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When a hospital shuts down, its administrators tell the Department of Community Health they are giving up their license. All health care groups in Georgia need to get a hospital license from the department.The process of actually losing the license takes 10 days — the time it took Hutcheson to strike a deal with ApolloMD.While lawyers for Hutcheson were not sure whether a deal could go through with the hospital license set to expire — without the license, any company coming in to Hutcheson’s current building would need to bring the structure up to code — Hutcheson got another lifeline.State Rep. Tom Weldon told Judge Paul Bonapfel last Monday that the department was giving Hutcheson an extension on the life of that license, and the hospital had until Christmas Eve to reopen. Weldon credited state Sen. Jeff Mullis, who Weldon said worked with Community Health Commissioner Clyde Reese to make sure Hutcheson had enough time to finish the deal.Hutcheson’s building is decades old, and the hospital’s CEO said last month that making the necessary improvements would cost millions, killing any deal with a company like ApolloMD.
One might call it a Christmas miracle: Hutcheson Medical Center may soon reopen.
Three weeks ago, the hospital’s lawyers thought they’d struck a deal with Prime Healthcare, a California-based company, to buy the hospital. But Prime’s offer fell through when that company refused to meet certain demands from Regions Bank, one of Hutcheson’s creditors.
Hutcheson has about $82 million of debt and was forced to close Dec. 4.
Two weeks ago, the hospital received a second offer. This one came from People’s Choice Hospital, a company from Illinois that specializes in telemedicine – the practice of patients “visiting” doctors through a computer screen, like an online chat. People’s Choice offered to buy Hutcheson for $4 million.
During a hearing, when lawyers discussed the offer from People’s Choice, an attorney representing ApolloMD entered the conversation through a conference call. The attorney said his client, an Atlanta-based health care company, was willing to up the offer, buying Hutcheson for $4.2 million.
And what’s more, he said, the offer would be paid entirely in cash. The offer from People’s Choice, on the other hand, was going to be paid with $3 million and a $1 million promise to pay.
Last week, U.S. Bankruptcy Court Judge Paul Bonapfel tentatively approved a management agreement between Hutcheson and ApolloMD. Though lawyers still needed to hammer out some small details of the agreement as of press time, they told Bonapfel in court last Monday they believed they could finalize a deal.
ApolloMD representatives plan to take over Hutcheson as managers at first, supplying the hospital with necessary cash and running the day-to-day operations. Then, at some point next year, ApolloMD would buy the hospital.
Regardless of the unresolved details, lawyers for Hutcheson expect to see the plywood ripped away from the doors and windows of the hospital within the next week.
“The trustee wants to reopen this hospital as soon as possible,” said Rob Williamson, Hutcheson’s bankruptcy attorney. “The more time it’s not operating, the harder it is to reopen.”
Last Monday, during another hearing in U.S. Bankruptcy Court, Williamson announced that the trustee overseeing Hutcheson’s finances preferred the deal from ApolloMD.
ApolloMD has already staffed part of Hutcheson since June, when Hutcheson’s leaders hired their doctors to run the hospital’s emergency department. An attorney for ApolloMD told Bonapfel last Monday that the company has more than 100 practices in 17 states.
Nursing home sale approved
Bonapfel also approved of Maybrook Healthcare’s purchase of Hutcheson’s nursing home and child care center for $7.3 million. The purchase allows the nursing home to stay open.
Erlanger Health System opposed the sale last month. Erlanger, which issued a $20 million line of credit to Hutcheson in 2011, had a lien on the property, meaning Erlanger could foreclose on the nursing home rather than let another buyer take it over.
However, Erlanger’s representatives agreed to a settlement two weeks ago. According to the agreement filed in court, Erlanger will receive about $2.9 million from the deal.
Catoosa County also signed off on the deal after opposing it last month. Back in 2011, when Erlanger loaned Hutcheson $20 million, Catoosa and Walker counties agreed to guarantee the loan. So if Hutcheson couldn’t repay the money, the counties would each give Erlanger $10 million.
Catoosa County Attorney Clifton “Skip” Patty said his group supported this settlement deal because it lowered the total debt to Erlanger. That means the counties will not have to pay as much money to the Chattanooga hospital.
Bonapfel, meanwhile, has long argued the deal for the nursing home is important for moral reasons. If Erlanger foreclosed on the property, the 109 residents would have to find a new place to live.
“The sale is in the best interest of the estate,” Bonapfel said, “and in the best interest of all the parties and, most importantly, in the interest of all the residents.”
Contact Tyler Jett at tjett@timesfreepress.com or 423-757-6476.