Buyers emerge for 2 hospitals

The effort by St. Francis Healthcare System of Hawaii to sell two shuttered medical facilities on Oahu that it recently took back in bankruptcy has attracted an offer from a partnership led by someone very familiar with the properties in Liliha and Ewa.

Eugene Tiwanak, a former St. Francis official, is leading a bid to buy the two former Hawaii Medical Center hospitals in partnership with a San Francisco-based physicians group, Hampton Health Ltd.

Tiwanak’s group hand-delivered a letter of intent Tuesday to St. Francis, offering to buy and reopen both facilities. A proposed purchase price was included but isn’t being made public. The partnership said it has necessary financing from investors to complete the acquisition.

The offer follows an expression of intent announced last week by the parent company of The Queen’s Medical Center to explore the feasibility of reopening the Ewa hospital.

Separately, the state’s Hawaii Health Systems Corp. won legislative approval earlier this month to buy the Liliha facility, though there haven’t been discussions with St. Francis and no funds were appropriated for such an acquisition.

Nathan Hokama, a St. Francis spokesman, said the organization can’t discuss any of the proposals due to a confidentiality agreement.

It’s unclear if St. Francis is able to consider the bid from Tiwanak’s group. Queen’s has an exploratory agreement with St. Francis that could give it a period to exclusively negotiate a purchase.

Tiwanak in some respects may be seen as having an advantage to completing a deal, given his background and the group’s offer to buy both the Ewa and Liliha facilities.

Tiwanak has worked for the Sisters of St. Francis since 1973 in many capacities, including planning, raising funds, administration and community outreach. As former president and chief executive officer of the St. Francis Healthcare Foundation, he was involved in efforts by the Catholic organization to sell the two acute care hospitals in 2005. At that time, St. Francis operated the hospitals but was looking for a buyer because rising costs had created financial difficulties.

St. Francis struck a deal to sell to a group of local doctors and a Kansas-based hospital operator, Cardiovascular Hospitals of America, for $68 million in 2007.

That group operated the hospitals as Hawaii Medical Center, but encountered financial problems and filed for bankruptcy in 2008.

After reorganizing as a nonprofit and emerging from bankruptcy in 2010, HMC returned to bankruptcy last June. Attempts were made to find a buyer through bankruptcy, but that was unsuccessful.

Because St. Francis provided $40.2 million in financing for HMC’s 2007 purchase, U.S. Bankruptcy Judge Robert Faris approved the assets’ return to St. Francis.

Tiwanak retired from St. Francis in 2007 after the sale to HMC, and established management consulting firm Tiwanak Associates Hawaii LLC for nonprofits with a focus on health care.

Through that work, he was involved with prospective suitors for the two hospitals while HMC was in bankruptcy. Tiwanak said Hampton Health, led by Dr. John H. Fullerton, seemed to be the best fit and was well capitalized. So he joined them.

“Hampton Health and Dr. Fullerton have an outstanding record of developing successful and creative health care programs and services, based in hospitals, clinics, the community and in homes,” Tiwanak said in a statement. “Their best-practices models of health care, and substantial financial resources, will allow us to provide quality care at both the (former St. Francis) ‘East’ and ‘West’ facilities.”

Tiwanak said his group would operate as a nonprofit and envisions establishing geriatric services as a new focus for the Liliha facility, which previously was an acute care hospital with a focus on organ transplant and dialysis procedures.

The Ewa facility’s core as an acute care hospital with an emergency room would not change, though Tiwanak said his group’s intention is to broaden its medical services.

Tiwanak’s group also has pledged to abide by ethical and religious directives of the Roman Catholic Church for health care services, which include prohibiting abortions and assisted suicide.

St. Francis also insists that indigent care be provided — a requirement that ultimately led to the demise of the hospitals, which serviced primarily low-income patients covered by the state’s low-reimbursing Medicaid health insurance program.

If any bid is accepted, it could be 18 to 24 months before regulatory approvals necessary to reopen the hospitals could be obtained, according to some estimates.

HMC-West in Ewa and its emergency room abruptly closed in December, creating a strain on Oahu’s emergency medical services as ambulances were diverted, overloading other hospitals. HMC-East in Li­liha closed in January.

The closings displaced the most vulnerable long-term chronic disease patients, halted transplants and resulted in layoffs of nearly 1,000 workers.

George Greene, president and CEO of the Healthcare Association of Hawaii, said multiple interest in acquiring the facilities is good news, especially for West Oahu residents needing health care. “Obviously we’re supportive of seeing an acute care facility being restarted in the community,” he said.

Tiwanak said Hampton Health is interested in partnering with Hawaii-based medical service providers, and buying the real estate of both campuses or leasing the property.

Hampton Health has two California offices, one in San Francisco and one in Novato, but its group of doctors mainly serves patients at a variety of hospitals and assisted-living facilities. The company also operates a free clinic in San Francisco.