Hutcheson Medical Center officials want to sell their clinic in Trenton, Ga., if a judge will let them.
A bankruptcy attorney for the North Georgia hospital filed a motion to amend Hutcheson's lease Friday. Hospital administrators asked to sell Trenton Family Practice to Dade County for $350,000. Hutcheson needs to sell the clinic because it is hemorrhaging money, and Dade County's leaders want it because they say about 8,000 residents use it each year.
The U.S. trustee overseeing Hutcheson's bankruptcy wants to block the sale, however. So do Catoosa County officials.
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U.S. Trustee Guy Gebhardt will argue in U.S. Bankruptcy Court in Rome at 12:30 p.m. today that the hospital should lose its Chapter 11 bankruptcy protection. Without the protection, creditors could try to foreclose on the hospital, which held about $80 million in liabilities as of December.
Lawyers on all sides of the issue will argue before a U.S. Bankruptcy Court judge in Atlanta on Friday.
Hutcheson's attorney, Robert Williamson, wrote in a motion last week that the Trenton clinic will close if the hospital can't sell it to Dade County. Hutcheson is experiencing a "critical cash-flow shortage," Williamson said. On Monday, Hutcheson closed its women's center in Fort Oglethorpe and its clinic in LaFayette.
Dade County Executive Ted Rumley said Memorial Hospital already has agreed to manage the clinic, assuming a judge approves the sale.
"It is not known where many residents would receive health care if Trenton Family Practice were not there," he wrote in an Aug. 26 letter to Hutcheson CEO Farrell Hayes. "Even a temporary disruption in the medical services provided by the facility would pose a threat to the health and the well-being of our citizens."
But Guy Gebhardt, the U.S. trustee overseeing Hutcheson's bankruptcy, wrote in a court motion Monday that the sale should be blocked because hospital leaders didn't follow court rules. He said Hutcheson has not proven that Dade County's offer is the best the hospital can get.
Gebhardt said he interviewed Hayes about the deal on Monday, when Hayes admitted that nobody at the hospital tried to pursue other buyers. And without other potential buyers, Hutcheson couldn't create a bidding war - which might cost the hospital money.
Hutcheson's leaders said money from the sale would go toward debt the hospital has incurred since filing for bankruptcy in November.
Gebhardt countered that this money would barely make a difference.
When the hospital filed for Chapter 11 bankruptcy, it held about $80 million in liabilities. In August, after reviewing some of Hutcheson's financial records, Gebhardt estimated that the hospital had incurred another $5 million of debt in nine months - a period when the hospital didn't even have to worry about paying off that original, $80 million debt to creditors.
Now, after reviewing more financial records, Gebhardt estimated in his motion on Monday that the amount of "new" debt is actually about $6.3 million.
He said a $350,000 sale price for the Trenton clinic will barely benefit Hutcheson, so the hospital has to at least show it tried to bring more bidders to the table.
"The debtors must still be called upon to establish a business justification for the sales price of the Trenton Clinic," Gebhardt wrote. "The debtors have failed to establish that the sale of the Trenton Clinic is in the best interest of their estate and their creditors."
Catoosa County leaders also want to block the sale. County Attorney Clifton "Skip" Patty said during Tuesday's commission meeting that he will file an objection because he believes the sale might hurt local taxpayers.
In 2011, when Erlanger Health System began managing Hutcheson, the Chattanooga hospital loaned Hutcheson $20 million. Catoosa and Walker County elected officials guaranteed that loan, assuming Hutcheson couldn't pay the money back. Last year, after the management agreement ended, Erlanger demanded the money.
With Hutcheson deep in debt, Erlanger officials might turn to Catoosa and Walker counties. So, Patty said, selling the Trenton clinic too cheaply could hurt local taxpayers. If Erlanger forecloses on Hutcheson's property first, the Chattanooga hospital might not need to dip into that $10 million that Catoosa County has promised.
"I fear that this is yet another scheme to put fresh money in the bottomless hole that is HMC," Patty said.
In another matter, Walker County Commissioner Bebe Heiskell is looking for a company to take over the local ambulance service. Last month, Heiskell said, Hutcheson was going to run it.
But Heiskell said at the time that she believed Hutcheson would give her county $2 million for the service. Members of the Hospital Authority, Hutcheson's governing body, said they were only taking the Walker County ambulance program if it were free.
Walker County Emergency Services Chief Randy Camp wrote in a memo to his employees last week that Heiskell canceled the ambulance service transition from Walker County to Hutcheson. Instead, she would ask private companies to propose offers for taking over the service.
On Aug. 5, Angel EMS CEO Dewayne Wilson told the Times Free Press that Heiskell had agreed to pay his Fort Oglethorpe-based company $225,000 before surprising him by announcing that she would actually give the service to Hutcheson.
Contact staff writer Tyler Jett at 423-757-6476 or tjett@timesfreepress.com.