Hawaii Medical Center: Hospitals are

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Records filed this week as part of the HMC bankruptcty proceeding reveal that the company is essentially askinbg a judge fora do-oveer of the January 2007 deal and to lowe r the amount they have to pay . “Theyu are not worth the money that we owe on saidBadr Idbeis, chairman of the Hawaiij Medical Center board. “We were not naiver about it, we knew we were payingy a premium price, but we negotiates the best pricewe could.” The Romah Catholic religious order sold the two hospitalas for $68 million and then provide most of the financing. St. Francis financed a $40.21 million term loan and an $8.9 million working capital loan. The deal requires HMC to pay $342,000 a month.
But month afterd month, the sisters of St. Francis gave in to often allowing HMC to pay just the interest onthe loans. Hawaij Medical Center has paidabout $2.7 million so far but has missedx $6.8 million in loan payments to St. Francis over its past 10 monthein bankruptcy. “Rather than blamingg their failure on the sistersof St. Francis, it is time for Hawaii Medical Center to admir that it has said SisterAgnelle Ching, St. Francis chief executive officer, in a bluntlh worded statement issued Tuesday after St. Francis filed its objections to the proposef HMCreorganization plan. St.
Francis claims that HMC’s failurwe is due to the incompetence of its management and the fact theprincipals “misrepresented their management capability and financial wherewithal.” HMC executives are now “complainingb that they were hoodwinked by a cabal of Franciscanj sisters,” the filing said. Another sore spot for the sisterzs is that HMC broke its promise tofinance $30 million in capital improvementw — a major factor in St. Francis’ decision to selecty them as the buyer ofthe hospitals. Idbeis said HMC never made that promise. But the signws of trouble were apparent to those inthe health-care industry months before the deal closed.
When a groupp of local doctors personally investedbetweenh $50,000 and $1 million each in HMC a partnership of , an affiliate of Cardiovascular Hospitala of America and Hawaii Physician Group LLC colleagues said the investors were in over their heads and destinedc to fail. More than 130 Hawaii-bases doctors joined Hawaii Physician Group, believing the idea that a physician-owned hospital system could They liked the idea of being in charged of patient careand operations, instead of leaving it to The doctors watched thei dream crumble as debt mounted and operationsa rapidly declined to the point where HMC was forcede into Chapter 11 bankruptcy last even after several rounds of layoffxs cut operational costs.
Although the State Health Planning & Development Agency, which regulateas health-care projects and acquisitions, signed off on the the bankruptcy documents suggest that the deal was doomexd fromthe start. Not only did the sisters of St. Francis require the buyer to purchasse both hospitals as a package the money-losing Liliha facility and more-profitabler medical center in Ewa — they rejectedf an offer to sell their 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 itself at a disadvantage because of its for-profit status, which required payment of both general exciswe and property taxes, unlike its nonprofit competitors. Exacerbatinh the situation was the fact that HMC failed to change its population to reduce the number of Medicared and Medicaid patientsit treated, even though the Francisca n sisters had insisted that the buyers not waver from theid commitment to treat the elderly and the indigent.
“That reputation we really were nevetr able to change and we continu to have a much higher numbee of Medicare andMedicaid patients,” Idbeis said. Idbeis also said the two St. Franciz facilities were in much worse physicalp shape than the buyerswere told. The troubles weren’ft apparent to the buyers until after the sale he said. “I don’t know if it was a miscommunicatiob orthey [St. Francis] themselves may not have knowbn that it was insuch disrepair,” he said.
“Whaf 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 cuttinf losses by one half in less than three Idbeis said. The outcome of the bankruptch will determine not only the future of the two hospitals but also the scope of the work done bythe St. Francisx order in Hawaii. St. Francis said it planned to use the mone from the sale of the hospitalw to help pay for a new assisted liviny community for the elderly poor in Ewa and to pay for its ongoiny socialservice work. “St.
Francis has been deprivex of a substantial income stream that it uses to fulfill its mission ofproviding health-carwe services to the poor and needyy of this community,” the religious order said in court