Samuel Mahelona Memorial Hospital was built in 1917 to isolate and treat people diagnosed with tuberculosis. Once admitted, patients were not permitted to leave.

Set on a green bluff overlooking the Kapaa coast, the hospital had its own dairy, hog farm and wood shop — self-sufficiency measures to contain the spread of contagious disease.

After a cure for tuberculosis became widely available in the 1950s, the hospital was rebuilt and repurposed as a long-term care and mental health facility.

Now Kauai’s oldest operating hospital is on the verge of its third reinvention. By spring, hospital officials aim to finalize a far-reaching plan to close some of the many gaps in the island’s health care system, especially for kupuna and people with mental illness.

Far more than a run-of-the-mill hospital upgrade, a long-term conceptual plan still under development calls for new additions to the 34-acre hospital campus, including housing rentals, a police substation, a public library, a preschool, commercial ventures, scenic open space and walking trails. Taking into account the needs of four adjacent state properties, including Kapaa high and elementary schools, the project would cluster jobs, housing, health care, schools, cultural activities and amenities around bus stops, bike lanes and pedestrian routes.

“There are a lot of dire community needs,” said Rep. Nadine Nakamura, a champion of the project who lives in the same neighborhood as the hospital. “We thought it makes sense to look at it more holistically.”

The plan focuses heavily on generating new revenue streams for the taxpayer subsidy-dependent Hawaii Health Systems Corp., the state agency that operates the hospital. Planners aim to achieve this by building rentable space for private businesses, such as an occupational therapy practice.

Other new facilities would be funded in partnership with government agencies. The oceanfront Kapaa Public Library, for example, is threatened by flooding exacerbated by climate change, with water recently filling the parking lot and lapping at the facility’s front steps. Library officials have identified the high-elevation hospital campus as an ideal place to relocate.

The plan also tackles housing affordability by proposing to build 342 rental units for teachers and hospital workers, assisted living and low-income residents — populations that struggle on Kauai to secure an affordable place to live.

Since the project site is on ceded Hawaiian lands, none of the planned development could be sold off.

Most of the funding to construct the project — a projected $400 million over two to three decades — would come from the state, with Kauai County and private partners kicking in some, according to a 2019 draft conceptual master plan. The state and county have already allocated $20 million for a new water well in Kapahi to support the future development, according to Nakamura.

Hospital administrators say a master plan will be finalized later this year. Then work may begin on an environmental impact statement, a process that project consultants estimate will take about a year to complete.

“It’s not a done deal but we’re getting close to the vision,” said Lance Segawa, chief executive officer of HHSC’s Kauai Region.

With facilities on Oahu, Kauai and the Big Island, HHSC provides care to patients regardless of their ability to pay. About 60% of the agency’s patients are covered by Medicare and Medicaid, which pay less than commercial insurance, such as HMSA or Kaiser, according to data shared by HHSC executives with the state House Finance Committee last week.

In fiscal year 2024, which starts July 1, HHSC facilities on Kauai and the Big Island are projected to need nearly $250 million in state subsidies, or about a third of the agency’s total budget. HHSC’s Oahu facilities request state funding separately.

HHSC’s Kauai properties include Samuel Mahelona Memorial Hospital, Kauai Veterans Memorial Hospital in Waimea and associated outpatient services. 

With operating expenses totaling more than $83 million in fiscal year 2022, HHSC’s aging, small-scale Kauai facilities are costly to maintain, with years of deferred maintenance. However, they are crucial players in the island’s overall health care landscape.

These facilities care for nearly a quarter of all acute care discharges and about 38% of all emergency department visits on Kauai, according to HHSC executives.

Mahelona hospital has 80 beds, but while hospital renovations are underway only 57 are in use. The plan would increase the hospital’s total bed count to 90, boosting its licensed long-term care capacity to 75 beds from 66.

The hospital would also add the island’s first beds devoted to memory care for patients with dementia or Alzheimer’s disease at a time when a rapidly aging population is increasing demand for health care services, straining Hawaii’s hospital systems.

The plan takes particular aim at creating new beds for people with severe mental illness.

The hospital’s outdated nine-bed short-term adult behavioral health unit would gain a bed and split into separate male and female wings.

“The current unit has a very old-style setup,” Segawa said. “We have beds around one big open area. We mix men and women. But this brand new unit that we’re contemplating is designed to be very much like the new state hospital (on Oahu) and it’s just a much, much better setup.”

A separate 24-bed adult residential behavioral health facility would offer psychiatric patients exiting the short-term facility with a transitional level of care before discharge — something not currently available on Kauai.

At a public meeting attended by about 35 people in the hospital auditorium Wednesday night, some community members raised concerns about the ability of the roads and current infrastructure to support so much new development.

Others, worried that the rising cost of living could force younger family members to leave Kauai, indicated that they would like the plan to focus on helping kupuna gain access to the supports that would allow them to age in place, even without the help of family.

Lihue resident Edward Kawamura suggested a new idea: Why not build Kauai’s first veterans home on the hospital campus?

The 82-year-old veteran of the Vietnam War noted that veterans of the Persian Gulf war, some of whom suffer from chronic health problems that stem from their service, will need support as they age.

“If we don’t get support for them, they’re going to be worse off than the homeless,“ he said.

Hawaii’s only state veterans home is on the Big Island, which HHSC took over during the pandemic. A second is under construction on Oahu.

Segawa said that the relatively small number of veterans on Kauai doesn’t support a dedicated residential facility. But HHSC, which operates a hospital on the island’s west side named in honor of Korean War veterans, could consider designating assisted living beds for Kauai vets, he said.

Civil Beat’s health coverage is supported by the Atherton Family Foundation, Swayne Family Fund of Hawaii Community Foundation and the Cooke Foundation.