The head of a group planning a new Maui hospital yesterday vowed to appeal a state agency's rejection of its proposal to build the facility.

Dr. Ron Kwon, Malulani Health Systems chairman, said the state-subsidized Maui Memorial Medical Center, currently the only hospital on Maui, was not adequately serving the county. He said it is clear Maui needs a second hospital.

"Nothing has changed in Maui County. The healthcare crisis here in terms of inadequate facilities continues and is going to get worse," Kwon said. "Someone is going to have to provide the solution. And we are the solution. So let's go for it. We're going to stay in there and fight this thing."

The State Health Planning and Development Agency on Monday ruled Malulani did not meet the established criteria for building its proposed hospital in Kihei.

The agency cited testimony that the new hospital would duplicate services already provided by Maui Memorial, increasing costs for the people of Maui while diluting the quality of care.

It also cited worries that Maui Memorial would be forced to give up its specialty neurointerventional stroke service because of the financial strain of competing with a new hospital. Maui Memorial is the only facility in the state offering that type of stroke treatment.

The agency was further concerned that Malulani wouldn't be able to hire enough nurses and doctors to staff the new hospital.

Kwon said Malulani was preparing its appeal, which would have to be filed by Oct. 16. He added Malulani's Mainland partner, the Texas-based for-profit hospital operator Triad Hospitals Inc., continues to support their efforts.

"They're not abandoning us. They want to see this happen," Kwon said.

Wesley Lo, Maui Memorial's chief executive officer, said his hospital was ready to argue further that Malulani's application should be denied.

"I'm confident of the merits of our arguments and the logic behind the decision," Lo said. "We'll just have to continue. This is part of the process that we will have to continue to face."