published Thursday, May 16th, 2013

Area counties back hospital credit line

Chattanooga Times Free Press file photo of Erlanger at Hutcheson building.
Chattanooga Times Free Press file photo of Erlanger at Hutcheson building.
Photo by Doug Strickland /Chattanooga Times Free Press.

Employees of Erlanger at Hutcheson will be getting paper checks today rather than direct deposit of their pay, according to a memo taped above a time clock in a hospital hallway.

The good news for employees is that the Fort Oglethorpe hospital is getting a $2.5 million line of credit today from Regions Bank that was underwritten at special meetings Wednesday of the commissioners of Catoosa and Walker counties.

"They're going to be able to get that money [Thursday]," Walker County Sole Commissioner Bebe Heiskell said after authorizing the credit line at a 6 p.m. Wednesday meeting.

Her meeting was the last in a series.

The Catoosa County Board of Commissioners OK'd the credit line at a special 10 a.m. meeting.

The Hospital Authority of Walker, Dade and Catoosa Counties met at 4 p.m. in closed session for more than an hour to consult via speakerphone with Hutcheson's Atlanta attorney. The board then voted in public to accept the line of credit.

"The wolf is not at the door," Hospital Authority Vice Chairman Bill Cohen said after the vote.

Cohen said the hospital has had a cash-flow problem since January. That was when Medicaid stopped paying the hospital about $300,000 a week, seeking to recoup about $6 million in past overpayments.

"They just quit paying us until we get level with them," Cohen said.

The hospital relies on Medicaid for about 47 percent of its income.

But come June, that portion of the Medicaid debt will be repaid, and hospital officials expect cash flow to return to normal.

Long term, Walker County Attorney Don Oliver expects the hospital will issue about $50 million in bonds to cover the $2.5 million line of credit issued today and all its other debts, including about $3 million still owed Medicaid, a $20 million line of credit extended by Erlanger Health System and about $24 million owed on a Regions Bank bond.

Ultimately, Heiskell expects the counties will lease Hutcheson to Erlanger or another hospital that will promise to pay what Heiskell said would be a $3.2 million annual bond payment for 30 years.

The counties would give up some control by leasing the hospital, Heiskell said, but residents wouldn't have to fear a property tax increase in case the hospital failed.

"Secured debt," Heiskell said of the leasing agreement. "I'm not going to do it any other way."

Cohen said, "The hospital's been profitable ... the last six months or so."

"Doctors are coming back and admitting patients," Cohen said. "Taxpayers shouldn't be nervous. I'm a taxpayer, and I'm not nervous."

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

about Tim Omarzu...

Tim Omarzu covers education 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.

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