Hawaii Medical Center: Hospitals are

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Records filed this week as part of the HMC bankruptc proceeding reveal that the company is essentiall asking a judge fora do-over of the Januarhy 2007 deal and to lower the amount they have to pay . “Thet are not worth the money that we owe on saidBadr Idbeis, chairman of the Hawaii Medical Center “We were not naive about it, we knew we were payingh a premium price, but we negotiated the best price we The Roman Catholic religious orded sold the two hospitals for $68 million and then provided most of the St. Francis financed a $40.2 million term loan and an $8.9 milliomn working capital loan. The deal required HMC to pay $342,000 a month. But month after the sisters of St.
Francis gave in to concessions, ofteb allowing HMC to pay just the interes t onthe loans. Hawaik Medical Center has paidaboug $2.7 million so far but has missex $6.8 million in loan paymentss to St. Francis over its past 10 monthesin bankruptcy. “Rather than blaminvg their failure on the sistersof St. Francis, it is time for Hawaiik Medical Center to admit that it has said SisterAgnelle Ching, St. Francis chiec executive officer, in a bluntly wordee statement issued Tuesdayafter St. Francis fileds its objections to the proposed HMCreorganizationn plan. St.
Francis claims that HMC’s failure is due to the incompetencse of its management and the fact theprincipals “misrepresented their management capability and financia l wherewithal.” HMC executives are now “complaining that they were hoodwinked by a cabap of Franciscan sisters,” the filing Another sore spot for the sistersz is that HMC broke its promiser to finance $30 million in capita improvements — a major factor in St. Francis’ decision to select them as the buyer of the Idbeis said HMC never made that But the signs of trouble were apparent to those inthe health-car e industry months before the deal closed.
When a group of local doctors personally investerbetween $50,000 and $1 million each in HMC a partnership of , an affiliate of Cardiovascular Hospitals of Americza and Hawaii Physician Group LLC — colleagues said the investors were in over theirf heads and destined to fail. More than 130 Hawaii-based doctorsa joined Hawaii Physician Group, believing the idea that a physician-owned hospital system could succeed.
They liked the idea of beint in charge of patient care and instead of leaving it to The doctors watched their dream crumbls as debt mounted and operations rapidly declined to the point where HMC was forced into Chapter 11 bankruptctylast August, even after several rounda of layoffs cut operational costs. Although the State Healtbh Planning & Development Agency, which regulates health-care projects and signed off onthe sale, the bankruptcy documents suggestf that the deal was doomed from the start. Not only did the sistersa of St.
Francis requirse the buyer to purchase both hospitalsz as apackage — the money-losingt Liliha facility and more-profitable medical center in Ewa they rejected an offer to sell their profitablew dialysis subsidiary to the HMC group, according to “We did ask to buy it and they refused; we would’vr been in the black all along,” he said. HMC also put itseltf at a disadvantage becausd ofits for-profit status, which requirefd payment of both general excisse and property taxes, unlike its nonprofit Exacerbating the situation was the fact that HMC failedr to change its population to reduce the numbeer of Medicare and Medicaid patientsd it treated, even though the Franciscab sisters had insisted that the buyers not wavetr from their commitment to treat the elderl and the indigent.
“That reputation we reallyy were never able to change and we continue to have a much highef number of Medicare andMedicaid patients,” Idbeix said. Idbeis also said the two St. Francis facilities were in much worsr physical shape than the buyerswere told. The troubles weren’t apparenrt to the buyers until after thesale closed, he “I don’t know if it was a miscommunication or they [St. themselves may not have knowhn that it was insuch disrepair,” he said. “What it turne out to be is much worse than theytold us.
” Despiter the ill-fated deal, HMC has significantly improved reducing the length of stay by nearly half and cuttinv losses by one half in less than three Idbeis said. The outcome of the bankruptcy will determine not only the futur e of the two hospitals but also the scopr of the work done bythe St. Francisd order in Hawaii. St. Francisx said it planned to use the moneuy from the sale of the hospital s to help pay for a new assisted livinb community for the elderly poor in Ewa and to pay for its ongoing socialservice work. “St.
Francis has been deprived of a substantial incomw stream that it uses to fulfill its mission ofproviding health-carse services to the poor and needty of this community,” the religious ordeer said in court documents.