WAILUKU, Maui — The controversial Malulani Health & Medical Center, a privately funded project that would have created a second acute-care hospital on Maui, appears to have taken its last gasp.

The group backing the proposed $212 million hospital on 40 acres in Kihei posted a statement on its Web site saying that Malulani has been placed in "a non-operational mode." The statement also said the only hope for resuscitation lies in reforming the state's certificate-of-need process used to evaluate major healthcare projects or a change of membership at the Legislature.

Dr. Ron Kwon, who headed the local effort to build Malulani, declined to elaborate yesterday.

He said the more than $1 million in donations raised by the local nonprofit Malulani Health Systems Inc. to support the initial hospital effort were spent on planning and seeking a certificate of need from the State Health Planning and Development Agency.

The project was a partnership between Malulani Health Systems Inc. and Triad Hospitals Inc. of Plano, Texas, which offered to pay 80 percent of construction costs for a healthcare campus that included a comprehensive imaging center, an emergency department, heliport, cardiac surgery facilities and neonatal intensive care unit.

Malulani failed to win the required health planning agency approval despite the support of Gov. Linda Lingle, former Maui Mayor Alan Arakawa, a sizable portion of the medical community and members of the public who expressed frustration with the Maui Memorial Medical Center in Wailuku, which is part of the state-subsidized Hawai'i Health Systems Corp.

The health planning agency is charged with ensuring that major new medical services and facilities fit within the state's healthcare priorities and don't threaten existing vital services.

SHORTCOMINGS

In Malulani's case, agency head Dr. David Sakamoto said the project failed to meet several criteria for approval, including providing proof there would be enough nurses, doctors and other employees to staff the new 150-bed hospital. He also said a second hospital "would undermine and weaken the community's healthcare system by duplicating and diluting services."

An effort in the Legislature to keep Malulani alive by exempting it from the certificate-of-need process also failed, as did attempts to overhaul the health planning agency process.

Malulani suffered another setback last month when Triad Hospitals shareholders agreed to sell the company to Community Health Systems Inc. of Franklin, Tenn. Officials at Community Health Systems could not be contacted for comment.

The statement on Malulani's Web site said the State Health Planning and Development Agency "ignored the clear and present danger to the health and safety of all the citizens and visitors of Maui County in permitting only one acute-care hospital to continue to try to provide services, despite abundant evidence that there was a critical bed and medical facility shortage and a definite need for new and improved medical care services, all of which were going to be provided by the new Malulani Health and Medical Center facility, at no cost to taxpayers ...

"Since any new medical facility on Maui 'could have an adverse impact on Maui Memorial,' SHPDA's decision and the failure of the Legislature to remedy it means that it will be extremely difficult and unlikely that any new hospital project could ever be approved for Maui County."

Maui Memorial officials waged a pitched battle against the Malulani proposal, arguing their hospital would lose $55 million annually, threatening its ability to act as a "safety net" provider to the poor. They also noted significant improvements at the Wailuku hospital, including a newly opened $46 million wing and a cardiovascular services center that received final state approval this month.

HOSPITAL BETTER OFF

The new center will allow physicians to conduct open-heart surgery and other procedures not currently available on Maui.

Maui Memorial Regional CEO Wesley Lo said yesterday the hospital emerged from the recent legislative session with more autonomy and approval for a $100 million revenue bond that will be used to build a wing devoted to cardiac, brain and vascular patients.

Lo said the community's desire for better medical care and more say in decisions affecting local healthcare issues became entangled in the debate over a new hospital, and that a more integrated approach to healthcare planning is needed.

"We need to look at what we can do to improve healthcare and stop focusing on broad solutions without understanding what some of the issues are," he said. "It's more than just saying, 'We'll get a new hospital and we'll have better healthcare.' Maybe, maybe not."

In the meantime, Maui Memorial continues to collaborate in a separate effort to build a smaller, privately run hospital in West Maui.

Reach Christie Wilson at cwilson@honoluluadvertiser.com.