published Friday, March 18th, 2011

Hutcheson, Erlanger inch closer to deal

by Emily Bregel


  • FY2006 — Loss of $1.4 million
  • FY2007 — Profit of $766,766
  • FY2008 — Loss of $467,517
  • FY2009 (unaudited) — Loss of $7.3 million
  • FY2010 (unaudited) — Loss of $7.1 million

Source: Hutcheson financial statements

The latest version of a partnership proposal between Hutcheson Medical Center and Erlanger Health System was resubmitted Thursday to Erlanger by the Walker County commissioner.

If adopted, the document will be in effect for at least 20 years, according to a Thursday news release from Walker County Sole Commissioner Bebe Heiskell.

“It was nothing to be taken lightly on behalf of the taxpayers,” she said in the release.

Changes to the document are intended to offer greater protections for taxpayer money and Hutcheson’s assets, as Catoosa, Dade and Walker counties commit to securing Erlanger’s future investment in Hutcheson. That investment is expected to be repaid either through future Hutcheson revenues, or by the counties if Hutcheson can’t rebound.

The original draft proposal from Erlanger has undergone extensive revisions by a 12-person transition team, comprising members of Hutcheson Medical Center’s four decision-making boards, and it had received a preliminary nod of approval from Erlanger officials, according to legal counsel for Hutcheson Medical Center Inc., the private nonprofit company that manages the hospital’s daily operations.

But commissioners from the three counties only recently got a look at the proposal, and they have made their own tweaks, Heiskell said.

“As the counties are still waiting on Erlanger to supply crucial information left blank in the proposal, including essential attachments, taking the time to consider these changes should not cause any [additional] delay,” Heiskell said.

When a financial review revealed that Erlanger would have to provide as much as $20 million to keep Hutcheson afloat, Erlanger hospital insisted that the counties guarantee its up-front investment.

Hutcheson would pay back Erlanger after getting back in the black, but if that doesn’t happen, the counties have pledged to offer the hospital’s property as collateral.

But Heiskell said no taxpayer money will be at risk, and she expects the hospital to return to profitability and repay Erlanger on its own.

Ashley Jewell, a trustee of the county-appointed Hospital Authority of Walker, Dade and Catoosa Counties, said in the news release that the agreement must include taxpayer protections. The Hospital Authority owns the hospital property and leases it to HMC.

“We cannot risk the assets of the hospital without adequate protections, and I have confirmed that a heavy majority of the authority board feels the same way,” he said.

Martha Attaway, chairwoman of the Hutcheson Medical Center Inc. board, said Thursday that a joint meeting of Hutcheson’s decision-making boards to vote on a final document should be scheduled before Erlanger’s next board of trustees meeting, set for Thursday. Erlanger trustees also must approve the contract before it is adopted.

Hutcheson Medical Center Discussion
Hutcheson Medical Center Discussion

In recent years Hutcheson has struggled with dwindling patient volumes, a loss of loyal community doctors and millions in debt. Leaders of the hospital hope a partnership with Erlanger will bring doctors — and patient referrals — back to the hospital, and bring Hutcheson back to profitability.

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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