County concerned over Hutcheson, plans Town Hall meeting March 10

County concerned over Hutcheson, plans Town Hall meeting March 10

March 9th, 2011 by Mike O'Neal in Catoosa

CORPORATE STRUCTURE

Hutcheson Medical Center, a publicly owned community hospital, is governed by the boards of five entities.

  • Hutcheson Medical Center Inc.: A private, nonprofit company that leases the building and operates the hospital.
  • Hospital Authority of Walker, Dade and Catoosa Counties: Owns the hospital building and oversees the lease. Its nine-person board is appointed by county commissioners.
  • Hutcheson Medical Division: For-profit sister company to Hutcheson Medical Center operates medical offices and practices. Its board oversees Hutcheson's clinics.
  • Hutcheson Health Enterprises: Nonprofit parent company of Hutcheson Medical Center and Hutcheson Medical Division.
  • Hutcheson Health Foundation: Nonprofit fundraising foundation for the hospital.

Two points regarding the proposed joint-operating agreement between Hutcheson Medical Center and Erlanger Health System were made clear during last week's Catoosa County Commission meeting.

Commissioners reaffirmed their commitment to support the full-service hospital located in Fort Oglethorpe.

They also expressed chagrin and disgust about the hospital board approving a six-figure severance package for HMC's recently resigned president and CEO, Charles Stewart.

"How is the board thinking they can give him $375,000 as a severance?" Commissioner Bobby Winters said.

Stewart joined Hutcheson in 2005, and the hospital went from multimillion-dollar losses to earning its first profit in years. But one profitable year (about $757,000 in 2007) was followed by the loss of about $468,000 the next and annual losses of about $7 million are now the norm.

The commissioners agree that HMC's continued existence depends on local governments' support. Along with their counterparts in Dade and Walker counties, the commissioners issued a statement last Monday stating, "It has become clear to the Counties that any long term management and success of Hutcheson Hospital will require the support of the Counties, at least to the extent of pledging security for financing for hospital operations."

Hutcheson is currently in default on a nearly $35.5 million bond issued in 2007 and has been reporting losses of about $1 million per month in its current fiscal year.

"This began in 1995-1996 when the three counties turned over all operations to the hospital," Commissioner Jim Cutler said.

Cutler was referring to Hutcheson severing direct financial ties with taxpayer support and shifting to nonprofit status in order to better compete with other area hospitals. Part of that process involved creating five separate boards to oversee HMC.

"When we didn't have any money at risk, we didn't really follow them," County Attorney Skip Patty said. "The Hospital Authority became nothing more than an advisory board."

Though the county commissions appointed members to the Hospital Authority board (the counties own the facility which HMC leases) that oversees its lease, county-appointed board members have no say in the hospital's operations.

"We basically left ourselves at the hospital board's mercy," Commissioner Ken Marks said.

That might change with the latest tri-county memorandum, County Attorney Chad Young said.

"Part of what we're trying to do is correct that," he said. "If the counties will be a part (of the hospital's new partnership with Erlanger) they will have some input. And control of management."

The memorandum states no financial commitments will be made unless and until the Hospital Authority is included in all negotiations regarding the hospital's future operations and resolution of its current indebtedness.

"The direction the hospital was heading was not something we were ever pleased with," Commissioner DeWayne Hill said. "We've been pushing for this for years."

TOWN HALL MEETING MARCH 10

Officials in Walker, Catoosa and Dade counties will hold a town hall-style meeting March 10 to discuss funding and other issues surrounding Hutcheson Medical Center.

The meeting will take place at 7 p.m. at The Colonnade in Ringgold.

Last week, leaders in the three counties sent a letter to the Hutcheson board of directors demanding that their county-appointed trustees start playing a lead role in the partnership negotiations between Hutcheson and Erlanger Health System.

Hutcheson leaders are currently negotiating a partnership arrangement with Erlanger in the hopes that a strategic relationship with the larger Chattanooga-based hospital will help recruit physicians and bring patients back into Hutcheson's beds.

In exchange for a seat at the head of the negotiating table and greater operational control of the hospital, the counties agreed to discuss securing Erlanger's future investment in Hutcheson, which is struggling to stay afloat in the face of deep financial losses.

The letter stipulates that the counties' guarantee of Erlanger's investment would not put any risk on taxpayers, such as a future tax levied on residents to pay back Erlanger.

For complete details of the Thursday meeting, see Friday's Chattanooga Times Free Press or visit timesfreepress.com.