DENNIS ODA / DODA@STARBULLETIN.COM Eugene Tiwanak, chief foundation officer of the St. Francis Healthcare System, stands in front of St. Francis Hospital on Liliha Street.

St. Francis sells
dialysis clinics

A group of local doctors and
a mainland company reach a joint
deal to buy the dialysis operations

St. Francis Healthcare System has agreed to sell a majority interest in its Hawaii outpatient renal dialysis program to a partnership between mainland-based Liberty Dialysis LLC and a local group of physicians.

The announcement of the tentative deal yesterday came a week after St. Francis reached an agreement to sell its two Oahu hospitals to Wichita, Kan.-based Cardiovascular Hospitals of America and a local doctors group led by cardiologist Danelo Canete.

Like the earlier transaction, the purchase price for the dialysis program was not disclosed.

St. Francis will retain less than a 5 percent stake in the program, while the ownership percentage of the two acquiring groups will be determined later, according to Eugene Tiwanak, chief foundation officer of St. Francis Healthcare System.

"It's part of the negotiated agreement that they wanted St. Francis to retain an interest in the partnership because of our long history," Tiwanak said.

Liberty Dialysis, based in Mercer Island, Wash., partners with nonprofit organizations, hospitals and kidney experts throughout the United States to own and operate dialysis programs. Liberty and its affiliates operate 14 dialysis clinics and are finishing construction of eight more centers. Once completed, Liberty will have a presence in Utah, Maryland, New York, Texas, Pennsylvania, California, Oklahoma, Idaho, West Virginia, Virginia and Hawaii.

St. Francis serves more than 1,000 dialysis patients with chronic renal disease throughout Hawaii in 11 outpatient clinics on Oahu, the Big Island, Maui, Kauai and Molokai. Besides local resident patients, St. Francis provides dialysis to mainland and foreign tourists visiting Hawaii.

The dialysis program, also known as the Renal Institute of the Pacific, is the largest hospital-based dialysis operation in the nation. St. Francis first began providing dialysis in 1965.

"The partnership with Liberty Dialysis affords us the unique opportunity to develop a physician-driven organization that will focus on providing quality care," said Dr. Eugene Wong, who is president of the medical staff of St. Francis Medical Center in Liliha and is the nephrologist leading the doctors group.

The new partnership will offer jobs to all 250 employees of St. Francis' renal program at comparable wages and benefits, according to Sister Beatrice Tom, chief executive of St. Francis. Tom said Liberty and St. Francis will work together to produce an orderly transition for employees and patients, whose treatment will not be affected by the change.

"We found Liberty Dialysis to be a company that closely mirrors our commitment to providing access to care for all patients in our community while delivering superior clinical outcomes," Tom said. "St. Francis is excited to participate in the partnership with the local nephrologists and Liberty, continue the execution of our mission and to care for renal patients throughout Hawaii."

Tom said she expects the deal to be completed in the next few months. A 60- to 90-day due diligence period is expected before a definitive agreement is reached. Federal, state and papal approvals are required. The separate sale of the hospitals, which needs similar approvals, is expected to close by the end of the year.

Tiwanak said having local representation was crucial in both deals.

"It was very, very important because of the objectives of the sisters in executing the sale," he said. "We felt that the Hawaii market is such that we're insular because we're an island. So it was necessary to get our local physicians involved."

Tiwanak said there are about six nephrologists involved in the local group, but other St. Francis physicians in the department are being contacted to gauge their investment interest.

Dr. Jared Sugihara, medical director of St. Francis' renal program, said Liberty's operating experience and commitment to invest in the partnership will allow for expansion of the program.

"Our partnership will immediately begin funding the purchase of new dialysis machines and the completion of several facility renovation and relocation projects," he said.

St. Francis, which employs 1,700 full-time workers in its health care system, had been shopping the St. Francis-Liliha and St. Francis-West medical centers, as well as the Renal Institute of the Pacific, for the past couple of years to gain relief from declining earnings and $30 million in debt. The 250 employees connected with the dialysis program are part of the 1,400 employees who work at the two hospitals.

Despite the proposed sales, the St. Francis name will continue to exist in Hawaii under several remaining organizations and their parent corporation, the St. Francis Healthcare System.