State to examine finances of Hawaii Medical Center
The state plans to meet with the owners of Hawaii Medical Center, formerly St. Francis Hospitals, to get a clearer picture of its financial health and determine what action, if any, needs to be taken, Gov. Linda Lingle said.
Her comments yesterday came a day after the failure of a legislative proposal that would have given the hospitals a temporary exemption from paying the 4.5 general excise tax on Oahu.
"I AM VERY AWARE of the need for a facility of that type on the west side of Oahu," Lingle said at a news conference in her office. "Our health director will have to get with them, sit down and talk it through and get a better understanding of some of these issues."
Hawaii Medical Center converted the hospitals in Ewa Beach and Liliha into a for-profit business from nonprofit status when it finalized a $68 million deal in January with St. Francis Healthcare System of Hawaii.
The for-profit status means the hospitals are no longer exempt from paying the general excise tax, estimated at about $8 million a year.
HMC officials said they were seeking the exemption because the financial situation they inherited was worse than first thought, and the financial burdens could force them to close by the fall.
While many lawmakers felt the Legislature needed to help HMC -- which has a higher percentage of uninsured, Medicare and Medicaid patients than any other hospital on Oahu -- others questioned whether the state should be subsidizing a for-profit entity.
Dr. Danelo Canete, chief executive of HMC, called the demise of the exemption "unfortunate," but said he is confident that the hospitals will be able to remain open.
"Temporary tax relief would have been in the public interest," Canete said in a written statement yesterday. "If state tax credits are appropriate to subsidize movies, an aquarium and high technology ventures, it seems tax relief would also be appropriate to ensure medical care is available to our people.
"We will continue to take appropriate internal measures and to work with our legislative leaders to find equitable solutions to the problem."
HMC is 51 percent owned by Wichita, Kan.-based CHA LLC, and 49 percent owned by the 130-member Hawaii Physicians Group, headed by Canete.