St. Francis looks to
transfer services

Financial problems prompt talks
with isle medical providers

Spurred by financial pressure, St. Francis Healthcare System officials have started discussions with three Hawaii-based medical providers in hopes of transferring operations at their two Oahu medical centers -- St. Francis-Liliha and St. Francis-West, officials confirmed yesterday.

St. Francis is negotiating with Queen's Health Systems, Hawaii Pacific Health and Kaiser Permanente regarding acute care services at the hospitals, according to officials from the organizations and the Hawaii Catholic Herald.

Eugene Tiwanak, president of the St. Francis Healthcare Foundation, said in yesterday's edition of the Catholic Herald that the system is looking for an arrangement where it can continue Catholic health care while getting relief from its financial problems.

Tiwanak said an agreement is expected soon regarding hospital operations, but a transfer would take two to four years.

The agreement could involve a management contract, lease arrangement, merger, sale of assets or a combination, said Tiwanak, who could not be reached for further comment yesterday.

"We don't know what form it will take," said Teri Tanaka, St. Francis spokeswoman. "It could be any assortment of options."

She could not say how close negotiations are or when a decision might be made.

Officials from the three medical providers with whom St. Francis Healthcare is in discussions confirmed that negotiations are ongoing, but declined to elaborate.

"We are in discussions to explore further opportunities between our two organizations," said Pat Oda, spokeswoman for Hawaii Pacific Health. "We're looking into the possibility of whether some type of collaboration might make sense."

Sister Beatrice Tom, St. Francis Healthcare's chief executive, said in a letter to employees and volunteers Thursday that the organization is "reassessing the way it performs its Christian mission."

She said there have been increased challenges of providing quality health care, especially with cutbacks in Medicare and Medicaid payments, increased government and technological requirements, and higher labor costs.

About 70 percent of patients at the St. Francis hospitals are covered either by Medicare or Medicaid.

"For health care systems such as ours that provides a safety net for some of Hawaii's sickest patients, the challenge is even greater," Sister Beatrice said.

Rich Meiers, president and chief executive of the Healthcare Association of Hawaii, said he has been telling lawmakers for several years that the state's health care institutions are facing serious financial problems.

"Maybe they're going to believe me now," he said, adding that the St. Francis situation is especially disturbing because the medical provider has a "long, proud history" for services statewide.

If anything happens to the St. Francis system, a major concern will be what happens to its organ transplant and renal dialysis facilities, he said.

Sister Beatrice, in her letter to staff members, said the hospitals are still trying to recover from a seven-week-long nurses strike in 2002 which cost more than $4 million and forced closing of two floors in the 188-bed Liliha facility. She also said St. Francis has been making loan payments on $30 million in debt.

"We've made many steps forward," she said. "Our acute admissions are up over prior years, and our numbers for the last seven months are very good, with both medical centers in the black."

But she said the loan's bondholder, Financial Securities Assurance, has ordered a new schedule to increase revenue and is requiring that the medical centers at least consider a sale or a merger.

"The nationwide financial challenges, as well as those requirements mandated by our bondholder, both focus on the business side of health care, not our original mission of carrying out Christ's healing ministry," she said.

Thus, she said, the health care system will work with a consultant to improve operations "while we determine new and better ways of continuing to care for the sick."

She told the Catholic Herald that the Sisters of St. Francis, sponsors of the St. Francis Healthcare system, must "get a just settlement" in any agreement. And it must ensure that "Catholic health care continue and that the poor are cared after," she said.

Tanaka noted that there have been several recent partnerships between health care organizations, including one between St. Francis, Hawaii Pacific Health Partners Inc. and Pacific Radiation Oncology Ventures Inc., a physician group, to operate as the Cancer Center of Hawaii on the Liliha campus.

She said there are many types of partnerships that could keep the Sisters of St. Francis involved in acute care.

"Our main focus continues to be on determining the value of any collaboration or business venture to patients, physicians, employees and communities we serve," she said.

Tanaka added that the Sisters are trying to identify "the scope of a new model of health care," perhaps focusing more on hospice, home health, senior bathing services, a staying-healthy-at-home program and long-term and residential care.

She said Sister Beatrice cited the system's Community Health Services as an example of the types of programs she envisions expanding.

A Residential Care Community being developed by St. Francis in Ewa with 300 independent-living rental units for low and moderate-income elderly also will have an important role in the new health care model, Tanaka said. It will have assisted living services, adult day care and other programs. The first units will open in 2007.