At the center of the dispute is a 100-bed, full-service hospital in Kihei proposed by Malulani Health Systems Inc.

Malulani president and board chairman Dr. Ron Kwon was born and reared on Maui, left the island to become a physician in the Boston area and then returned home to work at Maui Memorial for the past 20 years Kwon said he's seen the island's population grow. He also has seen the flaws and imperfections that have kept Maui Memorial from fully meeting the island's healthcare needs.

"The demographics of the island have changed, and a new hospital is long overdue," he said.

Maui's population is 130,000, not including the large number of tourists on the island each day. By comparison, Kaua'i has two acute-care hospitals for 60,000 residents, while the Big Island has five such facilities for 150,000 residents.

Malulani Health and Medical Center, a nonprofit organization, has raised more than $500,000 to pay for consultants, architectural renderings and a business plan, and the $200 million facility has been promoted at community forums across Maui County. Malulani plans to file a certificate-of-need application with the state Health Planning and Development Agency before the end of the year.

"Maui needs another hospital, if for no other reason as public safety," Kwon said. "A case of SARS could shut the hospital down. Where would we be then? There is no flexibility in the system."

More not always ideal

Maui Memorial officials have been campaigning against the competition, saying it threatens the financial viability of a facility that is a key part of the Hawai'i Health Systems Corp.'s 12-member quasi-public hospital system. Over the years, the hospital has fiercely fought free-standing surgery centers and any other medical facilities it deems a potential competitor for revenues.

"There is a real danger of having multiple hospitals in a small community," said Wesley Lo, CEO of Maui Memorial.

The 196-bed Maui Memorial was profitable last year to the tune of $1.4 million, but the hospital supports money-losing hospitals in Kula and on Lana'i that are also part of the HHSC system, which receives state subsidies. Officials said weakening the Maui hospital's financial position could also threaten healthcare in those rural communities.

Lo said one of the biggest threats a competing hospital poses is the potential loss of Maui Memorial's role as the island's sole acute-provider, a federal designation worth about $10 million in annual Medicare reimbursements.

He also said both hospitals would be competing for the same workforce and there would likely be dilution of medical services. The dilemma, according to Lo, might leave Maui with diminished quality healthcare, higher costs and fewer services.

"We don't want two mediocre hospitals," he said.

Lot of new growth

Maui Memorial will break ground this week on a state-financed $42 million renovation and improvement project that will produce a new wing with an ambulatory service center and new critical-care and surgery units.

In addition, the hospital has announced plans for a $60 million medical office building and parking structure.

Around the corner from the hospital is Kaiser's new $11.9 million Maui Lani Medical Clinic in Wailuku, which is scheduled to open later this month. Kaiser representative Chris Pablo said the clinic is designed to help meet a growing membership on Maui.

In Lahaina, the West Maui Improvement Foundation has scaled back its proposal for a 50- to 80-bed acute-care hospital to 32 beds to win a "critical access hospital" designation and the federal money necessary to build the $30 million to $40 million project on donated land in Ka'anapali.

No facility in West Maui

Joe Pluta, president of the foundation's sister group, the West Maui Taxpayers Association, said numerous financial studies and healthcare consultants have provided rock-solid proof of the need for and financial viability of a hospital in West Maui, a popular yet relatively isolated tourist center linked to the rest of the island by a two-lane road.

"It's absolutely insane not to have an acute-care hospital on this side of the island," he said. "It would be negligent not to have one."

But state officials may not see justification for two new hospitals, so Pluta's team is working to get a certificate-of-need application into SHPDA to allow the agency to consider both Malulani and West Maui at the same time.

In a new development, the West Maui group has been talking with Maui Memorial about collaborating in some way, even though the hospital previously opposed the project. The West Maui proposal doesn't threaten the hospital's sole-provider status because of its location an hour away.

"We believe we've got the leg up (on Malulani)," Pluta said.

Meanwhile, the Maui medical community has been debating how the new proposals will affect the future of healthcare on Maui.

Dr. Howard Barbarosh, Maui Medical's chief of cardiology and president-elect of the Maui Medical Society, said Maui's medical infrastructure needs a great deal of upgrading over the next 20 years. He said he doesn't care whether that happens via improvements at Maui Memorial or a second hospital.

"If we keep going the way we are, there is a potential for significant healthcare problems on Maui," he said.

Maui Medical Group, comprising 35 doctors, is opposing Malulani's plans. The group is considering moving into Maui Memorial's new office building.

Maui Medical Group CEO Dr. Guy Hirayama warned that two major hospitals might be too much for the island and that it might even lead to a crippling of the medical infrastructure. Under one scenario, he said, Malulani might end up driving Maui Memorial out of business and then, if Malulani experiences financial problems, its backers could pull out.

"The community is going to be left holding the bag," he said.

Hirayama said he's also concerned physicians could end up losing skills if the volume of cases is split between the two hospitals.

"It may sound nice to have a shiny new facility in your backyard, but I'm not sure a lot of community members understand the logistics of running a hospital," he said.

Competition is healthy

Dr. Steven Moser, former Maui Memorial medical director, said he used to oppose any competition on the grounds that it would jeopardize operations at the hospital.

But not anymore. Moser said Maui Memorial is hamstrung by inadequate and uncertain financing as well as top-heavy, Honolulu-centric management.

Moser, a kidney specialist who is now in private practice, said he's convinced competition is the only answer to the hospital's problems.

"It's a no-brainer. Right now, the hospital is stagnant. Movement is healthy," he said. Malulani will improve healthcare through its own services and by forcing Maui Memorial to better its services, he said.

The best outcome, he said, would be compromise and cooperation to divide "centers of excellence" between the two hospitals. But if one does not survive, the other, because of its competitive edge, will be capable of caring for the people of Maui better than is now possible, he said.

Linda Simon, a caretaker and personal assistant from Pukalani, said she's willing to give the new hospital a chance.

"The way Maui is growing, they could get the approval, start construction and get the equipment and then it's really going to be needed," she said. "A lot of people complain about Maui Memorial. Maybe it could provide a good alternative."