Hutcheson hears pitch from for-profit hospital firm

FORT OGLETHORPE—Trustees of the Hospital Authority that owns Hutcheson Medical Center heard a brief pitch from a for-profit hospital management firm that specializes in rural hospitals, at a special called meeting Friday night.

“Do investor-owned hospitals provide care to the poor? I’m proud of what we do for the poor,” said Alan Levine, of Naples, Fla.-based Health Management Associates, in his presentation. “We have hospitals in Florida that (have) 25 and 30 percent of their patient days are Medicaid and charity (care to the poor). And those hospitals are profitable, folks.”

Even as Hutcheson leaders and board representatives inch closer to finalizing a partnership deal with Erlanger Health System, legal counsel for the Hospital Authority board sought alternative proposals last week, issuing a request for information open to all — for-profit and nonprofit companies.

Six health systems or hospitals replied with interest, including Parkridge Medical Center and Memorial Health Care System in Chattanooga, who did not submit full proposals, said Don Oliver, legal counsel for the authority.

That request for information was issued in response to questions last week from the Hospital Authority board Chairman Darrell Weldon, who asked what the back-up plan was if the Erlanger deal fell apart, Oliver said.

Levine said the hospital shouldn’t rush into an agreement with nonprofit safety-net hospital Erlanger.

“Make sure you consider all your options,” he said. “Unfortunately the analogy I use is ‘making a decision with a gun to your head,’ because you’re facing some serious financial issues here. Sometimes those are when the worst decisions get made.”

Hospital leaders have been engaged in talks with Erlanger since entering into a 60-day due diligence period in late October. The partnership is aimed at saving the ailing Fort Oglethorpe hospital, which is losing $1 million a month and is in default on a $35 million bond issue.

Only five trustees — the minimum required for a legal meeting — were present at the meeting, out of nine total members. Present were board vice chairman Bill Cohen, Steven Ellis, Bill Chapin, Daniel Jewell, Bill Cohen and David Ashburn.

Board Chairman Darrell Weldon was not present at the meeting, after he issued a notice canceling the called meeting on Thursday. But legal counsel for the board and Daniel Jewell sent emails later that day emphasizing that the meeting would go on as scheduled. They suggested efforts to cancel the meeting were intended to undermine the board’s authority.

Hospital trustees temporarily tabled one motion until more trustees could review it. The motion would have put Hutcheson Medical Center Inc. on notice that it had violated the terms of the Hospital Authority’s lease agreement and risked termination of that agreement, a 40-year lease first signed in the mid-1990s.

Delaying the vote would help unite trustees, said trustee Ken Rhudy, who listened in on the meeting by phone and could not cast a vote. “The momentum we have built has fallen by the wayside. The only way to rebuild it is by getting everybody in the room to talk.”

Under the motion the lease agreement could be terminated after 90 days if Hutcheson Medical Center Inc. failed to remedy or take “reasonable steps” to remedy the problems in that time, the motion said.

Those violations include failure to maintain bond covenants, including meeting a minimum of 45 days cash on hand, required under the terms of the lease, Oliver said.

Trustees scheduled another meeting for Wednesday, April 6, to address that issue.

They then went into closed session to discuss changes their legal counsel had suggested to the latest version of the Erlanger management agreement and related documents, which are under a confidentiality agreement.