Hawaii hospital system announces new reorganization plan - Hawaii News Now - KGMB and KHNL

Hawaii hospital system announces new reorganization plan

Salim Hasham Salim Hasham

By Jim Mendoza - bio | email

HONOLULU (HawaiiNewsNow) - After two years in bankruptcy reorganization, Hawaii Medical Center said its ready to emerge with a clean bill of health and pay off $68 million it owes St. Francis Healthcare System of Hawaii -- the hospital's former owner.

"We are actually going to pay them out over seven years. We've worked out a mechanism to pay them back in full," chief operating officer Salim Hasham said.

A new reorganization plan filed in court Wednesday includes a large dose of debt relief. Hasham said all creditors would be paid back within ten to twelve years.

"Our contention to the court is we have been very successful doing what we're doing to turn the hospital around," he said.

The new plan has the support of shareholders and unsecured creditors. It turns Hawaii's only for-profit hospital system into a not-for-profit organization.

Hasham said the change could save $6 million dollars a year in taxes.

"It's a very big part of the plan because essentially what happens is we stop paying excise taxes, we stop paying property taxes," he said. "The shareholders cease to exist. Essentially, what happens now is this hospital becomes a public institution."

Hawaii Medical Center operates two hospitals: HMC East and HMC West.

It filed for bankruptcy in August 2008. If a judge gives the new plan the go-ahead, Hawaii Medical Center could be out of bankruptcy reorganization by July.

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