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CMW News: Oahu medical center files for bankruptcy

Case Management Weekly, September 3, 2008

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Hawaii Medical Center, LLC (HMC) had been working hard to increase its number of patients and to decrease the length of stay at its two facilities, but that wasn’t enough to satisfy its creditor, Siemens Finance.

Siemens refused to extend an existing loan agreement for HMC, forcing it to declare Chapter 11 bankruptcy last week. HMC says seeking bankruptcy protection was necessary in order to continue providing uninterrupted care to its patients.

HMC runs Hawaii’s only for-profit hospitals, which means it isn’t exempt from certain taxes. However, it still must adapt to the government reductions in Medicare and Medicaid reimbursements, a major factor in its cash flow issues. Salim Hasham, a turnaround expert hired by HMC to get its facilities out of debt, says hospitals all over the country are facing problems with Medicare and Medicaid reimbursement, which is often at or even below cost. Seeking protection in bankruptcy is the best option for some facilities, according to The Honolulu Advertiser.

HMC has a combined 342 beds at its two facilities and a workforce of about 930 employees. The organization laid off 89 employees in its business and information departments in March and plans to lay off 80 more in the coming months to better match the number of patients treated in its facilities.

Source: The Honolulu Advertiser

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