SB1464

SECTION 1. This Act is recommended by the governor for immediate passage in accordance with section 9 of article VII of the Constitution of the State of Hawaii.

SECTION 2. Although funds were appropriated to the department of health for comprehensive medical and health care services for the Kahuku community for the fiscal period beginning July 1, 2006, and ending June 30, 2007, a critical funding emergency now exists.

The purpose of this Act is to request an emergency appropriation of $950,000 in general funds for fiscal year 2006-2007 to fund a grant pursuant to chapter 42F, Hawaii Revised Statutes, to Kahuku Hospital on Oahu; provided that the legislature during this regular session of 2007, whether before or after the effective date of this Act, authorizes such a grant.

SECTION 3. Kahuku Hospital is a twenty-five bed facility that provides emergency care, general acute care, surgery, skilled nursing, ancillary care, and other health care services to the residents of the north shore of Oahu from Waimea Bay to Kahana. Because of continuing operating losses at the hospital, the board of directors of Kahuku Hospital in November 2006 voted to file a petition in the U.S. Bankruptcy Court under chapter 7 of the U.S. Bankruptcy Code to liquidate non-exempt assets and close down the hospital on December 31, 2006. Due to the compelling potential harm the closing of Kahuku Hospital could bring to the community, the board of directors of Kahuku Hospital has agreed to continue the hospital’s operations into the first half of 2007 under a reorganization proceeding pursuant to chapter 11 of the U.S. Bankruptcy Code pending the enactment of legislation that will have the effect of causing Kahuku Hospital to be acquired by Hawaii health systems corporation, or otherwise to become affiliated with Hawaii health systems corporation in a manner that will permit Kahuku Hospital to operate in a financially sound manner.

The department of health has released to Kahuku Hospital in fiscal year 2006-2007, $500,000 granted by the legislature pursuant to chapter 42F, Hawaii Revised Statutes, and an additional $500,000 which represents the money awarded to Kahuku Hospital through a chapter 103F, Hawaii Revised Statutes, procurement for health and medical services in the Kahuku community. It is estimated these moneys will permit Kahuku Hospital to continue operating until the first week in March, 2007. The $950,000 requested by this Act represents the estimated cash shortfall after the expenditure of the department of health’s funds already released to Kahuku Hospital that will be incurred for the period from January 1, 2007, through June 30, 2007, for projected operating losses, the costs associated with the chapter 11 reorganization proceeding, and the transfer of hospital operations to Hawaii health systems corporation.

It is in the public interest to keep Kahuku Hospital operating in order to serve the residents of the north shore of Oahu by enabling it to file for chapter 11 rather than for chapter 7 bankruptcy, which would allow the hospital to: continue operations; preserve its hospital license; retain its certificate of need and critical access hospital designation; to reorganize; and to settle its debts.

The legislature finds and declares that this Act is in the public interest and for the public health, safety, and general welfare.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $950,000, or so much thereof as may be necessary, for fiscal year 2006-2007 to fund a grant pursuant to chapter 42F, Hawaii Revised Statutes, to Kahuku Hospital on Oahu; provided that the legislature during this regular session of 2007, whether before or after the effective date of this Act, authorizes such a grant.

SECTION 5. The sum appropriated shall be expended by the department of health.

SECTION 6. This Act shall take effect upon its approval.

INTRODUCED BY:

_____________________________

BY REQUEST

THE SENATE	S.B. NO.	1464
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII