LOS ANGELES — Hawaii legislators advanced two bills on Friday intended to help St. Francis Healthcare System of Hawaii reopen two Oahu hospitals, one of which would provide the system with $80 million in special-purpose revenue bond authority.

The Roman Catholic religious order would use the money for upgrades across its seven-hospital system, but also to reopen Hawaii Medical Center West in Ewa as a hospital and HMC-East in Liliha as a long-term care center, said state Rep. Rida Cabanilla, a Democrat.

St. Francis resumed control this year of the two hospitals, which had been sold in 2007 for $68 million to HMC LLC, then a for-profit joint venture between Hawaii Physician Group LLC and Kansas-based Cardiovascular Hospitals of America.

HMC first filed for Chapter 11 bankruptcy protection in August 2008. It emerged in August 2010 and became a nonprofit organization before filing its second bankruptcy in June. HMC closed the hospitals in December.

“We are just trying to give them options,” Cabanilla said of House Bill 2345, which would authorize the revenue bonds, and HB 609, which would allow Hawaii Health Systems Corp., the public hospital system, to negotiate with St. Francis to operate HMC-East.

St. Francis also has been negotiating with other health care systems interested in purchasing the hospitals.

Both bills were approved in the House Health Committee on Friday and are expected to reach the floor this week.

Cabanilla doesn’t expect that the bond bill would be approved until May when the legislative session nears its close. Though the bill has support in the House, she has experienced some opposition to the measure in the Senate, she said.

“If they are able to reopen next month and someone decides to buy it, then I would kill the special revenue bond, because it would no longer be needed,” Cabanilla said. “That is why I said it is an option.”

House Health Committee chair Rep. Ryan Yamane, D-Waipahu-Mililani, said he introduced HB 609, the bill that allows negotiations on the long-term care facility, also with the intent of giving the hospital system options.

The closures not only put 1,000 people out of work, but also created a situation for residents of Ewa, located 20 miles from downtown Honolulu on the leeward side of Oahu, where the nearest emergency hospital is located 15 miles away, Cabanilla said.

“Hawaii Medical West was vital because it was the only fully running emergency hospital for the leeward coast,” Yamane said. “So it had an effect on emergency rooms in that area. We saw spikes in ERs and the length of time it took to get emergency care there.”

A judge is expected to approve the bankruptcy reorganization plan any day now, which will allow St. Francis to move forward in exploring joint ventures or a sale of the hospitals, Yamane said.

“Some of the entities interested in purchasing the HMC West facility are waiting until the proceedings are done,” he said. “They want to know what conditions those facilities are in and what capital improvements might be necessary.”

If St. Francis reopens the hospitals through a joint venture in which another entity manages the hospital, it could access the bonds, but if a for-profit hospital purchases the hospital, that entity would not be able to attain financing through the tax-exempt bonds, Cabanilla said.

The special-purpose revenue bonds are available only to nonprofit entities with a statewide impact and are not backed by the state’s general fund.

Legislators did not want to wait until the dust had settled on the bankruptcy to introduce legislation, because the legislative session ends in May.

“If we waited, it would limit what we could do to help them,” Yamane said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.