A federal appeals court Friday cleared the way for the privatization of three Maui hospitals to finally proceed by dissolving an injunction that had blocked the transaction between the state and Kaiser Permanente.

The 9th U.S. Circuit Court of Appeals on May 17 had issued the injunction, effectively halting the largest privatization effort in state history.

On Friday the court issued a new order that dissolved that injunction, allowing Kaiser to finally assume control of Maui Memorial Medical Center, Kula Hospital & Clinic and Lanai Community Hospital later this year.

Lawmakers last year authorized privatization of the three facilities, and the state reached an agreement in January to have Kaiser operate all three. Gov. David Ige has predicted the effort will save the state $260 million in hospital subsidies over the next decade.

The privatization effort has been fought by the state’s public worker unions, which represent about 1,400 employees at the Maui hospitals. Most of the hospital staffers are expected to continue working at the hospitals for Kaiser, but they will no longer be state workers.

The United Public Workers sued the governor last year to stop the privatization of the facilities, arguing the state’s plan would harm workers who have contracts in place that run through June 30, 2017.

On Aug. 13 the two sides announced that Ige and UPW Director Dayton Nakanelua signed a settlement ensuring the union contracts will remain in place for the hospital workers, while allowing the state to complete the transfer to Kaiser as early as Nov. 6.

Under the agreement, the hospital workers will be supervised by Kaiser, and their state contract terms governing issues such as wages, work hours, sick leave and holidays remain in effect through June.

Kaiser must also offer the union workers jobs for at least six months after the expiration of their contracts, according to the terms of the agreement. UPW members work in areas such as maintenance, food service and laundry.

In a statement issued Friday, state Attorney General Douglas Chin said the court made it clear during oral arguments “that it preferred seeing the parties settle instead of the court making an all-or-nothing decision,” adding, “Reaching compromise is not always easy. I thank Gov. Ige and the union leadership for finding a forward path.”

The order means that all transition activities between the state and a new Kaiser entity, Maui Health System, may resume at the three Maui region facilities, according to Chin.

Ige has said he expects additional state hospitals will be privatized, including Hilo Medical Center and Kona Community Hospital on Hawaii island.

Ige said in an interview there are no immediate plans in the works to privatize the publicly run Hilo and Kona hospitals, but said the state’s efforts on Maui offer a “blueprint for how to proceed forward on other deals.”