Effective March 14, Hawaii Health Systems Corporation (HHSC) and Kahuku Hospital completed a $2.9 million transaction made possible by a bill passed by the state Legislators and approved by Governor Linda Lingle last year. The funding allows the only North Shore critical access hospital to continue its operation without interruption.

In the transaction, which was facilitated by the state Department of Health, the assets of the former Kahuku Hospital were acquired in bankruptcy by Kahuku Medical Center, a new non-profit organization established by HHSC, to operate the facility. The facility will now be known as Kahuku Medical Center, which will be affiliated with HHSC.

"This acquisition is the result of work between our organizations, in addition to the Department of Health and regional lawmakers, and is designed to benefit the North Shore community," said Vincent Lee, Oahu region chief executive officer, Hawaii Health Systems Corporation. "The transfer agreement strengthens the facility and ensures continued access to North Shore residents."

R. Eric Beaver, Kahuku Hospital Board chair, noted that the affiliation with the state hospital system and the name change is an important milestone in the hospital’s history and reflects a fresh start for the hospital. "The acquisition provides the hospital with an opportunity to expand and become more efficient in its services being better able to respond to the healthcare needs of the communities it serves," Beaver said.

"Sincere thanks to the board, employees, supportive physicians, residents,vendors, donors, legislators, administration, HHSC and attorneys for making this happen."

Beaver added that Kahuku Hospital’s bankruptcy proceeding will continue and that it will focus on resolving the claims of creditors. At this point, the Kahuku Hospital board is hopeful that a substantial distribution will be made to the hospital’s creditors through the bankruptcy proceeding.

Following the passage of Act 113, HHSC Oahu region (Leahi Hospital and Maluhia), in collaboration with the Department of Health, established the transition course in

July 2007. Subsequently, licensures were obtained, systems (i.e., finance, information technology, etc.) were developed and implemented, and legal issues were addressed.

"The Legislature and the Administration, along with the HHSC Oahu region staff, have invested substantial resources and expertise to augment the facility staffing and equipment," noted Thomas Driskill, Jr., HHSC president and chief executive officer.

State Department of Health Director Chiyome Fukino, M.D., added, "The hospital has grown stronger through the struggles of the early years. The growth of the North Shore dictates the need for ongoing services."

"By working together, we have come a long way to get to this point," said Representative Michael Magaoay. "Once again our North Shore residents have proven there is much power when voices come together as an Ohana."

Future capital improvement projects, pending the approval of lawmakers this year include: air-conditioning upgrade; roof replacement; helipad upgrade; and life-safety projects.

"Healthcare is at the very top of everyone’s list and keeping Kahuku Hospital open is a huge accomplishment. I am grateful to everyone who supported this effort, particularly the people of the North Shore," said Senator Clayton Hee.

KMC, which employs 75 staff members and whose medical staff is comprised of 15 physicians, is designated as a critical access hospital. This designation is provided to qualified rural hospitals and enables them to receive cost reimbursement from Medicare to maintain operations. The 23-bed hospital serves the North Shore and Windward Oahu communities with 24-hour limited emergency care, in addition to long-term care, pharmacy, x-ray, occupational therapy and physical therapy services. It opened as a plantation hospital in 1928.

HHSC was established in 1996 as a public benefit corporation of the State of Hawaii. As the state’s community hospital system, HHSC continues to fulfill the state’s promise to provide affordable, accessible, quality, hometown healthcare.