With payments to creditors being made, the health enterprise looks to expand
POSTED: 1:30 a.m. HST, Aug 20, 2010
The Hawaii Medical Center, formerly the St. Francis Medical Center, emerged this week from bankruptcy after a two-year struggle to repay creditors amid declining reimbursements.
"We have survived. We have demonstrated in the most difficult circumstance that we can actually move forward," said Salim Hasham, who recently was named CEO.
"This is a very significant milestone for HMC and one that will enable us to move forward much more vigorously."
HMC, which converted to a not-for-profit from a for-profit health care provider in June, will focus on attracting more specialists and expanding core services at both its Liliha and Ewa facilities.
That includes increasing outpatient surgeries at HMC East and expanding emergency and imaging services at HMC West. The hospitals specialize in transplants, cardiac care, liver and thoracic tumor surgery, orthopedics and skilled nursing.
Another key strategy to keep the medical centers viable is to partner with other health care providers, Hasham said.
"Like all other health care providers, the challenge will be to continue to provide access to quality care in a rapidly changing economy and regulatory environment," he said.
The U.S. Bankruptcy Court approved in May a joint reorganization plan by HMC, its unsecured creditors and more than 130 physician shareholders.
HMC filed for Chapter 11 bankruptcy reorganization in August 2008 after recording operating losses of about $21.8 million since January 2007, when the hospital was acquired for $68 million from St. Francis Healthcare System of Hawaii, which provided the bulk of the financing.
HMC will pay $46 million owed to St. Francis over seven years and $21 million to unsecured creditors over 14 years. The institution paid its first $5.7 million installment to St. Francis on Tuesday and paid $1.7 million earlier. It has secured exit financing of $15 million.
"We look forward to collaborating with HMC and being able to take full advantage of our services and facilities to help the community and strengthen the viability of both institutions," said Sister Agnelle Ching, St. Francis' CEO, in a statement.
HMC was the state's only physician-owned, for-profit entity but failed to bring the hospitals to profitability after inheriting money-losing operations in the January 2007 acquisition. The result was layoffs of a couple hundred workers.
HMC was previously a partnership of CHA LLC, formerly known as Cardiovascular Hospitals of America, and 130 local physicians who comprise Hawaii Physician Group LLC. CHA Hawaii no longer has a stake in the hospitals, which instead are run by a nine-member board of directors.
HMC provides acute dialysis care to a significant number of Oahu's renal patients and operates the only organ transplant center in the Pacific and full-service emergency hospital in West Oahu.