published Sunday, June 2nd, 2013

Erlanger to decide whether to lease Hutcheson

People exit Erlanger at Hutcheson in Fort Oglethorpe, Ga., in this file photo.
People exit Erlanger at Hutcheson in Fort Oglethorpe, Ga., in this file photo.
Photo by Ashlee Culverhouse /Chattanooga Times Free Press.

Erlanger Health System may decide by Tuesday whether to take the plunge and extend its short-term relationship with Hutcheson hospital into a decades-long deal.

A management team from Erlanger has been running the hospital in Fort Oglethorpe since 2011.

Officials at the rebranded Erlanger at Hutcheson say they've staunched the flow of red ink and, through such improvements as increasing the patient count and bringing back doctors that had left, had the hospital $757,000 in the black as of April.

But the hospital is hamstrung by $56 million in debt. The Erlanger at Hutcheson management team wants the three counties that own the hospital -- Catoosa, Walker and Dade -- to issue low-interest, 30-year bonds so the debt is reduced to manageable annual payments of about $3.2 million.

County officials have said they'd be willing to issue bonds to cover the debt, provided Erlanger promises to cover the bond payments by leasing the hospital from the counties. That way, taxpayers won't be on the hook if the hospital fails.

The county-appointed board in charge of Hutcheson gave Erlanger a deadline of Tuesday to issue a letter of intent to lease Hutcheson. The letter would be the first, key step toward a comprehensive lease agreement.

"If the terms are correct, they're our first choice," Walker County Sole Commissioner Bebe Heiskell said of Erlanger. "If they decided against this, we'll go out for proposals from other hospitals."

Erlanger spokeswoman Pat Charles said Friday that "it would be premature for Erlanger to comment about this because we're still in negotiations."

Despite posting a positive operating statement for the first time in seven years, Erlanger at Hutcheson has no financial reserves. The hospital recently had to borrow a little more than $3 million from Catoosa and Walker counties to cover operating expenses.

"Time is of the essence. Every day, money's being spent and the clock's ticking," Heiskell said. "[Hutcheson doesn't] need to run out of money and -- back against the wall -- sign whatever's put in front of them."

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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