Gov. Linda Lingle has released $12.7 million for the state's public hospital system, including nearly $1 million to help pay for improvements at Hilo Medical Center, Kona Community Hospital and Leahi Hospital.

The bulk of the funds, $11.8 million, will be used to help Hawai'i Health Systems Corp. pay down its accounts payable balance. Those funds represent an advance of HHSC's fiscal 2009 second quarter allocation. Another $923,030 will be used to float general obligation bonds for the capital improvement projects at the three hospitals.

"While state law limits the extent of my involvement in the budget and operations of the Hawai'i Health Systems Corporation, my administration is committed to working with its leadership and regional boards to improve its financial situation," Lingle said.

"This advance, coupled with proactive efforts by HHSC to increase efficiencies, will be vital in ensuring Hawai'i's public hospitals are able to continue providing quality care to our Neighbor Island residents," she said.

The HHSC said in June that it faced a mounting deficit and would be forced to lay off workers, curtail the recruitment of doctors and limit on-call services for doctors at its network of public hospitals.

The state's general fund subsidy for HHSC is $53.6 million for the 2009 fiscal year that began July 1, according to a news release from the governor's office. Lingle released the first quarter allocation of $12.9 million on July 2. The allocations are being used by HHSC to pay their primary pharmaceutical supplier and other vendors that provide essential goods and services.

The governor also approved $3.1 million for the system's malpractice insurance costs in July.

As of July 28, HHSC's system-wide accounts payable balance had been reduced to $40.5 million, but that balance is again growing and the first quarter allocation of general funds has already been exhausted.

Lingle said the second quarter allocation will provide temporary relief to facilities with the most dire cash flow circumstances, including Kona Community Hospital, Hilo Medical Center and Maui Memorial Medical Center.

The HHSC was established in 1996 to oversee Hawai'i's community hospitals. It is the fourth-largest public-hospital system in the country and is governed in part by five semi-autonomous regional boards.

The HHSC currently oversees 13 public hospitals and has 4,200 doctors. The hospitals are Hilo Medical Center, Hale Ho'ola Hamakua, Ka'u Hospital, Kona Community Hospital and Kohala Hospital on the Big Island; Maui Memorial Medical Center, Kula Hospital and Lana'i Community Hospital in Maui County; Leahi Hospital, Maluhia and Kahuku Medical Center on O'ahu; and West Kaua'i Medical Center and Samuel Mahelona Memorial Hospital on Kaua'i.