Wahiawa General Hospital is cutting the equivalent of 100 full-time positions amid claims that it owes University of Hawaii medical school physicians $800,000 in back pay.

The UH John A. Burns School of Medicine says Wahiawa General hasn’t paid a group of UH-affiliated physicians for the past 10 months. The medical school is threatening to pull its residency program from Wahiawa General after more than 20 years.

"We’re at a point where we have to have some payment for these physicians to move forward," said UH Medical School Dean Jerris Hedges. "From our point of view, it would be very unfortunate for Wahiawa to be forced … into a bankruptcy situation. We would like to see an alternative solution. Part of that is to bring partners to share in the cost of training future doctors."

Wahiawa General’s CEO Don Olden contradicted Hedges.

"We basically deny it (owing UH money) because there are mitigating factors," said Olden, declining to explain those factors. "It’s their assertion. It’s not ours."

Olden said Wahiawa General is working to reduce expenditures after losing some of its business to the Queen’s Medical Center-West Oahu, which opened in May at the site of the former Hawaii Medical Center-West in Ewa.

Wahiawa has cut the equivalent of 60 full-time positions since May and another 40 positions will be eliminated within the next two months to reduce expenses by about $3 million, Olden said. Some workers were laid off, while others had their hours cut.

Wahiawa General added about 100 positions after HMC-West closed in December 2011 and it was flooded by new patients from West Oahu.

"We’ve had a significant drop in business at Wahiawa hospital. We’re still needing to reduce our costs to get to break even," Olden said. "We are having to manage our cash flow very tight. We’ve got the same problems that anybody would have in a situation like that."

The hospital, which is a private nonprofit, also said it must make adjustments for the soaring costs of employee health insurance and expenses related to the Affordable Care Act, also known as Obamacare. Total annual revenue fell to $44 million this year from a peak of about $54 million in recent years, Olden said. Meanwhile, costs have increased by about $10 million, he added.

"There’s been these significant changes in the health care environment that have made it very difficult for community hospitals focused on small communities to succeed," said Hedges. "As with HMC, changes in any Oahu hospital operation can have adverse ripple effects across the community."

According to Hedges, Wahiawa hasn’t been able to pay six UH faculty physicians who supervise residents at Wahiawa and are part of the University Clinical, Education & Research Associates, or UCERA.

Hedges said the medical school has been paying the faculty at Wahiawa out of the school’s rainy day fund, which is quickly being depleted.

"There’s a point at which those rainy day funds are gone," Hedges said. "We have to have an alternative in place before that happens."

The residency program at Wahiawa is the only one in the state for family medicine doctors.

Olden said Wahiawa General invests more than $2 million annually in the program, which has 18 residents and graduates six physicians per year.

"We lose money every year — half a million to $1.5 million," Olden said. "We’ve tried really hard since I’ve been here to keep the program alive because we think it’s a significant benefit for the state. We tried to get support and help from the Legislature and tried to get the John A. Burns School of Medicine to step up and encourage the Legislature to put funding into the program, but we haven’t been successful."

To help Wahiawa General cut costs, UH is proposing to shift oversight of the residency program to UCERA and bring in other health care organizations to share in educational expenses, Hedges said.

Wahiawa General said its supports the medical school’s proposal to create a consortium that includes the Queen’s Medical Center, Hawaii Pacific Health and the Hawaii Medical Service Association as partners investing in the program, which would ultimately reduce its expenses.