Kaiser Permanente now plans to wait until July 1 to take over three state-run Maui County medical facilities, a decision that means further delays for the largest privatization effort in state history. It could also mean the Maui hospital operations will be scaled back in the months ahead, according to a top hospital executive.

In a letter to Gov. David Ige dated Sunday, Maui Health System Hospital Administrator Ray Hahn formally notified Ige that the Kaiser takeover planned for Nov. 6 “is no longer possible.” Maui Health is a subsidiary of Kaiser.

Hahn said in his letter it was essential that the state finalize agreements by last week with the United Public Workers and the Hawaii Government Employees Association to amend the public worker union contracts to finalize the transfer of the hospitals by Nov. 6. That didn’t happen, and Hahn said the next “clearly identifiable” date for the transfer to be completed is July 1.

Lawmakers last year authorized privatization of Maui Memorial Medical Center, Kula Hospital & Clinic and Lanai Community Hospital, and the state reached an agreement in January to have Kaiser operate all three facilities. Ige has predicted the change will save the state $260 million in hospital subsidies over the next decade.

The privatization has been opposed 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.

Wesley Lo, chief executive officer for the Hawaii Health Systems Corp.’s Maui region, said the latest delay in the Kaiser takeover means the Maui County facilities will likely be downsized to stay in business until Kaiser can take over next year.

Maui hospital administrators will need to make some “extremely tough decisions” to deal with the “shocking setback,” Lo said. Those decisions will likely result in bed and specialty closures, and more patients being transported to Honolulu medical centers, he said.

“We may need to shrink our capacity to provide good patient care,” he said. “Once we reach our capacity, do we ship them to Hono­lulu, or do you start just having nonpermanent people not familiar with our system taking care of them? That’s the risk. We are going to deliver the best care we can given our resources, but at some point in time, because of our reduced resources, we have to treat the people in the hospital first as opposed to worrying about the entire community. It’s detrimental to the future of health care on Maui.”

The original plan was for Kaiser to take control of the Maui County facilities on July 1, 2016, but the changeover was delayed after the UPW sued to block the plan. The union argued the state’s plan would harm workers who have contracts in place that run through June 30, 2017.

The state settled that lawsuit this month, but the Ige administration has been unable to finalize supplemental agreements with the public worker unions to modify the union contracts that run through June 30, according to Hahn.

Officials with the Governor’s Office and the UPW would not comment on the Kaiser letter, but the two sides are continuing to negotiate over issues related to the privatization effort.

As a result of the delays and uncertainty, the Maui County hospitals have more than 400 vacancies — about 25 percent of the workforce — and have been scrambling to fill some of them with temporary workers and traveling nurses, Lo said.

“We are extremely disappointed with the continued delays of this transition. For years now we have known that the current business model could not sustain our hospitals while meeting the needs of our communities,” Lo said in a news release. “We held so much hope that this transition would increase the quality of health care provided to our friends and family. Unfortunately, this impasse continues to chip away at our faith that this system is set up to ensure that we can provide high quality care for the long-term.”

Hahn said in his letter to Ige that Kaiser had little choice but to delay the privatization effort again.

“Due to the practical and logistical difficulties of mobilizing necessary trainers, vendors, and other resources during the winter holiday season, as well as the length of time and complexity involved in restarting and completing all necessary transition readiness work and fulfilling all closing conditions in order to achieve a smooth transfer, and the ongoing uncertainty associated with the state’s inability to resolve its issues with the unions, we are confirming the transfer date for closing and transfer of operations is July 1, 2017,” Hahn wrote.

“We believe that the ongoing uncertainty associated with repeatedly setting and cancelling potential closing dates (for the hospital transfer), while not intended, is a disservice to the people of Maui and Lanai, as well as to all the clinical and administrative staff who have dedicated so much time and effort to this project on behalf of the state, MHS, the hospitals, and the communities of Maui and Lanai,” Hahn wrote. “With a new date of July 1, 2017, we will all avoid the perpetual raising and dashing of expectations as interim closing dates are repeatedly set and cancelled.”

Laura M. Lott, director of communications and public relations for Kaiser Permanente Hawaii, said in a statement that Kaiser remains “committed to a smooth transition of hospital operations that ensures patient safety and minimizes disruption.”

Lo, who was not included in the negotiations between the Ige administration and unions, said “there has been little to no transparency” in the process.

“We are extremely frustrated to learn that negotiations have failed,” Lo said. “Our patients, our staff, our community, and visitors have endured worry, threatened cuts and service closures for far too long, and even with the lack of urgency in settling this matter, they show up, because at the end of the day, our services affect our families.”

Lo said he plans to step down as CEO on Nov. 6, the day Kaiser was supposed to assume control of the hospitals.