St. Francis Healthcare seeks $80 million bond

Joy Yadao
Joy Yadao
Ryan Yamane
Ryan Yamane

HONOLULU (HawaiiNewsNow) – St. Francis Healthcare Systems of Hawaii, which sold the now defunct Hawaii Medical Centers in 2007, is asking lawmakers to approve an $80 million special purpose revenue bond because it may want to use the money to reopen the two Oahu hospitals.

Hawaii Medical Centers East and West shut down more than a month ago because of mounting debt.  Since then other hospitals have, at times, been so swamped with patients they have had to redirect ambulances and patients have endured longer travel time in search of medical care.

The St. Francis Healthcare System was the prime lender when it sold its two hospitals in 2007.  It is now the major secured creditor of the defunct hospitals.  As such, the bankruptcy court will soon be giving the hospitals back to St. Francis.

It appeared St. Francis would allow other health care providers such as Hawaii Pacific Health or The Queen's Medical Center to eventually reopen the hospitals.  But now St. Francis is exploring the possibility of re-opening the hospitals on its own or reopening in a partnership with other entities, including possibly Queen's or HPA.

"There are many possibilities," said Joy Yadao, Director of Advocacy and Business Development for St. Francis Healthcare System of Hawaii.

Yadao said St. Francis was not actively looking to get back in the acute healthcare business but it may because the community, especially West Oahu, needs a hospital.

"The overwhelming response of the people in West Oahu is that they need emergency room and operating room … in an acute care facility.  We know that that is a need," Yadao said.

Yadao told Hawaii NewsNow St. Francis is not in a position to make firm decisions until it gets the hospitals back from bankruptcy court.  But it wants to be ready to finance whatever decision it eventually makes, and that is why it is asking for the $80-million special purpose revenue bond.  The money would be used to renovate HMC East and make needed improvements at HMC West.

House Health Committee Chairman Ryan Yamane helped usher the bond request through his committee Friday.

"This is not taxpayer dollars being used to help fund any type of special purpose revenue for the sisters of St. Francis.  Basically this is a bond in which sisters of St. Francis are requesting up to 80 million dollars in which they could use the state of Hawaii as more like a co-signer to support them getting a low interest loan from any financial institution," Yamane said.

Yamane says the state has approved similar bonds for other hospitals.  And he said issuing a bond would pose little risk to the state.  Taxpayers would not responsible for payments - even if the borrower fails to repay the loan.  At worst defaulting could damage the state's bond rating.

Both Hawaii Pacific Health and the Queen's Medical Center have expressed interest in opening an acute care facility at Hawaii Medical Center West.

"The Queen's Medical Center is mindful of the Sisters of St. Francis' interest in Hawaii Medical Center-East and Hawaii Medical Center-West and are respectful of their mission," said Art Ushijima, President of The Queen's Medical Center.

"Queen's has expressed interest in maintaining HMC-West to serve the needs of the community there.  However, first and foremost, we remain respectful of the good work that has been done at St. Francis Medical Center and Hawaii Medical Center.  We look forward to the resolution of all proceedings in bankruptcy court," Ushijima added.
In December, when the bankruptcy court ordered HMC to shut down, HPH President and CEO Chuck Sted said, "Hawaii Pacific Health for many years has believed, and we've been very public about it, that Hawaii Medical Center West will be very successful in the future as a community hospital and as an affiliate of Hawaii Pacific Health, if we can accomplish that."

Both HPH and Queen's are waiting and watching to see what St. Francis does once it gets the now closed hospitals back from the court.

While the House Health Committee quickly approved the $80 million bond proposal, the Senate Health committee has deferred action on the proposal until Wednesday, February 15th.

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