Counties seeking role in hospital negotiations

Counties seeking role in hospital negotiations

March 1st, 2011 by Emily Bregel in News

Document: Counties' letter to HMC, Erlanger

Fed up with being kept out of the loop, leaders of Walker, Dade and Catoosa County are demanding that their county-appointed trustees start playing a lead role in partnership negotiations with Erlanger Health System in Chattanooga, according to a letter obtained by the Times Free Press.

In exchange for a seat at the head of the negotiating table and greater operational control of the hospital for their trustees, the counties agreed to discuss securing Erlanger's future investment in Hutcheson, which is struggling to stay afloat in the face of deep financial losses.

On Monday, county leaders sent a letter detailing their requests to Erlanger's management team and to the board members of Hutcheson Medical Center Inc., the private nonprofit company that leases the Hutcheson hospital facilities and property from the counties.

The trustees of the Hospital Authority of Walker, Dade and Catoosa Counties oversee the terms of Hutcheson's lease to HMC and have been fighting for more involvement in the hospital's decision-making.

Martha Attaway, chairwoman of the HMC board, said the board is willing to work with the counties in any way to ensure community-based health care remains available in the community.

"Our board of directors has but one primary interest: that the residents of our community have access to the highest level of quality health care possible. If relinquishing control of our authority enables for that goal to be met, then so be it," she said in an e-mail.

After learning the extent of Hutcheson's financial troubles, Erlanger made it clear some financial guarantee from the counties would be a requirement of partnering with the struggling community hospital, said Dade County Executive Ted Rumley.

Initial estimates suggested Erlanger would offer about $5 million to help get Hutcheson back on its feet. But the new estimate is closer to $25 million, after a 60-day due diligence period, which started in October, revealed deep financial turmoil at the Fort Oglethorpe hospital, Rumley said.

County leaders and members of the county-appointed Hospital Authority board have said the HMC board has withheld crucial financial information that should have been public, and made poor management decisions that have led to the hospital's current predicament.

The letter said hospital trustees will not engage in negotiations until their demands are met.

"The Counties are not in a position to discuss such a pledge or any other form of assistance until and unless the (hospital authority) board is primarily in charge of governance of the Hospital affairs and is firmly in charge of hiring and firing of all Hospital administration, at least until some other negotiated agreement is reached" with Erlanger, according to the letter.

Hutcheson leaders are currently negotiating a partnership arrangement with Erlanger in the hopes that a strategic relationship with the larger Chattanooga-based hospital will help recruit physicians and bring patients back into Hutcheson's beds.

In an e-mailed statement, Erlanger President and CEO Jim Brexler said issues of hospital governance must be worked out within the community.

"This is not for Erlanger to decide. We remain committed to helping North Georgians maintain quality, community-based health care," he said.

Hutcheson is losing about $1 million a month, and has lost more than $7 million for the past two fiscal years. Hutcheson is also in default of its $35 million bond issue, limiting its financial options.

County leaders say the HMC board, and the recently resigned Hutcheson President and CEO Charles Stewart, have allowed the community hospital to sink into the red and alienated loyal doctors in the community who now refer their patients to other hospitals.

"In reality HMC is the board that was on the watch when the hospital went under," Rumley said. "They can blame it on the recession or whatever they want to blame it on, but I don't see that. This is something that been happening five or six years."


The letter stipulates that the counties' guarantee of Erlanger investment would not put any risk on taxpayers, such as a future tax levied on residents to pay back Erlanger.

Alternately, the counties could offer up Hutcheson's property and buildings as collateral to secure Erlanger's investment, Rumley said.

If five or 10 years down the road Hutcheson could not repay its debt, the taxpayers would not be on the hook for the money, but the property would go to Erlanger, he said.

For all the recent talk of Hutcheson's five boards working together, and giving the county-appointed board members more authority, county leaders say information about the negotiations with Erlanger are still being kept secret, according to the letter. Recently the hospital created a "transition team" that included three members from four of Hutcheson's boards, including the hospital authority board, as part of an effort to work together on the negotiation.

The HMC board's efforts to limit access to Erlanger's initial proposal and other hospital information "make it clear that the (Hospital Authority) transition team members and their professional advisors will not receive appropriate respect in the negotiation process," the letter states.

The counties want to get county-appointed members on the Hutcheson Medical Center board, Rumley said.

"We want our representatives to be on the actual decisive, decision-making board," Rumley said.