Struggling Hutcheson seeks partners

Struggling Hutcheson seeks partners

July 12th, 2010 by Emily Bregel in Health

HUTCHESON FINANCIALS

Fiscal 2007: Gain of $767,000

Fiscal 2008: Loss of $468,000, including one-time bond refinancing

Fiscal 2009: Pending

Source: Gerald Faircloth, chief financial officer

The economic recession is weighing on Hutcheson Medical Center in Fort Oglethorpe and to lessen deepening losses, hospital leaders are exploring options, including partnerships with other health care facilities in Chattanooga.

"It's sort of like we've been in a lull, like when you're out at sea and the wind quits blowing. You're just sort of sitting there with no momentum," said Hutcheson Chief Financial Officer Gerald Faircloth.

The hospital hasn't yet had any formal discussions with other hospitals about any joint venture, but a relationship with an outside facility seems likely, said Charles Stewart, Hutcheson president and CEO.

"There are so many unknowns looking farther down the road with health care reform, we will need to be working in close collaboration with someone," he said.

A few years ago, Hutcheson was on the rebound after multimillion-dollar losses in the early part of the decade. The hospital recorded its first gain in years in 2007 with a profit of $767,000, Mr. Faircloth said.

But the recession's onset reversed the hospital's turnaround, especially in the 2009 fiscal year, which for Hutcheson ended last September, Mr. Faircloth said.

Officials still are finalizing numbers for fiscal year 2009, but Hutcheson's bottom line will be deeper in the red than in the previous fiscal year, when the hospital lost $468,000, Mr. Faircloth said.

Hospital officials are considering partnerships with other hospitals in areas including electronic health records and telemedicine. The hospital might create a set-up in which Hutcheson patients could consult electronically with a specialist at a major hospital such as Erlanger while still remaining a patient at Hutcheson, Mr. Faircloth said.

In an e-mailed statement, Erlanger President and CEO Jim Brexler said he is open to a collaboration.

"Erlanger's foremost concern has, and continues to be, meeting the needs of all patients in our region," he said. "To address that concern, the Erlanger Health System stands ready to work with local leadership to ensure continued access to quality health care services."

Parkridge Medical Center spokeswoman Pat Holloway would not comment on the possibility of a collaboration with Hutcheson but said officials knew about the Georgia hospital's financial concerns.

"We are aware of the situation and we're monitoring it closely," she said.

Jim Hobson, president and CEO of Memorial Hospital, said the hospital already works closely with Hutcheson in some areas such as cardiology and is open to future collaboration.

"As we all kind of stare into health care of the future and what that's going to mean, the notion of all of us being open to new kinds of partnerships is something that continues to make sense to me," he said.

Community hospitals face major hurdles in today's economy.

Just last week, Chatsworth-based Murray Medical Center's financial troubles prompted a warning from affiliate Hamilton Health Care System, which owns Hamilton Medical Center in Dalton, Ga., and has lent money to Murray.

Hamilton leaders said the medical center must alter its operations to stem its losses, projected to reach $2.4 million for this year. Otherwise, Hamilton will stop lending the hospital money to cover its operating costs.

Since 2006, Hamilton has lent about $7 million to Murray Medical Center, which is leased from the Murray County Hospital Authority by Murray Medical Center Inc., an affiliate of Hamilton.

More than three-quarters of Murray County residents go outside the county for their health care services, said Lamar Lyle, chairman of the board for Hamilton Health Care System.

"They're in a position where they don't have the volume and don't have the revenue flow to cover their costs. We don't see that trend improving," he said.

TOUGH COMPETITION

A number of Georgia hospitals are seeking partnership with other health care providers to cope with financial woes, said Kevin Bloye, spokesman for the Georgia Hospital Association.

Metro Atlanta-based St. Joseph's Hospital still is looking for a partner hospital to help it control costs after last week abandoning efforts to forge a joint venture with Piedmont Hospital, according to the Atlanta Journal-Constitution.

Ty Cobb Healthcare System, based in Royston, Ga., is collaborating with local doctors to build a physician-owned hospital in Northeast Georgia, Mr. Bloye said.

"We see that as a trend," he said. "There are a lot of creative arrangements that are coming to fruition because it is such a difficult environment. A lot of hospitals are beginning to realize, when they look at their long-term survival, that they're going to need to establish some partnerships for help with that."

Hutcheson officials say that, like most hospitals, its revenues and patient admission levels have been undercut by high uninsured rates among patients, and the loss of paying patients who are deciding to delay elective treatments.

Many patients coming to the hospital's emergency department have delayed preventive care and are sicker and more expensive to treat, Mr. Faircloth said.

But the hospital also is ceding valuable patient referrals to other hospitals who employ doctors or operate clinics in the North Georgia area, including Memorial Hospital, Parkridge Medical Center and Erlanger.

For example, Memorial operates an eight-physician family medical practice on Battlefield Parkway that treats about 14,000 patients. Parkridge also employs a number of physicians in the area and operates Parkridge Medical Associates of North Georgia, and Erlanger South Family Medicine sees patients in Ringgold, Ga.

"When you have hospitals in rural areas that have larger regional facilities nearby that are putting outpatient centers in those areas, it makes it extremely difficult for those (rural) hospitals," Mr. Bloye said.

Hutcheson is focusing on boosting its own primary care physician presence to re-establish a strong referral base, Mr. Faircloth said. The hospital has added at least three primary care physicians in the last year and a half, he said.

"Physicians are key to our success," he said.