Hutcheson Medical Center finds last-minute savior

Judge OKs sale of hospital to Atlanta medical company

Hutcheson Medical Center in Fort Oglethorpe, Ga., in seen in this file photograph from October 2015.

ATLANTA - Salvation came to Hutcheson Medical Center.

The Fort Oglethorpe hospital, which closed Dec. 4, may soon reopen after U.S. Bankruptcy Court Judge Paul Bonapfel tentatively approved a management agreement Monday between Hutcheson and ApolloMD, an Atlanta-based health care company.

Though lawyers still needed to hammer out some small details of the agreement, they told Bonapfel in court they believed they could finalize a deal later this week.

photo Staff photo by Maura Friedman / Paramedic Sandra Gray, right, comforts RN Katrina Park upon hearing that staff will be laid off at Hutcheson Medical Center on Tuesday in Fort Oglethorpe, Ga.

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photo (From left) Kim Plant, Hutcheson Director of Physician Practice Operations, Tiffany Richards, Hutcheson Medical Staff Coordinator, Michelle Chandler, Hutcheson Occupational Health, and Jennifer Frazier, Hutcheson Director of Case Management, sit before Catoosa County Manager Jim Walker in Fort Oglethorpe, Ga. on Wednesday, Dec. 2, 2015.

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 two weeks.

"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."

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 on Monday the company has more than 100 practices in 17 states.

With about $82 million of debt, Hutcheson filed for Chapter 11 bankruptcy protection in November 2014. While the hospital's administrators told staff throughout this year a buyer would take over Hutcheson and keep the operation running, they failed to find their hero. And on Dec. 4 the hospital shut down, its leaders believing they didn't have enough money left.

Two weeks ago, the hospital's lawyers thought they'd struck a deal with Prime Healthcare, a California-based company. But Prime's offer fell through when that company refused to meet certain demands from Regions Bank, one of Hutcheson's creditors.

Then last week, 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.

But during a hearing Friday afternoon, when lawyers discussed this new offer from People's Choice, an attorney representing ApolloMD entered the conversation through a conference call. The attorney said his client 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.

On Monday, during another hearing in U.S. Bankruptcy Court, Williamson announced that the trustee overseeing Hutcheson's finances preferred the deal from ApolloMD.

All of these negotiations could have been a moot issue if the deal was occurring too late. As of Friday, that was a problem some of the attorneys involved in the Hutcheson case wondered about. The problem involved Hutcheson's hospital license.

All health care groups in Georgia need to get a hospital license from the Department of Community Health. But when a hospital shuts down, its administrators tell the department they are giving up their license. The process of actually losing the license takes 10 days.

Monday would have been the 10th day.

Lawyers for Hutcheson told Bonapfel on Friday they were not sure whether a deal could go through with the hospital license set to expire. They said members of the Department of Community Health told them they had never handled this issue before - hospital administrators saying they will close, then changing their minds.

Without the license, any company coming in to Hutcheson's current building would need to bring the structure up to code. And because Hutcheson's building is decades old, the hospital's CEO said last month, making the necessary improvements would cost millions. He said it would kill any deal with a company like ApolloMD.

On Monday, however, state Rep. Tom Weldon, R-Ringgold, told Bonapfel that the department was giving Hutcheson an extension on the life of that license. The hospital now has until Christmas Eve to reopen. Weldon credited state Sen. Jeff Mullis, R-Chickamauga, who Weldon said worked with Community Health Commissioner Clyde Reese to make sure Hutcheson had enough time to finish the deal.

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 last week. 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 staff writer Tyler Jett at or at 423-757-6476.