Judge pulls plug on ailing Hutcheson; CEO gives up fight to save hospital

FORT OGLETHORPE, Ga. - Hutcheson Medical Center will drift off life support.

After a judge denied hospital officials' efforts to keep the doors open for another month, CEO Farrell Hayes emailed employees at noon Tuesday, telling them he could not save the hospital. Though he is not in control of personnel decisions anymore, he believes a bankruptcy court-appointed trustee will begin laying off hospital staff this week.

Hayes, who has been in charge of Hutcheson since November 2013, has continually told employees to ignore the noise and just keep working hard. The hospital would survive, he said, despite the bankruptcy declaration and the growing debt and the threats of foreclosure.

Even this month, as the trustee began the process of closing Hutcheson, Hayes told employees that a potential savior awaited. Prime Healthcare Services, a California-based company claiming to specialize in hospital turnarounds, wanted to buy Hutcheson for $7 million. They could keep the hospital open. They could save people's jobs.

But on Tuesday, an emotional Hutcheson staff met reality. The hospital owed too many people too much money - and those people weren't satisfied with Prime Healthcare's offer.

Hayes' fight to keep Hutcheson alive is over.

"I'm giving up," he told the Times Free Press. "I just don't see it happening."

Despite laying off about 130 people in September and October, Hayes said Hutcheson still employs about 500 people. Of those, 320 are full-time workers. He said all but 150 of them will be gone by the end of next week. Most of those who will remain on staff work for Parkside Nursing Home, the center that Hutcheson plans to sell for about $7 million next month.

Hayes did not know specifically when employees will lose their jobs. But Ronald Glass, the bankruptcy trustee, plans to stop accepting patients Friday. Then, at 8 a.m. on Dec. 4, the emergency room will close.

Glass did not return multiple calls seeking comment Tuesday, although last month he told the Times Free Press that Hutcheson simply did not have enough money to continue operating.

After Glass told Hayes to begin laying off employees by 4 p.m. Monday, multiple hospital sources told the Times Free Press that an attorney representing Walker County had filed a motion in U.S. Bankruptcy Court, hoping to stop Glass' efforts. Walker County is involved in the case because its commissioner appoints residents to a board that operates the hospital, alongside appointees from Catoosa and Dade counties.

In the motion, attorney Stuart James argued that Hutcheson has enough money to continue running through Dec. 21. If the hospital stayed open that long, Prime Healthcare could buy the hospital at a Dec. 3 auction, keeping Hutcheson running and keeping its staff employed.

But Regions Bank has opposed the sale. According to a December bankruptcy court filing, Hutcheson owes Regions about $33 million. If the bank does not receive its money, it has the right to foreclose on Hutcheson's ambulatory surgery center on Battlefield Parkway.

James said after Tuesday's hearing that Regions opposed the sale to Prime Healthcare because the bank's leaders believe they can get more money by taking Hutcheson's property.

"The judge said that it's Regions' money," James recalled, "and Regions gets to decide what it wants to do with its money."

Jeremy King, a spokesman for Regions, said after the hearing, "Our goal throughout this process has been to work with everyone involved to find a sustainable path forward for Hutcheson. Unfortunately, the financial challenges facing the hospital are severe."

Hayes said Prime Healthcare will not buy the hospital if it shuts down first because too many parts of the building are no longer up to code. If a state inspector visits the hospital when someone tries to re-open it, the inspector will not let them open the doors.

"If we close for a day," Hayes said, "it's closed."

An attorney representing Prime Healthcare did not return multiple calls seeking comment Tuesday.

Tangled debts

Even if Regions agreed with the sale, another creditor opposes Hutcheson selling its property. Erlanger Health System, which loaned Hutcheson $20 million in 2011, has already fought against another acquisition: The sale of Hutcheson's nursing home.

That deal would net $7 million from Maybrook Healthcare. But Erlanger believes Hutcheson does not have the right to sell its nursing home because Erlanger's debt was secured by that property. In other words, Erlanger believes it has the right to foreclose on the nursing home and the hospital's main campus if Hutcheson does not pay back its debt. Erlanger says that debt has swelled to a total of $32 million when interest is included.

Catoosa County officials have also opposed that deal, at least in its present form. As part of the loan between Erlanger and Hutcheson, leaders from Catoosa and Walker counties agreed in 2011 to guarantee at least part of the debt. If Erlanger is out up to $20 million, Catoosa and Walker counties will have to split the bill. Before it can dip into those taxpayer funds, however, Erlanger has to try to foreclose on Hutcheson's property.

Catoosa County attorney Clifton "Skip" Patty said he wants to know for sure that the local government will receive at least part of the $7 million flowing from Maybrook on the nursing home sale. Either that, or he wants Erlanger to be able to foreclose. He believes either outcome would save Catoosa County some money.

"We're trying to protect the taxpayers of Catoosa," he said.

I've worked at a lot of places, and there will never be another Hutcheson. We are family. We love this community.

But Walker County Attorney Don Oliver said the leaders of Catoosa County have worked with Erlanger to help shut down Hutcheson. Oliver doesn't know why Patty and the Catoosa County commissioners would work with Hutcheson - he just believes they haven't supported the local hospital as passionately as the leaders of Walker County.

"It has absolutely been a mystery to me why Catoosa has basically backed every effort Erlanger has made to close Hutcheson," Oliver said. "I've worked in exactly the opposite direction [as Catoosa County]."

Patty pointed out that Catoosa backed the $20 million loan from Erlanger, in addition to another $6 million loan to keep the salaries flowing. In 2011, while Erlanger managed Hutcheson, Catoosa offered to issue a bond so that the hospital's annual debt payments would be more manageable.

"We gave it every chance in the world," Patty said. "We spent money after money. It just kept eating up more and more money, getting more and more in debt."

End of an era

On Tuesday afternoon, as news of the judge's decision spread through the halls of the hospital, nurse Katrina Park began to cry. A paramedic gave her a tissue and pulled her in for a long hug.

Park has worked at the hospital for 15 years. A lot of other Hutcheson employees have been at the hospital for decades. Some were born here and grew up visiting their parents - who were employees of the hospital decades ago - when nobody worried if their paychecks would bounce or if their health insurance coverage was still active.

Opened in 1953, Hutcheson was part of wave of community hospitals that opened in rural stretches of the country as part of a federal government program to boost access to health care. It was a small town hospital, the type of place where a doctor treated his old high school football coach, where a nurse kept watch over her nephew.

Even in 2015, the hospital reminded Park of an era when doctors made house calls.

She said the place felt warm. Patients wrote her cards, calling her an angel. One time, while pumping gas, someone walked up to her, thanked her for sitting with that person's mother as she took her last breaths.

"I don't want to go anywhere," Park said Tuesday. "I've worked at a lot of places, and there will never be another Hutcheson. We are family.

"We love this community."

Times Free Press Multimedia Reporter Maura Friedman contributed to this report.

Contact Staff Writer Tyler Jett at 423-757-6476 or at tjett@timesfreepress.com.