Medical center has until Thursday to find new owner

The bankrupt Hawaii Medical Center, owner of Liliha and Ewa hospitals, has until Thursday to find a new owner or face a shutdown that would leave 990 people without jobs.

MidCap Financial, based in Bethesda, Md., has agreed to continue financing HMC’s operations through Thursday.

MidCap Financial has been funding operations of the money-losing hospitals since June but is now requiring a buyer be found by Thursday for the flow of cash to continue.

If a buyer signs a letter of intent, MidCap would provide financing until the new owner takes over.

There are at least half a dozen prospective buyers that are seriously considering the assets, and at least one has put down the required $250,000 deposit, according to HMC CEO Maria Kostylo.

Hawaii Pacific Health, owner of Kapiolani and Straub hospitals, is among those considering buying all or parts of HMC. Hawaii Pacific Health indicated it is interested in buying HMC’s newer Ewa hospital, which opened in 1990.

"We’re very hopeful we will have a buyer soon," Kostylo said Monday after a brief bankruptcy update hearing. "We’re on a rushed time line to find a buyer. Because it’s such a short time frame, there (are) only serious buyers considering it. We’re considering all options at this time."

HMC and several potential buyers have been in discussions during the past two weeks, she said. Offers must be accepted by MidCap, the facilities’ former owner St. Francis Healthcare System of Hawaii and the General Unsecured Creditors Committee. Confidentiality agreements prohibit HMC from disclosing prospective buyers or their offers.

"Just the speed of how it needs to happen might be a little disconcerting to some," Kostylo said. "If the event occurs that we cannot find a buyer, then we would have to initiate a wind-down."

The 240-bed HMC-East in Liliha had about 80 patients as of Monday, and the 102-bed HMC West in Ewa had 70, Kostylo said.

St. Francis announced in late October it was pulling out of a bankruptcy reorganization plan that would have returned the facilities to the Roman Catholic religious order.

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, comprised 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 — and is HMC’s main creditor.

HMC first filed for Chapter 11 bankruptcy protection in August 2008. It emerged in August 2010 and filed again in June of this year.

HMC became a nonprofit organization governed by a nine-member board of directors when it emerged from its first bankruptcy.

In addition, the Kansas company and local physicians group no longer had a stake in the hospitals that provide 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.