that keeping a robust economy on the island of Maui, as well as keeping government at the level it should be and not interfering with society by taking on more than it can handle. We're gonna come back after a short break and we're gonna explore some issues such as agriculture on Maui, the water situation and federal laws and how that affects Maui and the rest of the island as well as the share market, such as Airbnb. Don't go away, my guest is Vice President of Research at Grassroot, Joe Kent. I'm Keeley Ikeena. You're watching Ehana Kako on the ThinkTech Hawaii broadcast network. Hello, my name is Josh Green. I serve as Senator from the Big Island on the Kona side and I'm also an emergency room physician. My program here on ThinkTech is called Health Care in Hawaii. I'll have guests that should be interesting to you twice a month. We'll talk about issues that range from mental health care to drug addiction to our health care system and any challenges that we face here in Hawaii. We hope you'll join us. Again, thanks for supporting ThinkTech. Hi, I'm Donna Blanchard. I'm the host of Center Stage, which is on Wednesdays at two o'clock here on ThinkTech. On Center Stage, I talk with artists about not only what they do and how they do it, but the meat of the conversation for me is why they do it, why we go through this. A lot of us are not making our livings doing this and a lot of us would do this with our last dying breath if we had that choice. And that's what I love to talk to people about. I hope you enjoy watching it and I hope you get inspired because there's an artist inside you too. Join us on Center Stage at two o'clock on Wednesdays. Bye. Aloha and welcome back to Ehana Kako. We're here every week on the ThinkTech Hawaii broadcast network. I'm Kelea Akina. My guest today is Joe Kent, Vice President of Research at the Institute. Before going on though, I do wanna say thanks so much to ThinkTech Hawaii. What a great organization that produces about 30 to 35 hours of original content from downtown Honolulu. You see it right behind me. Downtown Honolulu, where we produce that content. And it goes all across the world. It covers everything from economic issues to social issues to government issues, artistic issues, just a wonderful coming together of knowledge and you can see all of that work at ThinkTechHawaii.com. You can also visit our programs on grassrootsinstitute.org. That's grassrootssingularinstitute.org. Now back to Joe. We're talking about here today, gone to Maui. Well, this has been fascinating just talking about what happens on Maui can be an incubator for public policy, good public policy all throughout the state. And there's an issue that we're very closely involved with that has to do with water. And one of the things that's just kind of ironic, Joe, is that on one hand, Maui is just infused with water. It is the wettest place or one of the wettest islands around more water than the island of Oahu. You've got artesian springs, wells. You've got the beauty of... You've got the West Maui mountains, some of the rainiest places on earth. Absolutely, all of this wonderful rain. And it's surrounded by water if we had desalination technique. So my question to you is this, having lived on Maui. Why is everybody on Maui talking about how hard it is to get water on Maui? What's interfering between the big supply of water and satisfying the thirsts and needs of people as well as agricultural needs? What's in the way? Well, yeah, that's a good question. If you read the paper on Maui every week, it seems like there's always a drought. And you think, well, didn't it just rain? And people just can't get the water. And the reason is because of bureaucracy. In other words, government. Right, government bureaucracy. So the water's there, the people are there. We just can't get the water to the people because of government. Well, there's more water on Maui than there is on Oahu. But there's way, way less people. And you think, why are so many people thirsty there? And there's a lot of people who have a plot of land. And for years, for generations, they haven't been able to get hooked up to the water. And the reason is because there was, there's one person in the government who's assigned to give out these water meters to hook people up to the water. And that one person has to deal with 3,000 applications for water. And he gets through about two every month. So if he gets about- Two a month on a list of 3,000? Yeah, he gets about- This is longer than the Hawaiian Homes Waving List. That's right. He gets about through about two a month and he has to do all these applications. Now you think, well, why is it just one guy doing this? And the reason is because there aren't enough public engineers to do the paperwork. So- Joe, I'm a little incredulous here. I can't believe if the problem is that simple, we haven't solved that problem. The problem is that simple. No, come on. And we haven't solved the problem. And so the county council on Maui, they were incredulous as well. And they said, well, why can't we just get private sector engineers to do the work? In other words, hire people to do the work that needs to be done. Exactly. And so- And they said they can't get private sector engineers to do it because of a law that prevents private workers from doing work that public workers would have done. Oh my goodness. Are you talking about a state of Hawaii Supreme Court interpretation that basically says that if the government has traditionally been carrying out a certain kind of work, that it would be unlawful to have the private sector do that, to have the government give those contracts to anyone else? It's called the Kono decision. And it says if government has done it, then the private sector can't do it. And that's what's preventing the water, people getting a drink on Maui. So the government doesn't have the people to handle these permits and get people hooked up to the meters for water. And so the city council comes up with this idea that, well, let's put out contracts and hire people to do that job for us or hire another company to do that for us. And they're afraid of a Supreme Court ruling here in Hawaii that says you can't do that. Yeah. And in the meantime, thousands of people wait and continue to wait for generations. Imagine if you had a house and you wanted to pass it on to somebody and that house couldn't get hooked up to the water. It devalues the land. Well, this ruling is by the court something worth challenging. Because, Joe, in your research across the country, is this a common thing to have a law like this? From our research, this is unique to Hawaii. Oh, we're number one in something again. Yeah. I don't know if number one or number 50 on this. But yeah, it's unique. And why is this not challenged in courts? Maybe it should be challenged in courts. Well, you know, if there are any lawyers watching. OK. Well, that's an issue. But that's not the only water issue on Maui. Maui, as we said earlier, is impacted by things that affect the entire state and how they deal with them could be a model. And one of those areas has to be in terms of federal regulation. We have POTUS, we have SCOTUS. And now we have WOTUS, Waters of the United States, the Clean Water Act, which has a broad jurisdiction, as well as other acts like the Food Safety Modernization Act and so forth. Federal laws made in Washington, DC that affect water supply and agriculture in Hawaii. How does this Clean Water Act hurt water availability and forming in Maui? Well, the question is, when does the government get to own water? Obviously, the government has jurisdiction over the oceans. But what about rivers? What about streams? And what about ducks or irrigation? So how far back up the stream can the government go? And what the Clean Water Act now is doing is it's making it a little ambiguous about how far the government can go up the stream. And that might even include land. So you might have land where water could feasibly run. And does the government then have jurisdiction over that? Now on Maui, we have this sugar cane company that has now gone belly up. Right, HCNS. HCNS. And now that's 36,000 of acres that a lot of people would like to get their hands on, including the government. And so the question is, will the government use the Clean Water Act to go up the ocean, up the river, up the streams to get this land? That's still an open question. Or will protesters invoke this federal law? Because doesn't it deal with anybody's water that empty out into American waters? And the land that has been vacated by the Hawaiian sugar at 36,000 acres is filled with irrigation ditches that ultimately empty out into water. Well, this issue is playing out on Kauai right now. There's a dairy farm that's dealing with this exact issue. And their farm operations could be shut down because of this very thing. The protesters, I believe, have employed the services of a legal firm called Earth Justice, which is an advocate for environment. But they're invoking the Clean Water Act. Well, of course, if there is pollution going in the ocean, of course, that needs to be addressed. But the question is, when it's a little ambiguous, and when there are other factors that play, such as maybe they want the water, and they're just trying to figure out a way to get it. Well, that's an issue, then, that we need to be monitoring very carefully. So what you and your team are doing is looking at these federal laws and seeing what kind of impact they have on Hawaii. Ultimately, what we need is for people to be involved in communicating to their lawmakers. Right. I mean, this is about people have to rise up and try to study this issue. But of course, a lot of these issues are boring. They're buried in large documents, thousands of pages thick. And who's going to want to do that research? Well, Grasher Institute, that's what we do. We bury through the research and try to pick out the nuggets that really affect people's lives. And hopefully, that can make a difference. Well, recently, when the Hawaii Canaan Sugar shut down, it was announced that that was 78% of all agriculture on the island of Maui. That's incredible. That's huge. And there are great challenges to getting it up and running to become agricultural land for diversified agriculture. And we wish them well. We were trying to work with farmers and others to see that that is a solution for that problem. But throughout our state, a recent study also shows that agriculture is in serious decline. In fact, so much more that the greatest source or the greatest product of agriculture in Hawaii, more than 51%, is the seed industry by seed companies, such as Monsanto and so forth. But in terms of actual agricultural output as food, it's shrinking tremendously. So what's happening on Maui? Well, as you know, the governor challenged the state to try to double food production. And on Maui, it's dying. It's sad to say, like you said, 70% is now fallow. And if you look on Maui, you look at the fields where there used to be beautiful green fields. Now it's just fads of dustball now. Has the government in issuing this challenge to double food productivity put out a plan, a strategy as to how that's going to be accomplished? No. In fact, the agriculture department and those who are very deep into that industry and sector were totally unaware that the governor had this plan. And so he failed to tell the most important people in this process. Well, we hope we can be part of the process of solution. And I hope that you and your researchers at Grassroots Institute can make some positive contributions to the future of agriculture. Joe, it's been great talking with you today. Great. Thank you. And I want to thank you very much for being with us. My guest today, Joe Kent, vice president of research at the Grassroots Institute of Hawaii. And I hope you see some of the thinking that we do. We're trying to find solutions for the entire state. And I hope you'll join us in being committed to Maui and its problems to find greater solutions that will empower everyone in the state of Hawaii as we work together or as we like to stay at the Grassroots Institute. Ehana Kākou, let's work together. Until next week, I'm Kilii Akinna for the Think Tech Hawaii broadcast network. Aloha.