Hawaii Medical Center said it has found a new lender and potential buyer, averting the possibility that the bankrupt operator of hospitals in Liliha and Ewa, formerly known as St. Francis, will have to shut down.

HMC reported to bankruptcy court Monday that Prime Healthcare Services, a California hospital owner and operator, has taken over as lender from a financial company that threatened to cut off funding if a buyer was not found soon for the hospitals.

"Now that we have a new lender, that lender will be dealing with the debtor and interested parties to set new deadlines for a purchaser," said Chris Muzzi, an attorney for HMC. "At this point in time there’s no deadline looming, so there is essentially some breathing room to allow the hospitals to operate and to continue their efforts to find a buyer."

MidCap Financial, which had been funding operations since June, had given the center a deadline to secure a letter of intent and $250,000 deposit from a buyer.

The deadline, which was Thursday, raised concern that HMC-East in Liliha and HMC-West in Ewa might have to close, leaving 990 workers without jobs.

Now the center can continue talks with prospective buyers. CEO Maria Kostylo said there are "several" parties interested.

While Prime Healthcare is one of the interested parties, its financing of the hospitals does not prevent others from considering a purchase.

Prime Healthcare owns and operates 14 acute-care hospitals in California.

Prime Healthcare has been the focus of several news reports questioning its business practices.

California Watch, a media organization founded by the Center for Investigative Reporting, reported in July that Prime Healthcare transferred an unusually high number of patients from its emergency rooms to its hospital beds, gaining hundreds of millions of dollars by targeting people with Medicare.

California Watch also reported that Kaiser Permanente in California is suing Prime Healthcare for fraudulent billing, though Prime Healthcare said the lawsuit was prompted by its own claim against Kaiser for refusing to reimburse costs for treatment.

The reported a year ago that the U.S. Department of Health and Human Services and California Department of Justice were examining whether a "reported surge" in blood infections at Prime Healthcare hospitals was a result of Medicare fraud.

"There’s been accusations lodged against us by the Service Employees International Union, and they have perpetuated a smear campaign and they have gotten political allies to forward requests to investigate us," Prime Healthcare’s spokesman Edward Barrera said Monday. "As far as we are aware, there are no federal or state investigations of us on any of the previous accusations."

Prime Healthcare issued a news release last month stating that the California Department of Public Health officially dismissed on Sept. 30 all cases related to allegations of improper diagnosis and coding of a blood infection at Prime Healthcare hospitals. It issued a second release in late October responding to an investigative piece by California Watch calling it an "attempt to smear Prime Healthcare."

When asked about the allegations against its new lender, HMC CEO Kostylo said she couldn’t speak to Prime Healthcare’s reputation and continuing issues on the mainland.

Nathan Hokama, a spokesman for HMC’s former owner St. Francis Healthcare System of Hawaii and its main creditor, said St. Francis will check potential buyers before the hospitals change hands.

"St. Francis will be engaged in the due-diligence process to make sure that the buyer makes quality patient care a priority and looks after the best interest of the community," Hokama said. St. Francis must approve a sale since it is the center’s main creditor.

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, composed 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.

HMC first filed for Chapter 11 bankruptcy protection in August 2008. It emerged in August 2010 and became a nonprofit organization governed by a nine-member board of directors before filing its second bankruptcy in June.