Dr. Collin R. Dang, the new chief executive officer of Hawaii Medical Center, is hoping to cure the hospital's operator's money-losing operations earlier than thought and for the company to exit bankruptcy by June 2009.

At the same time, Dang did not rule out further cuts at the two former St. Francis Medical Center hospitals if HMC's finances worsen, or possibly looking at other options, including greater specialization at the hospitals. The company had previously talked about exiting bankruptcy next August.

"Cutting staff is always the last resort. However, we cannot predict what will be required in the future," Dang said in comments made during a "Hot Seat" chat Wednesday on www.HonoluluAdvertiser.com.

"We will do all we can to make HMC healthy so further layoffs will not be required."

Dang was named head of Hawaii Medical Center LLC at the start of the month, taking over from friend and fellow heart surgeon Dr. Danelo Canete, who headed them since their acquisition in January 2007. Dang, 64, was chief of cardiac surgery at Hawaii Medical Center-East along with serving as a clinical assistant professor of surgery at the John A. Burns School of Medicine.

Dang and Canete were among a group of 130 doctors who teamed with Kansas-based Cardiovascular Hospitals of America to buy the 240-bed St. Francis Medical Center in Liliha and 102-bed St. Francis Medical Center in 'Ewa in a $46.5 million transaction. The doctors have a 45 percent interest in HMC, while CHA owns 54 percent.

The group took over with high hopes and a plan to return the hospitals to profitability within a year. It had a three-pronged plan that called for improving treatment so that patient length of stay was cut and more people could be treated.

It also saw an opportunity to better manage how it coded, billed and collected money, along with getting more patient referrals. This last step has been difficult for HMC, which has dramatically cut staffing because it isn't filling as many hospital beds as it wants.

At the time of the purchase, HMC chairman Badr Idbeis said the company planned to pump at least $32 million in improvements to the two hospitals over five years while pledging to set new standards for patient care in the state.

Idbeis said he planned to make $7 million to $8 million of improvements during the first year, and $5 million annually thereafter.

But within the first month of ownership, the company announced about 150 workers would be laid off, noting that the staffing cuts would allow it to be financially viable within six months. If not, it might have to contemplate bankruptcy.

This year, the company announced three rounds of layoffs totaling about 320 workers.

$21.8M IN THE RED

By the time HMC filed for Chapter 11 bankruptcy on Aug. 29, it had amassed $21.8 million in red ink in 19 months of hospital ownership.

The filing came because HMC believed a lender, Siemens Financial Services, might not extend more money under a $20 million revolving loan agreement.

Among the bankruptcy creditors was St. Francis Healthcare System, the healthcare service nonprofit run by Franciscan sisters who previously owned the hospitals. It had provided $40 million in seller financing to HMC, which had paid $6.5 million of the $46.5 million sale price.

St. Francis continues to own about 1 percent of the hospitals. St. Francis last month said it is working with HMC so that the hospitals can continue to provide care.

But it appears relations between St. Francis and Hawaii Medical Center have been strained by the bankruptcy, with St. Francis at one point pressing to move the bankruptcy proceeding to Hawai'i from Wilmington, Del., over HMC's wishes.

MAINLAND MANAGING

In early September, Sister Agnelle Ching, chief executive officer of St. Francis Healthcare, filed a declaration criticizing HMC's insistence on having bankruptcy proceedings take place six time zones from the hospitals.

"For the less than two years of its ownership, CHA has tried to manage the hospitals from Wichita, Kan., with terrible financial results," Ching said in a bankruptcy court filing that noted St. Francis Healthcare System is owed $65 million in seller financing, a working capital loan and 25-year land lease.

In response, one of CHA's partners' attorneys called St. Francis a disgruntled creditor. The case was transferred to Honolulu about a month ago.

Salim Hasham, a turnaround specialist hired by HMC as its chief implementation officer earlier this year, has said the financial difficulties can be traced to a number of problems, including its role as a primary provider for the uninsured and government-insured market in Honolulu.

While all hospitals here are wrestling with these problems, at HMC three-quarters of patients are on either Medicare or Medicaid, which doesn't cover the full cost of providing care.

FINANCIAL TROUBLES

Its financial position also has contributed to a deferral of maintenance and capital improvements. Hasham and others have fashioned a turnaround plan that includes debt restructuring, leasing of unneeded space, improving referrals and other measures. It also has signed an agreement with Perot Systems Revenue Cycle Solutions to improve cash collections and revenue flow.

The bankruptcy also has been a problem for more than 2,400 creditors owed millions of dollars. Among this group is the Organ Donor Center of Hawaii, which as of last month was owed $850,000.

The donor center is the only federally designated private, nonprofit charitable organization authorized to recover organs and tissue for transplant in Hawai'i. As such, it is bound to send most of its organs to the only transplant center in the state, which is at Hawaii Medical Center East.

Stephen Kula, donor center executive director, last month said the bankruptcy had weighed on the program's budget.

"When we don't get paid, a lot our programs suffer," Kula said.

"We can't go back and say, 'We're recalling all your livers and kidneys.' "

HMC, which relies on Cardiovascular Hospitals for some management services, has worked to pare operations so staffing meets operational needs. Hawaii Medical Center West is now staffed for about 50 patients, or slightly more than one-fifth of the number of beds it is certified to offer.

Hawaii Medical Center East is at the same staffing level. That's half the number needed if the hospital's 102 beds were fully occupied. The company can ask people to work overtime or call in others should the patient census increase.

Dang, in his online chat Wednesday, said HMC's highest priority remains serving patients at the highest levels of care. He said the managers are mindful that they need to keep the hospitals' doors open.

"While we do not expect to face such a situation, if HMC were unable to continue, thousands of patients would be affected," Dang wrote.