Hutcheson Medical: Lots of irons in the fire

Hutcheson Medical Center in Fort Oglethorpe has a lot of irons in the fire.

Requests for proposals to find a lease partner have been sent out; longterm financing options are being explored with Walker, Catoosa and Dade counties; and the hospital is severing ties with Chattanooga-based Erlanger Health System.

Hutcheson’s board of directors met Sept. 25 for about two hours. The board rearranged the agenda to accommodate questions from county leaders. Catoosa County Board of Commissioners chairman Keith Greene and county attorney Chad Young stayed long enough to get the information they needed.

“The counties want all the information they can get on the RFP (request for proposals) process and who or who may not be responding,” said HMC board of directors chairman Corky Jewell.

RFPs were sent out Sept. 11 seeking regional and national targets for a long-term operating lease agreement. Ken Conner with Chattanooga-based accounting firm Decosimo is managing the lease proposal process. The proposals also include the option of buying the hospital outright. Proposals are due Oct. 24.

After the initial proposals are received, it could take up to two months to review them, according to Conner. Based on the timeline established for review, due diligence and attorney general approval of a final lease agreement may not be reached until the beginning of 2014.

At about a month into the process, Jewell said, “There are no adverse surprises at this point.”

In fact, the process is going as expected and responses are being received, he said.

“We have interest. We have non-disclosure agreements being submitted by different entities so that they can talk to us and we can set up meetings and exchange information.”

Meanwhile the sole financing option considered by Catoosa County remains at a standstill. County commissioners tabled an alternative resolution to provide the hospital with a $35 million bond anticipation note (basically a short-term loan) on Sept. 12. Commissioners decided to delay a decision because they needed more information.

“Hospital leaders and staff have solidified the core services and quality outcomes in recent years and have demonstrated that the hospital can be profitable,” Greene said in a prepared statement issued by Waterhouse public relations and Hutcheson Medical Center. “The right partner will position Hutcheson for continued growth as the community hospital for our region, while providing a revenue stream for the repayment and restructuring of hospital debts.”

Financial reports for August showed a loss of $1.5 million. Expenditures for the month were just over $4 million and revenue was $2.8 million. The average daily census, births and emergency room visits remain about the same as August 2012. Outpatient visits saw a drop of about 1,000 people compared to last year.

Hutcheson president and CEO Roger Forgey attributes the volume drop and subsequent financial loss to publicity on the management agreement ending with Erlanger.

“However, our volumes are rebounding as the community understands we still have the same committed medical and hospital staff providing the quality level of care that has contributed to Hutcheson’s financial turnaround this past year,” Forgey said.