An agreement that will keep Kahuku Hospital operating at least through February has been reached between the state and the facility's board, averting a shutdown of the only hospital on O'ahu's North Shore.

The accord, signed by state Health Director Dr. Chiyome Fukino and hospital chairman Eric Beaver, calls for the state to release $500,000 to help the money-losing facility remain open at least for another two months, and for Gov. Linda Lingle's administration to submit an emergency funding request for another $950,000.

"If it hadn't gone this way, we would have been closed by the end of the year," said Don Olden, the hospital's chief executive officer. "We basically have bridged this through the end of February."

The agreement should keep Kahuku operating through a planned Chapter 11 bankruptcy and subsequent transfer to Hawai'i Health Systems Corp. next summer.

The 25-bed hospital has lost millions of dollars over the past six years and its closure would have shuttered the only emergency room on the North Shore. Since mid-November, when the board announced it was being forced to close the facility, the state and legislators have worked to see how they could avoid a shutdown.

Susan Jackson, deputy director of the state health department, said Kahuku Hospital should receive the $500,000, and that the signing of the agreement was in keeping with the Lingle administration's commitment to save it. She said it also is part of the Department of Health's goal of assuring access to timely and affordable care as much as possible.

It was important for the North Shore to "have some sort of urgent or emergency care available to them," Jackson said.

Olden said state Rep. Michael Magaoay, D-46th (Kahuku, North Shore, Schofield), and Sen. Clayton Hee, D-23rd (Kane'ohe, Kahuku), also had signed a letter supporting the efforts to save Kahuku Hospital. The two will be instrumental in emergency legislation for more funding. Money from that request would be used to help the hospital pay off what it owes to Medicare and keep the facility operating through the end of June, Olden said. It also would go to hire lawyers, accountants and consultants needed to guide the hospital through a bankruptcy reorganization, Olden said.

The hospital hopes to shed about $3.5 million of debt through Chapter 11 bankruptcy and make it more attractive for the hospital to be transferred to Hawai'i Health Systems, operator of 12 community hospitals for the state.

Olden said Kahuku Hospital would be transferred in July if all goes well and the legislation is passed as hoped. He said Hawai'i Health Systems also would need to receive an increase in funding from the Legislature to absorb Kahuku Hospital's costs.

Reach Greg Wiles at gwiles@honoluluadvertiser.com.