Hutcheson ready to borrow from Erlanger

Hutcheson ready to borrow from Erlanger

July 28th, 2011 by Chris Carroll in News

Hutcheson Medical Center. Staff Photo by Angela Lewis/Chattanooga Times Free Press

Erlanger Hospital

Erlanger Hospital

Hutcheson Medical Center will make its first six-figure dip into Tennessee taxpayer money, borrowing $700,000 from Erlanger Health System to meet payroll costs for July.

Funded by Catoosa, Dade and Walker counties, Hutcheson entered a last-ditch management agreement with Erlanger, which offered up to $20 million in credit as part of the April deal.

Hutcheson must pay back all loans from Erlanger, a process that could take years. Since Erlanger stepped in - and for many months before that - Hutcheson's financial team has reported nothing but cataclysmic losses.

In case Hutcheson fails, Catoosa and Walker have pledged $10 million each to pay back the lifeline, but only as a stopgap because the value of Hutcheson's property, buildings and equipment likely will exceed $20 million in collateral, officials have said.

Erlanger historically receives $3 million from Chattanooga and Hamilton County coffers, records show.

Various Hutcheson boards gathered for a regular monthly meeting Wednesday night, and several trustees commended hospital management for "keeping the money in the bank" this long, as Hutcheson Medical Center Inc. board Chairman Corky Jewell put it.

Many expected Hutcheson to petition Erlanger for help long before now, he added.

Gregg Gentry, Erlanger's vice president of human resources and the hospital's Hutcheson transition chief, said the ailing North Georgia community hospital needed Chattanooga's public funds to meet about $1 million in payroll costs.

Incidentally that's almost the same amount Hutcheson lost in June - $1.1 million, according to the hospital's latest financial statement - marking the third month out of the last four the hospital has reported million-dollar losses. Gentry described the payroll costs as a calendar anomaly that happens twice a year.

Hutcheson laid off 75 employees in April, some of whom had never worked anywhere else. A news release issued at the time said the layoffs would "increase financial stability to the facility" - savings of $285,000 a month, or $3.4 million annually.

There was no discussion of further layoffs at Wednesday night's meeting.