published Thursday, April 14th, 2011

Erlanger OKs Hutcheson partnership

by Chris Carroll

Chattanooga’s largest hospital approved a management agreement Wednesday that will place it in charge of Hutcheson Medical Center, lending a sense of finality to seven months of North Georgia power struggles.

Erlanger Health System will provide physicians, executive leadership, strategic planning and a $20 million line of credit to the deeply indebted Fort Oglethorpe hospital.

“This will not be an easy task, and many very tough decisions will need to be made in the coming days,” Erlanger President and CEO Jim Brexler said.

Brexler added that a due diligence period revealed “significant financial challenges not previously known” to Erlanger or Hutcheson, which recently defaulted on a $35 million bond and laid off 75 employees. The hospital is losing $1 million a month.

The details of the management proposal are under a confidentiality agreement.

Erlanger’s vote came a day after trustees from two of Hutcheson’s four boards agreed to vacate their positions and relinquish operating power to the Hospital Authority of Walker, Dade and Catoosa Counties, a nine-member group of political appointees that owns the hospital building and oversees its lease.

The Hospital Authority’s pro-Erlanger vote was contingent on replacing members from both operating boards with the Hospital Authority’s own trustees, placing the deal in danger since both boards — Hutcheson Medical Center Inc. and Hutcheson Health Enterprises Inc. — were reluctant about voting themselves out of power.

But a two-hour closed session on Tuesday alleviated whatever problems the boards had with nonexistence, and the Hospital Authority’s vote became official.

“We have a hospital,” former Hutcheson Health Enterprises chairman Jim Forster said, seconds after his board dissolved.

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