Roger ForgeyRINGGOLD, Ga. -- Unschooled on the subtleties of hospital finances, Catoosa County officials hired an expensive tutor.
County commissioners voted Tuesday to pay former Hutcheson Medical Center CEO Roger Forgey $150 an hour to consult with them on the ins and outs of the hospital's bankruptcy filings. Local officials hope Forgey can help predict Hutcheson's financial future.
County Attorney Clifton "Skip" Patty will meet with Forgey every couple of weeks to discuss the hospital's latest monthly financial filings. If county officials don't think Hutcheson can sustain itself long term, Patty said, they will try to pull the plug.
The hospital is in Chapter 11 bankruptcy. That status is for companies whose officials think they can keep their heads above water if given time to reorganize with a new money-making plan.
Catoosa County officials aren't sure Hutcheson can be saved. According to bankruptcy court filings, the hospital has $80 million in liabilities against $30 million in assets. In December, it spent $100,000 more than it made. In January, that difference jumped to $300,000.
Forgey said those figures don't necessarily mean Hutcheson can't survive. It just raises questions, which he will try to answer for the commissioners.
To remain in Chapter 11 bankruptcy, Patty said, Hutcheson needs to be able to pay all of its secured debts and some of its unsecured debts.
A secured debt has collateral attached to it, like a house. According to a bankruptcy court document filed in December, Hutcheson owes $26.7 million in secured debt. It has $52.9 million in unsecured debt, which isn't backed up by property or other assets.
If county officials believe the hospital can't surmount the financial tide, Patty said they will ask a federal judge to shift Hutcheson into Chapter 7 bankruptcy. A trustee would then sell all its non-exempt assets, like a used car sold for parts.
Hutcheson CEO Farrell Hayes did not return multiple calls seeking comment Wednesday and hospital board Chairman Dr. Darrell Weldon could not be reached late Wednesday afternoon.
Patty said any serious talk of changing to Chapter 7 won't happen until he studies the financials with Forgey. But if it needs to happen, he said, county officials want to do it sooner than later.
To help Hutcheson make payroll, Catoosa and Walker counties each guaranteed a $10 million loan to Erlanger Health System in 2011. Local taxpayers are still on the hook for that money.
Under Chapter 7, Patty said, a trustee could sell assets to Erlanger for the money that Catoosa County owes. Then taxpayers would be off the hook.
"If it sells as a hospital," Patty said, "it's worth more than $10 million. If it sells as a warehouse, I don't know."
Forgey became Hutcheson's CEO in February 2012, when it was still under a management agreement with Erlanger. He left in October 2013, after the two hospitals ended their agreement, blaming each other for irreconcilable differences.
Forgey said Hutcheson was losing about $1.7 million a month when he took over. By the end, he said, the hospital was turning a slight profit each month.
He has since joined Community Health Service of Georgia and said he has consulted for hospitals and local governments before this agreement. He said working with Catoosa County is not an attack on the hospital.
"I wouldn't do a thing in the world to harm Hutcheson," he said. "I love those people. That staff is great."
If Catoosa County wants to shift from Chapter 11 bankruptcy to Chapter 7, Patty said, it will have to ask a judge to approve the plan. Officials from another county that is part of the Hospital Authority -- such as Walker County -- could then oppose that plan.
Lawyers for the two sides would then argue in court.
Patty said Catoosa County commissioners want the hospital to remain. They also don't want to lose $10 million.
Contact staff writer Tyler Jett at tjett@timesfreepress.com or at 423-757-6476.