Hawaii hospitals suffered operating losses of $150 million last year and expect the situation to worsen in the near future.
The federal government's Medicare program and the Hawaii Quest program have not been fully reimbursing state hospitals for the costs of providing service.
Hawaii hospitals also racked up $143.8 million in charity care and bad debt in 2007.
Hawaii Medical Center, which operates two former St. Francis hospitals on Oahu, filed for bankruptcy this year and cut the number of beds it offers.
The state's publicly subsidized hospital network, Hawaii Health Systems Corp., has requested millions in emergency funding from the state to stay in business.
Kona Community Hospital, part of the HHSC network on the Big Island, laid off 10 percent of its workers, while the privately run North Hawaii Community Hospital laid off 12.6 percent of its staff.
An Ernst & Young LLP report released last week, and prepared for the Healthcare Association, shows Hawaii hospitals as a group have sustained operating losses for eight consecutive years.
Reimbursements from Medicare, which represents about one-third of Hawaii patient charges, only covered 77 percent of costs. Medicaid/Quest payments covered about 71 percent of costs.
Payments from private insurers, such as the Hawaii Medical Service Association, cover slightly more than expenses, but it is not enough to make up for losses produced in providing medical services to Medicare and Medicaid/Quest patients.
Association officials expect the deteriorating economy to exacerbate the hospitals' problems as the state jobless rate climbs and more people lose their health insurance.
The Healthcare Association of Hawaii includes hospitals, nursing homes, home healthcare providers and hospice providers.