Bakken gives health care in Hawaii a strong pulse

Nearly 20 years ago, Doris Bakken fell in love with an expanse of oceanfront land on the Big Island of Hawaii, a patch of paradise for a retirement home. But the real estate agent warned: There was no water, electricity or sewer service.

"That's OK," she replied. "My husband is an engineer."

Indeed he is: Earl Bakken is the inventor of the first battery-powered pacemaker and a co-founder of Medtronic Inc., now the world's biggest medical technology company, with $13.5 billion in revenue.

It turned out that paradise would require a good deal of the inventor's ingenuity.

Once the Bakkens settled into retirement, they discovered the island had no hospital. A conventional "warehouse for sick people" -- as Earl Bakken characterizes hospitals -- wouldn't do. A model facility integrating Western and Eastern medical practices and philosophies would.

Today, the North Hawaii Community Hospital is seen as a prototype for a new kind of hospital, mixing high-tech facilities with medical care that treats the patient as a "whole person -- mind, body and spirit." And no one has been a bigger spiritual and financial mentor than the 84-year-old Bakken, who has donated more than $15 million to the community-owned nonprofit hospital since moving to Hawaii, and has served on the board of directors for several years.

Bakken's long and loyal relationship with the hospital has proved to be a new test of the engineer's skills -- giving him a chance to explore his own innovative ideas about health care but also straining his patience and generosity.

The hospital Bakken helped create features the latest medical equipment and services, including a high-tech 64-slice CT scanner, five surgical suites, a rapid response team and a fully equipped critical-care unit -- all unusual for such a small institution.

It also embraces "the high-touch, the human caring side," Bakken says. "The loving and caring for the patient with massage, acupuncture, chiropractic, qigong, tai chi, meditation and all of these things that work with the patient's mind."

Since opening in 1996, the 40-bed hospital has lost money, mostly because reimbursements from Medicare, Medicaid and private insurers never quite kept up with the cost of providing medical care. But the gap long was bridged with donations from individuals such as Bakken and from charitable foundations, according to a hospital report last summer.

By 2004, however, the hospital's financial picture began to deteriorate. Expenses grew at 41 percent, according to the report, while revenue grew only 33 percent. Part of the cause was start-up costs of several initiatives, including the takeover of the Waimea Women's Center, which ensured availability of OB/GYN services in the community, the hiring of new specialists needed for a full-service hospital, the opening of a Heart Brain Center and design and permit costs associated with hospital additions, according to the report.

Then, early this year, the hospital ended its relationship with the Adventist Health System, a California management company, and replaced it with Tennessee-based Quorum Health Resources. Quorum's steps toward improved fiscal management included billing and collections, in an effort to make North Hawaii less dependent on donor support.

The transition has been rocky. In June, 59 employees were let go, a move that deeply upset Bakken, who told an industry magazine that the layoffs "weren't done with any kindness, any aloha."

Paul Dunne, hospital vice president for fund development and marketing, said staffing was evaluated "and we made reductions so that our staff is more consistent with national staffing standards." The hospital also has pared nonsalary costs and is negotiating with payers for more favorable reimbursement rates, he said in a recent e-mail.

In some ways, the hospital's idyllic island setting works against its fiscal well-being.

Total hospital expenses in Hawaii exceeded reimbursements by $150 million in 2006, and the state suffers from the lowest rate in the U.S. of overall hospital reimbursement, primarily from Medicare and Medicaid. Health care costs are generally 80 percent to 100 percent higher than on the mainland, Dunne said.

As a private hospital, North Hawaii is not a candidate for state funds that are available to many public institutions.

In July, Bakken briefly severed ties to his beloved institution as the hospital went through its financial restructuring. In addition to the 59 layoffs, several top administrators, including the chief executive, either quit or were terminated.

"There was a little period there in which things got so bad that I couldn't associate with it," Bakken said in a recent interview. He declined to be more specific, saying only that the hospital's former chief executive, who hailed from the mainland, didn't understand Hawaiian culture.

After months of uproar in the small community over the hospital's direction and some fence-mending by the consulting firm running the hospital, Bakken is back in the fold.

"I'm now back because we have a new interim CEO who is doing extremely well, and doing everything to my liking," he said. "I feel pretty good about the way it's going now."

For now, Bakken says he is satisfied with most of the moves the hospital is taking to mend fences with the community and its donor base. He's deeply involved in the search for a permanent CEO who "loves the Hawaiian culture. That is very critical."

Janet Moore • 612-673-7752