ROME, Ga. - Hutcheson Medical Center will sell its nursing home at an auction.
Debbie Owens, CEO of New Beginnings Care, signed an agreement Tuesday promising to pay about $7.1 million for Parkside at Hutcheson Nursing Home. Owens' offer will serve as the first bid in an auction for the property, where 102 residents live.
Officials have not yet set a date for the auction. But during a hearing Wednesday, U.S. Bankruptcy Court Judge Paul Bonapfel and Hutcheson attorneys discussed holding the event in mid-November. The lawyers will set a firm date during a status hearing in Atlanta on Oct. 30. Only bidders, Hutcheson leaders and three representatives of Erlanger Health System will be allowed to attend the auction.
Erlanger loaned Hutcheson $20 million in 2011 and hasn't been repaid the money. On Wednesday, Erlanger attorneys opposed the auction, arguing that the Chattanooga hospital should be able to foreclose on the nursing home.
Bonapfel disagreed. He said an auction will allow a new owner to take over the nursing home smoothly, allowing the residents to remain in their homes. If Erlanger forecloses, Bonapfel said, the hospital will shut the facility down and the elderly residents will be moved to a different nursing home before Erlanger sells the property to a new owner.
Erlanger's eventual payday has grown over the years because of the interest on its 2011 loan. Catoosa and Walker county officials have promised to pay the hospital up to $10 million each, assuming Erlanger doesn't recover all of its money by selling the hospital's main campus and nursing home.
Bonapfel said the Chattanooga hospital should be happy with the money generated from the nursing home auction, whether it is $7.1 million or a greater amount.
Staff Photo by Dan Henry / The Chattanooga Times Free Press- 10/21/15. Hutcheson Hospital and Medical Center in Fort Oglethorpe, Ga., on October 21, 2015."If Erlanger gets to sue the counties (for the $10 million each), and if Erlanger gets the money from the sale," the judge asked, "what's wrong with that?"
Erlanger's attorneys argued the sale was not proper for several legal reasons, including the fact that the hospital doesn't own the nursing home property. The property is owned by the Hospital Authority of Walker, Catoosa and Dade counties.
Hutcheson's lawyers argued that the authority can transfer the property to the hospital, which could then sell it. Erlanger's lawyers argued that couldn't happen. The two sides will meet again Oct. 30.
Possible shutdown
If Hutcheson auctions its nursing home, what's next?
U.S. Trustee Martin Ochs proposed for the second time in two months that Bonapfel should end the bankruptcy case. Bonapfel responded that, should the case end, the whole hospital will shut down. He said that is a possibility, pointing out that only eight patients were in the hospital Wednesday morning and that only about 300 of the 800 employees on staff late last year are still around.
"If nobody wants to buy the hospital," Bonapfel said, "it's time to shut it down."
Catoosa County Attorney Clifton "Skip" Patty told the judge that the county's elected leaders also believe the hospital should close. In addition to promising to pay Erlanger $10 million on behalf of Hutcheson, Patty pointed out, the county extended a $3 million line of credit to Hutcheson after the hospital's agreement with Erlanger ended in 2013.
"It will not work," Patty said. "This ox is dead. I hate it. We all hate it. We've been trying to make it work since 2011. It just won't work."
Bonapfel said he will not weigh in on that issue until someone buys the nursing home.
Chickamauga clinic
The Walker County Development Authority voted Tuesday to "move forward toward the purchase" of Hutcheson's Chickamauga Family Practice, a clinic that hospital administrators shut down last week.
Development authority board member Virgil Sperry said the group called an emergency meeting after Commissioner Bebe Heiskell and former Chickamauga City Manager John Culpepper said they were worried that 800 patients would need to find new doctors. According to a letter from Walker County Attorney Don Oliver to Hutcheson Attorney Rob Williamson, the county would pay the hospital $350,000 for the clinic.
Dade County's development authority paid the same amount for Hutcheson's Trenton clinic last month. And like Dade County, Oliver said, Walker County will ask Memorial Hospital to manage the clinic. He said Wednesday officials with Walker County and the hospital are still working out the details.
In Dade County, Executive Ted Rumley said, Memorial pays rent of $13 per square foot of the clinic. With about 6,100 square feet, that comes out to about $80,000.
Oliver said Wednesday attorneys will bring the deal before Bonapfel during the Oct. 30 hearing. They did not discuss the matter in court Wednesday because Hutcheson did not file the paperwork on the sale until Tuesday evening, giving the other lawyers involved in the case little time to react.
Contact staff writer Tyler Jett at tjett@timesfreepress.com or at 423-757-6476.
Hutcheson Hospital and Medical Center stands in Fort Oglethorpe, Ga., in this October 21, 2015, file photo.