Erlanger President and CEO Kevin Spiegel speaks with members of the Chattanooga Times Free Press editorial board Thursday.It is important for the public to understand the real facts leading up to Erlanger Health System’s decision to file foreclosure proceedings against Hutcheson Medical Center. Foreclosure on the property is a definitive requirement in the loan document imposed by Walker and Catoosa Counties prior to enabling the guarantee provision by the counties.
On April 8, 2011, the trustees of the Hospital Authority of Walker, Dade and Catoosa Counties and Hutcheson Medical Center voted unanimously for the hospital to enter into a management agreement with Erlanger. Under the agreement, Erlanger committed to a fully secured loan of up to $20 million backed by the Hutcheson campus and a full guarantee of payment by Catoosa and Walker counties. Erlanger then agreed to fund the line of credit, and every penny of the loan was used to pay Hutcheson employee salaries and Hutcheson operating expenses. This was required since Hutcheson Medical Center’s previous management lost its ability to be paid by Medicare.
Without Erlanger’s financial support, Hutcheson would have been unable to survive or make payroll. The board requested Erlanger to manage, and the counties unanimously guaranteed payment to Erlanger.
Over the next two years, under the very capable leadership of Roger Forgey, Hutcheson recorded significant improvements in monthly operating income — from previous operating losses of more than $1.5 million a month — through a steady growth in patient volume, cost-containment measures and the rebuilding of a much stronger physician base in North Georgia. Forgey and other members of Erlanger’s management team reported to the Hutcheson board. Any actions provided by the management team were reviewed and approved by that board.
In May 2013, the Hutcheson board asked Erlanger for an additional $550,000 to be able to make payroll due to delayed payments. Again, the counties of Catoosa and Walker guaranteed that debt.