published Wednesday, September 4th, 2013

Catoosa commissioners vote to offer Hutcheson $35 million; Walker County balks

Hutcheson Medical Center
Hutcheson Medical Center
Photo by Doug Strickland /Chattanooga Times Free Press.

Catoosa County, Ga., commissioners voted Tuesday morning to get $35 million in debt off Hutcheson Medical Center's back while the Fort Oglethorpe hospital looks for a new partner to manage its operations.

But Walker County's sole commissioner said Tuesday afternoon that she won't support it.

After meeting behind closed doors for 50 minutes, Catoosa commissioners voted 4-0 immediately to issue up to $35 million in short-term bond anticipation notes to consolidate most of Hutcheson's $60 million in debt.

"Bottom line is, 'How important is the hospital?'" Catoosa Commission Chairman Keith Greene said in support of the refinancing.

A bailout of that size may be dead on arrival, though. Catoosa County officials said they won't go it alone, and Walker Commissioner Bebe Heiskell balked at backing the $35 million note.

"I will not do it," Heiskell said in a news release. "I will not put the Walker County taxpayers unnecessarily at risk on such a business decision."

Instead, Heiskell countered with a smaller offer. She wants to add $3.4 million to what she said is $3.3 million still on hand from a previous line of credit to keep Hutcheson operational while a new partner is found.

Heiskell even upped the ante.

"If Catoosa County will not join Walker County in its moderate proposed solution, then I am prepared to go it alone and Walker County will back the $3.4 million loan without Catoosa County. I will make certain the hospital and the physicians have everything they need," she said in the news release.

Or, Heiskell suggested, Catoosa could issue the $35 million note on its own.

"The current hospital is almost entirely in Catoosa. The future of the hospital is on [Battlefield Parkway] and will all be in Catoosa County," she stated. "So, given these extra benefits, I understand why Catoosa might be willing to put its taxpayers more at risk. I give them my blessing."

Hutcheson is seeking a new management partner. The hospital is ending its contract with Erlanger Health System. Bids from potential management companies are due Oct. 25.

Paying off Regions Bank

Hutcheson owes about $29 million to Regions Bank's parent company, Regions Financial Corp., Catoosa County attorney Chad Young said. Issuing the $35 million note would take Regions out of the picture, said Young, which he said would have several advantages.

For one, the counties would get a first lien against Hutcheson's Battlefield Parkway campus. Now, the counties don't have any claim against those assets; Regions does.

"We'll have ultimate control of all of the assets," Green said.

Paying off Regions also would allow Hutcheson to sell its Parkside Nursing Home, Young said, and use the proceeds for ongoing operations, capital expenditures or to retire debt.

"Regions [currently] won't approve the sale of the nursing home," Young said.

It makes sense for Hutcheson to sell Parkside Nursing Home, he said, because the trend is for nursing home companies to run such facilities. The hospital that wins the bid to manage Hutcheson won't be interested in running its nursing home, Young said.

Paying off Regions, Young said, also would free up Hutcheson's audited financial statements from 2008 on, which now cannot be released until the Regions debt is paid.

"[The audits are] critical for the RFP process," Young said, referring to the request for proposals that may be issued as soon as Friday.

Regions Bank spokesman Mel Campbell couldn't be reached for comment Tuesday afternoon.

Catoosa County Commissioner Jim Cutler was absent from Tuesday's meeting.

Contact 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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