"Overall, their proposal best addressed the objectives of the sisters," said Eugene Tiwanak, chief foundation officer for St. Francis. "Essentially, there was a continuation of the sisters' philosophy to the commitment and care for patients."

Dr. Danelo Canete, past president of the Philippine Medical Association, who initiated the deal with St. Francis, said "we're really excited. It will be the biggest doctor-owned and operated hospital in the country."

The sale includes the Transplant Institute, which is the only organ transplant center in the state, but it excludes the Renal Institute of the Pacific and its 11 kidney dialysis centers. St. Francis is negotiating to sell the institute to another local doctors' group in partnership with a Mainland dialysis provider. The dialysis business makes up 30 percent of the nonprofit's $180 million annual revenue.

The hospitals are the main business of St. Francis Healthcare System of Hawai'i. Without them, St. Francis will have to reposition itself. It has identified long-term care as a main focus for the future of the sisters' mission in Hawai'i, Tiwanak said.

The buyers have 90 days to conduct due diligence, during which time they will examine the finances and operations of St. Francis before they sign a definitive agreement to buy the hospitals. The final sales contract should be ready by the end of September and the deal itself is expected to be finalized by year's end, providing it gets approval from regulators and the pope.

Canete said the buyers also agreed to adhere to the Catholic directive, which includes accepting low-income patients and not performing abortion or assisted suicide at the two hospitals.

About 1,400 people are employed at the two hospitals. Currently, there is no intention to cut staff but that could change, Tiwanak said.

Reducing costs, boosting revenue by increasing the number of patients served and better managing lengths of stay are areas that need improvement, the buyers said. The buyers won't assume the hospitals' debts, which will be paid off with money from the sale, Tiwanak said.

The Filipino-led bid beat out about half a dozen other contenders, including Queen's Health Systems. Kaiser Permanente Hawaii and Hawaii Pacific Health — operator of Straub Clinic and Hospital, Wilcox Health and Kapiolani Health — dropped out of negotiations.

The deal is a source of pride to Filipino-Americans who see it as the biggest reputation-booster since Ben Cayetano became governor.

"It means a lot to us," said Eddie Flores Jr., president and chief executive of L&L Drive Inn in Honolulu. "It's kind of like history being made, too, for us. ... It shows Filipinos are coming out into the mainstream."

Chona Montesines-Sonido, co-publisher of the Hawaii Filipino Chronicle in Waipahu, said Filipino-Americans are "thrilled and honored."

"These two hospitals are very important. In the West alone, a lot of Filipinos are here," she said.

About 30 of the 100 doctors who invested in the hospitals are Filipino-Americans, and all are local, Canete said. Nearly all of the doctors committed to putting up $100,000 each. The Mainland partner, CHA, did not say how much it is investing except that it has lined up lenders.

The deal gives the doctors 49 percent ownership in the hospitals while CHA will retain 51 percent. The board will comprise three CHA representatives and four local doctors. Executives will be named later, Canete said.

Roland Casamina, the Filipino-American president and CEO of House of Finance, said he is pleased that the group succeeded but expressed some reservation about the Mainland company having a controlling interest in the hospitals.

"Naturally, all Filipinos should be proud. I'm certainly proud," he said. But CHA "can make all the rules because they have controlling interest. (The doctors should) make it clear what kind of powers they have."

But Dr. Badr Idbeis, CHA's president and CEO, said the St. Francis hospitals "would be physician-driven." The role of the Kansas company would be to handle administrative functions and work with doctors to boost efficiency.

Hospitals run by doctors tend to be more responsive to patients' needs because physicians — unlike nonmedical personnel — have personal contact with people who are being treated, he said.

For example, a doctor who is treating someone for diabetes will think twice about restricting care. "There's no way you're going to skimp on her because you feel her pain as a physician," Idbeis said.

Doctor-run hospitals on the Mainland have good records of performance, said Rich Meiers, president and CEO of the Healthcare Association of Hawaii, which represents all hospitals in the state.