Hutcheson loses $1.2 million in March

Hutcheson loses $1.2 million in March

May 16th, 2011 by Chris Carroll in News

HUTCHESON LOSSES

• March: $1.2 million

• Last six months: $4.9 million

• Available line of credit from Erlanger: $20 million

Source: Hutcheson Medical Center

Hutcheson Medical Center lost more money than usual in March because of legal fees used to secure a $20 million lifeline from Erlanger Health System.

And even though the Erlanger money has been available for several weeks, Hutcheson officials aren't rushing to use it.

Records show Hutcheson lost $1.2 million in March, continuing its monthly seven-figure slide. That put a collective frown on its newly empowered governing board, the politically appointed Hospital Authority of Walker, Dade and Catoosa Counties.

"If it continues to have a deficit, then the money Erlanger has made available will be used to offset those losses," Hospital Authority trustee Corky Jewell said Friday.

Not yet, though. Jewell said staffs from both hospitals are "trying to get a true picture of the financial situation so we can ... minimize the involvement of Erlanger money so we don't become totally beholden to them."

The Fort Oglethorpe hospital underestimated its budgeted projection for bad debt by about $900,000, and ended up saddled with $2.4 million in unpaid patient costs in March, budget statements show. Some of that money will be relinquished if patients later qualify for Medicaid.

Extenuating circumstances also affected the bottom line. Since October, Hutcheson has spent more than $380,000 on legal fees related to the Erlanger deal, Baker said. Hutcheson lost $4.9 million in the same time frame.

"Obviously we didn't have a crystal ball when we were doing the budget," said Denise Baker, Hutcheson's interim chief financial officer.

But Hutcheson's financial problems were well known at the time, and officials knew something had to be done.

The North Georgia hospital's fiscal year began last October, about the same time Erlanger began to determine if a partnership was viable. Records show the due diligence process revealed a $5.4 million hole dating back to 2007.

Baker said that number is an estimate and blamed the loss on "incorrect data," but added that officials "felt we needed to report it" to the Hospital Authority in February. She declined to elaborate.

Looking ahead, officials expect savings from the hospital's 75 layoffs in April to begin materializing in May. Preliminary estimates place monthly savings at about $285,000.

"That will create a positive cash flow, more positive than it had been if we had those positions filled," Jewell said.

Baker declined to comment on whether the hospital's anemic financial situation justifies the nearly 800 employees currently at the hospital, but said Hutcheson's average daily census of 35 does not include emergency room visits, nursing home patients, surgeries and other types of care.

Erlanger officials are expected to release an interim strategic plan within the coming days, potentially including leadership plans and executive salaries.