Catoosa officials back 'Plan B' for Hutcheson

Catoosa officials back 'Plan B' for Hutcheson

April 6th, 2011 by Andy Johns in News

This is the campus of Hutcheson Medical Center in Fort Oglethorpe. Staff File Photo by Angela Lewis/Chattanooga Times Free Press

RINGGOLD - Catoosa County commissioners made plans to back Erlanger Health System's investment in a North Georgia hospital, even if a board of county-appointed officials votes down the agreement tonight.

Commissioners voted unanimously Tuesday morning to urge the county's Economic Development Authority to secure funding to back Hutcheson Medical Center in the event negotiations break down at one of the hospital's board meetings this evening.

Hutcheson and Erlanger have negotiated for months on a plan that would pump money into the struggling Hutcheson, which has been losing $1 million a month and defaulted on a $35 million bond. The 195-bed hospital also has struggled to keep doctors admitting their patients.

The Hospital Authority of Walker, Dade and Catoosa Counties will meet tonight to vote on the agreement, which three other boards already have approved. Though Hutcheson Medical Center Inc., Hutcheson Health Enterprises Inc. and Hutcheson Medical Division Inc. approved the contract Sunday, the agreement can't go through unless trustees of the Hospital Authority of Walker, Dade and Catoosa Counties agree.

Commissioners expressed concern that the board might vote down the agreement, which includes a total of $20 million in pledges from Catoosa and Walker counties.

Commissioners want the Economic Development Authority to be prepared to issue a $10 million bond for the county to back Erlanger's investment in case the agreement falls through.

"Essentially, this is Catoosa County's 'Plan B,'" Commission Chairman Keith Greene said.

County Attorney Skip Patty and commissioners said Erlanger, the Chattanooga hospital system that would invest more than $30 million in the Fort Oglethorpe hospital, essentially has said the current management agreement is its last offer.

Patty said some of the hospital's drug and equipment suppliers are seeking payment and have stopped allowing the hospital to buy on credit. If the suppliers don't get "like $3 million" from Hutcheson or Erlanger soon, shipments might cease altogether, essentially shutting down the hospital, he explained.

At the meeting Tuesday, Catoosa resident Phyllis Williams asked how the county's $10 million pledge could affect taxpayers.

"I know that when you borrow money you have to have collateral, and I don't want to be anybody's collateral," Williams said.

Greene said the pledge would come into play only if the hospital defaulted and, in that circumstance, the money would come from the county's reserves or a new bond issue.

"This is not a tax levy," he said. "We are not going to do anything to put the taxpayers at risk."

After the meeting, Greene acknowledged that the agreement between Hutcheson and Erlanger was a compromise, but said it was "acceptable."

"Is it perfect? No," he said. "We've all made concessions."

Commissioner Ken Marks agreed, saying that if Hutcheson closed the county would have to pay hospitals in Chattanooga or Dalton for its indigent care. Patty estimated the bill would be $5 million to $6 million annually if the county had to outsource all its indigent care.

"This is a good deal for us and basically the only one that's fair," Marks said.