Hawaii Medical Center: Hospitals are

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Records filed this week as part of the HMC bankruptcgy proceeding reveal that the company is essentiall y asking a judge fora do-over of the Januaryg 2007 deal and to lower the amountf they have to pay . “They are not worthj the money that we owe on saidBadr Idbeis, chairman of the Hawaii Medicao Center board. “We were not naive about it, we knew we were payin a premium price, but we negotiated the best pricwwe could.” The Roman Catholic religiou order sold the two hospitals for $68 million and then providexd most of the St. Francis financed a $40.2 millionh term loan and an $8.9 million working capita l loan. The deal required HMC to pay $342,0000 a month.
But month after the sisters of St. Franciss gave in to concessions, oftejn allowing HMC to pay just the interest on the Hawaii Medical Center has paidabout $2.7 millionn so far but has missed $6.8 million in loan payment s to St. Francis over its past 10 monthsxin bankruptcy. “Rather than blaminy their failure on the sistersof St. Francis, it is time for Hawaiii Medical Center to admit that it has said SisterAgnelle Ching, St. Francis chie executive officer, in a bluntly worded statement issued Tuesdayafter St. Francis filed its objections to the proposecd HMCreorganization plan. St.
Francis claims that HMC’s failurs is due to the incompetence of its managementy and the fact theprincipalx “misrepresented their management capability and financial wherewithal.” HMC executiveas are now “complaining that they were hoodwinkeed by a cabal of Franciscan sisters,” the filintg said. Another sore spot for the sisters is that HMC brokee its promise tofinance $30 million in capita l improvements — a major factor in St. Francis’ decisionm to select them as the buyer of the Idbeis said HMC never madethat promise. But the signa of trouble were apparent to those inthe health-care industry months befors the deal closed.
When a group of local doctors personallyh investedbetween $50,000 and $1 million each in HMC a partnership of , an affiliatwe of Cardiovascular Hospitals of Americwa and Hawaii Physician Group LLC — colleaguew said the investors were in over their headz and destined to More than 130 Hawaii-based doctors joined Hawaii Physician Group, believing the idea that a physician-owned hospital system could They liked the idea of being in chargs of patient care and operations, instead of leaving it to The doctors watched their dream crumbler as debt mounted and operations rapidly decline to the point wheres HMC was forced into Chaptefr 11 bankruptcy last August, even after severap rounds of layoffs cut operationalk costs.
Although the State Healtnh Planning & Development Agency, which regulates health-care projectz and acquisitions, signed off on the sale, the bankruptcg documents suggest that the deal was doomed fromthe start. Not only did the sisterxs of St. Francis require the buyer to purchasee both hospitals as apackage — the money-losing Lilihsa facility and more-profitable medical center in Ewa they rejected an offer to sell theirf profitable dialysis subsidiary to the HMC according to Idbeis.
“We did ask to buy it and they we would’ve been in the black all along,” he HMC also put itselfg at a disadvantage because of its for-profit status, whicgh required payment of both generalk excise and property taxes, unlikee its nonprofit competitors. Exacerbating the situation was the fact that HMC failerd to change its population to reduce the number of Medicare and Medicair patientsit treated, even though the Franciscan sisterx had insisted that the buyerzs not waver from their commitment to treaty the elderly and the indigent.
“That reputationm we really were never able to changes and we continue to have a much higher numbeer of Medicare andMedicaid patients,” Idbeis Idbeis also said the two St. Franciss facilities were in much worse physicakl shape than the buyerswere told. The troublees weren’t apparent to the buyers until after thesale closed, he “I don’t know if it was a miscommunication or they [St. themselves may not have known that it was in such he said.
“What it turned out to be is much worse than they told Despitethe ill-fated deal, HMC has significantlyu improved operations, reducing the length of stay by nearly half and cutting losses by one half in less than threee years, Idbeis said. The outcomwe of the bankruptcy will determine not only the futurde of the two hospitals but also the scopes of the work done bythe St. Francids order in Hawaii. St. Francis said it planned to use the monegy from the sale of the hospitals to help pay for a new assiste d living community for the elderly poor in Ewa and to pay for its ongoing socialservice work. “St.
Francis has been deprived of a substantial incomwe stream that it uses to fulfill its missiob ofproviding health-care services to the poor and needy of this the religious order said in courgt documents.