Hutcheson Medical Center will shut its doors in about a month, barring a last-minute offer for the Fort Oglethorpe hospital.
Ronald Glass, the trustee appointed to handle Hutcheson's financial decisions, told U.S. Bankruptcy Court Judge Paul Bonapfel on Friday that he will begin the process of shutting down the hospital's main campus and cancer center Monday. The process will take about 30 days.
Not enough patients use the hospital anymore, Glass said, in part because of negative reports of the hospital's condition that have been filed in bankruptcy court. At Glass' last count, five people were in Hutcheson Medical Center beds. That does not include the emergency room, which was handling between 40 and 50 people.
"It's a sad day for the community," Glass said, "but apparently it was unavoidable with all the parties involved and the lack of funding."
Hutcheson's leaders still hope a bidder will make a strong enough offer to buy the hospital. Chief Operating Officer Kevin Hopkins sent an email to the staff after Friday's court hearing, saying hospital leaders will continue to negotiate with a potential suitor throughout the weekend.
Those negotiations are complicated by the fact that Hutcheson is in Chapter 11 bankruptcy, and that some of its creditors get a seat at the table. Walker County Attorney Don Oliver, who also advises the hospital's governing authority, said officials from creditor Regions Bank won't agree to a deal with a potential buyer.
Oliver said a company that owns 35 hospitals — he wouldn't name it — offered to buy all of Hutcheson's property for $13 million. He said the Regions team would not sign off on the deal, believing the bank deserves more money. According to a court filing, Hutcheson owed Regions about $33 million in December.
Regions' loan is secured, meaning the bank can move to foreclose on Hutcheson's property on Battlefield Parkway if the hospital fails to pay what it owes. Oliver believes Regions wants to let the property shut down before selling it instead of allowing a buyer to take it now, while the hospital is still running.
If Regions is unsatisfied with the $13 million offer, Oliver said, the bank can at least make a counteroffer and see how the company reacts.
"Why does Regions think they're going to get a better offer on an empty building sitting there?" Oliver said. "What are they thinking?"
Regions Bank attorney David Lemke said in a statement that "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. Our conversations have continued, but the proper forum for those conversations is the legal system, not the press."
The attorney for the committee of unsecured creditors, David Kurzwell, whom Oliver said has also been part of these negotiations, did not return a call seeking comment.
Oliver said he was surprised by Glass' decision to begin shuttering Hutcheson. Glass appeared before the hospital's board Wednesday and Oliver felt Glass supported keeping the hospital's doors open.
"Nothing financially changed substantially between Wednesday night and this morning," Oliver said. "As a matter of fact, we had an unexpected $100,000 check come in. We made the payroll. I don't understand what changed his mind. I was surprised and disappointed."
Glass said the hospital could not stay afloat given the lack of patients. Much of the hospital's money, he said, comes 45-60 days after a patient visits. So while the hospital's financial picture is OK today, he believes Hutcheson would not have enough money on hand two months from now — assuming it remained open.
Glass will inform the state licensing board that Hutcheson needs to be shut down next week, and state officials will help move any remaining patients to another hospital.
"It will be very orderly," he said. "By the book. As little disruption as possible."
Parkside Nursing Home will remain open. Maybrook Healthcare LLC, a New York company, has offered to buy the nursing home for $7.2 million, according to an asset purchase agreement filed in Bankruptcy Court on Friday. This is the second offer Hutcheson has received for the nursing home, where 102 people live.
Last week, New Beginnings Care offered to buy the nursing home for $100,000 less than the latest offer. Maybrook Healthcare's offer will stand as the purchase price, unless another company steps in. It's unclear what the deadline is for offers, though Oliver expects the transition will be complete by the beginning of next year.
Those living in the nursing home will not have to move if this purchase is finalized.
However, attorneys for Erlanger Health System have tried to stop the process, contending Hutcheson does not have the right to sell the nursing home.
Erlanger gave Hutcheson a $20 million line of credit in 2011 and believes it has the right to foreclose on the nursing home, which was part of the collateral for the loan along with the hospital itself.
Catoosa County Attorney Clifton "Skip" Patty also opposes the sale. Patty said Hutcheson owes Erlanger about $32 million, including interest. If taking the Hutcheson properties doesn't satisfy the debt, Catoosa and Walker counties will each owe Erlanger up to $10 million.
But if Erlanger could make more than $12 million selling Hutcheson land, Patty said, the counties could owe less than $10 million apiece.
Erlanger's lawyers did not return calls seeking comment Friday.
However, Patty said, "Erlanger's not happy. Catoosa County's not happy. But I guess all of the attorneys that have provided work for (Hutcheson) are pretty happy."
Contact staff writer Tyler Jett at email@example.com or at 423-757-6476.