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Ex-St. Francis exec, Calif. firm offer to buy 2 Oahu hospitals

By Star-Advertiser staff

LAST UPDATED: 03:25 p.m. HST, May 16, 2012

A former St. Francis Healthcare executive and a California-based medical group have submitted a letter of intent to acquire the shuttered Hawaii Medical Center facilities in Ewa and Liliha, the partnership announced today.
Eugene Tiwanak, the former president and chief executive officer of the St. Francis Healthcare Foundation and St. Francis Residential Care Community, has joined with Hampton Health Ltd. Hawaii LLC, in the offer to buy the properties from St. Francis Healthcare System of Hawaii. 
The letter was hand-delivered Tuesday but the price remains confidential, according to a news release from the partnership.
HMC-West in Ewa and its emergency room abruptly closed in December, creating an immediate strain on Oahu's emergency medical services as ambulances were diverted, overloading other hospitals. HMC-East in Li­liha closed in January. The two are returning to St. Francis Healthcare's control as part of a lengthy and contentious bankruptcy of the hospitals' owner, Hawaii Medical Center.
The closures displaced the most vulnerable long-term chronic disease patients, halted lifesaving transplants and resulted in layoffs of nearly 1,000 workers.
In bankruptcy filings, a financial adviser for HMC last year estimated the value of the buildings and leasehold interest for the Ewa campus at roughly $28 million
Last week, officials from the parent company of the Queen's Medical Center announced an agreement with St. Francis Healthcare that will enable Queen's to explore the feasibility of reopening the Ewa hospital. Queen's officials described the agreement as the first step in a length process.
Today's announcement said that Hampton Health Ltd. has obtained the necessary financing from investors to acquire both hospitals.
"I have worked in many capacities for the Sisters of St. Francis since 1973, including planning, raising funds, administration and community outreach," said Tiwanak. "It would be a privilege to guide these healthcare institutions as chief executive officer if we can reach agreement with St. Francis Healthcare System."
St. Francis Healthcare insists that a buyer must abide by Catholic ethical and religious directives, including prohibiting abortions and assisted suicide, as well as agree to provide indigent care — 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.
Tiwanak said Hampton intends to meet those directives. "Hampton Health will continue to operate the hospitals under the beliefs of the Catholic Church," he said.
Hampton Health would expand medical services and programs, particularly at the Ewa hospital, according to the announcement. Tiwanak also said Hampton Health was interested in partnering with Hawaii-based medical service providers, and in acquiring the fee interest in both campuses. However, the company would also be open to discussing a long-term lease acquisition, he added. 
Hampton Health Ltd. was founded by Dr. John H. Fullerton and is based in San Francisco.

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Changalang wrote:
There are many things in play including insurance claims for flood damage. An $80 million dollar bond from the State introduced by an ex-St. Francis nurse who currently heads the State House of Representatives as Chair of Housing that does not result in much needed SNF beds for the State may very well be the scr3w job that exhausts all goodwill an a small island where culturally people have very very long memories and a dedicated desire for "justice". CMS is not the only investigation arm of the Federal gov't. Food for thought. :) Let's all hope that Westside gets a hospital open ASAP from a capable management entity, whoever that may end up to be. Outsiders wading into the local healthcare market usually don't fare well. What ever happened to Summerlin anyway? Many had reservations about the bond and the timing of the bill. I guess we will all see. God works in mysterious ways. LOL.
on May 16,2012 | 04:05PM
Changalang wrote:
We all know Calvin currently runs the House; typo. Cabinilla is House Housing Chair. Sorry about the confusing run on sentence.
on May 16,2012 | 04:22PM
Changalang wrote:
Addendum: " HB2345 RELATING TO THE ISSUANCE OF SPECIAL PURPOSE REVENUE BONDS TO ASSIST ST. FRANCIS HEALTHCARE SYSTEM OF HAWAII. Report Title: St. Francis Healthcare System; SPRB Description: Authorizes the issuance of special purpose revenue bonds of up to $80,000,000, for St. Francis Healthcare System to finance the construction, improvement, and equipment of its healthcare facilities. Effective July 1, 2050. (HB2345 HD1) Companion: Package: None Current Referral: HTH, WAM Introducer(s): CABANILLA, AQUINO, CHING, CULLEN, HAR, RHOADS, SAY, YAMANE " . . . Just so people know that what is stated is factual . . . " Rida Cabanilla is a Democratic member of the Hawaii House of Representatives, representing the 42nd District since 2005 . . . Registered Nurse at Saint Francis Medical Center, Critical Care." (Ballotpedia) Just keeping it real. Seems there are a lot of skeletons in the closet with the door just cracked open a wee bit.
on May 16,2012 | 06:49PM
jtamura69 wrote:
First of all, I didn't know that it was a Catholic belief to value money over human life? They showed their true belifs when they kicked out all those patients. Hamilton Health will probably run it back into bankruptcy. It would have been better to sell it to someone like Queen's Health who know what they're doing.
on May 16,2012 | 04:07PM
Changalang wrote:
Hamilton has no idea how difficult and punishing the permitting and inspection process can be in Hawaii; not to mention gaining the trust of HMSA. This is an island that functions on trust. :)
on May 16,2012 | 04:14PM
justin_thyme wrote:
Queen's should acquire, operate and staff the Ewa facility. Queen's' resources include its superior medical and surgical specialty physicians, its excellent nursing administration, and its much greater financial strength. With a few exceptions, the former HMC-West had a decidedly inferior group of physicians on its staff. As for HMC-East, Mr. Tiwanak and Hampton Health should not be permitted to operate an acute-care facility. Instead, the Liliha campus should become a combined Skilled Nursing and Long-Term Care facility.
on May 16,2012 | 05:06PM
Changalang wrote:
Agree, but there are factors that make both ex-hospitals very unsavory acquisitions. The post bankruptcy facilities no longer are up to code. Ewa will take tens of million of dollars in infrastructure upgrades just to get up to current building code. East WAS licensed for acute care and not an SNF, but that may be out of reach for re-certification because follow up inspections could mean East needs to be demolished and may need condemning. Since Queen's is the only one who could make West work because of their bond rating; it may be much more feasible to look at other sites for growth and leave the drown burning bag of dog dukie on Hampton's porch. Personally, I think Queen's should look at Wahiawa General for a growth strategy. If Rida Cabinilla can get $80 million to give to two time losers like St. Francis; the big gun, House Finance Chair Marcus Oshiro may want to help bring Wahiawa General up a few notches. The $1.7 he acquired was chicken feed. Wahiawa General is would serve Ernie Martin's, Marcus Oshiro's, Rep. Lee's, and Senator Hee's constituency. Since it is not a bankrupt wreck, the building code variances are still grandfathered in. There is an old Sicilian saying about letting the rats sleep together and watching them become cannibals from afar. The lesson comes across much better in the original language. I want to see Hawaii taxpayer money put to a winning operation; like the highly successful transplant center that Queen's opened in record time. The bottom line is that St. Francis found a fiscal lifeline via Rida Cabinilla; so faulty memories can be used as an excuse to make pretend that everything before the money no longer is implied or applied. Why settle for one cross when you can get a double cross. I guess nuns don't believe in karmic consequences of Buddhism. Perhaps when the dust settles, they will.
on May 16,2012 | 06:31PM
Changalang wrote:
Found another skeleton. " While such consulting arrangements are common, the St. Francis deal is unusual because, as a board member, Blanco had a relation ship with key St. Francis executives and a financial incentive for Unidev to be selected by them. The hospital in Liliha is the largest of seven affiliates operating under the umbrella of St. Francis Healthcare System of Hawaii, which in turn is controlled by The Sisters of the Third Franciscan Order of Syracuse, N.Y. The Liliha hospital and St. Francis Medical Center West in Ewa are in the process of being sold. Blanco and St. Francis officials say the payments did not create an actual conflict of interest because the hospital board and the entity developing the assisted-living project are separate. But Unidev was concerned enough about a potential conflict that it asked Blanco to get a waiver from St. Francis executives confirming that they had no problem with him acting as go-between. Sister Beatrice Tom, then the CEO of St. Francis, provided the waiver. But given the tough new regulatory climate imposed on nonprofits by the Internal Revenue Service, it's not clear that the waiver is sufficient. A spokesman for the regional IRS office in Sacramento, Bill Steiner, said determining whether the kind of arrangement made by Blanco violates rules for nonprofit organizations would be a complex question. "What it really gets down to is that it doesn't look good on its face, but you have to get all the detailed facts and circumstances," Steiner said. "It may look like a conflict to the public, but it may or may not be that in legalese."
on May 16,2012 | 07:24PM
Changalang wrote:
(continued) But after learning about the Blanco-Unidev matter from PBN and reviewing documents filed in the lawsuit, state Deputy Attorney General Hugh Jones said his office "is conducting a preliminary inquiry into the relationships involved in this transaction." He declined to comment further. While working for Unidev, the lawsuit says, Blanco prepared "substantial and critical research regarding potential St. Francis development projects, including identifying potential development properties, gathering photographs of the properties, researching zoning and tax maps for each property, researching the corporate structure of St. Francis Healthcare Systems of Hawaii and its subsidiary corporations, researching for background information on potential St. Francis properties, [and] researching and compiling local news media articles regarding the need for affordable housing in Hawaii."
on May 16,2012 | 07:36PM
Changalang wrote:
(continued) The project under consideration was a proposed $100 million assisted-care project in Ewa. As it divests itself of its hospitals, St. Francis is moving into the areas of caring for the homeless and elderly. "Mr. Tiwanak and others at St. Francis sought out Mr. Blanco and had many meetings and conversations regarding the advancement of this project," according to Muzzo, Blanco's attorney. "This was especially true since Unidev did not have a local presence on the island until recently." . . . Unidev, in court filings, said that a final contract with Blanco's partnership was never signed. Both Internal Revenue Service policies and the state's nonprofit corporations act require all facts about a possible conflict of interest to be disclosed to the board and cleared by the recorded vote of a majority of disinterested board members, according to Jones, the deputy attorney general. (10SEP2006; Pacific Business News) This was when St. Francis hospitals were being sold the first time to HMC/CHA.
on May 16,2012 | 07:40PM
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