published Friday, June 28th, 2013

Erlanger, Hutcheson formalize agreement to lease Fort Oglethorpe facility

Erlanger at Hutcheson
Erlanger at Hutcheson
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After weeks of closed-door negotiations and last-minute meetings, leaders with the Hutcheson Medical Center board, three North Georgia counties and Erlanger Health System have formalized their agreement to have Erlanger lease the Fort Oglethorpe facility for 10 years, with two 10-year extensions.

At their Thursday night meeting -- with North Georgia county leaders watching from the front row -- Erlanger trustees approved a letter of intent to lease the hospital.

After the vote, all of the North Georgia and Hutcheson officials gave a round of applause.

"It's not just the best thing for the hospital, it's the best thing for our county and our taxpayers," said Dade County board Chairman Ted Rumley. "This is critical. This is history, really. With the indigent care we provide, and with not knowing what's going to happen with Obamacare, this was a wise thing for the counties to do."

The final lease will not be approved by all parties until after a "feasibility study" is conducted by a third party, which will evaluate Hutcheson's financial viability and market share value.

Erlanger CEO Kevin Spiegel said he was "extremely excited" about plans for a deeper partnership with Hutcheson, working with already-existing employees and doctors.

"Our initial focus will be on enhancing quality, and strengthening relationships with community physicians," he said in a news release.

Thursday's vote comes on the heels of a Wednesday night meeting where the Hutcheson hospital board passed a resolution under which it stated that it expected to get a lease agreement with a "hospital entity."

It is still unclear how much money may be at stake in a potential agreement between the two hospitals.

The agreement Thursday caps off weeks of prolonged meetings -- some late into the night -- where officials on Hutcheson's numerous governing bodies struggled to strike an agreement that pleased all of the representatives from Walker, Catoosa and Dade counties.

Erlanger currently manages the renamed Erlanger at Hutcheson, while the three North Georgia counties own the hospital. County officials have said they're willing to issue low-interest bonds to cover Hutcheson's roughly $60 million in outstanding debt -- on the condition that Erlanger guarantees its lease payments will repay that figure.

Without such a guarantee, Dade County wouldn't have "been on board at all," said Rumley. It was the last North Georgia county to agree to the deal, with officials finalizing their stance just 45 minutes before Erlanger's meeting.

The other counties have echoed the sentiment, but representatives from each praised the final outcome of the discussions, calling it a "natural next step" and in a joint news release.

"Erlanger fits into our community, and will provide all of the necessary services for our citizens," said Keith Greene, chairman of the Catoosa County board of commissioners. "The hospital's been struggling for so long. ... We'll start seeing patients return. And doctors."

Despite all of the back-and-forth leading up the deal, Erlanger board members appeared to enter the meeting already on a united front. A news release written before the meeting stated that the board "voted unanimously" to approve the letter of intent.

During the meeting they did just that, posing just two cursory questions and having no public discussion as a body.

The lease must be formalized by Aug. 9 or Hutcheson will be free to put the lease out for bid. Spiegel said that even if that happens, Erlanger will have the first right of refusal.

On Wednesday, Walker and Catoosa county commissioners just approved a $6 million line of credit to keep Hutcheson operating while negotiations are under way.

While the study into Hutcheson's financial status is conducted, Spiegel said Erlanger will continue to manage the hospital.

"It will remain undisturbed during this entire time," Spiegel assured.

If Erlanger and Hutcheson sign a lease agreement, it will need final approval from the Georgia Office of the Attorney General.

Contact staff writer Kate Harrison at kharrison@timesfreepress.com or 423-757-6673. Contact staff writer Tim Omarzu at tomarzu@timesfreepress.com or 423-757-6651.

about Tim Omarzu...

Tim Omarzu covers Catoosa and Walker counties for the Times Free Press. Omarzu is a longtime journalist who has worked as a reporter and editor at daily and weekly newspapers in Michigan, Nevada and California. Stories he's covered include crime in blighted parts of metro Detroit and Reno, Nev.; environmental activists tree-sitting in California's Sierra Nevada foothills; attempts by the Michigan Militia to take over a township┬╣s government in northern Michigan. A native of Michigan, ...

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