Layoffs, service cuts coming at Hutcheson Medical Center

Layoffs, service cuts coming at Hutcheson Medical Center

December 19th, 2013 by Kate Harrison Belz in Local Regional News

Hutcheson Medical Center Board Chairman Corky Jewell, center, addresses members during a joint hospital board meeting at Hutcheson on Wednesday in Fort Oglethorpe.

Photo by Maura Friedman/Times Free Press.

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Hutcheson timeline

Hutcheson is more than $60 million in debt, the bulk of which is $25 million loaned by Regions Bank, $20.5 million loaned by Erlanger Health System, and a $6 million line of credit from Regions Bank.

2010 -- Hutcheson loses more than $7 million, after another $7 million loss the year before.

February 2011 -- Hutcheson CEO Charles L. Stewart resigns under fire after his administration is blamed for driving away doctors, allowing the hospital's patient census to fall precipitously and taking some $12 million in overpayments from Medicaid and Medicare that Hutcheson is still working to repay. The hospital also defaulted on a $35 million bond issue under his leadership.

April 2011 -- 75 Hutcheson employees are laid off.

May 2011 -- With Hutcheson losing nearly $1 million a month, the hospital enters a management agreement with Chattanooga-based Erlanger Health System. Erlanger provided physicians, executive leadership, strategic planning and a $20 million line of credit to the deeply indebted Fort Oglethorpe hospital.

2012 -- Roger Forgey, an Erlanger executive, takes the helm of Hutcheson. Shortly after, he announces another round of layoffs, impacting about 5 percent of the hospital's then 825 employees in an effort to "right size."

July 2012 -- For the first time in more than three years, Erlanger at Hutcheson posts a profit, and will continue to do so more consistently in following months. Board members credited Forgey with helping stabilize the hospital and bringing back physicians.

June 2013 -- Hutcheson announces it will enter a leasing agreement with Erlanger for 10 years, with North Georgia leaders calling the move "historic" and "critical" for Hutcheson's success. But the agreement fell apart following a study of Hutcheson's financial viability and market share value.

August 2013 -- Hutcheson severs its management agreement with Erlanger, claiming the Chattanooga hospital did not hold up its end of the pact.

September 2013 -- The hospital issues a request for proposals from other health care providers to take over the hospital's management. Only Erlanger and Chattanooga company Lincoln Healthcare submit proposals, neither of which is accepted by Hutcheson.

November 2013 -- Forgey departs Hutcheson as Erlanger's management is brought to a close. Farrell Hayes, Hutcheson's chief financial officer since May 2012, is tapped to be the hospital's chief operating officer and takes interim CEO duties.

December 2013 -- Catoosa County declines to back a "critically needed" $2 million loan for the hospital. Walker County agrees to back a line of credit alone while Hutcheson states that its new strategic plan will include "austerity measures" crafted in a series of closed-door, executive-session meetings.

Source: Times Free Press archives

For 52 years, thousands of North Georgians drew their first breaths in the delivery room at the hospital now known as Hutcheson Medical Center.

But the last baby to be born at the Fort Oglethorpe facility will be delivered before the New Year is rung in.

And on Dec. 31, potentially several dozen employees will lose their jobs after the board of the financially troubled hospital voted Wednesday to suspend all labor and infant delivery services.

"We absolutely hate doing it," said Hutcheson Chief Operating Officer and interim CEO Farrell Hayes, who called the decision-making process "brutal."

"There's no question we offer a very high-quality service and a very devoted staff," said Hayes. "But it is absolutely the right economic decision."

Hutcheson loses approximately $2 million a year on labor and delivery services, hospital officials said.

"Suspending Hutcheson's labor and delivery unit is a very difficult decision and one that we do not make lightly," Corky Jewell, chairman of the board, said in a prepared statement.

Hutcheson officials said the hospital has seen a steady decrease in births over the past 12 years as Chattanooga hospitals have become more competitive.

Hayes said 37 employees will be impacted by the suspension of services, though qualified employees will be offered comparable positions currently open in other parts of the hospital.

Employees not offered a job with Hutcheson will be offered a severance package.

The public hospital is $60 million in debt and struggling to find its financial footing after recently severing a management contract with Erlanger Health System.

Three of the hospital's boards met for two hours in closed session Wednesday before unanimously voting on the change with no public discussion.

Hayes said the fact that notice of the layoffs falls around Christmastime was unavoidable because of the hospital's financial situation.

"It was going to be tough no matter when we decided to do it," he said. "But doing it now is certainly more painful."

Hayes, whose own two children were born at Hutcheson, says he knows the move will be a blow to the community.

Dubbed as "The Place Where Babies Come From," Hutcheson's Women's Center has been open since 1988, though babies have been delivered at the hospital since it opened in 1952.

The delivery services have long been a point of pride for the community, and many assume that it is one of the more financially steady services Hutcheson offers.

But Hayes says that is a common misconception.

The hospital hit its peak of deliveries in the 1990s, Hayes said. Since then, the number of deliveries has shrunk to about half of what it was at that time. Meanwhile competition for those services from Erlanger Health System and Parkridge Health System in Chattanooga has only mounted.

Georgia Medicaid provides reimbursements in nearby Tennessee, meaning Hutcheson loses the hometown advantage it has against large Chattanooga hospitals just eight minutes away.

About 60 percent of Dade, Walker and Catoosa County babies are born in Chattanooga, said hospital spokeswoman Stacey Kaufmann.

As for expectant mothers planning to deliver at Hutcheson, Kaufmann said all of Hutcheson's obstetricians have practicing privileges at other local hospitals.

While the hospital is shuttering labor and delivery, its Women's Center will technically remain open for now, as pediatric services and gynecological surgery will remain at Hutcheson.

And if something drastic were to happen -- if Georgia Medicaid decided to only reimburse Georgia hospitals, for instance -- there is a chance that labor and delivery services could resume.

But Hayes said he has no expectations for such a shift. Instead, the hospital will turn its focus to service lines like surgery, cardiology, orthopedics and gastroenterology. The board voted Wednesday to outfit two new GI labs at its new facility on Battlefield Parkway.

"We're going to try to put our resources toward areas where we're going to have the volumes to make it economically feasible," Hayes said.

Contact staff writer Kate Harrison at kharrison@timesfreepress.com. or 423-757-6673.