Catoosa County OKs $3 million line of credit for Hutcheson

Catoosa County OKs $3 million line of credit for Hutcheson

June 27th, 2013 by Tim Omarzu in Local Regional News

Erlanger at Hutcheson

Chad Young

Chad Young

The financial lifeline for Erlanger at Hutcheson got longer Wednesday when Catoosa County commissioners voted to extend by $3 million what amounts to a total $6 million line of credit to the Fort Oglethorpe hospital.

That buys more time for closed-door negotiations between Chattanooga-based Erlanger Health System and officials from Catoosa, Walker and Dade counties about the fate of the county-owned hospital.

The management team from Erlanger that took over Hutcheson in 2011 says it's turned finances around at the once-troubled hospital through steps such as increasing the patient count and bringing back doctors who had left. But they say they're hamstrung by the hospital's roughly $60 million debt.

County officials are willing to issue long-term, low-interest bonds to refinance Hutcheson's debt and make it manageable -- but only if Erlanger guarantees to cover the annual bond payments through a lease. That way, taxpayers won't be on the hook to pay the bonds if the hospital fails.

Negotiations are heading in the right direction, Catoosa County Attorney C. Chad Young said.

"That is moving forward," Young told commissioners. "It is moving forward in a very positive direction."

'Real deadline'

Aug. 9 is the new deadline for a lease agreement to be reached, Young said.

Hutcheson's county-appointed board previously set a June 4 deadline to receive a letter of intent from Erlanger stating that it was willing to lease the hospital. The June deadline came and went without any action.

"August 9 is a real deadline," Young said.

After meeting for half an hour behind closed doors Wednesday morning, Catoosa commissioners quickly approved a $3.5 million line of credit for Hutcheson through Regions Bank. Walker County Sole Commissioner Bebe Heiskell voted on June 20 to back the credit line.

Catoosa and Walker counties previously agreed to a $2.5 million line of credit for Hutcheson through Regions Bank.

Combined with the $3.5 million approved Wednesday, that brings the line of credit backed by the counties to a total of $6 million.

The hospital may not use all of that, county officials said.

"This is a line of credit. It's not necessarily a $6 million loan," Catoosa Commissioner Jim Cutler said.

The $6 million line of credit will be "rolled into" bonds to be issued to cover Hutcheson's outstanding debts, Young said. Those debts include a $35 million Regions Bank bond issue and $20 million loaned by Erlanger.

Contact staff writer Tim Omarzu at or 423-757-6651.