Ailing Kahuku Hospital, a medical lifeline for many North Shore residents, was saved this year after state lawmakers agreed to bring it in as an affiliate of the Hawai'i Health Systems Corp.

But oddly, the rescue of the hospital was overlooked for much of the session while state House lawmakers fought privately over greater regional autonomy in the state's quasi-public hospital system.

Lawmakers agreed to create five regional boards with broad powers over hospital finance and procurement but to keep a statewide corporate board to oversee the system's 12 community hospitals. Driven by Maui, which has been divided over plans for a private hospital to compete with the system's Maui Memorial Medical Center, the debate was about local control over healthcare and was similar in theme to the fight three years ago over breaking up the state Department of Education into local school districts.

Others involved, though, say it was also a Neighbor Island play to weaken and ultimately replace Thomas Driskill Jr., the system's Honolulu-based president and chief executive.

"I think it had a lot to do with that," said state Rep. Bob Herkes, D-5th (Ka'u, S. Kona). "A number of us are concerned with the current management of HHSC, and we've expressed that in a number of ways over a number of years."

Gov. Linda Lingle's advisers are reviewing the bill and have asked Driskill for an analysis of its possible impact. The administration had concerns about the bill during the session, and if Lingle vetoes the bill, it would likely become a flash point if lawmakers return for a veto override session in July.

The corporation was established by the Legislature in 1996 as a safety net for the state's community hospitals. It is the fourth-largest public-hospital system in the nation, with an operating budget of nearly $350 million.

As a statewide system, it can provide management efficiencies and help weaker hospitals, like Kahuku, that might not otherwise survive. But the idea for regional boards with greater autonomy had come up before the system was created and had surfaced over the years when complaints arose about Driskill's leadership.

"The bill that was passed has kept the system intact. It has connected with the communities in a very positive way by setting authority out there for regional boards in all five regions," Driskill said.

"So I think that's all very positive. We have the ability to work things at the system level, if you would, where there is value. And yet we're evolving, our organization is evolving, to get even more community focused."

This year, Maui wanted to form a separate corporation, which was opposed by Driskill and others who thought it would cripple the system.

Maui has sought more autonomy to better manage healthcare locally and to also help calm the uproar over the proposed Malulani Health & Medical Center, a private hospital in Kihei that was rejected last year by the state Health Planning and Development Agency.

"My motivation was to ensure that autonomy will give us better local health services," said state Rep. Bob Nakasone, D-9th (Wailuku, Pu'unene, Makawao), a veteran lawmaker who used his considerable power to shape the bill behind the scenes.

With warnings that the entire public hospital system would be undermined if Maui bolted, Big Island and Maui lawmakers met privately and agreed on a bill that would grant more regional autonomy while also preserving the statewide system. But the makeup of the regional boards and other key details were slow in coming, and as the session came to an end, House Democratic leaders had to intervene with Nakasone and state Rep. Josh Green, D-6th (N. Kona, Keauhou, Kailua-Kona), a Big Island doctor and chairman of the House Health Committee.

Worried that Green, whose committee had jurisdiction over the bill, would not move close enough to Nakasone's position, House leaders simply went around the younger lawmaker. First they removed Green from the negotiating committee, then they put him back on, but added another lawmaker, state Rep. James Tokioka, D-15th (Lihu'e, Koloa), basically to cancel out his vote.

Green ended up voting for the bill on the House floor anyway and said he is at peace with the bare-knuckled way it was handled. "It was contentious," Green said.

"But what everyone seemed to want is local boards and local decision-making, and that's what we had in the end."

Although Maui lost its bid for a separate regional corporation, it achieved more regional autonomy in the bill.

Green said he thought the debate over regional autonomy overshadowed bringing Kahuku Hospital into the system because of the important roles community hospitals have on the Neighbor Islands, where the system is the largest healthcare provider. Nakasone and Herkes said doctors and hospitals on the Neighbor Islands want more hands-on control of a system now ruled from Honolulu.

"I think that people finally decided that enough is enough, and they had to stand up and talk about it," Herkes said.

The bill would establish five 12-member regional boards on O'ahu, Maui, Kaua'i, East Hawai'i and West Hawai'i by January 2008. The boards would have control over hospital budgets, facilities, personnel and operations. The boards would also be able to set rates subject to systemwide policies.

The boards would be exempt from state procurement and open-government, or sunshine, laws.

The Lingle administration opposed the exemption from procurement law. The administration told lawmakers that while it may be easier and faster to award contracts without public bidding, it's a process "vulnerable to abuse."

The corporate board has authority over the chief executive, so a board dominated by members from the regions could mean job uncertainty for Driskill over the next year and a half. Driskill has led the system since 1997.

"My perspective on it is a very simple one," Driskill said. "I'm here to serve. We're looking out for the best possible healthcare for the communities and our visitors in our communities. That's the bottom line. And I welcome, personally welcome, any input that can further those goals, whatever that may be."

State Rep. Barbara Marumoto, R-19th (Wai'alae Iki, Kalani Valley, Kahala), said the bill would lead to a rapid change in management on the corporate board and, possibly, in the system's administration. Marumoto said she sees a need for new management because she believes the toxic atmosphere that surrounded the bill damaged relations between the Legislature and the system.

"But ironically, if there is new management, I no longer see a need to split up the system," Marumoto said, warning that regions may compete against each other for state money and resources. "As I see it — united the HHSC stands, divided it falls — for sure, it is weaker."

Reach Derrick DePledge at ddepledge@honoluluadvertiser.com.