SB952

SECTION 1. The legislature finds that Kahuku hospital has been serving the residents of the north shore of Oahu from Kualoa to Waimea Bay, with a population of about twenty-seven thousand, since 1929. Kahuku hospital is a twenty-five bed facility that has provided an array of health care services including emergency care, general acute care, surgery, skilled nursing, ancillary care, and health education. It is one of nine hospitals in the State with a federal medicare designation as a critical access hospital, which allows it to receive higher reimbursements amounting to about $1,000,000 in additional revenue annually.

On November 6, 2006, the board of directors of Kahuku hospital voted to file for Chapter 7 bankruptcy and close down the hospital on December 31, 2006, because of continuing operating losses of about $1,500,000 a year and that has now reached $3,500,000. If such closure were to occur, the hospital would lose its hospital license, its certificate of need, and its critical access hospital designation, all of which would require time and expense for another hospital to obtain, effectively shutting down hospital-based health care services in the area for an indefinite period. Closing down Kahuku hospital would pose a grave threat to the health and safety of all residents on the north shore and windward areas of Oahu, who would have to drive either twenty-two miles to Wahiawa general hospital or thirty-two miles to Castle Medical Center in Kailua for hospital-based care, both trips requiring over an hour to make a long a single access road that is periodically closed by inclement weather or traffic mishap.

Accordingly, the legislature finds that 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 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; reorganize; and settle its debts. It is the purpose of this Act to authorize the Hawaii health systems corporation to bring Kahuku hospital under its governance through formal affiliation with the corporation and to provide for transitional facilitation by the director of health.

SECTION 2. Chapter 323F, Hawaii Revised Statutes, is amended by adding a new section to be appropriately designated and to read as follows:

"§323F- Acquisition of Kahuku hospital. (a) Kahuku hospital on Oahu may be assimilated into the Hawaii health systems corporation in a manner and to an extent that may be negotiated. After assimilation, all the assets of Kahuku hospital shall become the property of the corporation and Kahuku hospital shall be operated by the corporation.

(b) None of the liabilities of Kahuku hospital shall become liabilities of the corporation.

(d) The corporation, without regard to section 323F—31, may adjust the levels of services provided by Kahuku hospital.

(e) The purchase of goods and services by, or on behalf of, Kahuku hospital shall be exempt from chapters 103D and 103F.

(f) Kahuku hospital shall be exempt from chapters 92 and 102 and section 103—53."

SECTION 3. Kahuku hospital; acquisition by Hawaii health systems corporation; transitional facilitation by director of health. The director of health, as an interested third party, shall act in the role of honest broker to help facilitate the successful acquisition of Kahuku hospital by the Hawaii health systems corporation during the transition period.

SECTION 4. There is appropriated out of the general revenues of the State of Hawaii the sum of $ , or so much thereof as may be necessary for fiscal year 2007-2008, to carry out the purposes of this Act, including the hiring of necessary staff.

The sum appropriated shall be expended by the department of health for the purposes of this Act.

SECTION 5. New statutory material is underscored.

SECTION 6. This Act shall take effect upon its approval, except that section 4 shall take effect on July 1, 2007 and section 3 shall be repealed upon:

(1) The receipt of a letter by the director of health from the corporation board of the Hawaii health systems corporation officially notifying the director of health that the acquisition of Kahuku hospital by the corporation has been successfully completed; and

(2) The issuance of a proclamation by the governor that the events in paragraph (1) have occurred.

INTRODUCED BY:	_____________________________

THE SENATE	S.B. NO.	952
TWENTY-FOURTH LEGISLATURE, 2007
STATE OF HAWAII