Owners of the former St. Francis Medical Centers say they are in discussions with potential buyers for the financially troubled hospitals in Liliha and Ewa following a decision by St. Francis Healthcare System of Hawaii to abandon a bankruptcy reorganization plan that would’ve returned the facilities to them.

"Hawaii Medical Center and St. Francis Healthcare System have been unable to resolve outstanding issues related to the amended plan of reorganization," HMC CEO Maria Kostylo told employees yesterday. "The financial contributions required to fund ongoing operations for Hawaii Medical Center and the governmental liabilities are too great for St. Francis to assume. Because of this, St. Francis can no longer support the reorganization plan."

The 240-bed HMC East and 102-bed HMC West combined employ 990 people.

The money-losing hospitals, which has been funded by bankruptcy lender MidCap Financial since June, will continue to operate, though it’s unclear how long the lender will fund operations.

Hawaii Medical Center filed for Chapter 11 bankruptcy protection in June, less than a year after emerging from bankruptcy. As part of the Chapter 11 bankruptcy reorganization, HMC sought to relinquish ownership of the hospitals to lender and former owner St. Francis.

St. Francis exited the acute care business when it sold its two medical centers in January 2007 for $68 million to HMC LLC, a joint venture between Hawaii Physician Group LLC, comprised of local doctors, and Kansas-based Cardiovascular Hospitals of America.

At the time, St. Francis said it would use the proceeds from the sale to better fulfill its mission of caring for Hawaii’s growing senior and poor population through hospice and other proj­ects. The Roman Catholic religious order provided the bulk of the financing for the sale — $40.2 million — and is HMC’s main creditor.

"We are aggressively pursuing other potential buyers and continue to receive funding from MidCap Financial to support our efforts," Kostylo said.