St. Francis Healthcare System of Hawaii is pushing lawmakers to approve an $80 million bond backed by the state to refurbish and eventually reopen the defunct Hawaii Medical Centers.
For the first time since the closure of the bankrupt hospitals more than a month ago, the Roman Catholic religious order said it is preparing to upgrade both campuses in anticipation of reopening HMC-West in Ewa as a hospital and HMC-East in Liliha as a long-term care center.
"St. Francis Healthcare System is committed to reopening a hospital in West Oahu, but how that hospital is operated still needs to be explored further," said spokesman Nathan Hokama. "It could be under the St. Francis Healthcare System umbrella but could be operated by another entity."
Retaining an acute-care hospital under the St. Francis umbrella would be a complete change in strategy for the sisters who sold the aging facilities five years ago specifically to get out of the money-losing acute-care business.
Up until late last year, St. Francis considered resuming control of the hospitals but backed out because of financial concerns. St. Francis then blocked a sale of the assets to an affiliate of California-based Prime Healthcare Services, thereby forcing the shutdown of the hospitals, displacing patients and leaving nearly 1,000 workers unemployed.
House lawmakers scheduled a press conference for today to discuss House Bill 2345, which would provide St. Francis the $80 million in special-purpose revenue bonds to "reopen the now-closed hospital in Ewa Beach," said state Rep. Rida Cabanilla (D, Waipahu-Honouliuli-West Loch-Ewa), who introduced the measure.
"There’s a public outcry out there to have a hospital facility, so we will entertain anyone who will be willing to do it," she said. "If all else fails, St. Francis is willing to take their property and run it as a hospital. I think they’re the ace in the hole."
The state authorizes and guarantees special-purpose revenue bonds so private entities serving the public can borrow money at lower interest rates.
St. Francis said the $80 million would be used to proceed with deferred maintenance projects, refurbish buildings and resurface parking lots at both campuses.
The state said it could fast-track regulatory requirements in a matter of weeks. However, it is unclear how quickly the hospitals could reopen given the additional time it would need to restaff, purchase equipment and renovate the facilities.
The Franciscan sisters sold the hospitals in January 2007 for $68 million to HMC LLC, then a for-profit joint venture between Hawaii Physician Group LLC, composed of 130 local doctors, and Kansas-based Cardiovascular Hospitals of America. St. Francis provided the bulk of the financing for the sale, $40.2 million.
HMC first filed for Chapter 11 bankruptcy protection in August 2008. It emerged in August 2010 and became a nonprofit organization before filing its second bankruptcy in June. HMC began closing the hospitals in December.
Other hospitals have expressed an interest in acquiring the HMC facilities.
The Queen’s Medical Center and Hawaii Pacific Health, operator of the Kapiolani and Straub hospitals, said they are interested in acquiring the Ewa hospital, while the quasi-public Hawaii Health Systems Corp. is pursuing the Liliha facility.
St. Francis said it might work with another hospital to reopen the closed facilities.
"It could be a joint venture. It could be many different options," Hokama said. "We haven’t explored all the options yet."
He added that St. Francis’ health expertise is now in preventive and long-term care, as opposed to acute care.
Senate Health Committee Chairman Josh Green said it’s unlikely that St. Francis would get an $80 million bond and reopen the hospitals on its own.
"I don’t really think that’s part of their strategy or even a real road forward for them," Green said. "I just don’t foresee that happening — they actually get a big bond and suddenly restart again. All indications have been pointing to HPH or Queen’s (taking over)."
Cabanilla said she expects the bond bill to pass out of the House Health Committee today and move to a floor vote next week.
Meanwhile, lawmakers will vote on another measure, House Bill 609, which would allow Hawaii Health Systems Corp. to negotiate with St. Francis to operate Liliha’s HMC-East facility.
"We’re just positioning these bills so that way, whatever is determined, we can move quickly forward," said state Rep. Ryan Yamane, House Health Committee chairman, who introduced HB 609. "Once bankruptcy court is finalized and the sisters finally express their intentions either to sell or lease, then we can go from there and see which vehicles to open up HMC-West as an emergency hospital and convert HMC-East into a long-term care facility that would be ideal for the health of the state."
