In a statement released today, Hawaii Medical Center, LLC (HMC) has filed for Chapter 11 bankruptcy reorganization. HMC's chief executive officer, Dr. Danelo Canete, said the actions, filed in US Bankruptcy Court in Delaware on behalf of HMC, its two subsidiaries, HMC East and HMC West, and CHA Hawaii, are intended to prevent any interruption in hospital operations.

Hawaii Medical Center owns and operates two hospitals in Honolulu acquired from St. Francis Health Systems in January 2007. They are HMC-East in Liliha and HMC-West in Ewa Beach, with a combined total of 342 beds.

Canete states the filings were prompted by the refusal of an HMC lender to extend existing loan agreements.

HMC's bankruptcy papers show the company has enough cash to meet all of its employee obligations and request permission from the court to keep wages and benefits as they are. In addition, HMC proposes to sell its accounts receivable in order to fund full payment of its vendors and other unsecured creditors.

As explained in the bankruptcy papers, the roots of HMC's challenges include problems in the health care industry generally, and delays in implementing its turnaround plan due to limited access to cash. HMC has made a number of operational changes, resulting in cost savings and improved financial results. Further changes have been proposed, and will be implemented as part of the reorganization process.

Hawaii Medical Center LLC is a partnership of CHA Hawaii, an affiliate of Cardiovascular Hospitals of America (CHA), a leading US hospital management company, and the over 130 Hawaii-based physicians who form Hawaii Physician Group LLC.

Related Story:

Sister Agnelle Ching, CEO of St. Francis Response to Bankruptcy

---