Citing a “;deep reduction”; in a $8.6 million state health contract, Kahi Mohala Behavior Health, an 88-bed psychiatric hospital in Ewa Beach, announced yesterday it will lay off up to 15 percent or 30 of its 200 employees.

However, Kahi Mohala said it would make the layoffs gradually - between now and June - in order not to disrupt services.

The move is necessary, the nonprofit hospital said, because the state Health Department cut back its contract through the Adult Mental Health Division.

“;This loss of the contract leaves us with no choice but to downsize,”; said Leonard Licina, chief executive officer. “;We regret the hardship this presents on our employees and their families, and we are working with them to review their options to continue health care coverage and navigate unemployment benefits.”;

Janice Okubo, spokeswoman for the Health Department, said the department had a contract with Kahi Mohala that reserved 32 beds.

Because of a reduced patient population at the Hawaii State Hospital in Kaneohe, the department informed Kahi Mohala that it would reduce its contract to 16 beds - eight immediately and another eight in June.

Barbra Pleadwell, hospital board chairwoman, said the hospital will maintain its quality of service during the transition. The patient population yesterday was 72, up from 69 last month.

“;Few events cause as much stress, confusion and uncertainty among employees as downsizing,”; she said in a statement.