published Tuesday, March 15th, 2011

Catoosa and Walker counties look at alternative hospital pact


by Emily Bregel
  • photo
    This is the campus of Hutcheson Medical Center in Fort Oglethorpe. Staff File Photo by Angela Lewis/Chattanooga Times Free Press

County leaders in two North Georgia counties say they aren’t so sure they will support a management agreement largely worked out this weekend between Erlanger executives and leaders of Hutcheson Medical Center Inc.

Catoosa and Walker county officials will present their own agreement, which is an edited version of Erlanger’s original draft proposal, to Erlanger Health System officials today, Walker County attorney Don Oliver said Monday.

Oliver couldn’t speak to details because of confidentiality issues, but he said the initial agreement didn’t provide enough security for the counties.

“Erlanger has to strike a deal with HMC, and they have to also strike a deal with the counties, if they want any sort of county backing,” he said.

Walker, Catoosa and Dade counties own the Hutcheson buildings and property and lease it to Hutcheson Medical Center.

A 12-member “transition team” comprised of representatives from Hutcheson’s four decision-making boards met Saturday to review Erlanger’s partnership agreement. On Monday, Erlanger leaders indicated that their board is ready to vote on the agreement once they get a guarantee of their multi-million dollar investment in Hutcheson from county commissioners in Dade, Catoosa and Walker.

Erlanger has said it will go forward with the partnership only if county leaders are on board, and if the counties pledge to guarantee Erlanger’s investment of up to $20 million in Hutcheson.

While officials in Catoosa and Walker aren’t ready to sign off on the agreement, Dade County Executive Ted Rumley has said he is ready to support the contract currently on the table.

County leaders received a copy of the agreement a week ago, Oliver said.

“The transition team was approving the things it took to satisfy HMC, but it’s going to take a few different items to satisfy the counties,” he said.

Under a partnership arrangement, Erlanger would:

• Invest up to $20 million over the next 18 months to keep Hutcheson afloat until the community hospital becomes profitable again and can pay back the loan, an Erlanger news release stated. Erlanger executives have not specified where the money will come from.

• Oversee Hutcheson’s daily operations.

• Recruit physicians to bring more patients back to the hospital.

• Co-brand the two hospitals “as one.”

Erlanger could even extend T.C. Thompson Children’s Hospital into North Georgia, according to the news release. Children’s Hospital is the region’s only pediatric medical center.

“A great tradition of quality obstetrics exists at Hutcheson, and we only want to strengthen it,” Erlanger board Chairman Dan Quarles said in the release.

Hutcheson lost more than $3 million in the first quarter of the current fiscal year alone, and has lost $7 million in each of the past two fiscal years. Hutcheson leaders have warned county leaders that a deal with Erlanger must go through soon for the North Georgia hospital to keep its doors open, Oliver said.

County leaders have said they are willing to put up the hospital’s building and grounds as collateral to secure Erlanger’s investment, but they disagree over whether taxpayers might also be on the hook for repayment in the worst-case scenario that Hutcheson doesn’t again become profitable.

Rumley has emphasized he will not put county taxpayer’s money at risk.

But Walker and Catoosa leaders say some investment of county money might be necessary, both to back Erlanger’s loan and to keep Hutcheson’s doors open until Erlanger’s money starts flowing.

Erlanger is in the process of appraising the value of Hutcheson’s property, which could take 60 to 90 days alone, and the counties might have to put up money to support Hutcheson in the meantime, Oliver said.

“The counties have pledged to individually or in some combination make sure there is available cash to carry Hutcheson through the final stages of this negotiation process,” said Walker County Sole Commissioner Bebe Heiskell in an e-mailed statement.

Hutcheson leaders are looking to Erlanger to bring doctors and their patient referrals, which are desperately needed to fill the hospital’s empty beds.

Erlanger President and CEO Jim Brexler said in a release that Erlanger would support physicians willing to return to practicing at Hutcheson by offering back-up on-call coverage in specialty areas and other clinical support that Erlanger, a Level I trauma center, can provide.

“We realize that the backbone of any hospital is its clinical professionals,” he said in the Erlanger release.

Contact staff writer Emily Bregel at ebregel@timesfreepress.com or 423-757-6467.

about Emily Bregel...

Health care reporter Emily Bregel has worked at the Chattanooga Times Free Press since July 2006. She previously covered banking and wrote for the Life section. Emily, a native of Baltimore, Md., earned a bachelor’s degree in American Studies from Columbia University. She received a first-place award for feature writing from the East Tennessee Society of Professional Journalists’ Golden Press Card Contest for a 2009 article about a boy with a congenital heart defect. She ...

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